<PAGE>

                                                                    Exhibit 10.4

                            1999 STOCK OPTION PLAN

                                      OF

                                UNDERLINE, INC.

          1.   PURPOSES OF THE PLAN. This stock option plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of Underline, Inc., a New York corporation (the "Company"), and its
present and future Subsidiaries (as defined in Section 19), and to offer an
additional inducement in obtaining the services of such persons. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonqualified stock options which do not qualify as ISOs ("NQSOs"), but the
Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.

          2.   STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
12, the aggregate number of shares of common stock, $.01 par value per share, of
the Company ("Common Stock") for which options may be granted under the Plan
shall not exceed 150,000. Such shares of Common Stock may, in the discretion of
the Board of Directors of the Company (the "Board of Directors"), consist either
in whole or in part of authorized but unissued shares of Common Stock or shares
of Common Stock held in the treasury of the Company. Subject to the provisions
of Section 13, any shares of Common Stock subject to an option which for any
reason expires, is canceled or is terminated unexercised or which ceases for any
reason to be exercisable shall again become available for the granting of
options under the Plan. The Company shall at all times during the term of the
Plan reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of the Plan.

          3.   ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board of Directors or by a committee of the Board of Directors consisting of not
less than two directors, each of whom shall be a "non-employee director" within
the meaning of Rule 16b-3 (together with any successor rule or regulation "Rule
16b-3") promulgated under the Securities Exchange Act of 1934 (the Board of
Directors or such committee, as applicable, is hereafter referred to as the
"Plan Administrator"). A majority of the members of the Plan Administrator shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, and any acts approved in writing by all
members without a meeting, shall be the acts of the Plan Administrator. In the
case of Non-Employee Director Options, the Plan Administrator shall be the Board
of Directors and all references to the Plan Administrator shall be deemed to
refer to the Board of Directors.
<PAGE>

          Subject to the express provisions of the Plan, the Plan Administrator
shall have the authority, in its sole discretion, with respect to Employee
Options and Consultant Options (as defined in Section 19): to determine the key
employees who shall be granted Employee Options and the consultants and advisors
who shall be granted Consultant Options; the times when options shall be
granted; whether an Employee Option shall be an ISO or a NQSO; the number of
shares of Common Stock to be subject to each option; the term of each option;
the date each option shall become exercisable; whether an option shall be
exercisable in whole, in part or in installments and, if in installments, the
number of shares of Common Stock to be subject to each installment, whether the
installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any option or installment; whether shares of Common Stock may be
issued upon the exercise of an option as partly paid and, if so, the dates when
future installments of the exercise price shall become due and the amounts of
such installments; the fair market value of a share of Common Stock; the
exercise price of each option; the form of payment of the exercise price;
whether to restrict the sale or other disposition of the shares of Common Stock
acquired upon the exercise of an option and, if so, whether to waive any such
restriction; whether to subject the exercise of all or any portion of an option
to the fulfillment of contingencies as specified in the contract referred to in
Section 11 (the "Contract"), including without limitation, contingencies
relating to entering into a covenant not to compete with the Company, any of its
Subsidiaries or a Parent, to financial objectives for the Company, any of its
Subsidiaries or a Parent, a division of any of the foregoing, a product line or
other category, and/or the period of continued employment of the optionee with
the Company, any of its Subsidiaries or a Parent, and to determine whether such
contingencies have been met; whether an optionee is Disabled (as defined in
Section 9); and with respect to Employee Options and Consultant Options, the
amount, if any, necessary to satisfy the Company's obligation to withhold taxes
or other amounts; the fair market value of a share of Common Stock; to construe
the respective Contracts and the Plan; with the consent of the optionee, to
cancel or modify an option, provided, that the modified provision is permitted
                            --------
to be included in an option granted under the Plan on the date of the
modification, and  further, provided, that in the case of a modification (within
                   -------  --------
the meaning of Section 424(h) of the Code) of an ISO, such option as modified
would be permitted to be granted on the date of such modification under the
terms of the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; and to make all other determinations necessary or
advisable for administering the Plan. Any controversy or claim arising out of or
relating to the Plan, any option granted under the Plan or any Contract shall be
determined unilaterally by the Plan Administrator in its sole discretion. The
determinations of the Plan Administrator on the matters referred to in this
Section 3 shall be conclusive and binding on the parties. The Board of Directors
shall have the authority described above with respect to the granting of Non-
Employee Director Options.

