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                                                                     Exhibit 4.1


                           INTERACTIVE OBJECTS, INC.

                            1998 STOCK OPTION PLAN


     SECTION 1.     Purpose.  The purpose of this 1998 Stock Option Plan (the
                    -------
"Plan") is to enable Interactive Objects, Inc. (the "Company") to attract and
retain the services of people with training, experience and ability, and to
provide additional incentive to such persons by granting them an opportunity to
participate in the ownership of the Company.

     SECTION 2.     Stock Subject to Plan.  The stock subject to this Plan shall
                    ---------------------
be the Company's common stock, $.01 par value per share (the "Common Stock"),
presently authorized but unissued. The aggregate amount of Common Stock reserved
for issuance or delivery upon exercise of all options granted under this Plan
shall not exceed 4,000,000 shares of Common Stock, subject to adjustment
pursuant to Section 10 below. If any option granted under this Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall be returned to the Plan and become
available for future grant under the Plan.

     SECTION 3.     Administration.  The Plan shall be administered by the Board
                    --------------
of Directors of the Company or any committee of the Board of Directors delegated
such authority pursuant to Section 3.3 (the "Plan Administrator"), in accordance
with the following terms and conditions:

            3.1     General Authority.  Subject to the express provisions of the
                    -----------------
Plan, the Plan Administrator shall have the authority, in its sole discretion,
to determine all matters relating to options granted under the Plan, including,
without limitation, the selection of individuals to be granted options, the
number of shares to be subject to each option, the fair market value of the
shares and the exercise price, the term, whether such options shall be
immediately exercisable or shall become exercisable in increments over time, and
all other terms and conditions thereof, and to make all other determinations
necessary or advisable in the administration of the Plan. Grants under this Plan
to persons eligible need not be identical in any respect, even when made
simultaneously. The Plan Administrator may from time to time adopt, amend and
rescind rules and regulations relating to the administration of the Plan. The
interpretation and construction by the Plan Administrator of any terms or
provisions of this Plan or any option issued hereunder, or of any rule or
regulation promulgated in connection herewith, shall be conclusive and binding
on all interested parties. The Plan Administrator in its sole discretion may
grant incentive stock options ("Incentive Stock Options") as such term is
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and/or nonqualified stock options ("Nonqualified Stock Options"). A
Nonqualified Stock Option is a stock option which is not an Incentive Stock
Option. The term "option" when used in this Plan refers to Incentive Stock
Options and Nonqualified Stock Options, collectively.

            3.2     Directors.  A member of the Board of Directors may be
                    ---------
eligible to participate in or receive or hold options under this Plan; provided,
however, that no member of the Board of Directors shall vote with respect to the
granting of an option hereunder to himself or herself.

            3.3     Delegation to a Committee.  The Board of Directors, if it so
                    -------------------------
determines, may delegate to one or more committees of the Board of Directors
(each consisting of not less than two members of the Board of Directors) any or
all authority for the administration of the Plan, subject to such
<PAGE>

terms and conditions the Board of Directors may prescribe. If, and so long as,
the Company has a class of equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board of
Directors in determining the membership of any such committee shall, with
respect to option grants to any persons subject to or likely to become subject
to Section 16 of the Exchange Act, give due consideration to the provisions
regarding (a) "outside directors" as contemplated by Section 162(m) of the Code
and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act. Thereafter references to the Plan Administrator in this Plan shall be
deemed to be references to such committee to the extent such authority is so
delegated.

            3.4     Replacement of Options.  Without limiting the authority
                    ----------------------
granted to the Plan Administrator under Section 3.1, the Plan Administrator, in
its sole discretion, shall have the authority, among other things, to (a) grant
options subject to the condition that options previously granted at a higher or
lower exercise price under the Plan be canceled or exchanged in connection with
such grant (the number of shares covered by the new options, the exercise price,
the term and the other terms and conditions of the new option, shall be
determined in accordance with the Plan and may be different from the provisions
of the canceled or exchanged options), and (b) amend or modify outstanding and
unexercised options, with the consent of the holder of the option, to, among
other things, reduce the exercise price per share, establish the exercise price
at the then-current fair market value of the Common Stock or accelerate or defer
the exercise date, vesting schedule or expiration date of any option.

