Document:

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                                                                  EXHIBIT 10.1

               ADDENDUM TO MASTER SERVICES AND SUPPLY AGREEMENT

     THIS ADDENDUM (this "Addendum"), dated as of September 29, 2000, by and
                          --------
among PeoplePC, Inc. a Delaware corporation, having its principal place of
business at 100 Pine Street, Suite 1100, San Francisco, California 94111
("PeoplePC"), Ford Motor Company, a Delaware corporation, having its principal
----------
place of business at The American Road, Dearborn, Michigan 48120, ("Ford") and
                                                                    ----
Ford Motor Credit Company, a Delaware corporation, having its principal place of
business at One American Road, Dearborn, Michigan 48121 ("Ford Credit") amends
                                                          -----------
that certain Master Services and Supply Agreement, dated April 4, 2000, by and
between PeoplePC and Ford (the "Agreement").
                                ---------

                                R E C I T A L S:

     A.  PeoplePC and Ford entered into the Agreement without contemplating that
Ford Credit could effectively provide financial services to the Members.

     B.  PeoplePC and Ford have agreed to permit Ford Credit to be the exclusive
provider of the Financial Services that are offered through the PeoplePC Buyers
Club (i) to the Members and (ii) to those Customers who elect to participate in
the Customer Program.

     C.  Pursuant to Section 15.4 and Exhibit C of the Agreement, PeoplePC and
Ford desire to amend the Agreement and to add Ford Credit as a party to the
Agreement for the limited purpose of being the exclusive provider of Financial
Services to the Members and Customers under the terms and conditions set forth
in this Addendum.

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, PeoplePC, Ford and Ford Credit agree as follows:

     A.  Addendum.  Exhibit E hereby is added to the Agreement to read as
         --------
follows:

     "1.  Definitions.  As used in this Addendum, all capitalized terms, unless
          -----------
otherwise defined in this Addendum, shall have the meanings set forth in the
Agreement, as amended by this Addendum.  Except as expressly set forth in this
Addendum, all defined terms of the Agreement shall remain unchanged and in full
force and effect.  The following terms are added to the Agreement and shall have
the meanings ascribed to them below:

     1.1  "Customers" shall mean all authorized Ford customers, Ford dealers and
Ford dealers' employees who elect to participate in the free ISP or computer
programs under the terms and conditions offered to them in accordance with the
LOI or the definitive agreement(s) that will be based on the LOI.

     1.2  "Customer Program" means those free ISP and/or bundled computer
offerings made by Ford, Ford Credit and PeoplePC to the Customers and/or the
Eligible Employees (if an additional offering is made to them beyond the FECP)
as such offerings are further described
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in the LOI, the definitive agreement(s) that will be based on the LOI or such
other agreements as the Parties may mutually agree.

          1.3 "Effective Date of the Addendum" shall mean the date that the
Addendum is duly executed by all of the Parties.

          1.4 "Exclusivity Period" means the three (3) years commencing on the
Effective Date of the Addendum, plus any additional time remaining on the
Fulfillment Period, but in no event shall the Exclusivity Period exceed six
years from the date of the Effective Date of the Addendum.

          1.5 "Financial Services" means the following banking and financial
services: checking accounts, savings accounts, money market accounts, NOW
accounts, cash deposit accounts, loans and loan services, mortgages and mortgage
services, retirement accounts (including IRAs, KEOGHs, 401Ks and similar
retirement accounts), retirement account services, mutual funds and mutual fund
services, brokerage accounts and brokerage account services, insurance and
insurance services, financial planning, personal financial services aggregators,
bill presentment services, consumer credit account information and Ford-branded
tax preparation services, but specifically excluding financial software and
books, PeoplePC-offered tax preparation services and a PeoplePC-branded credit
card offering provided that such credit card offering will not directly market
the above banking and financial services to any Member or Customer accepting
such credit card.

          1.6 "Financial Services Exclusivity" shall have the meaning defined in
Paragraph 2 of this Addendum.

          1.7 "Ford Revenues" means the revenues actually received, directly or
indirectly, by Ford Credit Company for the sale and/or bounty of a Financial
Service through the Buyers Club to a Member and/or Customer.
         1.8 "Fulfillment Period" means the period that commences on the
Effective Date of the Addendum and ends on the expiration of the last Ford
Member Agreement that was executed on or before the third anniversary of the
Effective Date of the Addendum.

          1.9 "LOI" shall mean that Letter of Intent by and between Ford Credit
and PeoplePC executed on even date herewith that sets forth the terms and
conditions of the offerings to be made by the Parties to the Customers.