          No member or former member of the Plan Administrator shall be liable
for any action, failure to act or determination made in good faith with respect
to the Plan or any option hereunder.

                                      -2-
<PAGE>

          4.   ELIGIBILITY; GRANTS. The Plan Administrator may from time to
time, in its sole discretion, consistent with the purposes of the Plan, grant
Employee Options to key employees (including officers and directors who are key
employees) of, and Consultant Options to consultants to, the Company or any of
its Subsidiaries. The Board of Directors may grant Non-Employee Director Options
to any Non-Employee Director. Such options granted shall cover such number of
shares of Common Stock as the Plan Administrator may determine, in its sole
discretion; provided, however, that the maximum number of shares subject to
            --------  -------
Employee Options that may be granted to any individual during any calendar year
under the Plan (the "162(m) Maximum") shall not exceed 100,000 shares; and
further provided, that the aggregate market value (determined at the time the
------- --------
option is granted in accordance with Section 5) of the shares of Common Stock
for which any eligible employee may be granted ISOs under the Plan or any other
plan of the Company, or of a Parent or a Subsidiary of the Company, which are
exercisable for the first time by such optionee during any calendar year shall
not exceed $ 100,000. Such limitation shall be applied by taking ISOs into
account in the order in which they were granted. Any option (or the portion
thereof) granted in excess of such amount shall be treated as a NQSO.

          5.   EXERCISE PRICE. The exercise price of the shares of Common Stock
under each Employee Option and Consultant Option shall be determined by the Plan
Administrator in its sole discretion; provided, however that the exercise
                                      --------  -------
price of an ISO shall not be less than the fair market value of the Common Stock
subject to such option on the date of grant; and further provided, that if, at
                                                 ------- --------
the time an ISO is granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price of such ISO shall not be less than 110% of the fair
market value of the Common Stock subject to such ISO on the date of grant. The
exercise price of the shares of Common Stock under each Non-Employee Director
Option shall be equal to the fair market value of the Common Stock subject to
such option on the date of grant.

          The fair market value of a share of Common Stock on any day shall be
(a) if the Common Stock is then publicly traded, the price at which the last
purchase and sale transaction was consummated on the last trading day prior to
the day of determination or, if no purchase and sale transaction was consummated
on that day, the price at which the last such transaction was consummated prior
to the day of determination; and provided further that if the Common Stock is
traded on more than one exchange or market on the last such day, then the price
to be used shall be the price of the last purchase and sale transaction on the
principal exchange or market on which the Common Stock is listed for trading,
(b) if the Common Stock is not publicly traded, the fair market value of the
Common Stock shall be determined by the Plan Administrator in good faith by any
method not inconsistent with applicable regulations adopted by the Treasury
Department relating to stock options.

                                      -3-
<PAGE>

          6.   TERM. The term of each Employee Option and Consultant Option
granted pursuant to the Plan shall be such term as is established by the Plan
Administrator, in its sole discretion; provided, however, that the term of each
                                       --------  -------
ISO granted pursuant to the Plan shall be for a period not exceeding 10 years
from the date of grant thereof; and further, provided, that if, at the time an
                                    -------  --------
ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, of any of its Subsidiaries or of a Parent,
the term of the ISO shall be for a period not exceeding five years from the date
of grant. Employee Options and Consultant Options shall be subject to earlier
termination as hereinafter provided. Subject to earlier termination as
hereinafter provided, each Non-Employee Director Option shall be exercisable for
a term of ten years commencing on the date of grant.

