<PAGE>

                                                                    EXHIBIT 10.1
                                                                    ------------



                                  EDOCS, INC.
                                  -----------


                            1998 STOCK OPTION PLAN
                            ----------------------


          1.  Purpose.  The purpose of the eDocs, Inc. 1998 Stock Option Plan
              -------
(the "Plan") is to encourage key employees of eDocs, Inc. (the "Company") and of
any present or future parent or subsidiary of the Company (collectively,
"Related Corporations") and other individuals who render services to the Company
or a Related Corporation, by providing opportunities to participate in the
ownership of the Company and its future growth through (a) the grant of options
which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"); (b) the grant of options
which do not qualify as ISOs ("Non-Qualified Options"); (c) awards of stock in
the Company ("Awards"); and (d) opportunities to make direct purchases of stock
in the Company ("Purchases").  Both ISOs and Non-Qualified Options are referred
to hereafter individually as an "Option" and collectively as "Options."
Options, Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights."  As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.

          2.  ADMINISTRATION OF THE PLAN.
              --------------------------

                   A.  Board or Committee Administration.  The Plan shall (be
                       ---------------------------------
              administered by the Board of Directors of the Company (the
              "Board") or, subject to paragraph 2(D) (relating to compliance
              with Section 162(m) of the Code), by a committee appointed by the
              Board (the "Committee"). Hereinafter, all references in this Plan
              to the "Committee" shall mean the Board if no Committee has been
              appointed. Subject to ratification of the grant or authorization
              of each Stock Right by the Board (if so required by applicable
              state law), and subject to the terms of the Plan, the Committee
              shall have the authority to (i) determine to whom (from among the
              class of employees eligible under paragraph 3 to receive ISOs)
              ISOs shall be granted, and to whom (from among the class of
              individuals and entities eligible under paragraph 3 to receive
              Non-Qualified Options and Awards and to make Purchases) Non-
              Qualified Options, Awards and authorizations to make Purchases may
              be granted; (ii) determine the time or times at which Options or
              Awards shall be granted or Purchases made; (iii) determine the
              purchase price of shares subject to each Option or Purchase, which
              prices shall not be less than the minimum price specified in
              paragraph 6; (iv) determine whether each Option granted shall be
              an ISO or a Non-Qualified Option; (v) determine (subject to
              paragraph 7) the time or times when each Option shall become
              exercisable and the duration of the exercise period; (vi) extend
              the period during which outstanding Options may be exercised;
              (vii) determine whether restrictions such as repurchase
<PAGE>

                                      -2-


          options are to be imposed on shares subject to Options, Awards and
          Purchases and the nature of such restrictions, if any, and (viii)
          interpret the Plan and prescribe and rescind rules and regulations
          relating to it. If the Committee determines to issue a Non-Qualified
          Option, it shall take whatever actions it deems necessary, under
          Section 422 of the Code and the regulations promulgated thereunder, to
          ensure that such Option is not treated as an ISO. The interpretation
          and construction by the Committee of any provisions of the Plan or of
          any Stock Right granted under it shall be final unless otherwise
          determined by the Board. The Committee may from time to time adopt
          such rules and regulations for carrying out the Plan as it may deem
          advisable. No member of the Board or the Committee shall be liable for
          any action or determination made in good faith with respect to the
          Plan or any Stock Right granted under it.

               B.  Committee Actions.  The Committee may select one of its
                   -----------------
          members as its chairman, and shall hold meetings at such time and
          places as it may determine.  A majority of the Committee shall
          constitute a quorum and acts of a majority of the members of the
          Committee at a meeting at which a quorum is present, or acts reduced
          to or approved in writing by all the members of the Committee (if
          consistent with applicable state law), shall be the valid acts of the
          Committee.  From time to time the Board may increase the size of the
          Committee and appoint additional members thereof, remove members (with
          or without cause) and appoint new members in substitution therefor,
          fill vacancies however caused, or remove all members of the Committee
          and thereafter directly administer the Plan.

               C.  Grant of Stock Rights to Board Members.  Stock Rights may be
                   --------------------------------------
          granted to members of the Board.  All grants of Stock Rights to
          members of the Board shall in all respects be made in accordance with
          the provisions of this Plan applicable to other eligible persons.
          Members of the Board who either (i) are eligible to receive grants of
          Stock Rights pursuant to the Plan or (ii) have been granted Stock
          Rights may vote on any matters affecting the administration of the
          Plan or the grant of any Stock Rights pursuant to the Plan, except
          that no such member shall act upon the granting to himself or herself
          of Stock Rights, but any such member may be counted in determining the
          existence of a quorum at any meeting of the Board during which action
          is taken with respect to the granting to such member of Stock Rights.

