Document:

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                                                                    EXHIBIT 4.09

                                 VELOGIC INC.
                     1998 STOCK OPTION/STOCK ISSUANCE PLAN
                     -------------------------------------

                                  ARTICLE ONE

                              GENERAL PROVISIONS
                              ------------------

     I.   PURPOSE OF THE PLAN

          This 1998 Stock Option/Stock Issuance Plan is intended to promote the
interests of Velogic Inc., a California corporation, by providing eligible
persons in the Corporation's employ or service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to continue in such employ or service.

          Capitalized terms herein 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 interests
     of all persons under the Plan.

     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 shall be subject to removal
     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
     (subject to the provisions of the Plan) 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 grant or stock issuance thereunder.

     IV.  ELIGIBILITY

          A.   The persons eligible to participate in the Plan are as follows:
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               (i)   Employees,

               (ii)  non-employee members of the Board or the nonemployee
     members of 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 grants made under the Option Grant Program, which
     eligible persons are to receive the option grants, the time or times when
     those 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 when 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 made under the Stock Issuance Program,
     which eligible persons are to receive such stock issuances, the time or
     times when those issuances are to be made, the number of shares to be
     issued to each Participant, the vesting schedule (if any) applicable to the
     issued shares and the consideration to be paid by the Participant 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
     8,000,000 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 option exercise or
     direct 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.

          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
     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
Incentive 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
     Administrator in accordance with the following provisions:

                    (i)  The exercise price per share shall not be less than
     eighty-five percent (85%) of the Fair Market Value per share of Common
     Stock on the option grant date.

                    (ii) If the person to whom the option is granted is a 10%
     Shareholder, 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.

               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 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 instructions (A) 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 (B) 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 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 grant. 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.
               --------------------------------

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

                              (i)   Should the Optionee cease to remain in
     Service for any reason other than death, Disability or Misconduct, then the
     Optionee shall have a period of three (3) months following the date of such
     cessation of Service during which to exercise each outstanding option held
     by such Optionee.

                              (ii)  Should Optionee's Service terminate by
     reason of Disability, then the Optionee shall have a period of twelve (12)
     months following the date of such cessation of Service during which to
     exercise each outstanding option held by such Optionee.

                              (iii) If the Optionee dies while holding an
     outstanding option, then the personal representative of his or her estate
     or the person or persons to whom the option is transferred pursuant to the
     Optionee's will or the laws of inheritance shall have a twelve (12)-month
     period following the date of the Optionee's death to exercise such option.

                              (iv)  Under no circumstances, however, shall any
     such option be exercisable after the specified expiration of the option
     term.

                              (v)   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 with respect to any and all option shares for which the
     option is not otherwise at the time exercisable or in which the Optionee is
     not otherwise at that time vested.

                              (vi)  Should Optionee's Service be terminated for
     Misconduct, then all outstanding options held by the Optionee shall
     terminate immediately and cease to remain 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 Optionee's cessation of Service
     or death from the limited 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.   Shareholder Rights. The holder of an option shall have no
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     shareholder rights with respect to the shares subject to the option until
     such person shall have exercised the option, paid the exercise price and
     become the recordholder of the purchased shares.

          E.   Unvested Shares. 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

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     shares) shall be established by the Plan Administrator and set forth in the
     document evidencing such repurchase right. The Plan Administrator may not
     impose a vesting schedule upon any option grant or the shares of Common
     Stock subject to that option which is more restrictive than twenty percent
     (20%) per year vesting, with the initial vesting to occur not later than
     one (1) year after the option grant date. However, such limitation shall
     not be applicable to any option grants made to individuals who are officers
     of the Corporation, non-employee Board members or independent consultants.

          F.   First Refusal Rights. Until such time as the Common Stock is
               --------------------
     first registered under Section 12 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 Plan. 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, the option 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.

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

          D.   10% Shareholder. If any Employee to whom an Incentive Option is
               ---------------
     granted is a 10% Shareholder, then the option term shall not exceed five
     (5) years measured from the option grant date.