          7.   EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is being
exercised and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due on exercise if the Contract with respect to an
Employee Option permits installment payments) (a) in cash or by certified check
or (b) in the case of an Employee Option or a Consultant Option, if the
applicable Contract permits, with previously acquired shares of Common Stock
having an aggregate fair market value on the date of exercise (determined in
accordance with Section 5) equal to the aggregate exercise price of all options
being exercised, or with any combination of cash, certified check or shares of
Common Stock.

          The Plan Administrator may, in its sole discretion, permit payment of
the exercise price of an option by delivery by the optionee of a properly
executed notice, together with a copy of his irrevocable instructions to a
broker acceptable to the Plan Administrator to deliver promptly to the Company
the amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.

          A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate to him for such
shares; provided, however, that until such stock certificate is issued, any
        --------  -------
optionee using previously acquired shares-of Common Stock in payment of an
option exercise price shall continue to have the rights of a stockholder with
respect to such previously acquired shares.

          In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.

          8.   TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, any holder of an Employee Option or
Consultant

                                      -4-
<PAGE>

Option whose relationship with the Company, its Parent and Subsidiaries as an
employee or a consultant has terminated for any reason (other than in the case
of an individual optionee his the death or Disability) may exercise such option,
to the extent exercisable on the date of such termination, at any time within
three months after the date of termination, but not thereafter and in no event
after the date the option would otherwise have expired.

          For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation, or the parent
or any subsidiary of such corporation, for purposes of Section 422(a) of the
Code. As a result, an individual on military, sick leave or other bona fide
leave of absence shall continue to be considered an employee for purposes of the
Plan during such leave if the period of the leave does not exceed 90 days, or,
if longer, so long as the individual's right to reemployment with the Company
(or a related corporation) is guaranteed either by statute or by contract. If
the period of leave exceeds 90 days and the individual's right to reemployment
is not guaranteed by statute or by contract, the employment relationship shall
be deemed to have terminated on the 91 st day of such leave.

          Except as may otherwise be expressly provided in the applicable
Contract, Employee Options and Consultant Options granted under the Plan shall
not be affected by any change in the status of the optionee so long as the
optionee continues to be an employee of, or a consultant or advisor to, the
Company, or any of the Subsidiaries or a Parent (regardless of having changed
from one to the other or having been transferred from one corporation to
another).

          Except as provided below, a Non-Employee Director Option may be
exercised at any time during its ten year term. The Non-Employee Director Option
shall not be affected by the optionee ceasing to be a director of the Company or
becoming an employee of, or consultant to, the Company, any of its Subsidiaries
or a Parent.

          Nothing in the Plan or in any option granted under the Plan shall
confer on any optionee any right to continue in the employ of, or as a
consultant or advisor to, the Company, any of its Subsidiaries or a Parent, or
as a director of the Company, or interfere in any way with any right of the
Company, any of its Subsidiaries or a Parent to terminate the optionee's
relationship at any time for any reason whatsoever without liability to the
Company, any of its Subsidiaries or a Parent.

          9.   DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an individual optionee dies
(a) while he is an employee of, or consultant to, the Company, any of its
Subsidiaries or a Parent, (b) within three months after the termination of such
relationship or (c) within one year following the termination of such
relationship by reason of his Disability, his Employee Option or Consultant
Option may be exercised, to the extent exercisable on the date of his death, by
his Legal

                                      -5-
<PAGE>

Representative (as defined in Section 19) at any time within one year after
death, but not thereafter and in no event after the date the option would
otherwise have expired.

          Except as may otherwise be expressly provided in the applicable
Contract, any individual optionee whose relationship as an employee of, or
consultant to, the Company, its Parent and Subsidiaries has terminated by reason
of such optionee's Disability may exercise his Employee Option or Consultant
Option, to the extent exercisable upon the effective date of such termination,
at any time within one year after such date, but not thereafter and in no event
after the date the option would otherwise have expired.