            3.5     Loans to Optionees.  The Plan Administrator, in its sole
                    ------------------
discretion, may provide that the Company loan to any Optionee sufficient funds
to exercise any option granted under the Plan and/or to pay withholding tax due
upon exercise of such option. The Plan Administrator shall have the authority to
make such determinations at the time of grant or exercise and shall establish
repayment terms thereof, including installments, maturity, interest rate and
security for repayment.

     SECTION 4.     Eligibility.  Options may be granted only to persons who, at
                    -----------
the time the option is granted, are employees, directors, consultants or
advisors of the Company or any of its then-existing parent or subsidiary
corporations (hereafter a "Parent" or "Subsidiary"). Any person to whom an
option is granted under this Plan shall be referred to hereinafter as
"Optionee." Any Optionee may receive one or more grants of options as the Plan
Administrator shall from time to time determine, and such determinations may be
different as to different Optionees and may vary as to different grants.
Optionees who are not employees will only be eligible to receive Nonqualified
Stock Options. An "employee" shall be any person, including officers and
directors, employed by the Company or any Parent or Subsidiary, with the status
of employment determined based upon such minimum number of hours or periods
worked as shall be determined by the Board of Directors in its discretion,
subject to any requirements of the Code.

     SECTION 5.     Terms and Conditions of Options.  Options granted under this
                    -------------------------------
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with this Plan. Each option agreement
shall clearly indicate whether the option granted thereby is an Incentive Stock
Option or a Nonqualified Stock Option. Notwithstanding the foregoing, all such
options shall include or incorporate by reference the following terms and
conditions:

            5.1     Number of Shares and Exercise Price.  The maximum number of
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shares that maybe purchased pursuant to the exercise of each option and the
price per share at which such option is exercisable (the "exercise price") shall
be as established by the Plan Administrator, provided that the exercise price
for any Incentive Stock Option shall not be less than the fair market value per
share of the Common Stock at the time the option is granted and subject further
to Section 7.2 below. The exercise
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price of Nonqualified Stock Options may be less than, equal to or greater than
the fair market value per share of the Common Stock at the time the option is
granted.

                    a.     Limitation on Number of Shares Underlying Options.
                           -------------------------------------------------
Subject to adjustment from time to time as provided in Section 10 below, the
Plan Administrator shall not grant options to any person in any one fiscal year
of the Company in an amount that exceeds, in the aggregate, 250,000 shares of
Common Stock. This limitation shall be applied in a manner consistent with the
requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.

                    b.     Determination of Fair Market Value.  For the purposes
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of this Plan, fair market value of Common Stock, as of any date, shall be
determined as follows:

                    (i)    If the Common Stock is listed on any established
            stock exchange or a national market system, including without
            limitation The Nasdaq National Market, its fair market value shall
            be the closing sales price for such stock (or the closing bid, if no
            sales were reported), as quoted on such system or exchange, or the
            system or exchange with the greatest volume of trading in Common
            Stock, for the last market trading day prior to the time of
            determination, as reported in The Wall Street Journal or such other
            source as the Plan Administrator deems reliable;

                    (ii)   If the Common Stock is quoted on The Nasdaq SmallCap
            Market, on the over-the-counter system, or regularly quoted by a
            recognized securities dealer but selling prices are not reported,
            its fair market value shall be the last trade reported for the
            Common Stock on the last market trading day prior to the time of
            determination, as reported in The Wall Street Journal or such other
            source as the Plan Administrator deems reliable; or

                    (iii)  In the absence of an established market for the
            Common Stock, the fair market value thereof shall be determined in
            good faith by the Plan Administrator.

            5.2     Duration of Options.  Subject to the restrictions contained
                    -------------------
in Section 9, the term of each option shall be established by the Plan
Administrator and, if not so established, shall be ten years from the date it is
granted, but in no event shall the term of any Incentive Stock Option exceed ten
years.

            5.3     Exercisability. Each option shall prescribe the installments
                    --------------
or vesting schedule, if any, under which an option granted under the Plan shall
become exercisable. In the absence of a defined vesting schedule in an option
agreement, the option covered by such agreement shall vest annually over four
years from the date of grant, at the rate of 25 percent per year on each
anniversary of the date of grant. The Plan Administrator, in its absolute
discretion, may waive or accelerate any vesting requirement contained in
outstanding and unexercised options. Only whole shares shall be issued pursuant
to the exercise of any option.