     III.  CORPORATE TRANSACTION

          A.   The shares subject to each option outstanding under the Plan at
     the time of a Corporate Transaction shall automatically vest in full 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 that option and may be exercised for
     any or all of those shares as fully-vested shares of Common Stock. However,
     the shares subject to an outstanding option shall not vest on such an
     accelerated basis if and to the extent: (i) such option is to be assumed by
     the successor corporation (or parent thereof) in the Corporate Transaction
     and any repurchase rights of the Corporation with respect to the unvested
     option shares are concurrently to be assigned to such successor corporation
     (or parent thereof) or (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 those unvested option shares

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     or (iii) the acceleration of such option is subject to other limitations
     imposed by the Plan Administrator at the time of the option grant.

          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 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.

          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 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
     either at the time the option is granted or at any time while the option
     remains outstanding, to structure one or more options so that those options
     shall automatically accelerate and vest in full (and any repurchase rights
     of the Corporation with respect to the unvested shares subject to those
     options shall immediately terminate) upon the occurrence of a Corporate
     Transaction, whether or not those options are to be assumed in the
     Corporate Transaction.

          F.   The Plan Administrator shall also have full power and authority,
     exercisable either at the time the option is granted or at any time while
     the option remains outstanding, to structure such option so that the shares
     subject to that option will automatically vest on an accelerated basis
     should the Optionee's Service terminate by reason of an Involuntary
     Termination within a designated period (not to exceed eighteen (18) months)
     following the effective date of any Corporate Transaction in which the
     option is assumed and the repurchase rights applicable to those shares do
     not otherwise terminate. Any option so accelerated shall remain exercisable
     for the fully-vested option shares until the expiration or sooner
     termination of the option term. In addition, the Plan Administrator may
     provide that one or more of the Corporation's outstanding repurchase rights
     with respect to shares held by the Optionee at the time of such Involuntary
     Termination shall immediately terminate on an accelerated basis, and the
     shares subject to those terminated rights shall accordingly vest at that
     time.

          G.   The portion of any Incentive Option accelerated in connection
     with a Corporate Transaction shall remain exercisable as an Incentive
     Option only to the extent the applicable One Hundred Thousand Dollar
     limitation is not exceeded. To the extent such dollar limitation is
     exceeded, the accelerated portion of such option shall be exercisable as a
     NonStatutory 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 Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but

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with an exercise price per share based on the Fair Market Value per share of
Common Stock on the new option grant date.

                                       7
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                                 ARTICLE THREE

                            STOCK ISSUANCE PROGRAM
                            ----------------------

     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 but shall not be less than eighty-five percent (85%) of the
     Fair Market Value per share of Common Stock on the issue date. However, the
     purchase price per share of Common Stock issued to a 10% Shareholder shall
     not be less than one hundred and ten percent (110%) of such Fair Market
     Value.

                    2.   Subject to the provisions of Section I of Article Four,
     shares of Common Stock may be issued under the Stock Issuance Program for
     any 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. However, the Plan Administrator may not impose a
     vesting schedule upon any stock issuance effected under the Stock Issuance
     Program which is more restrictive than twenty percent (20%) per year
     vesting, with initial vesting to occur not later than one (1) year after
     the issuance date. Such limitation shall not apply to any Common Stock
     issuances made to the officers of the Corporation, non-employee Board
     members or independent consultants.

                    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, 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 shareholder 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

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               no further shareholder 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 purchasemoney note of the
               Participant attributable to such 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 non-completion of the vesting schedule
               applicable to those 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 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 the terms established by the Plan
               Administrator and set forth in the document evidencing such
               right.

               II.  CORPORATE TRANSACTION

                    A.  Upon the occurrence of a Corporate Transaction, all
outstanding repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereon 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.

                    B.  The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or any
time while the Corporation's repurchase rights with respect to those shares
remain outstanding, to provide that those rights shall automatically terminate
on an accelerated basis, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant's Service
should subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).

               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.

                                       9
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                                 ARTICLE FOUR

                                 MISCELLANEOUS
                                 -------------

     I.   FINANCING

          The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Option Grant Program or the purchase price
for shares issued under the Stock Issuance Program by delivering a full-
recourse, interest bearing promissory note payable in one or more installments
and secured by the purchased shares. However, any promissory note delivered by a
consultant must be secured by collateral in addition to the purchased shares of
Common Stock. 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. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
those 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.