          The term of a Non-Employee Director Option shall not be affected by
the death or Disability of the optionee. If an optionee holding a Non-Employee
Director Option dies during the term of such option, the option may be exercised
at any time during its term by his Legal Representative.

          10.  COMPLIANCE WITH SECURITIES LAWS. The Plan Administrator may
require, in its sole discretion, as a condition to the exercise of any option
that either (a) a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.

          The Plan Administrator may require, in its sole discretion, as a
condition to the exercise of any option that the optionee execute and deliver to
the Company his representations and warranties, in form, substance and scope
satisfactory to the Plan Administrator, which the Plan Administrator determines
are necessary or convenient to facilitate the perfection of an exemption from
the registration requirements of the Securities Act, applicable state securities
laws or other legal requirement, including without limitation that (a) the
shares of Common Stock to be issued upon the exercise of the option are being
acquired by the optionee for his own account, for investment only and not with a
view to the resale or distribution thereof, and (b) any subsequent resale or
distribution of shares of Common Stock by such optionee will be made only
pursuant to (i) a Registration Statement under the Securities Act which is
effective and current with respect to the shares of Common Stock being sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption, the optionee shall prior to any offer of
sale or sale of such shares of Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.

          In addition, if at any time the Plan Administrator shall determine, in
its sole discretion, that the listing or qualification of the shares of Common
Stock subject to such option

                                      -6-
<PAGE>

on any securities exchange, Nasdaq or under any applicable law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition to, or in connection with, the granting of an option or the issue of
shares of Common Stock thereunder, such option may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Plan
Administrator.

          11.  STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Plan Administrator.

          12.  ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of a stock dividend, split-up,
combination, reclassification, recapitalization, merger (whether or not the
Company is the surviving corporation), consolidation or exchange of shares or
similar transaction that results in a change in the shares of Common Stock
outstanding immediately prior to such event (any of the foregoing, an
"Adjustment Event"), then the aggregate number and kind of securities subject to
the Plan, the aggregate number and kind. of securities subject to each
outstanding option and the exercise price thereof, the number and kind of
securities subject to future options and the 162(m) Maximum shall be
automatically adjusted so that the optionee with respect to such option subject
to this Plan shall be entitled to purchase (subject to the vesting provisions of
any applicable option contract entered into between the Company and this
optionee, provided that to the extent that such vesting is dependent directly or
indirectly upon continued employment with the Company, continued employment with
any successor to the Company shall satisfy such employment requirement) the
number and kind of securities that the optionee would have owned if the optionee
had owned the full number (regardless of vesting limitations) of shares of
Common Stock subject to the option immediately prior to such Adjustment Event,
unless the Board of Directors, in their reasonable discretion, determines that
other adjustments are appropriate to give economic effect to the Adjustment
Event, which determination of the Board of Directors shall be conclusive and
binding on all parties.

          13.  AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors and approved by the Company's stockholders on November
10, 1999. No option may be granted under the Plan after October 31, 2009. The
Board of Directors, without further approval of the Company's stockholders, may
at any time suspend or terminate the Plan, in whole or in part, or amend it from
time to time in such respects as it may deem advisable, including, without
limitation, in order that ISOs granted hereunder meet the requirements for
"incentive stock options" under the Code, to comply with the provisions of Rule
16b-3, Section 162(m) of the Code, or any change in applicable law, regulations,
rulings or interpretations of administrative agencies; provided, however, that
                                                       --------  -------
no amendment shall be effective without the requisite prior or subsequent
stockholder approval which would (a) except as contemplated in Section 12,
increase the maximum number of shares of Common Stock for which options may be

                                      -7-
<PAGE>

granted under the Plan or the 162(m) Maximum or (b) materially increase the
benefits accruing to participants under the Plan. No termination, suspension or
amendment of the Plan shall, without the consent of the holder of an existing
and outstanding option affected thereby, adversely affect his rights under such
option. The power of the Plan Administrator to construe and administer any
options granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.