         1.10 "Members" means those Eligible Employees who elect to participate
in the Ford Employee Connectivity Program and who execute the Ford Member
Agreement with PeoplePC.

         1.11 "Territory" means the United States and Canada and their
respective territories and possessions as of the Effective Date of the Addendum.

     2.  Financial Services Exclusivity.  During the Exclusivity Period, Ford
         ------------------------------
Credit, by
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itself or through any third party it selects, shall be the exclusive provider of
Financial Services presented to the Members in the Territory by the PeoplePC
Solutions, Buyers Club and PeoplePC website offerings. Unless specifically
authorized in writing by Ford Credit, PeoplePC shall not contract with or permit
any third party to advertise, promote or display any Financial Services
presented to the Members in the Territory by the PeoplePC Solutions, Buyers Club
and PeoplePC website offerings. On the Effective Date of the Addendum, Ford
Credit shall pay to PeoplePC a single, non-refundable payment of Three Million
Seven Hundred Fifty Thousand and No/100 Dollars ($3,750,000.00) for Financial
Services Exclusivity under this Paragraph 2 of the Addendum. The Parties agree
and acknowledge that such fee shall also guarantee that Ford Credit, by itself
or through any third party it selects, shall be the exclusive provider of
Financial Services presented to the Customers under the Customer Program by the
PeoplePC Solutions, Buyers Club and PeoplePC website offerings. Unless
specifically authorized in writing by Ford Credit, PeoplePC shall not contract
with or permit any third party to advertise, promote or display any Financial
Services presented to the Customers under the Customer Program by the PeoplePC
Solutions, Buyers Club and PeoplePC website offerings. The Parties shall use all
good faith efforts to negotiate and execute promptly the definitive agreement(s)
based upon and further described in the LOI. Notwithstanding the foregoing, the
ability or inability of the Parties to successfully implement the Customer
Program shall in no way alter or invalidate the terms, conditions, right and
obligations of this Addendum.

     3.   Revenue Sharing. For the avoidance of doubt, the Parties shall use the
          ---------------
following methods to allocate revenues generated from Members and/or Customers.
For the Financial Services sold to Members and/or Customers, Ford shall retain
100% of the Ford Revenues earned. Each Party shall retain 100% of the revenues
derived from (i) the sale of tax preparation services that it individually
offers to the Members and/or Customers and (ii) the sale of co-branded credit
card services that it individually offers to the Members and/or Customers.
During the Term, PeoplePC shall pay to Ford Credit a sum that is equal to fifty
percent (50%) of Net Revenues derived from the sales of Partner Products to
Customers or Members by a Buyers Club Partner (i) immediately upon launch of the
Customer Program for sales to Customers and (ii) according to Exhibit C for
sales to Members. Net Revenues are defined as gross revenues actually received
by PPC from a Buyers Club Partner for the sale of a Partner Product through the
Buyers Club to a Member and/or Customer less amounts paid or credited to a
Buyers Club Partner for returns, refunds or other allowances, such other
allowances are subject to Ford's approval.

    4.    Format of Offering.  The presentation and delivery to the Buyer's Club
          ------------------
of the Financial Services offered or provided by or through Ford Credit or its
Affiliates to the Members shall be substantially in the form and content
provided in Schedule 1 of this Addendum and will be no less prominent then other
            ----------
products and services presented to Members and Customers on the Buyer's Club or
other PeoplePC partner buyers forum.

     5.   Counterparts.  This Addendum may be executed in counterparts or
          ------------
multiple originals, all of which shall be regarded as one and the same
instrument, and which shall be the official and governing version in the
interpretation of this Addendum."
<PAGE>

     IN WITNESS WHEREOF, PeoplePC and Ford have caused this Addendum to be
executed by duly authorized officers or representatives as of the Effective Date
of the Addendum.

PeoplePC, Inc.                     Ford Motor Company

By:/S/ Wayne Gattwell              By:__________________________
   ----------------------

Name:  WAYNE GATTWELL               Name:________________________
     --------------------

Title:    CMO                      Title:_______________________
      -------------------
<PAGE>

     IN WITNESS WHEREOF, PeoplePC and Ford have caused this Addendum to be
executed by duly authorized officers or representatives as of the Effective Date
of the Addendum.