               D.  Performance-Based Compensation.  The Board, In Its
                   ------------------------------
          discretion, may take such action as may be necessary to ensure that
          Stock Rights granted under the Plan qualify as "qualified performance-
          based compensation" within the meaning of Section 162(m) of the Code
          and applicable regulations promulgated thereunder ("Performance-Based
          Compensation").  Such action may include, in the Board's discretion,
          some or all of the following (i) if the Board determines that Stock
          Rights granted under the Plan generally shall constitute Performance-
          Based Compensation, the Plan shall be administered, to the extent
          required for
<PAGE>

                                      -3-

          such Stock Rights to constitute Performance-Based Compensation, by a
          Committee consisting solely of two or more "outside directors" (as
          defined in applicable regulations promulgated under Section 162(m) of
          the Code), (ii) if any Non-Qualified Options with an exercise price
          less than the fair market value per share of Common Stock are granted
          under the Plan and the Board determines that such Options should
          constitute Performance-Based Compensation, such options shall be made
          exercisable only upon the attainment of a pre-established, objective
          performance goal established by the Committee, and such grant shall be
          submitted for, and shall be contingent upon shareholder approval and
          (iii) Stock Rights granted under the Plan may be subject to such other
          terms and conditions as are necessary for compensation recognized in
          connection with the exercise or disposition of such Stock Right or the
          disposition of Common Stock acquired pursuant to such Stock Right, to
          constitute Performance-Based Compensation.

          3.  Eligible Employees and Others.  ISOs may be granted only to
              -----------------------------
employees of the Company or any Related Corporation.  Non-Qualified Options,
Awards and authorizations to make Purchases may be granted to any employee,
officer or director (whether or not also an employee) or consultant of the
Company or any Related Corporation.  The Committee may take into consideration a
recipient's individual circumstances in determining whether to grant a Stock
Right.  The granting of any Stock Right to any individual or entity shall
neither entitle that individual or entity to, nor disqualify such individual or
entity from, participation in any other grant of Stock Rights.

          4.  Stock.  The stock subject to Stock Rights shall be authorized but
              -----
unissued shares of Common Stock of the Company, par value $.001 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner.  The aggregate number of shares which may be issued pursuant to the Plan
is 1,500,000, subject to adjustment as provided in paragraph 13.  If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the unpurchased shares of
Common Stock subject to such Option shall again be available for grants of Stock
Rights under the Plan.

          No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 1,050,000 shares of Common Stock
under the Plan during any fiscal year of the Company.  If any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part or shall be repurchased by the Company, the shares subject to such Option
shall be included in the determination of the aggregate number of shares of
Common Stock deemed to have been granted to such employee under the Plan.

          5.  Granting Of Stock Rights.  Stock Rights may be granted under the
              ------------------------
Plan at any time on or after May 21, 1998 and prior to May 21, 2008.  The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
<PAGE>

                                      -4-

     6.   Minimum Option Price; ISO Limitations.
          -------------------------------------

               A.  Price for Non-qualified Options, Awards and Purchases.
                   -----------------------------------------------------
          Subject to paragraph 2(D) (relating to compliance with Section 162(m)
          of the Code), the exercise price per share specified in the agreement
          relating to each Non-Qualified Option granted, and the purchase price
          per share of stock granted in any Award or authorized as a Purchase,
          under the Plan may be less than the fair market value of the Common
          Stock of the Company on the date of grant; provided that, in no event
          shall such exercise price or such purchase price be less than the
          minimum legal consideration required therefor under the laws of any
          jurisdiction in which the Company or its successors in interest may be
          organized.

               B.  Price for ISOs.  The exercise price per share specified in
                   --------------
          the agreement relating to each ISO granted under the Plan shall not be
          less than the fair market value per share of Common Stock on the date
          of such grant.  In the case of an ISO to be granted to an employee
          owning stock possessing more than ten percent (10%) of the total
          combined voting power of all classes of stock of the Company or any
          Related Corporation, the price per share specified in the agreement
          relating to such ISO shall not be less than one hundred ten percent
          (110%) of the fair market value per share of Common Stock on the date
          of grant.  For purposes of determining stock ownership under this
          paragraph, the rules of Section 424(d) of the Code shall apply.