          14.  NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the optionee,
only by the optionee or his Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect. Anything to the contrary
     -- ------
notwithstanding, the optionee cannot exercise any option if to do so would
result in the termination of the Company's election to be taxed as an
"S-corporation."

          15.  WITHHOLDING TAXES. The Company may withhold (a) cash, (b) subject
to any limitations under Rule 16b-3, shares of Common Stock to be issued with
respect thereto having an aggregate fair market value on the exercise date
(determined in accordance with Section 5), or (c) any combination thereof, in an
amount equal to the amount which the Plan Administrator determines is necessary
to satisfy the Company's obligation to withhold Federal, state and local income
taxes or other amounts incurred by reason of the grant or exercise of an option,
its disposition, or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand. The Company shall not be required to
issue any shares of Common Stock pursuant to any such option until all required
payments have been made.

          16.  LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued upon exercise
of an option under the Plan and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares as it determines, in its
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act
and any applicable state securities laws, (b) implement the provisions of the
Plan or any agreement between the Company and the optionee with respect to such
shares of Common Stock, or (c) permit the Company to determine the occurrence of
a "disqualifying disposition," as described in Section 421(b) of the Code, of
the shares of Common Stock issued or transferred upon the exercise of an ISO
granted under the Plan.

                                      -8-
<PAGE>

          The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.

          17.  USE OF PROCEEDS. The cash proceeds from the sale of shares of
Common Stock pursuant to the exercise of options under the Plan shall be added
to the general funds of the Company and used for such corporate purposes as the
Board of Directors may determine.

          18.  SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Section
19) or assume the prior options of such Constituent Corporation.

          19.  DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:

               (a)  Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, any of its
Subsidiaries or a Parent in a transaction to which Section 424(a) of the Code
applies (or would apply if the option assumed or substituted were an ISO), or
any Parent or any Subsidiary of such corporation.

               (b)  Consultant Option. The term "Consultant Option" shall mean a
NQSO granted pursuant to the Plan to a person who, at the time of grant, is a
consultant to the Company or a Subsidiary of the Company, and at such time is
neither a common law employee of the Company or any of its Subsidiaries nor a
director of the Company.

               (c)  Disability. The term "Disability" shall mean a permanent
and total disability within the meaning of Section 22(e)(3) of the Code.

               (d)  Employee Option. The term "Employee Option" shall mean an
option granted pursuant to the Plan to an individual who, at the time of grant,
is a key employee of the Company or any of its Subsidiaries.

               (e)  Legal Representative. The term "Legal Representative" shall
mean the executor, administrator or other person who at the time is entitled by
law to exercise the rights of a deceased or incapacitated optionee with respect
to an option granted under the Plan.

               (f)  Non-Employee Director. The term "Non-Employee Director"
shall mean a person who is a director of the Company, but is not a common law
employee of the Company, any of its Subsidiaries or a Parent.

                                      -9-
<PAGE>

               (g)  Non-Employee Director Option. The term "Non-Employee
Director Option" shall mean a NQSO granted pursuant to the Plan to a person who,
at the time of the grant, is a Non-Employee Director.

               (h)  Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.

               (i)  Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.

          20.  GOVERNING LAW; CONSTRUCTION. The Plan, such options as may be
granted hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions.

          Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.

          21.  PARTIAL INVALIDITY. The invalidity, illegality or
unenforceability of any provision in the Plan or any Contract shall not affect
the validity, legality or enforceability of any other provision, all of which
shall be valid, legal and enforceable to the fullest extent permitted by
applicable law.

                                      -10-
<PAGE>

                                UNDERLINE, INC.