PeoplePC, Inc.                    Ford Motor Company

By:___________________            By:/s/ James A. Yost
                                     ---------------------------

Name:_________________             Name: JAMES A. YOST
                                        -------------------------

Title:________________             Title:   VP & CIO
                                         ------------------------
<PAGE>

                                   Schedule 1
                                   ----------

     To be determined by mutual agreement of the Parties.<PAGE>

                                                                    EXHIBIT 4.01

                             AJUBA SOLUTIONS, INC.
                             AMENDED AND RESTATED
                            1998 STOCK OPTION PLAN

     1.   Purposes of the Plan. The purposes of this 1998 Stock Option Plan are
          --------------------
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant of an Option and subject to the applicable provisions of Section 422 of
the Code and the regulations promulgated thereunder.

     2.   Definitions.  As used herein, the following definitions shall apply:
          -----------

          (a)  "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

          (b)  "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options are, or will be, granted under the
Plan.

          (c)  "Board" means the Board of Directors of the Company.

          (d)  "Code" means the Internal Revenue Code of 1986, as amended.

          (e)  "Committee" means a Committee appointed by the Board of Directors
in accordance with Section 4 of the Plan.

          (f)  "Common Stock" means the Common Stock of the Company.

          (g)  "Company" means Ajuba Solutions, Inc., a California corporation.

          (h)  "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any Director of the Company whether
compensated for such services or not. If the Company registers any class of any
equity security pursuant to the Exchange Act, the term Consultant shall
thereafter not include Directors who are not compensated for their services or
are paid only a Director's fee by the Company.

          (i)  "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any Parent or Subsidiary
is not interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. A leave of
absence approved by the Company shall include sick leave, military leave, or any
other personal leave approved by an authorized representative of the Company.
For purposes of Incentive Stock Options, no such leave may exceed 90 days,
unless
<PAGE>

reemployment upon expiration of such leave is guaranteed by statute or contract,
including Company policies. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 91st of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.

          (j)  "Director" means a member of the Board of Directors of the
Company.

          (k)  "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

          (l)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (m)  "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

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

               (ii)  If the Common Stock is regularly quoted by a recognized
     securities dealer but selling prices are not reported, its Fair Market
     Value shall be the mean between the high bid and low asked prices for the
     Common Stock on the last market trading day prior to the day of
     determination; or

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

          (n)  "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

          (o)  "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

          (p)  "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (q)  "Option" means a stock option granted pursuant to the Plan.

          (r)  "Optioned Stock" means the Common Stock subject to an Option.

                                       2
<PAGE>

          (s)  "Optionee" means an Employee or Consultant who receives an
Option.

          (t)  "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (u)  "Plan" means this 1998 Stock Option Plan.

          (v)  "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.

          (w)  "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.

          (x)  "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan. Subject to the provisions of Section 11 of
          -------------------------
the Plan, the maximum aggregate number of Shares that may be subject to option
and sold under the Plan is 5,476,9751 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.

          If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program, the
unpurchased Shares that were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, upon exercise of an Option, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares are repurchased by the
Company at their original purchase price, and the original purchaser of such
Shares did not receive any benefits of ownership of such Shares, such Shares
shall become available for future grant under the Plan. For purposes of the
preceding sentence, voting rights shall not be considered a benefit of Share
ownership.

     4.   Administration of the Plan.
          --------------------------

          (a)  Initial Plan Procedure. Prior to the date, if any, upon which the
               ----------------------
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a Committee appointed by the Board.

          (b)  Plan Procedure after the Date, if any, upon which the Company
               -------------------------------------------------------------
Becomes Subject to the Exchange Act.
-----------------------------------

               (i)   Multiple Administrative Bodies. If permitted by Rule 16b-3,
                     ------------------------------
     the Plan may be administered by different bodies with respect to Directors,
     Officers and Employees who are neither Directors nor Officers.

               (ii)  Administration with Respect to Directors and Officers. With
                     -----------------------------------------------------
     respect to grants of Options to Employees who are also Officers or
     Directors of the

________________________
/1/ Reflects 2:1 stock split effective April 1, 1998; 1,663,641 share increase
approved by the Board December 16, 1998; and 800,000 share increase approved by
the Board February 10, 2000.

