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                                                                    EXHIBIT 10.8

                           KNOWLEDGE DISCOVERY ONE, INC.
                      1996 STOCK OPTION/STOCK ISSUANCE PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

I.      PURPOSE OF THE PLAN

        This 1996 Stock Option/Stock Issuance Plan is intended to promote the
interests of Knowledge Discovery One, Inc., a Delaware corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.

        Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.

II.     STRUCTURE OF THE PLAN

        A. The Plan shall be divided into two (2) separate equity programs:

                      (i) the Option Grant Program under which eligible persons
        may, at the discretion of the Plan Administrator, be granted options to
        purchase shares of Common Stock, and

                      (ii) the Stock Issuance Program under which eligible
        persons may, at the discretion of the Plan Administrator, be issued
        shares of Common Stock directly, either through the immediate purchase
        of such shares or as a bonus for services rendered the Corporation (or
        any Parent or Subsidiary).

        B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern, the interest of all
persons under the Plan.

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III.    ADMINISTRATION OF THE PLAN

        A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and may he removed by the Board at any time. The Board
may also at any time terminate the functions of the Committee and reassume all
powers and authority previously delegated to the Committee.

        B. The Plan Administrator shall have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue
such interpretations of, the Plan and any outstanding options or stock
issuances thereunder as it may deem necessary or advisable. Decisions of the
Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any option or stock issuance thereunder.

IV.     ELIGIBILITY

        A. The persons eligible to participate in the Plan are as follows:

                      (i)   Employees,

                      (ii)  non-employee members of the Board or the board of
        directors of any Parent or Subsidiary, and

                      (iii) consultants and other independent advisors who
        provide services to the Corporation (or any Parent or Subsidiary).

        B. The Plan Administrator shall have full authority to determine, (i)
with respect to the option grants under the Option Grant Program, which eligible
persons are to receive option grants, the time or times when such option grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory
Option, the time or times at which each option is to become exercisable, the
vesting schedule (if any) applicable to the option shares and the maximum term
for which the option is to remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to
receive stock issuance, the time or times when such issuances are to be made,
the number of shares to be issued to each Participant,


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the vesting schedule (if any) applicable to the issued shares and the
consideration to be paid for such shares.

        C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

V.      STOCK SUBJECT TO THE PLAN

        A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 2,801,636
shares.

        B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan, and subsequently repurchased by the
Corporation, at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan, shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan.

        C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of rights and benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.


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                                   ARTICLE TWO

                              OPTION GRANT PROGRAM

I.      OPTION TERMS

        Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided however, that each such document
shall comply with the terms specified below. Each document evidencing an Incen-
tive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

        A.     Exercise Price.

               1. The exercise price per share shall be fixed by the Plan Admin-
istrator and may be less than, equal to or greater than the Fair Market Value
per share of Common Stock on the option grant date.

               2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Four
and the documents evidencing the option, be payable in cash or check made
payable to the Corporation. Should the Common Stock be registered under Section
12(g) of the 1934 Act at the time the option is exercised, then the exercise
price may also be paid as follows:

                      (i) in shares of Common Stock held for the requisite
        period necessary to avoid a charge to the Corporation's earnings for
        financial reporting purposes and valued at Fair Market Value on the
        Exercise Date, or

                      (ii) to the extent the option is exercised for vested
        shares, through a special sale and remittance procedure pursuant to
        which the Optionee shall concurrently provide irrevocable written
        instructions to (a) a Corporation designated brokerage firm to effect
        the immediate sale of the purchased shares and remit to the Corporation,
        out of the sale proceeds available on the settlement date, sufficient
        funds to cover the aggregate exercise price payable for the purchased
        shares plus all applicable Federal, state and local income and
        employment taxes required to be withheld by the Corporation by reason of
        such exercise and (b) the Corporation to deliver the


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        certificates for the purchased shares directly to such brokerage firm in
        order to complete the sale.

        Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

        B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

        C. Effect of Termination of Service.

               1.     The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

                      (i) Any option outstanding at the time of the Optionee's
        cessation of Service for any reason shall remain exercisable for such
        period of time thereafter as shall be determined by the Plan
        Administrator and set forth in the documents evidencing the option, but
        no such option shall be exercisable after the expiration of the option
        term.

                      (ii) Any option exercisable in whole or in part by the
        Optionee at the time of death may be exercised subsequently by the
        personal representative of the Optionee's estate or by the person or
        persons to whom the option is transferred pursuant to the Optionee's
        will or in accordance with the laws of descent and distribution.

                      (iii) During the applicable post-Service exercise period,
        the option may not be exercised in the aggregate for more than the
        number of vested shares for which the option is exercisable on the date
        of the Optionee's cessation of Service. Upon the expiration of the
        applicable exercise period or (if earlier) upon the expiration of the
        option term, the option shall terminate and cease to be outstanding for
        any vested shares for which the option has not been exercised. However,
        the option shall, immediately upon the Optionee's cessation of Service,
        terminate and cease to be outstanding to the extent the option is not
        otherwise at that time exercisable for vested shares.


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                      (iv) Should the Optionee's Service be terminated for
        Misconduct, then all outstanding options held by the Optionee shall
        terminate immediately and cease to be outstanding.

               2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

                      (i) extend the period of time for which the option is to
        remain exercisable following the Optionee's cessation of Service from
        the period otherwise in effect for that option to such greater period of
        time as the Plan Administrator shall deem appropriate, but in no event
        beyond the expiration of the option term, and/or

                      (ii) permit the option to be exercised, during the
        applicable post-Service exercise period, not only with respect to the
        number of vested shares of Common Stock for which such option is
        exercisable at the time of the Optionee's cessation of Service but also
        with respect to one or more additional installments in which the
        Optionee would have vested under the option had the Optionee continued
        in Service.

        D. Stockholder Rights. The holder of an option shall have no stock
holder rights with respect to the shares subject to the option until such person
shall have exercised the option, paid the exercise price and become a holder of
record of the purchased shares.

        E. Repurchase Rights. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

        F. First Refusal Rights. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Option Grant


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Program. Such right of first refusal shall be exercisable in accordance with the
terms established by the Plan Administrator and set forth in the document
evidencing such right.

        G. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory
Option may, in connection with the Optionee's estate plan, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.

II.     INCENTIVE OPTIONS

        The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Four shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under the
Plan shall not be subject to the terms of this Section II.

        A. Eligibility. Incentive Options may only be granted to Employees.

        B. Exercise Price. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

        C. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (of any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as


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Incentive Options shall be applied on the basis of the order in which such
options are granted.

        D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date and the option term shall not exceed five
(5) years measured from the option grant date.

III.    CORPORATE TRANSACTION

        A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to pur chase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such option or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall be
made by the Plan Administrator, and its determination shall be final, binding
and conclusive.

        B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.


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        C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

        D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number, and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the number and class of securities available for issuance under the Plan
following the consummation of such Corporate Transaction and (ii) the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.

        E. The Plan Administrator shall have the discretion, exercisable at the
time the option is granted or at any time while the option remains outstanding,
to provide that any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.

        F. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding to provide for the automatic acceleration of one or more outstanding
options (and the automatic termination of one or more outstanding repurchase
rights with the immediate vesting of the shares of Common Stock subject to
those rights) upon the occurrence of a Corporate Transaction, whether or not
those options are to be assumed or replaced (or those repurchase rights are to
be assigned) in the Corporate Transaction.


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        G. The portion of my Incentive Option accelerated in connection with an
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

        H. The grant of options under the Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

IV.     CANCELLATION AND REGRANT OF OPTIONS

        The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Option Grant Program
and to grant in substitution new options covering the same or different number
of shares of Common Stock but with an exercise price per share based on the
Fair Market Value per share of Common Stock on the new grant date.