     SECTION 6.     Restrictions on Transferability.
                    -------------------------------

            6.1     Options granted under this Plan and the rights and
privileges conferred hereby shall not be subject to execution, attachment or
similar process and may not be assigned, alienated, pledged, sold, or
transferred in any manner (whether by operation of law or otherwise) other than
by will or by the laws of descent and distribution.
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            6.2     Notwithstanding Section 6.1 above, in the case of a
Nonqualified Stock Option, an Optionee may transfer such option either (a)
pursuant to a "domestic relations order" as defined in Section 414 of the Code
or Section 206 of the Employment Retirement Income Security Act, or the rules
thereunder, or (b) by transfer without the receipt of consideration by an
Optionee, subject to such rules as the Plan Administrator may adopt to preserve
the purposes of the Plan (including limiting such transfers to transfers by
Optionees who are directors or senior executives), to

                    (i)    a member of his or her Immediate Family or, in the
            case of an Optionee that is a corporation, partnership or limited
            liability company, holders of equity ownership interest of Optionee;

                    (ii)   a trust solely for the benefit of the Optionee and/or
            his or her Immediate Family, or

                    (iii)  a partnership, corporation or limited liability
            company whose only partners, shareholders or members are the
            Optionee and/or (y) his or her Immediate Family members or (z)
            holders of equity ownership interest of Optionee (in the case of an
            Optionee that is a corporation, partnership or limited liability
            company).

(each transferee described in 6.2(a) and (b) is hereafter referred to as a
"Permitted Transferee"), provided that the Plan Administrator is notified in
advance in writing of the terms and conditions of any proposed transfer
described in (a) or (b) and it determines that the proposed transfer complies
with the requirements of the Plan and the applicable option agreement. For this
purpose, "Immediate Family" means, with respect to a particular Optionee, the
Optionee's spouse, children and grandchildren (including adopted and
stepchildren and grandchildren).

            6.3     Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of an option granted under the Plan or any right or privilege
conferred hereunder contrary to the provisions of the Plan, or upon the sale,
levy or any attachment or similar process upon the rights and privileges
conferred by an option granted under the Plan, the option shall thereupon
terminate and become null and void.

            6.4     The terms of options granted under this Plan and transferred
in accordance with this Section 6 shall apply to the beneficiaries, executors
and administrators of the Optionee and of the Permitted Transferees of the
Optionee (including the beneficiaries, executors and administrators of the
Permitted Transferees), including the right to agree to any amendment of the
applicable option agreement, except that Permitted Transferees shall not
transfer any option other than by will or by the laws of descent and
distribution.

            6.5     Options granted under this Plan, or options transferred in
accordance with this Section 6, are exerciseable during Optionee's lifetime only
by Optionee or Permitted Transferee, as applicable (or his or her attorney in
fact or guardian). In the event of the death of an Optionee or Permitted
Transferee, options may be exercised by such Optionee's or Permitted
Transferee's executor or administrator. In no event shall the Company issue
shares of Common Stock upon exercise of an option unless Optionee or Permitted
Transferee makes sufficient payment, as determined by the Company, to meet
withholding tax obligations on such exercise or other arrangements satisfactory
to the Plan Administrator to provide for such payment.

     SECTION 7.     Certain Limitations Regarding Incentive Stock Options.  The
                    -----------------------------------------------------
grant of Incentive Stock Options shall be subject to the following special
limitations:
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            7.1     Limitation on Amount of Grants.  To the extent that an
                    ------------------------------
Optionee is granted Incentive Stock Options that in the aggregate (together with
all other Incentive Stock Options granted by the Company or any Parents or
Subsidiaries) entitle the Optionee to purchase, in any calendar year during
which such options first become exercisable, stock of the Company, any Parent or
any Subsidiary having a fair market value (determined as of the time such
options are granted) in excess of $100,000, such options in excess of the
$100,000 threshold shall be treated as Nonqualified Stock Options. No limitation
shall apply to Nonqualified Stock Options.

            7.2     Grants to Ten Percent Shareholders.  Incentive Stock Options
                    ----------------------------------
may be granted to a person who, at the time the option is granted, owns more
than ten percent of the total combined voting power of all classes of stock of
the Company and any Parent or Subsidiary only if (i) the exercise price is at
least 110 percent of the fair market value of the Common Stock at the time of
grant, and (ii) the option is not exercisable more than five years from the date
of grant.