                                       3
<PAGE>

     Company, the Plan shall be administered by (A) the Board if the Board may
     administer the Plan in compliance with the rules under Rule 16b-3
     promulgated under the Exchange Act or any successor thereto ("Rule 16b-3")
     relating to the disinterested administration of employee benefit plans
     under which Section 16(b) exempt discretionary grants and awards of equity
     securities are to be made, or (B) Committee designated by the Board to
     administer the Plan, which Committee shall be constituted to comply with
     the rules under Rule 16b-3 relating to the disinterested administration of
     employee benefit plans under which Section 16(b) exempt discretionary
     grants and awards of equity securities are to be made.  Once appointed,
     such Committee shall continue to serve in its designated capacity until
     otherwise directed by the Board.  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, and remove all members of the
     Committee and thereafter directly administer the Plan, all to the extent
     permitted by the rules under Rule 16b-3 relating to the disinterested
     administration of employee benefit plans under which Section 16(b) exempt
     discretionary grants and awards of equity securities are to be made.

               (iii) Administration with Respect to Other Employees and
                     --------------------------------------------------
     Consultants. With respect to grants of Options and to Employees or
     -----------
     Consultants who are neither Directors nor Officers of the Company, the Plan
     shall be administered by (A) the Board or (B) a Committee designated by the
     Board, which committee shall be constituted in such a manner as to satisfy
     Applicable Laws. Once appointed, such Committee shall continue to serve in
     its designated capacity until otherwise directed by the Board. 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, and remove all members of the Committee and thereafter directly
     administer the Plan, all to the extent permitted by the Applicable Laws.

          (c)  Powers of the Administrator. Subject to the provisions of the
               ---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority in its discretion:

               (i)   to determine the Fair Market Value of the Common Stock, in
     accordance with Section 2(m) of the Plan;

               (ii)  to select the Consultants and Employees to whom Options may
     from time to time be granted hereunder;

               (iii) to determine whether and to what extent Options are granted
     hereunder;

               (iv)  to determine the number of Shares to be covered by each
     such award granted hereunder;

                                       4
<PAGE>

               (v)    to approve forms of agreement for use under the Plan;

               (vi)   to determine the terms and conditions of any award granted
     hereunder;

               (vii)  to determine whether and under what circumstances an
     Option may be settled in cash under subsection 9(f) instead of Common
     Stock;

               (viii) to reduce the exercise price of any Option to the then
     current Fair Market Value if the Fair Market Value of the Common Stock
     covered by such Option has declined since the date the Option was granted;

               (ix)   to provide for the early exercise of Options for the
     purchase of unvested shares subject to such terms and conditions as the
     Administrator may determine; and

               (x)    to construe and interpret the terms of the Plan and awards
     granted pursuant to the Plan.

          (d)  Effect of Administrator's Decision. All decisions, determinations
               ----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.

     5.   Elibility.
          ---------

          (a)  Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

          (b)  Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

          (c)  Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuation of his or her employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.

          (d)  Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities

                                       5
<PAGE>

required to be registered under Section 12 of the Exchange Act, the following
limitations shall apply to grants of Options to Employees:

               (i)  The foregoing limitations shall be adjusted proportionately
     in connection with any change in the Company's capitalization as described
     in Section 11.

               (ii) If an Option is cancelled in the same fiscal year of the
     Company in which it was granted (other than in connection with a
     transaction described in Section 11), the cancelled Option shall be counted
     against the limit set forth in subsection (i) above. For this purpose, if
     the exercise price of an Option is reduced, such reduction will be treated
     as a cancellation of the Option and the grant of a new Option.

     6.   Term of Plan. The Plan shall become effective upon the earlier to
          ------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

     7.   Term of Option. The term of each Option shall be the term stated in
          --------------
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.

     8.   Option Exercise Price and Consideration.
          ---------------------------------------

          (a)  The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:

               (i)  In the case of an Incentive Stock Option

                    (A)  granted to an Employee who, at the time of grant of
          such Option, owns stock representing more than ten percent (10%) of
          the voting power of all classes of stock of the Company or any Parent
          or Subsidiary, the per Share exercise price shall be no less than 110%
          of the Fair Market Value per Share on the date of grant.

                    (B)  granted to any other Employee, the per Share exercise
          price shall be no less than 100% of the Fair Market Value per Share on
          the date of grant.

               (ii) In the case of a Nonstatutory Stock Option

                    (A)  granted to a person who, at the time of grant of such
          Option, owns stock representing more than ten percent (10%) of the
          voting power of all classes of stock of the Company or any Parent or
          Subsidiary, the per Share

                                       6
<PAGE>

          exercise price shall be no less than 110% of the Fair Market Value per
          Share on the date of the grant.

                    (B)  granted to any other person, the per Share exercise
          price shall be no less than 85% of the Fair Market Value per Share on
          the date of grant.