                               STOCK OPTION PLAN
                             STOCK OPTION CONTRACT

                         Dated as of December 1, 1999
                         ----------------------------

     THIS STOCK OPTION CONTRACT is between Underline, Inc., a New York
corporation (the "Company"), and (the "Optionee").
                  -------              --------

        1.  Grant. The Company, in accordance with the allotment made by the
            -----
Company's Board of Directors or (if applicable) committee of the Company's Board
of Directors (as applicable, the "Plan Administrator") and subject to the terms
and conditions of the 1999 Stock Option Plan of the Company (the "Plan"), hereby
                                                                  ----
grants to the Optionee an option to purchase an aggregate of shares (the
"Shares") of the common stock, $.01 par value, of the Company (the "Common
                                                                    ------
Stock") at an exercise price of $4.50 per share (the "Exercise Price").
-----                                                 --------------

        2.  Term; Vesting; Exercise. a) The term of this option shall be 10
            -----------------------
years from the date hereof, subject to earlier termination as provided in the
Plan. This option shall vest and become exercisable as to 25% of the Shares on
December 1, 2000 (the "Vesting Date"), as to an additional 25% of the Shares
                       ------------
upon the first anniversary of the Vesting Date, as to an additional 25% of the
Shares upon the second anniversary of the Vesting Date, and as to the remaining
25% of the Shares upon the third anniversary of the Vesting Date. The right to
purchase Shares of Common Stock under this option shall be cumulative, so that
if the full number of shares purchasable in a period shall not be purchased, the
balance may be purchased at any time or from time to time thereafter, but not
after the expiration of the option. This option shall be deemed to be a stock
option only as to the first $100,000 of shares with respect to which this option
is exercised in any year.

        (b) Notwithstanding the foregoing, upon the approval by the stockholders
of the Company of (i) the sale of all or substantially all of the assets or
equity of the Company or (ii) a plan of complete liquidation of the Company or
plan of merger or consolidation of the Company, in either case pursuant to which
the stockholders of the Company immediately prior to the merger will own, as a
result of their ownership of such shares, less than 50% of the voting power of
the Company (determined based on the right to vote for directors of the Company)
immediately after the consummation of such event (a "Trigger Event"), the
                                                     -------------
successor entity or a parent or subsidiary of the successor entity shall agree
to either:

        (x) grant to the Optionee options to purchase a number of shares of such
        successor entity or a parent or subsidiary of such successor entity,
<PAGE>

        at an exercise price and having other terms (including the terms
        relating to the vesting thereof) and conditions so that the value of
        that option shall be as nearly equivalent as practicable to this
        option.; or

        (y)  to assume this option.

             In the event that the successor entity or a parent or subsidiary of
the successor entity refuses to substitute or assume this option, then the
vesting of the option granted hereunder shall be accelerated such that all
unvested options shall become exercisable for a period of fifteen (15) days
prior to the closing of the transaction.

        (c)  In the event that the Optionee's relationship with the Company, its
Parent and Subsidiaries as an employee or a consultant is terminated (or is
deemed terminated in accordance with the provisions of the Plan) for any reason
(other than in the case of the Optionee's death or Disability (as defined in the
Plan)), the Optionee may exercise this option, to the extent exercisable on the
date of such termination, at any time within three months after the date of
termination, but not thereafter and in no event after the date this option would
otherwise have expired.

             Except as may otherwise be expressly provided herein, this option
shall not be affected by any change in the status of the Optionee so long as the
Optionee continues to be an employee of, or a consultant or advisor to, the
Company, or any of the Subsidiaries or a Parent (regardless of having changed
from one to the other or having been transferred from one corporation to
another).


        (d)  If the Optionee dies (a) while he is an employee of, or consultant
to, the Company, any of its Subsidiaries or a Parent, (b) within three months
after the termination of such relationship or (c) within one year following the
termination of such relationship by reason of his Disability, this option may be
exercised, to the extent exercisable on the date of his death, by his Legal
Representative (as defined in the Plan) at any time within one year after death,
but not thereafter and in no event after the date the option would otherwise
have expired.