               C.  $100,000 Annual Limitation on ISO Vesting.  Each eligible
                   -----------------------------------------
          employee may be granted Options treated as ISOs only to the extent
          that, in the aggregate under this Plan and all incentive stock option
          plans of the Company and any Related Corporation, ISOs do not become
          exercisable for the first time by such employee during any calendar
          year with respect to stock having a fair market value (determined at
          the time the ISOs were granted) in excess of $100,000.  The Company
          intends to designate any Options granted in excess of such limitation
          as Non-Qualified Options, and the Company shall issue separate
          certificates to the optionee with respect to Options that are Non-
          Qualified Options and Options that are ISOs.

               D.   Determination of Fair Market Value.  If, at the time an
                   -----------------------------------
          Option is granted under the Plan, the Company's Common Stock is
          publicly traded, "fair market value" shall be determined as of the
          date of grant or, if the prices or quotes discussed in this sentence
          are unavailable for such date, the last business day for which such
          prices or quotes are available prior to the date of grant and shall
          mean (i) the average (on that date) of the high and low prices of the
          Common Stock on the principal national securities exchange on which
          the Common Stock is traded, if the Common Stock is then traded on a
          national securities exchange; or (ii) the last reported sale price (on
          that date) of the Common Stock on the Nasdaq National Market, if the
          Common Stock is not then traded on a national securities
<PAGE>

                                      -5-


          exchange; or (iii) the closing bid price (or average of bid prices)
          last quoted (on that date) by an established quotation service for
          over-the-counter securities, if the Common Stock is not reported on
          the Nasdaq National Market. If the Common Stock is not publicly traded
          at the time an Option is granted under the Plan, "fair market value"
          shall mean the fair value of the Common Stock as determined by the
          Committee after taking into consideration all factors which it deems
          appropriate, including, without limitation, recent sale and offer
          prices of the Common Stock in private transactions negotiated at arm's
          length.

     7.   Option Duration.  Subject to earlier termination as provided in
          ---------------
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B).  Subject to earlier termination as provided in paragraphs
9 and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

     8.   Exercise of Option.  Subject to the provisions of paragraphs 9
          ------------------
through 12, each Option granted under the Plan shall be exercisable as follows:

               A.  Vesting.  The Option shall either be fully exercisable on the
                   -------
          date of grant or shall become exercisable thereafter in such
          installments as the Committee may specify.

               B.  Full Vesting of Installments.  Once an installment becomes
                   ----------------------------
          exercisable, it shall remain exercisable until expiration or
          termination of the Option, unless otherwise specified by the
          Committee.

               C.  Partial Exercise.  Each Option or installment may be
                   ----------------
          exercised at any time or from time to time, in whole or in part, for
          up to the total number of shares with respect to which it is then
          exercisable.

               D.  Acceleration of Vesting.  The Committee shall have the right
                   -----------------------
          to accelerate the date that any installment of any Option becomes
          exercisable; provided that the Committee shall not, without the
          consent of an optionee, accelerate the permitted exercise date of any
          installment of any Option granted to any employee as an ISO (and not
          previously converted into a Non-Qualified Option pursuant to paragraph
          16) if such acceleration would violate the annual vesting limitation
          contained in Section 422(d) of the Code, as described in paragraph
          6(C).
<PAGE>

                                      -6-

     9.   Termination Of Employment.  Unless otherwise specified in the
          -------------------------
agreement relating to such ISO, if an ISO optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his or her ISOs shall
become exercisable, and his or her ISOs shall terminate on the earlier of (a)
three months after the date of termination of his or her employment, or (b)
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16.  For purposes of this paragraph 9, employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute or by contract.  A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence.  ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation.  Nothing in the Plan shall
be deemed to give any grantee of any Stock Right the right to be retained in
employment or other service by the Company or any Related Corporation for any
period of time.

     10.  DEATH; DISABILITY.
          -----------------

               A.  Death.  If an ISO optionee ceases to be employed by the
                   -----
          Company and all Related Corporations by reason of his or her death,
          any ISO owned by such optionee may be exercised, to the extent
          otherwise exercisable on the date of death, by the estate, personal
          representative or beneficiary who has acquired the ISO by will or by
          the laws of descent and distribution, until the earlier of (i) the
          specified expiration date of the ISO or (ii) one year from the date of
          the optionee's death.