            7.3     Taxation of Incentive Stock Options.  In order to obtain
                    -----------------------------------
certain tax benefits afforded to Incentive Stock Options under Section 422 of
the Code, the Optionee must hold the shares issued upon the exercise of an
Incentive Stock Option for a minimum of two years after the date of grant of the
Incentive Stock Option and one year from the date of exercise. An Optionee may
be subject to the alternative minimum tax at the time of exercise of an
Incentive Stock Option. The Plan Administrator may provide in any option
agreement evidencing an Incentive Stock Option granted under this Plan that the
Optionee under such agreement be required to give the Company prompt notice of
any subsequent disposition of shares acquired on exercise of such Incentive
Stock Option prior to the expiration of the above holding periods.

     SECTION 8.     Exercise of Options.  Options shall be exercised in
                    -------------------
accordance with the following terms and conditions:

            8.1     Procedure.  Options shall be exercised by delivery to the
                    ---------
Company of written notice of the number of shares with respect to which the
option is exercised.

            8.2     Payment. Payment of the exercise price shall be made in full
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within five business days of the notice of exercise of the option and shall be
in cash or bank-certified, cashier's or personal check. If the Company's Common
Stock is registered under Section 12 of the Exchange Act, then, to the extent
permitted by applicable laws and regulations (including, but not limited to,
federal tax and securities laws and regulations) and unless the Plan
Administrator determines otherwise, an option also may be exercised by (a)
delivery of shares of Common Stock of the Company that have been held by the
Optionee for at least six months having a fair market value equal to the
exercise price, such fair market value to be determined in good faith by the
Plan Administrator (such payment in stock may occur in the context of a single
exercise of an option or successive and simultaneous exercises, sometimes
referred to as "pyramiding," which provides that, rather than physically
exchanging certificates for a series of exercises, bookkeeping entries will be
made pursuant to which the Optionee is permitted to retain his existing stock
certificate and a new stock certificate is issued for the net shares), or (b)
delivery of a properly executed exercise notice together with irrevocable
instructions to (i) a broker to promptly deliver to the Company the amount of
sale or loan proceeds to pay the exercise price and any withholding tax
obligations that may arise in connection with such exercise, and (ii) the
Company to deliver the certificates for such purchased shares directly to such
broker, all in accordance with the requirements of the Federal Reserve Board.
<PAGE>

     In addition, the exercise price for shares purchased under an option may be
paid, either singly or in combination with one or more of the alternative forms
of payment authorized by this Section 8.2, by (y) a promissory note delivered
pursuant to Section 3.5 or (z) such other consideration as the Plan
Administrator may permit.

            8.3     Rights as Shareholder.  Until the issuance (as evidenced by
                    ---------------------
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the shares acquired on exercise, notwithstanding the
exercise of the option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the option and payment of the
exercise price. In the event that the exercise of an option is treated in part
as the exercise of a Nonqualified Stock Option pursuant to Section 7.2, the
Company shall issue a stock certificate evidencing the shares treated as
acquired upon the exercise of an Incentive Stock Option and a separate stock
certificate evidencing the shares treated as acquired upon the exercise of a
Nonqualified Stock Option, and shall identify each such certificate accordingly
in its stock transfer records. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of this Plan.

            8.4     Federal Withholding Tax Requirements.  Upon exercise of an
                    ------------------------------------
option, the Optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements. If permitted by the Plan Administrator,
such arrangements may include payment of the appropriate withholding tax in
shares of stock of the Company having a fair market value equal to such
withholding tax, either through delivery of shares held by the Optionee or by
reduction in the number of shares to be delivered to the Optionee upon exercise
of such option.

     SECTION 9.     Termination of Employment, Disability and Death.
                    -----------------------------------------------

            9.1     General. If the employment of the Optionee by the Company, a
                    -------
Parent or a Subsidiary shall terminate by retirement or for any reason other
than death or disability (as hereinafter provided), the option may be exercised
by the Optionee, or its Permitted Transferee, at any time prior to the
expiration of three months after the date of such termination of employment
(unless by its terms the option sooner terminates or expires), but only if and
to the extent the Optionee was entitled to exercise the option at the date of
such termination.

            9.2     Disability.  If the employment of the Optionee by the
                    ----------
Company, a Parent or a Subsidiary is terminated because of the Optionee's
disability (as herein defined), the option may be exercised by the Optionee, or
its Permitted Transferee, at any time prior to the expiration of one year after
the date of such termination (unless by its terms the option sooner terminates
or expires), but only if and to the extent the Optionee, or its Permitted
Transferee, was entitled to exercise the option at the date of such termination.
For purposes of this section, an Optionee will be considered to be disabled if
the Optionee is unable to engage in any substantial gainful activity by reason
of any medically determinable mental or physical impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.

