Document:

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                                                                    EXHIBIT 10.1

                                NETMOSPHERE, INC.
                             1997 STOCK OPTION PLAN

                     As Adopted Effective February 25, 1997
                            Amended January 12, 1998
                         and Amended September 11, 1998

            1. Purpose.

                        (a) The purpose of the Netmosphere, Inc. 1997 Stock
Option Plan (the "Plan") is to provide a means whereby selected eligible
employees and officers and directors of and consultants to Netmosphere, Inc., a
California corporation (the "Company"), and its Affiliates, if any, as defined
below, may be given a favorable opportunity to acquire common stock of the
Company (the "Common Stock"), thereby encouraging such persons to accept or
continue a qualifying relationship with the Company; increasing the interest of
such persons in the Company's welfare through participation in the growth and
value of the Common Stock; and furnishing such persons with an incentive to
improve operations and increase profits of the Company. The terms "Affiliate" or
"Affiliates" as used in the Plan shall mean any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Internal Revenue Code of 1986, as amended (the "Code").

                        (b) To accomplish the foregoing objectives, this Plan
provides a means whereby employees, directors, and consultants may receive
options to purchase Common Stock.

            2. Stock Options. Stock options granted pursuant to the Plan may, at
the discretion of the Board of Directors of the Company, be granted either as an
Incentive Stock Option ("ISO") or as a Nonstatutory Stock Option ("NSO"). An ISO
shall mean an option described in Section 422 of the Code. An NSO shall mean any
option not meeting the requirements of Section 422 of the Code. An option
designated as an NSO will not be treated as an ISO.

            3. Administration. The Board of Directors (the "Board"), whose
authority shall be plenary, shall administer the Plan, unless and until such
time as the Board delegates administration of the Plan pursuant to subsection
3(b), below.

                        (a) The Board, whose determinations shall be conclusive,
shall have the power, subject to and within the limits of the express provisions
of the Plan:

                                    (i) To grant options pursuant to the Plan.

                                    (ii) To determine from time to time which of
the eligible persons described in Section 5, below, shall be granted options
under the Plan, the number of shares for which each option shall be granted, the
term of each granted option and the time or times during the term of each option
within which all or portions of each option may be exercised (which at the
Board's discretion may be accelerated, if allowed under applicable law).
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                                    (iii) To construe and interpret the Plan and
options granted under it and to establish, amend, and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
shall generally determine all questions of policy and expediency that may arise
and may correct any defect, omission or inconsistency in the Plan or in any
option agreement with respect to the Plan in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.

                                    (iv) To grant options in exchange for
cancellation of options granted earlier at different exercise prices; provided,
however, nothing contained herein shall empower the Board to grant an ISO under
conditions or pursuant to terms that are inconsistent with the requirements of
subsection 4(b), below, or Section 422 of the Code.

                                    (v) To prescribe the terms and provisions of
each option granted (which need not be identical) and the form of written
instrument that shall constitute the option agreement.

                                    (vi) To amend the Plan as provided in
Section 11, below.

                                    (vii) Generally, to exercise such powers and
to perform such acts as are deemed necessary or expedient to promote the best
interests of the Company.

                                    (viii) To take appropriate action to cause
any option granted hereunder to cease to be an ISO; provided, however, no such
action may be taken by the Board without the written consent of the affected
optionee.

                        (b) The Board may, by resolution, delegate
administration of the Plan (including, without limitation, the Board's powers
under subsection 3(b) above) to a committee acting under the authority of the
Board. In the event that the Company has registered any equity security under
Section 12 of the Securities and Exchange Act of 1934, as amended (the "Act"),
such committee shall consist of not less than two (2) members of the Board each
of whom shall be a "disinterested person" and an "outside director". A member of
the Board is a "disinterested person" if at the time she exercises discretion in
administering the Plan she is not eligible and has not at any time within one
year prior thereto been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company (or Affiliate) entitling
the participants therein to acquire stock, stock options or stock appreciation
rights of the Company or (Affiliate), or if she otherwise satisfies the
requirements of a "disinterested person" within the meaning of Rule 16b-3 of the
Act. A member of the Board is an "outside director" if she is not a current
employee of the Corporation (or Affiliate), is not a former employee of the
Corporation (or Affiliate) who is receiving compensation for prior services, was
not an officer of the Corporation (or Affiliate) at any time, and currently is
not receiving compensation for personal services to the Corporation (or
Affiliate) in any capacity other than as a member of the Board, or if she
otherwise satisfies the requirements of an "outside director" as such term is
defined for purposes of Section 162(m) of the Code. The Board shall have
complete discretion to determine the composition, structure, form, term and
operation of any committee established to administer the Plan. The Board at any
time may revest in the Board the administration of the Plan.

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            4. Shares Subject to Plan and to Option.