        (e)  If the Optionee's relationship as an employee of, or consultant to,
the Company, its Parent and Subsidiaries has terminated by reason of the
Optionee's Disability, the Optionee  may exercise this option, to the extent
exercisable upon the effective date of such termination, at any time within one
year after such date, but not thereafter and in no event after the date the
option would otherwise have expired.


        3.   Exercise. This option shall be exercised by giving written notice
             --------
to the Company at its then principal office, presently 678 Broadway, 4th Floor,
New York, New

                                      -2-
<PAGE>

York 10012, Attn: D.J. Edgerton, Chief Executive Officer, stating that the
Optionee is exercising the option hereunder specifying the number of shares
being purchased and accompanied by payment in full of the aggregate purchase
price therefor (a) (i) in cash or by personal check, (ii) with previously
acquired shares of Common Stock which have been held by the Optionee for at
least six months or (iii) a combination of the foregoing or (b) in the manner
provided by a "cashless exercise" program adopted by the Company. In addition,
the Optionee shall, if requested by the Company, make such reasonable
representations to the Company as the Company may require.

          4.   Taxes. The Company or its Parent or Subsidiary may withhold cash
               -----
and/or shares of Common Stock to be issued to the Optionee in the amount which
the Company determines is necessary to satisfy its obligation to withhold taxes
or other amounts incurred by reason of the grant, exercise or disposition of
this option or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the Optionee to pay the Company such
amount and the Optionee agrees to pay such amount to the Company in cash
promptly upon demand.

          5.   Notice of Transfers. In the event of any disposition of the
               -------------------
shares of Common Stock acquired pursuant to the exercise of this option within
two years from the date hereof or one year from the date of transfer of such
shares to him, the Optionee shall notify the Company thereof in writing within
30 days after such disposition. In addition, the Optionee shall provide the
Company on demand with such information as the Company shall reasonably request
in connection with determining the amount and character of the Optionee's
income, the Company's deduction and its obligation to withhold taxes or other
amounts incurred by reason of such disqualifying disposition, including the
amount thereof.

          6.   Restriction or Exercise. Notwithstanding the foregoing, this
               -----------------------
option shall not be exercisable by the Optionee unless (a) a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act")
                                                             --------------
with respect to the shares of Common Stock to be received upon the exercise of
this option shall be effective and current at the time of exercise or (b) there
is an exemption from registration under the Securities Act for the issuance of
the shares of Common Stock upon such exercise. The Optionee hereby represents
and warrants to the Company that, unless such a Registration Statement is
effective and current at the time of exercise of this option, the shares of
Common Stock to be issued upon the exercise of this option will be acquired by
the Optionee for his own account, for investment only and not with a view to the
resale or distribution thereof. Such representations and warranties shall also
be deemed to be made by the Optionee upon each exercise of this option. In any
event, the Optionee shall notify the Company of any proposed resale of the
shares of Common Stock issued to him upon exercise of this option. Any
subsequent resale or distribution of shares of Common Stock by the Optionee
shall be made only pursuant to (x) a Registration Statement under the Securities
Act which is effective and current with respect to the sale of shares of Common
Stock being sold, or (y) a specific exemption from the registration requirements

                                      -3-
<PAGE>

of the Securities Act, but in claiming such exemption, the Optionee shall, prior
to any offer of sale or sale of such shares of Common Stock, provide the Company
(unless waived by the Company) with a favorable written opinion of counsel
satisfactory to the Company, in form, substance and scope satisfactory to the
Company, as to the applicability of such exemption to the proposed sale or
distribution. Nothing herein shall be construed as requiring the Company to
register the shares subject to this option under the Securities Act.

          7.   Lock-Up Period.  The Optionee 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, the Optionee shall not sell
or otherwise transfer any Common Stock or other securities of the Company during
the 180-day period (or such other 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.  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.