            9.3     Death. In the event of the death of an Optionee while in the
                    -----
employ of the Company, a Parent or a Subsidiary, the option shall be exercisable
on or prior to the expiration of one year after the date of such death (unless
by its terms the option sooner terminates and expires), but only if and to the
extent the Optionee was entitled to exercise the option at the date of such
death and only by
<PAGE>

the Optionee's personal representative if then subject to administration as part
of the Optionee's estate, or by the person or persons to whom such Optionee's
rights under the option shall have passed by the Optionee's will or by the
applicable laws of descent and distribution or by Optionee's Permitted
Transferee.

            9.4     Waiver or Extension of Time Periods.  The Plan Administrator
                    -----------------------------------
shall have the authority, prior to or within the times specified in this Section
9 for the exercise of any such option, to extend such time period or waive in
its entirety any such time period to the extent that such time period expires
prior to the expiration of the term of such option. In addition, the Plan
Administrator may modify or eliminate the time periods specified in this Section
9 with respect to particular option grants. However, no Incentive Stock Option
may be exercised after the expiration of ten years from the date such option is
granted. If an Optionee holding an Incentive Stock Option exercises such option,
by permission of the Plan Administrator, after the expiration of the time
periods specified in this Section 9, the option will no longer be treated as an
Incentive Stock Option under the Code and shall automatically be converted into
a Nonqualified Stock Option.

            9.5     Termination of Options. To the extent that the option of any
                    ----------------------
deceased Optionee or of any Optionee whose employment is terminated shall not
have been exercised within the limited periods prescribed in this Section 9, all
further rights to purchase shares pursuant to such option shall cease and
terminate at the expiration of such period.

            9.6     Non-Employee Optionees. Options granted to Optionees who are
                    ----------------------
not employees of the Company, a Parent or a Subsidiary at the time of grant
shall not be subject to the provisions of this Section 9, except as specifically
provided in the written option agreement for such Optionee.

     SECTION 10.    Option Adjustments.
                    ------------------

            10.1    Adjustments Upon Changes in Capitalization.  The aggregate
                    ------------------------------------------
number and class of shares on which options may be granted under this Plan, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and all such options, shall
each be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification or any like
capital adjustment, or any other increase or decrease in the number of shares of
Common Stock of the Company without the receipt of consideration by the Company.

            10.2    Effect of Certain Transactions.  Except as otherwise
                    ------------------------------
provided in the option agreement, in the event of a merger, consolidation,
disposition of all or substantially all of the assets, separation,
reorganization or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their shares of Common Stock, or upon the acquisition by a person (as
defined in Section 3(a)(9) and 13(d)(3) of the Exchange Act as in effective as
of the date hereof) of a majority of the Company's outstanding voting securities
(whether directly or indirectly, beneficially or of record) (each, a "Corporate
Transaction"), all outstanding and unexercised options granted under this Plan
shall automatically accelerate so that each option shall, immediately prior to
any such Corporate Transaction, become 100 percent vested (except that such
acceleration shall not occur if, in the opinion of the Company's accountants,
such acceleration would render unavailable "pooling of interest" accounting for
a Corporate Transaction that would otherwise qualify for such accounting
treatment). Provided further, however, that an option shall not so accelerate if
and to the extent that such option is, in connection with a Corporate
Transaction, either to be assumed by the successor corporation or its parent or
to be replaced with a comparable option for the purchase of shares
<PAGE>

of capital stock of such successor corporation or its parent. Immediately
following the consummation of any Corporate Transaction, all options shall
terminate and cease to remain outstanding, except to the extent assumed by a
successor corporation. Any such options that are assumed or replaced in a
Corporate Transaction and do not otherwise accelerate at that time shall be
accelerated in the event the Optionee's employment or services should
subsequently terminate within two years following such transaction.