                        (a) Subject provisions of Section 10, below (relating to
adjustments upon changes in stock), the stock which may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate Two Million Six
Hundred Thousand (2,600,000) shares of the Company's authorized Common Stock and
may be unissued shares, reacquired shares, or shares bought on the market for
the purpose of issuance under the Plan. If any options granted under the Plan
shall for any reason terminate or expire without having been exercised in full,
the stock not purchased under such options shall be available again for the
purpose of the Plan.

                        (b) If the aggregate fair market value of stock with
respect to which ISOs are exercisable for the first time by any individual
during any calendar year exceeds the amount provided in Section 442(d) of the
Code, such options representing stock in excess of the Section 422(d) annual
limitation shall be deemed to be a grant of an NSO to the extent of such excess.

            5. Eligibility.

                        (a) All employees of the Company and its Affiliates are
eligible to receive ISOs and only employees of the Company and its Affiliates
may be granted ISOs. Directors of the Company who are not also employees of the
Company shall not be eligible for ISOs, but are eligible for NSOs. Employees and
independent contractors s hall also be eligible for NSOs.

                        (b) No option issued under the Plan, may be granted to a
person who, at the time such option would be granted, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
outstanding capital stock of the Company or its Affiliate unless the option
price is at least one hundred percent (100%) in the case of an NSO, one hundred
ten percent (110%) in the case of an ISO, of the fair market value of the stock
subject to the option and such option by its terms is not exercisable after five
(5) years from the date such option is granted. Any employee may hold more than
one (1) option at any time. For purposes of this subsection 3(b), in determining
stock ownership, an optionee shall be considered as owning the voting capital
stock owned, directly or indirectly, by or for his brothers and sisters, spouse,
ancestors and lineal descendants. Voting capital stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries, as applicable. Common Stock with respect to which any such
optionee holds an option shall not be counted. Additionally, for purposes of
this subsection 3(b), outstanding capital stock shall include all capital stock
actually issued and outstanding immediately after the grant of the option to the
optionee. Outstanding capital stock shall not include capital stock authorized
for issue under outstanding options held by the optionee or by any other person.

            6. Terms of Options. Options granted pursuant to the Plan need not
be identical, but each option shall be granted within ten (10) years from the
date the Plan is adopted by the Board or approved by the shareholders, whichever
is earlier, shall specify the number of shares to which it pertains and shall be
subject to the following terms and conditions:

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                        (a) The purchase price of each option shall be
determined by the administrator of the Plan at the time the option is granted,
but shall in no event, except as otherwise set forth in Section 5, above, be
less than eighty-five percent (85%) in the case of an NSO, or one hundred
percent (100%) in the case of an ISO, of the fair market value of the stock
subject to the option on the date the option is granted. For all purposes of the
Plan, the fair market value of the Common Stock shall be, if the Stock is
publicly traded, its closing bid price on NASDAQ or the over-the-counter market,
or if is traded on another exchange, the last price at which it traded on such
exchange. If the stock is not publicly traded, the fair market value shall be
such value as is determined in good faith by the Board of Directors by taking
into consideration the following factors: the Company's net worth, prospective
earning power and dividend-paying capacity, and other relevant factors.

                                    "Other relevant factors" include the
goodwill of the business; the economic outlook in the particular industry; the
Company's position in the industry and its management, the degree of control of
the business represented by the block of stock to be valued; and the values of
securities of corporations engaged in the same or similar lines of business
which are listed on a stock exchange. In addition to the relevant factors
described above, consideration shall also be given to nonoperating assets
including proceeds of life insurance policies payable to or for the benefit of
the Company, to the extent such nonoperating assets have not been taken into
account in the determination of net worth, prospective earning power, and
dividend-earning capacity.

                        (b) Except as otherwise set forth in Section 5, above,
the term of any option shall not be greater than ten (10) years from the date it
was granted.

                        (c) An option by its terms, shall not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercisable, during the lifetime of the option holder, only by the individual to
whom the option is granted. Notwithstanding the above, if an employee is
determined to be incompetent by a court of proper jurisdiction, her legal
representative may exercise the option on her behalf.

                        (d) Each option shall become exercisable on an annual
basis as to not less than twenty percent (20%) of the total number of shares
subject thereto.

                        (e) Options under the Plan may be exercised by a
participant regardless of whether she is employed by the Company or an Affiliate
at the time of exercise.

                        (f) Upon the termination of a participant's employment
(defined as the date the participant is no longer employed by either the Company
or any of its Affiliates), her rights to exercise an option then held by her
shall be only as follows:

                                    (i) If a participant's employment is
terminated for any reason other than death of the participant, she may, within
not less than three (3) months following such termination, or within such longer
period as the Board may fix, exercise the option to the extent such option was
exercisable by the participant on the date of termination of his employment, or
to the extent otherwise specified by the Board, which may so specify at a time
that is subsequent

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to the date of the termination of his employment, provided, the date of exercise
is in no event after the expiration of the term of the option. However, if the
participant's employment is terminated due the Disability (within the meaning of
Section 22(e) of the Code) of the participant, then this paragraph 6(e)(ii)
shall apply to such participant by substituting twelve (12) months for three (3)
months.