               B.  Disability.  If an ISO optionee ceases to be employed by the
                   ----------
          Company and all Related Corporations by reason of his or her
          disability, such optionee shall have the right to exercise any ISO
          held by him or her on the date of termination of employment, for the
          number of shares for which he or she could have exercised it on that
          date, until the earlier of (i) the specified expiration date of the
          ISO or (ii) one year from the date of the termination of the
          optionee's employment.  For the purposes of the Plan, the term
          "disability" shall mean "permanent and total disability" as defined in
          Section 22(e)(3) of the Code or any successor statute.

     11.  Assignability.  No ISO shall be assignable or transferable by the
          -------------
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee shall be exercisable only by such optionee.  Stock
Rights other than ISOs shall be transferable to the extent set forth in the
agreement relating to such Stock Right.
<PAGE>

                                      -7-

     12.  Terms and Conditions of Options.  Options shall be evidenced by
          -------------------------------
instruments (which need not be identical) in such forms as the Committee may
from time to time approve.  Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options.  The Committee may specify that any Non-
Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine.  The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments.  The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.

     13.  Adjustments.  Upon the occurrence of any of the following events,
          -----------
an optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:

               A.  Stock Dividends and Stock Splits.  If the shares of Common
                   --------------------------------
          Stock shall be subdivided or combined into a greater or smaller number
          of shares or if the Company shall issue any shares of Common Stock as
          a stock dividend on its outstanding Common Stock, the number of shares
          of Common Stock deliverable upon the exercise of Options shall be
          appropriately increased or decreased proportionately, and appropriate
          adjustments shall be made in the purchase price per share to reflect
          such subdivision, combination or stock dividend.

               B.  Consolidations or Mergers.  If the Company is to be
                   -------------------------
          consolidated with or acquired by another entity in a merger or other
          reorganization in which shares of the Company's capital stock
          outstanding immediately prior to consummation of such event are
          converted into, exchanged for or represent less than 50% of the
          aggregate voting power of the surviving or successor entity, or in the
          event of a sale of all or substantially all of the Company's assets or
          otherwise (each, an "Acquisition"), the Committee or the board of
          directors of any entity assuming the obligations of the Company
          hereunder (the "Successor Board"), shall, as to outstanding Options,
          make appropriate provision for the continuation of such Options by
          substituting on an equitable basis for the shares then subject to such
          Options either (a) the consideration payable with respect to the
          outstanding shares of Common Stock in connection with the Acquisition,
          (b) shares of stock of the surviving or successor corporation or (c)
          such other securities as the Successor Board deems appropriate, the
          fair market value of which shall not materially exceed the fair market
          value of the shares of Common Stock subject to such Options
          immediately preceding the Acquisition.
<PAGE>

                                      -8-

               C.  Recapitalization or Reorganization.  In the event of a
                   ----------------------------------
          recapitalization or reorganization of the Company (other than a
          transaction described in subparagraph B above) pursuant to which
          securities of the Company or of another corporation are issued with
          respect to the outstanding shares of Common Stock, an optionee upon
          exercising an Option shall be entitled to receive for the purchase
          price paid upon such exercise the securities he or she would have
          received if he or she had exercised such Option prior to such
          recapitalization or reorganization.

               D.  Modification of ISOs.  Notwithstanding the foregoing, any
                   --------------------
          adjustments made pursuant to subparagraphs A, B or C with respect to
          ISOs shall be made only after the Committee, after consulting with
          counsel for the Company, determines whether such adjustments would
          constitute a "modification" of such ISOs (as that term is defined in
          Section 424 of the Code) or would cause any adverse tax consequences
          for the holders of such ISOs.  If the Committee determines that such
          adjustments made with respect to ISOs would constitute a modification
          of such ISOs or would cause adverse tax consequences to the holders,
          it may refrain from making such adjustments.

               E.  Dissolution or Liquidation.  In the event of the proposed
                   --------------------------
          dissolution or liquidation of the Company, then the Committee shall,
          as to outstanding Options, at its discretion provide, upon written
          notice to the optionees, (i) that all Options must be exercised, to
          the extent then exercisable within a specified number of days of the
          date of such notice, at the end of which period, the Options shall
          terminate or (ii) that such Options (including those which have not
          yet vested) shall be exercisable within a specified number of days of
          such notice, at the end of which period the Options shall terminate.