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                                  ARTICLE THREE

                              STOCK ISSUANCE TERMS

I.      STOCK ISSUANCE TERMS

        Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.

        A.     Purchase Price.

               1. The purchase price per share shall be fixed by the Plan
Administrator and may be less than, equal to or greater than the Fair Market
Value per share of Common Stock on the stock issuance date.

               2. Subject to the provisions of Section I of Article Four, shares
of Common Stock may be issued under the Stock Issuance Program for one or both
of the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

                      (i)   cash or check made payable to the Corporation, or

                      (ii)  past services rendered to the Corporation (or any
        Parent or Subsidiary).

        B.     Vesting Provisions.

               1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives.

               2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization,


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combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant's unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.

               3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

               4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to the surrendered shares.

               5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
cessation of the Participant's Service or the non-attainment of the performance
objectives applicable to such shares. Such waiver shall result in the immediate
vesting of the Participant's interest in the shares of Common Stock as to which
the waiver applies. Such waiver may be effected at any time, whether before or
after the Participant's cessation of Service or the attainment or non-attainment
of the applicable performance objectives.

        C. First Refusal Rights. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with


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the terms established by the Plan Administrator and set forth in the document
evidencing such right.

II.     CORPORATE TRANSACTION

        A. All of the outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent (i) those repurchase rights
are assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed in the Stock Issuance Agreement.

        B. Any cancellation rights that are assigned in the Corporate
Transaction shall automatically terminate, and the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
the Participant's Service should subsequently terminate by reason of an
Involuntary Termination within eighteen (18) months following the effective date
of such Corporate Transaction.

        C. The Plan Administrator shall have the discretion, exercisable either
at the time the unvested shares are issued or at any time while the
Corporation's repurchase right remains outstanding, to provide for the automatic
termination of one or more outstanding repurchase rights, and the immediate
vesting of the shares of Common Stock subject to those rights, upon the
occurrence of a Corporate Transaction, whether or not those repurchase rights
are assigned in connection with the Corporate Transaction.

III.    SHARE ESCROW/LEGENDS

        Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.


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                                  ARTICLE FOUR

                                  MISCELLANEOUS

I.      FINANCING

        A. The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price or the purchase price for shares issued under the Plan
by delivering a promissory note payable in one or more installments. The terms
of any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole
discretion. Promissory notes may be authorized with or without security or
collateral. In all events, the maximum credit available to the Optionee or
Participant may not exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share purchase.

        B. The Plan Administrator may, in its discretion, determine that one or
more such promissory notes shall be subject to forgiveness by the Corporation in
whole or in part upon such terms as the Plan Administrator may deem appropriate.

II.     EFFECTIVE DATE AND TERM OF THE PLAN

        A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.

        B. The Plan shall terminate upon the earliest of (i) the expiration of
the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as all fully-vested shares or (iii) the termination of
all outstanding options in connection with a Corporate Transaction. Upon such
Plan termination, all options


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and unvested stock issuances outstanding under the Plan shall continue to have
full force and effect in accordance with the provisions of the documents
evidencing such options or issuances.

III.    AMENDMENT OF THE PLAN

        A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect any rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan,
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

        B. Options to purchase shares of Common Stock may be granted under the
Plan and shares of Common Stock may be issued under the Plan that are in each
instance in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under the Plan are held in
escrow until there is obtained stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess grants or issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants the exercise or purchase price paid for any
excess shares issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding.

IV.     USE OF PROCEEDS

        Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.

V.      WITHHOLDING

        The Corporation's obligation to deliver shares of Common Stock upon the
exercise of any options or upon the issuance or vesting of such shares issued
under


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the Plan shall be subject to the satisfaction of all applicable Federal, state
and local income and employment tax withholding requirements.