          (b)  The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
a broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

     9.   Exercise of Option.
          ------------------

          (a)  Procedure for Exercise; Rights as a Shareholder. Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.

          An Option may not be exercised for a fraction of a Share.

          An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) hereof.  Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote, receive dividends or any other rights
as a shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option.  The Company shall issue (or cause to be issued)
such stock certificate promptly upon exercise of the Option.  No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 11
hereof.

          Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

          (b)  Termination of Employment or Consulting Relationship. In the
               ----------------------------------------------------
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (but not in the

                                       7
<PAGE>

event of an Optionee's change of status from Employee to Consultant (in which
case an Employee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option on the date three (3) months and one day following
such change of status) or from Consultant to Employee), such Optionee may, but
only within such period of time as is determined by the Administrator, of at
least thirty (30) days, with such determination in the case of an Incentive
Stock Option not exceeding three (3) months after the date of such termination
(but in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), exercise his or her Option to the extent
that the Optionee was entitled to exercise it at the date of such termination.
To the extent that the Optionee was not entitled to exercise the Option at the
date of such termination, or if the Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.

          (c)  Disability of Optionee. In the event of termination of an
               ----------------------
Optionee's Continuous Status as an Employee or Consultant as a result of his or
her disability, the Optionee may, but only within twelve (12) months from the
date of such termination (and in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent otherwise entitled to exercise it at the date of such termination.
If such disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive
Stock Option shall automatically cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option on
the day three months and one day following such termination. To the extent that
the Optionee was not entitled to exercise the Option at the date of termination,
or if the Optionee does not exercise such Option to the extent so entitled
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

          (d)  Death of Optionee. In the event of the death of an Optionee, the
               -----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant) by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option on the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after the Optionee's death, the
Optionee's estate or a person who acquires the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

          (e)  Rule 16b-3. Options granted to persons subject to Section 16(b)
               ----------
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

          (f)  Buyout Provisions. The Administrator may at any time offer to buy
               -----------------
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

                                       8
<PAGE>

     10.  Non-Transferability of Options.  Options may not be sold, pledged,
          ------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

     11.  Adjustments Upon Chances in Capitalization or Merger.
          ----------------------------------------------------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Option has yet been
granted or that has been returned to the Plan upon cancellation or expiration of
an Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company.
The conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. 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 of Common Stock subject
to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option shall terminate immediately
prior to the consummation of such proposed action.

          (c)  Merger, Stock or Asset Sale. In the event of a merger of the
               ---------------------------
Company with or into another corporation, or the sale of all or substantially
all of the stock or assets of the Company (each, a "Change of Control"), each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. The number of shares vesting monthly
under each assumed or substituted Option shall remain unchanged, such that,
after taking into account the additional vesting upon a Change of Control as
described above, the Option will vest fully in less than four years. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, then, upon the closing of such Change of
Control, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be exercisable as
to vested shares (including the additional twelve months' vesting as provided
above) for a period of fifteen (15) days from the date of such notice, and that
the Option or Stock Purchase Right shall terminate upon the expiration of such
period.

          For the purposes of this subsection, the Option or Stock Purchase
Right shall be considered assumed if, following the Change of Control, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the Change of Control, the consideration (whether stock, cash, or

                                       9
<PAGE>

other securities or property) received in the Change of Control by holders of
Common Stock for each Share held on the closing of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the Change of Control is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
Change of Control.

     12.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.

     13.  Amendment and Termination of the Plan.
          -------------------------------------

          (a)  Amendment and Termination. The Board may at any time amend,
               -------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made that would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

          (b)  Effect of Amendment or Termination. Any such amendment or
               ----------------------------------
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

     14.  Conditions upon Issuance of Shares.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

          As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

                                       10
<PAGE>

     15.  Reservation of Shares. The Company, during the term of this Plan,
          ---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

          The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

     16.  Agreements. Options shall be evidenced by written agreements in such
          ----------
form as the Administrator shall approve from time to time.

     17.  Shareholder Approval. Continuance of the Plan shall be subject to
          --------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws and the rules of any
stock exchange upon which the Common Stock is listed.

     18.  Information to Optionees and Purchasers. The Company shall provide to
          ---------------------------------------
each Optionee and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options outstanding, and, in the case of an individual who
acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.

                                       11
<PAGE>

                             AJUBA SOLUTIONS, INC.
                            1998 STOCK OPTION PLAN
                            STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Stock Option Agreement.