     II.  EFFECTIVE DATE AND TERM OF 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 shareholders. If
such shareholder 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 vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options and
unvested stock issuances outstanding at the time of a clause (i) termination
event shall continue to have full force and effect in accordance with the
provisions of the documents evidencing those 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 the 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 shareholder approval
pursuant to applicable laws and regulations.

          B.  Options may be granted under the Option Grant Program and shares
may be issued under the Stock Issuance Program which are in each instance in
excess of the number of shares of Common Stock then available for issuance under
the Plan, provided any excess shares actually issued under those programs shall
be held in escrow until there is obtained shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such shareholder 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.

                                       10
<PAGE>

     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 granted under the Plan or upon the direct issuance
or vesting of any shares issued under 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 options 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 persons Service at any time for any reason, with or without
cause.

     VIII. FINANCIAL REPORTS

           The Corporation shall deliver a balance sheet and an income statement
at least annually to each individual holding an outstanding option under the
Plan, unless such individual is a key Employee whose duties in connection with
the Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.

                                       11
<PAGE>

                                   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 two (2) 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
              ---------------------
shareholder 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 all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

          F.  Corporation shall mean Velogic Inc., a California corporation, and
              -----------
any successor corporation to all or substantially all of the assets or voting
stock of Velogic Inc., which shall by appropriate action adopt the Plan.

          G.  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 and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.

          H.  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.

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

          J.  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. 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

                                      A-1
<PAGE>

     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.

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

          L.  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 duties and responsibilities or the level of management to which
     he or she reports, (B) a reduction in his or her level of compensation
     (including base salary, fringe benefits and target bonuses under any
     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 without the individual's consent.

          M.  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 omissions 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.

          N.  1934 Act shall mean the Securities Exchange Act of 1934, as
              --------
 amended.
          O.  Non-Statutory Option shall mean an option not intended to satisfy
              --------------------
the requirements of Code Section 422.

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

          Q.  Optionee shall mean any person to whom an option is granted under
              --------
the Plan.

          R.  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.

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

          T.  Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
              ----
Plan, as set forth in this document.

          U.  Plan Administrator shall mean either the Board or the Committee
              ------------------
acting in its capacity as administrator of the Plan.

                                      A-2
<PAGE>

          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.

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

          AA. 10% Shareholder 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-3
<PAGE>

                                 VELOGIC 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 the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of 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 or 6.

          3.  Limited Transferability. During Optionee's lifetime, this option
              -----------------------
shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death.

          4.  Dates of Exercise.  This option shall become exercisable for the
              -----------------
Option Shares in one or more installments as specified in the Grant Notice.  As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

          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:

          (a) Should Optionee cease to remain in Service for any reason (other
than death, 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.

          (b) 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 inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier of
                                                                     -------
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.

          (c) Should Optionee cease Service by reason of Disability while this
option is outstanding, then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation
<PAGE>

of Service) during which to exercise this option. In no event shall this option
be exercisable at any time after the Expiration Date.

          Note: Exercise of this option on a date later than three (3) months
          ----
          following cessation of Service due to Disability will result in loss
          of favorable Incentive Option treatment, unless such Disability
                                                   ------
          constitutes Permanent Disability. In the event that Incentive Option
          treatment is not available, this option will be taxed as a Non-
          Statutory Option upon exercise.

               (d) During the limited period of post-Service exercisability,
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 pursuant to the Vesting Schedule specified in the Grant Notice
or the special vesting acceleration provisions of Paragraph 6. 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 one or more 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.

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

          6.   Accelerated Vesting.
               -------------------

               (a) In the event of any Corporate Transaction, the Option Shares
at the time subject to this option but not otherwise vested shall automatically
vest in full 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 and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall not vest on such an
accelerated basis if and to the extent: (i) this option is assumed by the
successor corporation (or parent thereof) in the Corporate Transaction and the
Corporation's repurchase rights with respect to the unvested Option Shares are
assigned to such successor corporation (or parent thereof) or (ii) this 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 (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 same Vesting Schedule applicable to
those unvested Option Shares as set forth in the Grant Notice.

               (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 to Optionee 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) The Option Shares may also vest upon an accelerated basis in
accordance with the terms and conditions of any special addendum attached to
this Agreement.