VI.     REGULATORY APPROVALS

        The implementation of the Plan, the granting of any option under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.

VII.    NO EMPLOYMENT OR SERVICE RIGHTS

        Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.


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                                    APPENDIX

        The following definitions shall be in effect under the Plan:

        A. Board shall mean the Corporation's Board of Directors.

        B. Code shall mean the Internal Revenue Code of 1986, as amended.

        C. Committee shall mean a committee of one (1) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

        D. Common Stock shall mean the Corporation's common stock.

        E. Corporate Transaction shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:

                      (i) a merger or consolidation in which securities
        possessing more than fifty percent (50%) of the total combined voting
        power of the Corporation's outstanding securities are transferred to a
        person or persons different from the persons holding those securities
        immediately prior to such transaction, or

                      (ii) the sale, transfer or other disposition of an or
        substantially all of the Corporation's assets in complete liquidation or
        dissolution of the Corporation.

        F. Corporation shall mean Knowledge Discovery One, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Knowledge Discovery One, Inc., which shall by
appropriate action adopt the Plan.

        G. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

        H. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.


                                      A-1
<PAGE>   18

        I. Fair Market Value per share of common stock on any relevant date
shall be determined in accordance with the following provisions:

                      (i) If the Common Stock is at the time traded on the
        Nasdaq National Market, then the Fair Market Value shall be the closing
        selling price per share of Common Stock on the date in question, as such
        price is reported by the National Association of Securities Dealers on
        the Nasdaq National Market or any successor system. If there is no
        closing selling price for the Common Stock on the date in question, then
        the Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

                      (ii) If the Common Stock is at the time listed on any
        Stock Exchange, then the Fair Market Value shall be the closing selling
        price per share of Common Stock on the date in question on the Stock
        Exchange determined by the Plan Administrator to be the primary market
        for the Common Stock, as such price is officially quoted in the
        composite tape of transactions on such exchange. If there is no closing
        selling price for the Common Stock on the date in question, then the
        Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

                      (iii) If the Common Stock is at the time neither listed on
        any Stock Exchange nor traded on the Nasdaq National Market, then the
        Fair Market Value shall be determined by the Plan Administrator after
        taking into account such factors as the Plan Administrator shall deem
        appropriate.

        J. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.

        K. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:

                      (i)   such individual's involuntary dismissal or discharge
        by the Corporation for reasons other than Misconduct, or

                      (ii) such individual's voluntary resignation following (A)
        a change in his or her position with the Corporation which materially
        reduces his or her level of responsibility, (B) a reduction in his or
        her level of


                                      A-2
<PAGE>   19

        compensation (including base salary, fringe benefits and participation
        in corporate-performance based bonus or incentive programs) by more than
        fifteen percent (15%) or (C) a relocation of such individual's place of
        employment by more than fifty (50) miles, provided and only if such
        change, reduction or relocation is effected by the Corporation without
        the individual's consent.

        L. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or ommissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

        M. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

        N. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.

        O. Option Grant Program shall mean the option grant program in effect
under the Plan.

        P. Optionee shall mean any person to whom an option is granted under the
Option Grant Program.

        Q. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

        R. Participant shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.


                                      A-3
<PAGE>   20

        S. Permanent Disability shall mean the inability of the optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.

        T. Plan shall mean the Corporation's 1996 Stock Option/Stock Issuance
Plan, as set forth in this document.

        U. Plan Administrator shall mean either the Board or the Committee, to
the extent the Committee is at the time responsible for the administration of
the Plan.

        V. Service shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.

        W. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.

        X. Stock Issuance Agreement shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

        Y. Stock Issuance Program shall mean the stock issuance program in
effect Under the Plan.

        Z. Subsidiary shall mean my corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

        AA. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).


                                      A-4
<PAGE>   21

                           KNOWLEDGE DISCOVERY ONE, INC.
                             STOCK OPTION AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the services of
selected Employees, non-employee members of the Board or of the board of
directors of any Parent or Subsidiary and consultants and other independent
advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Corporation (or a Parent or
Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to
them in the attached Appendix.