I.   NOTICE OF STOCK OPTION GRANT

     ((optionee))

     You have been granted an option to purchase Common Stock of Ajuba
Solutions, Inc. (the "Company"), subject to the terms and conditions of the Plan
and this Stock Option Agreement, as follows:

     Date of Grant                     ((DateofGrant))

     Vesting Commencement Date         ((VestingDate))

     Exercise Price per Share          $((price))

     Total Number of Shares Granted    ((Shares))

     Total Exercise Price              $((TotalPrice))

     Type of Option:              ___  Incentive Stock Option

                                  ___  Nonstatutory Stock Option

     Term/Expiration Date:             ((ExpirationDate))

     Exercise and Vesting Schedule:
     -----------------------------

     This Option is exercisable immediately, in whole or in part, conditioned
upon Optionee entering into a Restricted Stock Purchase Agreement with respect
to any unvested Shares.  The Shares subject to this Option shall vest and/or be
released from the Company's repurchase option, as set forth in the Restricted
Stock Purchase Agreement, according to the following schedule:

     25% of the Shares subject to the Option shall vest one year after the
Vesting Commencement Date, and 1/48th of the Shares subject to the Option shall
vest on the first day of each month thereafter, so that all of the Shares shall
be vested on the first day of the 48th month after the Vesting Commencement
Date.

     Termination Period:
     ------------------

     This Option may be exercised, to the extent vested, for ninety (90) days
after termination of Optionee's employment or consulting relationship, or such
longer period as may be applicable
<PAGE>

upon death or disability of Optionee as provided in the Plan, but in no event
later than the Term/Expiration Date as provided above.

II.  AGREEMENT

     1.   Grant of Option. Ajuba Solutions, Inc., a California corporation (the
          ---------------
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase the total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1998 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.

     If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an ISO as defined in Section 422 of the
Code.  However, if this Option is intended to be an ISO, to the extent that it
exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a
Nonstatutory Stock Option ("NSO").

     2.   Exercise of Option. This Option shall be exercisable during its term
          ------------------
in accordance with the provisions of Section 9 of the Plan as follows:

          (i)  Right to Exercise.
               -----------------

               (a)  Subject to subsections 2(i)(b) through 2(i)(e) below, this
Option shall be exercisable cumulatively according to the vesting schedule set
out in the Notice of Grant. Alternatively, at the election of the Optionee, this
option may be exercised in whole or in part at any time as to Shares which have
not yet vested. For purposes of this Stock Option Agreement, Shares subject to
this Option shall vest based on continued employment of or consulting services
by Optionee with the Company. Vested Shares shall not be subject to the
Company's repurchase right (as set forth in the Restricted Stock Purchase
Agreement, attached hereto as Exhibit C-1).

               (b)  As a condition to exercising this Option for unvested
Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

               (c)  This Option may not be exercised for a fraction of a Share.

               (d)  In the event of Optionee's death, disability or other
termination of the employment or consulting relationship, the exercisability of
the Option is governed by Sections 7, 8 and 9 below, subject to the limitation
contained in subsection 2(i)(e).

               (e)  In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

          (ii) Method of Exercise. This Option shall be exercisable by written
               ------------------
notice (in the form attached as Exhibit A) which shall state the election to
                                ---------
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements with respect to
such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and,

                                       2
<PAGE>

together with an executed copy of the Restricted Stock Purchase Agreement, if
applicable, shall be delivered in person or by certified mail to the Secretary
of the Company. The written notice and Restricted Stock Purchase Agreement shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of such written notice and Restricted
Stock Purchase Agreement accompanied by the Exercise Price.

     No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.

     3.   Optionee's Representations. In the event the Shares purchasable
          --------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), at the time this
Option is exercised, Optionee shall, if required by the Company, concurrently
with the exercise of all or any portion of this Option, deliver to the Company
his or her Investment Representation Statement in the form attached hereto as
Exhibit B.
---------

     4.   Lock-Up Period. Optionee hereby agrees that if so requested by the
          --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to the
first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

     5.   Method of Payment. Payment of the Exercise Price shall be by any of
          -----------------
the following, or a combination thereof, at the election of the Optionee:

          (i)   cash; or

          (ii)  check; or

          (iii) surrender of other shares of Common Stock of the Company which
(A) in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

          (iv)  to the extent permitted by the Administrator, delivery of a
properly executed exercise notice together with such other documentation as the
Administrator and the

                                       3
<PAGE>

broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
Exercise Price.