               F.  Issuances of Securities.  Except as expressly provided
                   -----------------------
          herein, no issuance by the Company of shares of stock of any class, or
          securities convertible into shares of stock of any class, shall
          affect, and no adjustment by reason thereof shall be made with respect
          to, the number or price of shares subject to Options.  No adjustments
          shall be made for dividends paid in cash or in property other than
          securities of the Company.

               G.  Fractional Shares.  No fractional shares shall be issued
                   -----------------
          under the Plan and the optionee shall receive from the Company cash in
          lieu of such fractional shares.

               H.  Adjustments.  Upon the happening of any of the events
                   -----------
          described in subparagraphs A, B, C or E above, the class and aggregate
          number of shares set forth in paragraph 4 hereof that are subject to
          Stock Rights which previously have been or subsequently may be granted
          under the Plan shall also be appropriately adjusted to reflect the
          events described in such subparagraphs.  The Committee or the
          Successor Board shall determine the specific adjustments to be made
          under
<PAGE>

                                      -9-

          this paragraph 13 and, subject to paragraph 2, its determination shall
          be conclusive.

     14.  Means of Exercising Options; Restriction on Issuance of Shares.
          --------------------------------------------------------------

               A.  An Option (or any part or installment thereof) shall be
          exercised by giving written notice to the Company at its principal
          office address, or to such transfer agent as the Company shall
          designate.  Such notice shall identify the Option being exercised and
          specify the number of shares as to which such Option is being
          exercised, accompanied by full payment of the purchase price therefor
          either (a) in United States dollars in cash or by check, (b) at the
          discretion of the Committee, through delivery of shares of Common
          Stock having a fair market value equal as of the date of the exercise
          to the cash exercise price of the Option (provided such shares of
          Common Stock have been held by the optionee free of any substantial
          risk of forfeiture for at least six (6) months), (c) at the discretion
          of the Committee, by delivery of the grantee's personal recourse note
          bearing interest payable not less than annually at no less than 100%
          of the lowest applicable Federal rate, as defined in Section 1274(d)
          of the Code, (d) at the discretion of the Committee and consistent
          with applicable law, through the delivery of an assignment to the
          Company of a sufficient amount of the proceeds from the sale of the
          Common Stock acquired upon exercise of the Option and an authorization
          to the broker or selling agent to pay that amount to the Company,
          which sale shall be at the participant's direction at the time of
          exercise, or (e) at the discretion of the Committee, by any
          combination of (a), (b), (c) and (d) above.  If the Committee
          exercises its discretion to permit payment of the exercise price of an
          ISO by means of the methods set forth in clauses (b), (c), (d) or (e)
          of the preceding sentence, such discretion shall be exercised in
          writing at the time of the grant of the ISO in question.  The holder
          of an Option shall not have the rights of a shareholder with respect
          to the shares covered by such Option until the date of issuance of a
          stock certificate to such holder for such shares.  Except as expressly
          provided above in paragraph 13 with respect to changes in
          capitalization and stock dividends, no adjustment shall be made for
          dividends or similar rights for which the record date is before the
          date such stock certificate is issued.

               B.  Notwithstanding the provisions of Section 14(A), the Company
          may delay the issuance of shares covered by the exercise of an Option
          and the delivery of a certificate for such shares until one of the
          following conditions shall be satisfied:

                   (i) The shares with respect to which such Option has been
               exercised are at the time of the issuance of such shares
               effectively registered or qualified under applicable federal and
               state securities laws now in force or as hereafter amended; or
<PAGE>

                                      -10-

                    (ii) Counsel for the Company shall have given an opinion,
               which opinion shall not be unreasonably conditioned or withheld,
               that such shares are exempt from registration and qualification
               under applicable federal and state securities laws now in force
               or as hereafter amended.

               C.   It is intended that all exercises of Options shall be
          effective, and the Company shall use its best efforts to bring about
          compliance with the above conditions within a reasonable time, except
          that the Company shall be under no obligation to qualify shares or to
          cause a registration statement or a post-effective amendment to any
          registration statement to be prepared for the purpose of covering the
          issuance of shares in respect of which any Option may be exercised,
          except as otherwise agreed to by the Company in writing.