               NOW, THEREFORE, it is hereby agreed as follows:

        1. Grant of Option. The Corporation hereby grants to Optionee, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.

        2. Option Term. This option shall have a term of ten (10) years measured
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5, 6 or
17.

        3. Limited Transferability. This option shall be neither transferable
nor assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's immediate family members or to a
trust established exclusively for the benefit of one or more such family
members. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to the

                                       1
<PAGE>   22

assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.

        4. Exercisability/Vesting.

               (a) This option shall be immediately exercisable for any or all
of the Option Shares, whether or not the Option Shares are vested in accordance
with the Vesting Schedule, and shall remain so exercisable until the Expiration
Date or sooner termination of the option term under Paragraph 5, 6 or 17. Any
unvested Option Shares purchased under this option shall be subject to
repurchase by the Corporation, at the Exercise Price paid per share, upon
Optionee's cessation of Service prior to vesting in those Option Shares.

               (b) Optionee shall, in accordance with the Vesting Schedule, vest
in the Option Shares in one or more installments over his or her period of
Service. Vesting in the Option Shares may be accelerated pursuant to the
provisions of Paragraph 6. In no event, however, shall any additional Option
Shares vest following Optionee's cessation of Service.

        5. Cessation of Service. The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

                      (i) Should Optionee cease to remain in Service for any
        reason (other than death, Permanent Disability or Misconduct) while this
        option is outstanding, then Optionee shall have a period of three (3)
        months (commencing with the date of such cessation of Service) during
        which to exercise this option, but in no event shall this option be
        exercisable at any time after the Expiration Date.

                      (ii) Should Optionee die while this option is outstanding,
        then the personal representative of Optionee's estate or the person or
        persons to whom the option is transferred pursuant to Optionee's will or
        in accordance with the laws of descent and distribution shall have the
        right to exercise this option. Such right shall lapse and this option
        shall cease to be outstanding upon the earlier of (A) the expiration of
        the twelve (12) month period measured from the date of Optionee's death
        or (B) the Expiration Date.


                                       2
<PAGE>   23


                      (iii) Should Optionee cease Service by reason of Permanent
        Disability while this option is outstanding, then Optionee shall have a
        period of twelve (12) months (commencing with the date of such cessation
        of Service) during which to exercise this option. In no event shall this
        Option be exercisable at any time after the Expiration Date.

                      (iv) Should Optionee's Service be terminated for
        Misconduct, then this option shall terminate immediately and cease to
        remain outstanding.

                      (v) During the limited post-Service exercise period, this
        option may not be exercised in the aggregate for more than the number of
        Option Shares in which Optionee is, at the time of Optionee's cessation
        of Service, vested in accordance with the Vesting Schedule. Upon the
        expiration of such limited exercise period or (if earlier) upon the
        Expiration Date, this option shall terminate and cease to be outstanding
        for any vested Option Shares for which the option has not been
        exercised. To the extent Optionee is not vested in the Option Shares at
        the time of Optionee's cessation of Service, this option shall
        immediately terminate and cease to be outstanding with respect to those
        shares.

                      (vi) In the event of a Corporate Transaction, the
        provisions of Paragraph 6 shall govern the period for which this option
        is to remain exercisable following Optionee's cessation of Service and
        shall supersede any provisions to the contrary in this paragraph.