     6.   Restrictions on Exercise. This Option may not be exercised until such
          ------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

     7.   Termination of Relationship. In the event an Optionee's Continuous
          ---------------------------
Status as an Employee or Consultant terminates, Optionee may, to the extent the
Option was vested at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not vested in this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.

     8.   Disability of Optionee. Notwithstanding the provisions of Section 7
          ----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his or her disability, Optionee may, but
only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Stock Option Agreement), exercise the Option to the extent the Option was
vested at the date of such termination. To the extent that Optionee is not
vested in the Option at the date of termination, or if Optionee does not
exercise such Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     9.   Death of Optionee. In the event of termination of Optionee's
          -----------------
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 11 below), by Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent the Option was vested at the date of
death. To the extent that Optionee is not vested in the Option at the date of
death, or if the Option is not exercised within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

     10.  Non-Transferability of Option. This Option may not be transferred in
          -----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

     11.  Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 8 of the Plan regarding Options

                                       4
<PAGE>

designated as ISOs and Options granted to more than ten percent (10%)
shareholders shall apply to this Option.

     12.  Tax Consequences. Set forth below is a brief summary as of the date of
          ----------------
this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
          (i)   Exercise of ISO. If this Option qualifies as an ISO, there will
                ---------------
be no regular federal income tax liability or state income tax liability upon
the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to the alternative minimum tax in the year of
exercise.
          (ii)  Exercise of ISO Following Disability. If the Optionee's
                ------------------------------------
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within 90 days of such termination for the ISO to
be qualified as an ISO.

          (iii) Exercise of NSO. There may be a regular federal income tax
                ---------------
liability and state income tax liability upon the exercise of an NSO. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee, the Company will be required to withhold from Optionee's compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise. If
the Optionee is subject to Section 16 of the Securities Act of 1934, as amended,
the date of income recognition may be deferred for up to six months.

          (iv)  Disposition of Shares. In the case of an NSO, if Shares are held
                ---------------------
for the minimum long-term capital gain holding period in effect at the time of
disposition, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal and state income tax purposes. In the case of
an ISO, if Shares transferred pursuant to the Option are held for the minimum
long-term capital gain holding period in effect at the time of disposition (and
provided such holding period includes at least one year after exercise of the
Option) and are disposed of at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal and state income tax purposes. If Shares purchased under an ISO
are disposed of after such one-year period following exercise, but before the
expiration of the minimum long-term capital gain holding period in effect at the
time of disposition, then gain realized on such disposition may be taxed as a
short-term capital gain, which may or may not be equivalent to taxation as
compensation income (taxable at ordinary income rates). If Shares purchased
under an ISO are disposed of within such one-year period or within two years
after the Date of Grant, any gain realized on such disposition will be treated
as compensation income to the extent of the difference between the Exercise
Price and

                                       5
<PAGE>

the lesser of (1) the Fair Market Value of the Shares on the date of exercise,
or (2) the sale price of the Shares.

          (v)   Notice of Disqualifying Disposition of ISO Shares. If the Option
                -------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

          (vi)  Section 83(b) Election for Unvested Shares Purchased Pursuant to
                ----------------------------------------------------------------
Nonstatutory Stock Options. With respect to the exercise of a Nonstatutory Stock
--------------------------
Option for unvested Shares, an election may be filed by the Optionee with the
Internal Revenue Service and, if necessary, the proper state taxing authorities,
within 30 days of the purchase of the Shares, electing pursuant to Section 83(b)
--------------
of the Code (and similar state tax provisions if applicable) to be taxed
currently on any difference between the purchase price of the Shares and their
Fair Market Value on the date of purchase. This will result in a recognition of
taxable income to the Optionee on the date of exercise, measured by the excess,
if any, of the fair market value of the Shares, at the time the Option is
exercised over the purchase price for the Shares. Absent such an election,
taxable income will be measured and recognized by Optionee at the time or times
on which the Company's Repurchase Option lapses. Optionee is strongly encouraged
to seek the advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election under
Section 83(b) and similar tax provisions. A form of Election under Section 83(b)
is attached hereto as Exhibit C-5 for reference.
                      -----------