          8.   Listing of Common Stock Prior to Exercise. Notwithstanding
               -----------------------------------------
anything herein to the contrary, if at any time the Plan Administrator shall
determine, in its discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or under any
applicable law, or the consent or approval of any governmental agency or
regulatory body, is necessary or desirable as a condition to, or in connection
with, the granting of an option or the issue of shares of Common Stock
hereunder, this option may not be exercised in whole or in part unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Plan Administrator.

          9.   Legends. The Company may affix appropriate legends upon the
               -------
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, or (b) implement the provisions of the Plan
or this Contract or any other agreement between the Company and the Optionee
with respect to such shares of Common Stock.

          10.  Shareholders Agreement.  Simultaneously with the grant of this
               ----------------------
option, the Optionee and the Company have entered into the Shareholder Agreement
in the form annexed hereto as Exhibit A.  The Shareholders Agreement, among
other things, restricts

                                      -4-
<PAGE>

the transfer of shares owned by the Optionee and provides the Company with
certain rights to purchase such shares upon any termination of the employment.

          11.  Stock Option Plan. The Company and the Optionee agree that they
               -----------------
will both be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made a part hereof. Any capitalized
term not defined herein shall have the meaning ascribed to it in the Plan. In
the event of a conflict between the terms of this Contract and the terms of the
Plan, the terms of the Plan shall govern and be controlling for all purposes.

          12.  Compliance with Law. The Optionee represents and agrees that he
               -------------------
will comply with all applicable laws relating to the Plan and the grant and
exercise of this option and the disposition of the shares of Common Stock
acquired upon exercise of the option, including without limitation, federal and
state securities and "blue sky" laws and the rules and regulations promulgated
thereunder.

          13.  Transferability. This option is not transferable by the Optionee
               ---------------
otherwise than by will or the laws of descent and distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee or the
Optionee's legal representatives.

          14.  Miscellaneous.
               -------------

          a.  This Contract shall be binding upon and inure to the benefit of
              any successor or assign of the Company and to any heir,
              distributee, executor, administrator or legal representative
              entitled to the Optionee's rights hereunder.

          b.  This Contract shall be governed by, and construed and enforced in
              accordance with, the laws of the State of Delaware, without regard
              to the conflicts of law provisions that would defer to the
              substantive laws of another jurisdiction. Neither this Contract
              nor the Plan shall not be construed with a presumption against any
              party by reason of such party having caused it to be drafted.

          c.  The invalidity, illegality or unenforceability of any provision
              herein shall affect the validity, legality or enforceability of
              any other provision, all of which shall be valid, legal and
              enforceable to the fullest extent permitted by applicable law.

          d.  The Optionee agrees that the Company may amend the Plan and the
              options granted to the Optionee under the Plan, subject to the
              limitations contained in the Plan.

                                      -5-
<PAGE>

          e.   The Optionee agrees to accept as final, conclusive and binding
               all decisions and interpretations of the Plan Administrator upon
               any question arising under the Plan or this contract. The
               Optionee further agrees to notify the Company promptly in the
               event of any change in the Optionee's residence address set forth
               below the Optionee's signature at the end of this contract.

          f.   This Contract, together with the Plan and the Shareholder
               Agreement, constitute the entire understanding and agreement
               between the parties hereto with respect to the subject matter
               hereof and supersedes all prior understandings and agreements
               with respect to such subject matter, all of which are merged
               herein.

          g.   This Contract may be executed in counterparts, all of which shall
               be deemed an original, but all of which together shall constitute
               one and the same agreement.

          h.   Nothing in the Plan or herein shall confer upon the Optionee any
               right to continue in the employ of the Company, any Parent or any
               of its Subsidiaries, or interfere in any way with any right of
               the Company, any Parent or its Subsidiaries to terminate such
               employment at any time for any reason whatsoever without
               liability to the Company, any Parent or any of its Subsidiaries.

                                      -6-
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Contract as of
the day and year first above written.

                                        UNDERLINE, INC.


                                        By:_________________________________


                                        ____________________________________
                                        Optionee:

                                      -7-