        6. Special Termination of Option.

               (a) All the Option Shares subject to this option at the time of a
Corporate Transaction but not otherwise vested shall automatically vest and the
Corporation's repurchase rights with respect to those Option Shares shall
immediately terminate so that this option shall, immediately prior to the
effective date of the Corporate Transaction, become exercisable for all of the
Option Shares as fully-vested shares of Common Stock and may be exercised for
any or all of those Option Shares. No such accelerated vesting of the Option
Shares, however, shall occur if and to the extent: (i) this option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof) and the Corporations repurchase rights with respect to the unvested
option shares are to be assigned to such successor corportion (or parent
thereof) or (ii) this option is to be replaced with a cash incentive program


                                       3
<PAGE>   24

of the successor corporation which preserves the spread existing on the unvested
Option Shares at the time of the Corporate Transaction (the excess of the Fair
Market Value of those Option Shares over the Exercise Price payable for such
shares) and provides for subsequent payout in accordance with the Vesting
Schedule. The determination of option comparability under clause (i) shall be
made by the Plan Administrator, and its determination shall be final, binding
and conclusive.

               (b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.

               (c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.

               (d) Should there occur in Involuntary Termination of Optionee's
Service within eighteen (18) months following a Corporate Transaction in which
this option is assumed or replaced and the Corporation's repurchase rights with
respect to the unvested Option Shares are assigned, all the Option Shares at the
time subject to this option but not otherwise vested shall automatically vest
and the Corporation's repurchase rights with respect to those Option Shares
shall terminate so that this option shall immediately become exercisable for all
those Option Shares as fully- vested shares of Common Stock and may be exercised
for any or all of those vested Option Shares at any time prior to the earlier of
(i) the Expiration Date or (ii) the expiration of the one (1)-year period
measured from the date of such Involuntary Termination.

               (e) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

        7. Adjustment in Option Shares. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding


                                       4
<PAGE>   25

Common Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the total number and/or class of
securities subject to this option and (ii) the Exercise Price in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.

        8. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

        9. Manner of Exercising Option.

               (a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:

                      (i) Execute and deliver to the Corporation a Purchase
        Agreement for the Option Shares for which the option is exercised.

                      (ii) Pay the aggregate Exercise Price for the purchased
        shares in one or more of the following forms:

                      (A) cash or check made payable to the Corporation; or

                      (B) a promissory note payable to the Corporation, but only
               to the extent authorized by the Plan Administrator in accordance
               with Paragraph 14.

        Should the Common Stock be registered under Section 12(g) of the 1934
Act at the time the option is exercised, then the Exercise Price may also be
paid as follows:

                      (C) in shares of Common Stock held by Optionee (or any
               other person or persons exercising the option) for the requisite
               period necessary to avoid a charge to the Corporation's earnings
               for financial reporting purposes and valued at Fair Market Value
               on the Exercise Date; or

                      (D) to the extent the option is exercised for vested
               Option Shares, through a special sale and remittance procedure
               pursuant to


                                       5
<PAGE>   26

               which Optionee (or any other person or persons exercising the
               option) shall concurrently provide irrevocable written
               instructions (I) to a Corporation-designated brokerage firm to
               effect the immediate sale of the purchased shares and remit to
               the Corporation, out of the sale proceeds available on the
               settlement date, sufficient funds to cover the aggregate Exercise
               Price payable for the purchased shares plus all applicable
               Federal, state and local income and employment taxes required to
               be withheld by the Corporation by reason of such exercise and
               (II) to the Corporation to deliver the certificates for the
               purchased shares directly to such brokerage firm in order to
               complete the sale.

                      Except to the extent the sale and remittance procedure is
               utilized in connection with the option exercise, payment of the
               Exercise Price must accompany the Purchase Agreement delivered to
               the Corporation in connection with the option exercise.

                      (iii) Furnish to the Corporation appropriate documentation
        that the person or persons exercising the option (if other than
        Optionee) have the right to exercise this option.

                      (iv) Execute and deliver to the Corporation such written
        representations as may be requested by the Corporation in order for it
        to comply with the applicable requirements of Federal and state
        securities laws.

                      (v) Make appropriate arrangements with the Corporation (or
        Parent or Subsidiary employing or retaining Optionee) for the
        satisfaction of all Federal, state and local income and employment tax
        withholding requirements applicable to the option exercise.