          (vii) Section 83(b) Election for Unvested Shares Purchased Pursuant to
                ----------------------------------------------------------------
Incentive Stock Options. With respect to the exercise of an Incentive Stock
-----------------------
Option for unvested Shares, an election may be filed by the Optionee with the
Internal Revenue Service and, if necessary, the proper state taxing authorities,
within 30 days of the purchase of the Shares, electing pursuant to Section 83(b)
--------------
of the Code (and similar state tax provisions if applicable) to be taxed
currently on any difference between the purchase price of the Shares and their
Fair Market Value on the date of purchase for alternative minimum tax purposes.
This will result in a recognition of income to the Optionee on the date of
exercise, for alternative minimum tax purposes, measured by the excess, if any,
of the fair market value of the Shares, at the time the option is exercised,
over the purchase price for the Shares. Absent such an election, alternative
minimum taxable income will be measured and recognized by Optionee at the time
or times on which the Company's Repurchase Option lapses. Optionee is strongly
encouraged to seek the advice of his or her tax consultants in connection with
the purchase of the Shares and the advisability of filing of the Election under
Section 83(b) and similar tax provisions. A form of Election under Section 83(b)
for alternative minimum tax purposes is attached hereto as Exhibit C-6 for
                                                           -----------
reference.

     OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b),

                                       6
<PAGE>

EVEN IF OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING
ON OPTIONEE'S BEHALF.

                                 AJUBA SOLUTIONS, INC.

                                 By:     ____________________________

                                 Title:  ____________________________

                                       7
<PAGE>

     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1998 STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions hereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.

Dated:____________________________           ____________________________

                                             Residence Address:

                                             ____________________________

                                             ____________________________

                                       8
<PAGE>

                            1998 STOCK OPTION PLAN

                                EXERCISE NOTICE

Ajuba Solutions, Inc.
2593 Coast Avenue
Mountain View, CA 94043

     1.   Exercise of Option. Effective as of today, ___________, 20__, the
          ------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Ajuba Solutions, Inc., a
California corporation (the "Company"), under and pursuant to the 1998 Stock
Option Plan (the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option
Agreement dated ________, 20___ (the "Option Agreement").

     2.   Representations of Optionee. Optionee acknowledges that Optionee has
          ---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     3.   Rights as Shareholder. Until the stock certificate evidencing such
          ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.

     Optionee shall enjoy rights as a shareholder until such time as Optionee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal hereunder.  Upon such exercise, Optionee shall have no further
rights as a holder of the Shares so purchased except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the
Shares so purchased to be surrendered to the Company for transfer or
cancellation.

     4.   Company's Right of First Refusal. Before any Shares held by Optionee
          --------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

          (a)  Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed

                                      A-1
<PAGE>

Transferee; and (iv) the bona fide cash price or other consideration for which
the Holder proposes to transfer the Shares (the "Offered Price"), and the Holder
shall offer the Shares at the Offered Price to the Company or its assignee(s).

          (b)  Exercise of Right of First Refusal. At any time within thirty
               ----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

          (c)  Purchase Price. The purchase price ("Purchase Price") for the
               --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

          (d)  Payment. Payment of the Purchase Price shall be made, at the
               -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

          (e)  Holder's Right to Transfer. If all of the Shares proposed in the
               --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal as provided herein before any Shares held by
the Holder may be sold or otherwise transferred.

          (f)  Exception for Certain Family Transfers. Anything to the contrary
               --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

          (g)  Termination of Right of First Refusal. The Right of First Refusal
               -------------------------------------
shall terminate as to any Shares ninety (90) days after the first sale of Common
Stock of the Company

                                      A-2
<PAGE>

to the general public pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

     5.   Tax Consultation. Optionee understands that Optionee may suffer
          ----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

     6.   Restrictive Legends and Stop-Transfer Orders.
          --------------------------------------------

          (a)  Legends. Optionee understands and agrees that the Company shall
               -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
          REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
          SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
          SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
          THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
          BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
          WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH
          TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
          TRANSFEREES OF THESE SHARES.

          (b)  Stop-Transfer Notices. Optionee agrees that, in order to ensure
               ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c)  Refusal to Transfer. The Company shall not be required (i) to
               -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

                                      A-3
<PAGE>

     7.   Successors and Assigns. The Company may assign any of its rights under
          ----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     8.   Interpretation. Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.

     9.   Governing Law; Severability. This Agreement shall be governed by and
          ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10.  Notices. Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11.  Further Instruments. The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12.  Delivery of Payment. Optionee herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.

     13.  Entire Agreement. The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement, the Restricted Stock Purchase Agreement, and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof.

Submitted by:                    Accepted by:

OPTIONEE:                        AJUBA SOLUTIONS, INC.

_____________________________    By: _____________________________

                                 Its:_____________________________

                                      A-4
<PAGE>

Address:
-------

_____________________________

_____________________________

_____________________________

                                      A-5

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