               (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 Common Stock as a class without the Corporation's receipt of
consideration, appropriate

                                       2
<PAGE>

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.  Shareholder Rights. The holder of this option shall not have any
              ------------------
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
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
     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
     which Optionee (or any other person or persons exercising the option) shall
     concurrently provide irrevocable instructions (a) 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 (b) 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.

                                       3
<PAGE>

              (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.

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

          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, interest-bearing
promissory note secured by those Option Shares. The payment schedule in effect
for any such promissory note 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 California without
resort to that State's conflict-of-laws rules.

          17. Shareholder Approval. If the Option Shares covered by this
              --------------------
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the shareholders, then
this option shall be void with respect to such excess shares, unless shareholder
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.

                                       4
<PAGE>

          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:

              (a)  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: (i) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability.

              (b)  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(b)
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, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.

              (c)  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.

                                       5
<PAGE>

                                   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 shareholder-
         ---------------------
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 all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

     F.  Corporation shall mean Velogic Inc., a California corporation.
         -----------

     G.  Disability shall mean the inability of Optionee to engage in any
         ----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute Permanent Disability in
the event that such Disability 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.

     H.  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.

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

     J.  Exercise Price shall mean the exercise price payable per Option Share
         --------------
as specified in the Grant Notice.

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

     L.  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 the price is reported by
     the National Association of Securities Dealers on the Nasdaq National
     Market. 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.

                                      A-1
<PAGE>

         (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.

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

     N.  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.

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

     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.

     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 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.  Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
         ----
Plan.

     W.  Plan Administrator shall mean either the Board or a committee of the
         ------------------
Board acting in its capacity as administrator of the Plan.

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

     Y.  Service shall mean the 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 an independent consultant.

     Z.  Stock Exchange shall mean the American Stock Exchange or the New York
         --------------
Stock Exchange.

                                      A-2
<PAGE>

     AA.  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.

     BB.  Vesting Schedule shall mean the vesting schedule specified in the
          ----------------
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

                                      A-3
<PAGE>

                                 VELOGIC INC.
                        NOTICE OF GRANT OF STOCK OPTION
                        -------------------------------

          Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Velogic Inc. (the "Corporation"):

          Optionee:_________________________________________________________
          --------

          Grant Date:_______________________________________________________
          ----------

          Vesting Commencement Date:_________________________________
          -------------------------

          Exercise Price: $__________________per share
          --------------

          Number of Option Shares:_____________shares of Common Stock
          -----------------------

          Expiration Date:___________________________________________
          ---------------

          Type of Option:  _______ Incentive Stock Option

                         _______ Non-Statutory Stock Option

          Date Exercisable:  Immediately Exercisable
          ----------------

          Vesting Schedule: The Option Shares shall initially be unvested and
          ----------------
          subject to repurchase by the Corporation at the Exercise Price paid
          per share. Optionee shall acquire a vested interest in, and the
          Corporation's repurchase right shall accordingly lapse with respect
          to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's
          completion of one (1) year of Service measured from the Vesting
          Commencement Date and (ii) the balance of the Option Shares in a
          series of thirty-six (36) successive equal monthly installments upon
          Optionee's completion of each additional month of Service over the
          thirty-six (36)-month period measured from the first anniversary of
          the Vesting Commencement Date. In no event shall any additional Option
          Shares vest after Optionee's cessation of Service.

          Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Velogic Inc. 1998 Stock Option/Stock
Issuance Plan (the "Plan"). Optionee further agrees to be bound by the terms of
the Plan and the terms of the Option as set forth in the Stock Option Agreement
attached hereto as Exhibit A.

          Optionee understands that any Option Shares purchased under the Option
will be subject to the terms set forth in the Stock Purchase Agreement attached
hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan
in the form attached hereto as Exhibit C.

          REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
          -----------------
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS
ASSIGNS.  THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE
AGREEMENT.

          At Will Employment. Nothing in this Notice or in the attached Stock
          ------------------
Option Agreement or Plan shall confer upon Optionee 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
<PAGE>

Optionee) or of Optionee, which rights are hereby expressly reserved by each, to
terminate Optionee's Service at any time for any reason, with or without cause.

          Definitions. All capitalized terms in this Notice shall have the
          -----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.

DATED:________________, 199__

                              VELOGIC INC.