               (b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto. To the extent any such Option Shares are
unvested, the certificates for those Option Shares shall be endorsed with an
appropriate legend evidencing the Corporation's repurchase rights and may be
held in escrow with the Corporation until such shares vest.

               (c) In no event may this option be exercised for any fractional
shares.


                                       6
<PAGE>   27

        10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF
THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.

        11. Compliance with Laws and Regulations.

               (a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.

               (b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

        12. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.

        13. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

        14. Financing. The Plan Administrator may, in its absolute discretion
and without any obligation to do so, permit Optionee to pay the Exercise Price
for the purchased Option Shares by delivering a full-recourse promissory note
payable to the Corporation. The terms of any such promissory note (including the
interest rate, the


                                       7
<PAGE>   28

requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.

        15. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.

        16. Governing Law. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Texas without
resort to that State's conflict-of-laws rules.

        17. Stockholder Approval.

               (a) The grant of this option is subject to approval of the Plan
by the Corporation's stockholders within twelve (12) months after the adoption
of the Plan by the Board. Notwithstanding any provision of this Agreement to the
contrary, this option may not be exercised in whole or in part until such
stockholder approval is obtained. In the event that such stockholder approval is
not obtained, then this option shall terminate in its entirety and Optionee
shall have no further rights to acquire any Option Shares hereunder.

               (b) If the Option Shares covered by this Agreement exceed, as of
the Grant Date, the number of shares of Common Stock which may without
stockholder approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of the Plan.

        18. Additional Terms Applicable to an Incentive Option. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:

                      (i) This option shall cease to qualify for favorable tax
        treatment as an Incentive Option if (and to the extent) this option is
        exercised for one or more Option Shares: (A) more than three (3) months
        after the date Optionee ceases to be an Employee for any reason other
        than death or


                                       8
<PAGE>   29

        Permanent Disability or (B) more than twelve (12) months after the date
        Optionee ceases to be an Employee by reason of Permanent Disability.

                      (ii) This option shall not become exercisable in the
        calendar year in which granted if (and to the extent) the aggregate Fair
        Market Value (determined at the Grant Date) of the Common Stock for
        which this option would otherwise first become exercisable in such
        calendar year would, when added to the aggregate value (determined as of
        the respective date or dates of grant) of the Common Stock and any other
        securities for which one or more other Incentive Options granted to
        Optionee prior to the Grant Date (whether under the Plan or any other
        option plan of the Corporation or any Parent or Subsidiary) first become
        exercisable during the same calendar year, exceed One Hundred Thousand
        Dollars ($100,000) in the aggregate. To the extent the exercisability of
        this option is deferred by reason of the foregoing limitation, the
        deferred portion shall become exercisable in the first calendar year or
        years thereafter in which the One Hundred Thousand Dollar ($100,000)
        limitation of this Paragraph 18(ii) would not be contravened, but such
        deferral shall in all events end immediately prior to the effective date
        of a Corporate Transaction in which this option is not to be assumed or
        the Optionee's Involuntary Termination in connection with a Corporate
        Transaction, whereupon the option shall become immediately exercisable
        as a Non-Statutory Option for the deferred portion of the Option Shares.

                      (iii) Should Optionee hold, in addition to this Option,
        one or more other options to purchase Common Stock which become
        exercisable for the first time in the same calendar year as this option,
        then the foregoing limitations on the exercisability of such options as
        Incentive Options shall be applied on the basis of the order in which
        such options are granted.


                                       9
<PAGE>   30

                                    APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Option Agreement.

B. Board shall mean the Corporation's Board of Directors.

C. Code shall mean the Internal Revenue Code of 1986, as amended.

D. Common Stock shall mean the Corporation's common stock.

E. Corporate Transaction shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:

                      (i) a merger or consolidation in which securities
        possessing more than fifty percent (50%) of the total combined voting
        power of the Corporation's outstanding securities am transferred to a
        person or persons different from the persons holding those securities
        immediately prior to such transaction, or

                      (ii) the sale, transfer or other disposition of all or
        substantially all of the Corporation's assets in complete liquidation or
        dissolution of the corporation.