            10.3    Further Adjustment of Options.  The Plan Administrator shall
                    -----------------------------
have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change in control of the Company,
as defined by the Plan Administrator, to take such further action as it
determines to be necessary or advisable, and fair and equitable to Optionees,
with respect to options. Such authorized action may include (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, options so as to provide for earlier, later,
extended or additional time for exercise and other modifications, and the Plan
Administrator may take such actions with respect to all Optionees, to certain
categories of Optionees or only to individual Optionees. The Plan Administrator
may take such action before or after granting options to which the action
relates and before or after any public announcement with respect to such, sale,
merger, consolidation, reorganization, liquidation or change in control that is
the reason for such action.

            10.4    Fractional Shares.  In the event of any adjustment in the
                    -----------------
number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.

            10.5    Determination of Plan Administrator to be Final.  All
                    -----------------------------------------------
adjustments made pursuant to this Section 10 shall be made by the Plan
Administrator and its determination as to what adjustments shall be made, and
the extent thereof, shall be final, binding and conclusive.

     SECTION 11.    Securities Regulations.
                    ----------------------

            11.1    Compliance.  Shares shall not be issued with respect to an
                    ----------
option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange, national market system, over the counter system, or any electronic
bulletin board, upon which the shares may then be listed, quoted or traded, and
shall further be subject to the approval of counsel for the Company with respect
to such compliance. Inability of the Company to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary for the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the nonissuance or sale of such
shares as to which such requisite authority shall not have been obtained.

            11.2    Representations by Optionee.  As a condition to the exercise
                    ---------------------------
of an option, the Company may require the Optionee to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 11.1 above. At the
option of the Company, a stop transfer order against any shares of stock may be
placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold or otherwise transferred
unless an opinion of counsel was provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the stock certificate in order to
<PAGE>

assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. This provision shall not
obligate the Company to undertake registration of options or stock hereunder.

     SECTION 12.    Employment Rights.  Nothing in this Plan or any option or
                    -----------------
right granted pursuant hereto shall confer upon any Optionee any right to be
continued in the employment of the Company, a Parent or any Subsidiary of the
Company, or to remain a director thereof or a consultant thereto, or to
interfere in anyway with the right of the Company, a Parent or any Subsidiary,
in its sole discretion, to terminate such Optionee's employment at any time or
to remove the Optionee as a director or consultant at any time.

     SECTION 13.    Amendment and Termination.
                    -------------------------

            13.1    Action by Shareholders.  The Plan may be terminated,
                    ----------------------
modified or amended by the shareholders of the Company.

            13.2    Action by Board of Directors.  The Board of Directors may
                    ----------------------------
also terminate the Plan, or modify or amend the Plan in such respects as it
shall deem advisable in order to conform to any changes in law or regulation
applicable thereto, or in other respects; provided, however, that, to the extent
required for compliance with Section 422 of the Code or any applicable law or
regulation, the Board of Directors may not, without further approval by the
shareholders of the Company:

                    (i)    Change the number of shares in the aggregate as to
            which options may be granted under the Plan;

                    (ii)   Change the eligibility of persons to be granted
            Incentive Stock Options under the Plan;

                    (iii)  Change the terms of the Plan which causes the Plan to
            lose its qualification as an incentive stock option plan under
            Section 422(b) of the Code; or

                    (iv)   Otherwise amend the Plan for which shareholder
            approved is required under any applicable law or regulation.

No termination, suspension or amendment of the Plan may, without the consent of
each Optionee to whom any option shall previously have been granted, adversely
affect the rights of such Optionees under such options.

            13.3    Automatic Termination.  Unless the Plan shall have been
                    ---------------------
terminated as herein provided, this Plan shall terminate ten years from the
earlier of: (i) the date on which the Plan is adopted by the Board of Directors;
or (ii) the date on which this Plan is approved by the shareholders of the
Company. No option may be granted after such termination, or during any
suspension of this Plan. The amendment or termination of this Plan shall not,
without the consent of the Optionee, alter or impair any rights or obligations
under any option previously granted under this Plan.

     SECTION 14.    Effective Date of the Plan.  This Plan shall become
                    --------------------------
effective on the date of its adoption by the Board of Directors of the Company
and options may be granted immediately thereafter, but no option may be
exercised under the Plan unless and until the Plan shall have been approved by
the
<PAGE>

shareholders within 12 months after the date of adoption of the Plan by the
Board of Directors. If such approval is not obtained within such period the Plan
and any options granted shall be null and void.

     Adopted by the Board of Directors on January 1, 1998; approved by the
Company's shareholders on April 15, 1998; amendment approved by the Company's
shareholders on July 23, 1999.