                              By:____________________________________

                              Title:_________________________________
                                      OPTIONEE

                              Address:_______________________________

                              _______________________________________

Attachments:
-----------

Exhibit A - Stock Option Agreement
Exhibit B - Stock Purchase Agreement
Exhibit C - 1998 Stock Option/Stock Issuance Plan

                                       2<PAGE>

                                                                    Exhibit 10.6

                                   AMENDMENT
                         Dated as of August [__], 2000

         This AMENDMENT (this "Amendment") is among KeraVision, Inc., a Delaware
                               ---------
corporation (the "Company"), [_____________] (the "Employee").
                  -------                          --------

                            PRELIMINARY STATEMENTS:

         1.   The Company and the Employee have entered into a Change Of Control
Agreement, dated as of [________] (the "Agreement"; capitalized terms used and
                                        ---------
not otherwise defined herein have the meanings assigned to such terms in the
Agreement).

         2.   The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control.

         3.   The Employee has previously issued those Promissory Notes set
forth on Schedule A attached hereto (the "Promissory Notes").
                                          ----------------

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         SECTION 1.   Amendment to Agreement.  Effective as of the date hereof,
                      ----------------------
and in accordance with Section 9(b) of the Agreement, the Company and the
Employee hereby agree to the following amendment to the Agreement:

         Section 2 of the Agreement is hereby revised in its entirety to read as
follows:

               "Stock Options and Promissory Notes.
                ----------------------------------

               (a)  Hostile Takeover. Subject to Sections 5 and 6 below, in the
                    ----------------
         event of a Hostile Takeover and regardless of whether the Employee's
         employment with the company is terminated in connection with the
         Hostile Takeover, each stock option granted for the Company's
         securities (the "Option") held by the Employee shall become fully
                          ------
         vested and immediately exercisable on the effective date of the
         transaction and shall be exercisable to the extent so vested in
         accordance with the provisions of the Option Agreement and Plan
         pursuant to which such Option was granted.

               (b)  Change of Control. Subject to Sections 5 and 6 below, in the
                    -----------------
         event of a Change of Control and regardless of whether the Employee's
         employment with the Company is terminated in connection with the Change
         of Control, each Option held by the Employee shall become vested on the
         effective date of the transaction as to fifty percent (50%) of the
         Option shares that have not otherwise vested as of such date. The
         Option shares that remain unvested as of the effective date of the
         transaction shall thereafter vest at the same rate (that is, the same
         number of shares shall vest during each vesting period) that was in
         effect prior to the Change of Control, and shall accordingly vest over
         a period that is one-half of the total vesting period that would
         otherwise be then remaining under the terms of the Option Agreement
         pursuant to which each such Option was granted.

               (c)  Promissory Notes. Subject to Sections 5 and 6 below, in the
                    ----------------
         event of a Change of Control or a Hostile Takeover and regardless of
         whether Employee's employment with the Company is terminated in
         connection with such Change of Control or Hostile Takeover, as the case
         may be, all amounts due to the Company, including accrued interest,
         pursuant to the terms and conditions of the Promissory Notes shall be
         forgiven in their entirety".

         SECTION 2.   Reference to and Effect on Agreement. (a) Upon and after
                      ------------------------------------
the effectiveness of this Amendment, each reference in the Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Agreement, and each reference in any other documents to "the Change of Control
Agreement", "thereunder", "thereof" or words of like import referring to the
Agreement, shall mean and be a reference to the Agreement as modified hereby.

<PAGE>

         (b)  Except as specifically modified above, the Agreement is and shall
continue to be in full force and effect and is hereby in all respects ratified
and confirmed.

         SECTION 3.    Counterparts. This Agreement may be executed in any
                       ------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement.

         SECTION 4.    Severability. Any provision of this Agreement that is
                       ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                           [Signature Page Follows]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

                                   KERAVISION, INC.,
                                   a Delaware corporation

                                   By: _______________________________
                                       Name: _________________________
                                       Title: ________________________

                                   EMPLOYEE

                                   By: _______________________________
                                       Name: _________________________
                                       Title: ________________________

<PAGE>

                                  SCHEDULE A

                               PROMISSORY NOTES

DATE OF                     AGGREGATE PRINCIPAL                        INTEREST

ISSUANCE                          AMOUNT                                 RATE
-------------------------------------------------------------------------------

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