F. Corporation shall mean Knowledge Discovery One, Inc., a Delaware corporation.

G. Employee shall mean an individual who is in the employ of the Corporation (or
any Parent or Subsidiary), subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.

H. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.

I. Exercise Price shall mean the exercise price per share as specified in the
Grant Notice.


                                       10
<PAGE>   31

J. Expiration Date shall mean the date on which the option expires as specified
in the Grant Notice.

K. Fair Market Value per share of the Common Stock on any relevant date shall be
determined in accordance with the following provisions:

                      (iii) If the Common Stock is at the time traded on the
        Nasdaq National Market, then the Fair Market Value shall be the closing
        selling price per share of Common Stock on the date in question, as the
        price is reported by the National Association of Securities Dealers on
        the Nasdaq National Market or any successor system. If there is no
        closing selling price for the Common Stock on the date in question, then
        the Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

                      (iv) If the Common Stork is at the time listed on any
        Stock Exchange, then the Fair Market Value shall be the closing selling
        price per share of Common Stock on the date in question on the Stock
        Exchange determined by the Plan Administrator to be the primary market
        for the Common Stock, as such price is officially quoted in the
        composite tape of transactions on such exchange. If there is no closing
        selling price for the Common Stock on the date in question, then the
        Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

                      (v) If the Common Stock is at the time neither listed on
        any Stock Exchange nor traded on the Nasdaq National Market, then the
        Fair Market Value shall be determined by the Plan Administrator after
        taking into account such factors as the Plan Administrator shall deem
        appropriate.

L. Grant Date shall mean the date of grant of the option as specified in the
Grant Notice.

M. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.

N. Incentive Option shall mean an option which satisfies the requirements of
Code Section 422.


                                       11
<PAGE>   32

O. Involuntary Termination shall mean the termination of Optionee's Service
which occurs by reason of:

                      (vi)  Optionee's involuntary dismissal or discharge by the
        Corporation for reasons other than Misconduct, or

                      (vii) Optionee's voluntary resignation following (A) a
        change in Optionee's position with the Corporation (or Parent or
        Subsidiary employing Optionee) which materially reduces Optionee's level
        of responsibility, (B) a reduction in Optionee's level of compensation
        (including base salary, fringe benefits and participation in corporate
        performance based bonus or incentive programs) by more than fifteen
        percent (15%) or (C) a relocation of Optionee's place of employment by
        more than fifty (50) miles, provided and only if such change, reduction
        or relocation is effected by the Corporation without Optionee's consent.

P. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).

Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

R. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.

S. Option Shares shall mean the number of shares of Common Stock subject to the
option as specified in the Grant Notice.

T. Optionee shall mean the person to whom the option is granted as specified in
the Grant Notice.

U. Parent shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of


                                       12
<PAGE>   33

the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

V. Permanent Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which is expected to result in death or has lasted or can be
expected to last for a continuous period of twelve (12) months or more.

W. Plan shall mean the Corporation's 1996 Stock Option/Stock Issuance Plan.

X. Plan Administrator shall mean either the Board or a committee of Board
members, to the extent the committee is at the time responsible for the
administration of the Plan.

Y. Purchase Agreement shall mean the stock purchase agreement in substantially
the form of Exhibit B to the Grant Notice.

Z. Service shall mean Optionee's performance of services for the Corporation (or
any Parent or Subsidiary) in the capacity of an Employee, a non-employee member
of the board of directors or a consultant or independent advisor.

AA. Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.

BB. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

CC. Vesting Schedule shall mean the vesting schedule specified in the Grant
Notice, as such vesting schedule is subject to acceleration in the event of a
Corporate Transaction.

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