     15.  Term and Amendment of Plan.  This Plan was adopted by the Board
          --------------------------
on May 21, 1998, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent.  If the
approval of stockholders is not obtained prior to May 21, 1999, any grants of
ISOs under the Plan made prior to that date will be rescinded.  The Plan shall
expire at the end of the day on May 21, 2008 (except as to Options outstanding
on that date).  Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13); (b) the provisions of
paragraph 3 regarding eligibility for grants of ISOs may not be modified; (c)
the provisions of paragraph 6(B) regarding the exercise price at which shares
may be offered pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); and (d) the expiration date of the Plan may not be
extended.   Except as otherwise provided in this paragraph 15, in no event may
action of the Board or stockholders alter or impair the rights of a grantee,
without such grantee's consent, under any Stock Right previously granted to such
grantee.

     16.  Modifications of ISOs; Conversion of ISOs Into Non-qualified
          ------------------------------------------------------------
Options. Subject to paragraph 13(D), without the prior written consent of the
-------
holder of an ISO, the Committee shall not alter the terms of such ISO (including
the means of exercising such ISO) if such alteration would constitute a
modification (within the meaning of Section 424(h)(3) of the Code).  The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion.  Such actions may include, but shall not be limited to,
extending the exercise period or reducing the exercise price of the appropriate
installments of such ISOs.  At the time of such conversion, the Committee (with
the consent of the optionee) may impose such
<PAGE>

                                      -11-


conditions on the exercise of the resulting Non-Qualified Options as the
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action. Upon the taking of such action, the Company shall issue
separate certificates to the optionee with respect to Options that are Non-
Qualified Options and Options that are ISOs.

     17.  Application of Funds.  The proceeds received by the Company from
          --------------------
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.

     18.  Notice To Company of Disqualifying Disposition.  By accepting an
          ----------------------------------------------
ISO granted under the Plan, each optionee agrees to notify the Company in
writing immediately after such optionee makes a Disqualifying Disposition (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan.
A Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.

     19.  Withholding of Additional Income Taxes.  Upon the exercise of a
          --------------------------------------
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income.  The Committee in its discretion may
condition (i) the exercise of an Option, (ii) the transfer of a Non-Qualified
Stock Option, (iii) the grant of an Award, (iv) the making of a Purchase of
Common Stock for less than its fair market value, or (v) the vesting or
transferability of restricted stock or securities acquired by exercising an
Option, on the grantee's making satisfactory arrangement for such withholding.
Such arrangement may include payment by the grantee in cash or by check of the
amount of the withholding taxes or, at the discretion of the Committee, by the
grantee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of a Option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.

     20.  Purchase For Investment; Rights of Holder on Subsequent Registration.
          --------------------------------------------------------------------
Unless the shares to be issued upon exercise of an Option granted under the Plan
have been effectively registered under the Securities Act of 1933, as now in
force or hereafter amended, the Company shall be under no obligation to issue
any shares covered by any option unless the person who exercised such Option, in
whole or in part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel for the Company and
upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the shares issued pursuant to such exercise of the
Option for his or her own account
<PAGE>

                                      -12-

as an investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the Securities Act of 1933, or any other applicable law, and
that if shares are issued without such registration, a legend to this effect may
be endorsed upon the securities so issued. In the event that the Company shall,
nevertheless, deem it necessary or desirable to register under the Securities
Act of 1933 or other applicable statutes any shares with respect to which an
Option shall have been exercised, or to qualify any such shares for exemption
from the Securities Act of 1933 or other applicable statutes, then the Company
may take such action and may require from each optionee such information in
writing for use in any registration statement, supplementary registration
statement, prospectus, preliminary prospectus or offering circular as is
reasonably necessary for such purpose and may require reasonable indemnity to
the Company and its officers and directors and controlling persons from such
holder against all losses, claims, damages and liabilities arising from such use
of the information so furnished and caused by any untrue statement of any
material fact therein or caused by the omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.

     21.  Governmental Regulation.  The Company's obligation to sell and
          -----------------------
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.

     Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.

     22.  Governing Law.  The validity and construction of the Plan and the
          -------------
instruments evidencing Stock Rights shall be governed by the laws of Delaware,
or the laws of any jurisdiction in which the Company or its successors in
interest may be organized.
<PAGE>

                                      -13-


              Register of Amendments to the 1998 Stock Option Plan
              ----------------------------------------------------


November 2, 1999 by Written Consent of the Stockholders:
-------------------------------------------------------

a.   Section 4 was amended to increase the number of authorized shares from
     1,500,000 to 3,000,000 shares.