                                    (ii) If a participant's employment is
terminated by death, his estate shall have the right for a period of not less
than twelve (12) months following the date of death, or for such longer period
as the Board may fix, to exercise the option to the extent the participant was
entitled to exercise such option on the date of death, or to the extent
otherwise specified by the Board, which may so specify, at a time that is
subsequent to the date of death, provided the actual date of exercise is in no
event after the expiration of the term of the option. A participant's estate
shall mean his legal representative or any person who acquires the right to
exercise an option by reason of the participant's death.

                        (g) Options may also contain such other provisions,
which shall not be inconsistent with any of the foregoing terms, as the Board
shall deem appropriate. No option, however. nor anything contained in the Plan,
shall confer upon any, employee any right to continue in the employ of the
Company (or Affiliate) nor limit in any way the right of the Company (or
Affiliate) to terminate her employment at any time.

                        (h) Subject to any required action by the Company's
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain and apply to the securities
to which a holder of the number of shares subject to the option would have been
entitled, provided, the excess of the aggregate fair market value of the shares
subject to the option immediately after such merger or consolidation over the
aggregate option price of such shares is not more than the excess of the
aggregate fair market value of all shares subject to the option immediately
before such merger or consolidation over the aggregate option price of such
shares. A dissolution or liquidation of the Company or a merger or consolidation
in which the Company is not the surviving corporation shall cause each
outstanding option to terminate, unless the surviving corporation in the case of
a merger or consolidation assumes outstanding options or replaces them with
substitute options and (i) the excess of the aggregate fair market value of the
shares subject to the option immediately after the substitution or assumption
over the aggregate option price of such shares is not more than the excess of
the aggregate fair market value of all shares subject to the option immediately
before such substitution or assumption over the aggregate option price of such
shares; and (ii) the new option or the assumption of the old option does not
give the employee additional benefits which she did not have under the old
option.

            7. Payments and Loans Upon Exercise.

                        (a) The purchase price of stock sold pursuant to an
option shall be paid either in full in cash or by certified check at the time
the option is exercised or to the extent permitted under the applicable
provisions of California General Corporation Law, pursuant to any deferred
payment arrangement that the Board in its discretion may approve; provided,
however, that any

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interest to be paid by an optionee in connection with any such deferred payment
arrangement shall be charged interest at the applicable federal rate as defined
in Section 1274(d) of the Code.

                        (b) The Company may make loans or guarantee loans made
by an appropriate Financial institution to individual optionees, including
officers, on such terms as may be approved by the Board for the purpose of
financing the exercise of options granted under the Plan and the payment of any
taxes that may be due by reason of such exercise.

                        (c) In addition, if and to the extent authorized by the
Board, optionees may make all or any portion of any payment due to the Company
upon exercise of an option by delivery of any property (including securities of
the Company) other than cash, so long as such property constitutes valid
consideration for the stock under applicable law.

                        (d) Where the Company has or will have a legal
obligation to withhold taxes relating to the exercise of any stock option, such
option may not be exercised, in whole or in part, unless such tax obligation is
first satisfied in a manner satisfactory to the Company.

            8. Use of Proceeds from Stock. Proceeds from the sale of stock
pursuant to options granted under the Plan shall be used for general corporate
purposes.

            9. Stock Transfer Restrictions; Repurchase Provisions. Stock issued
pursuant to the exercise of options granted under the Plan shall be subject to
those stock transfer restrictions and repurchase provisions which shall be set
forth in a Stock Restriction Agreement (the "Agreement"), substantially in the
form attached hereto as Exhibit A. Each individual shall be required to execute
the Agreement prior to receiving his shares.

            10. Adjustments of and Changes in the Stock. Subject to the
provisions set forth in subsection 6(h), above, in the event the shares of
Common Stock of the Company, as presently constituted, shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up, combination of
shares, or otherwise), or if the number of shares of Common Stock of the Company
shall be increased through the payment of a stock dividend, then there shall be
substituted for or added to each share of Common Stock of the Company
theretofore appropriated or thereafter subject or which may become subject to an
option under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock of the Company
shall be so changed, or for which each such share shall be exchanged or to which
each such share shall be entitled, as the case may be. Outstanding options shall
also be amended as to price and other terms if necessary to reflect the
foregoing events. In the event there shall be any other change in the number or
kind of the outstanding shares of Common Stock of the Company, or of any stock
or other securities into which such Common Stock shall have been changed, or for
which it shall have been exchanged, then if the Board of Directors shall, in its
sole discretion, determine that such change equitably requires an adjustment in
any option theretofore granted or which may be granted under the Plan, such
adjustment shall be made in accordance with such determination. No right to
purchase fractional shares shall result from any adjustment in options pursuant
to this Section 10. In case of any such adjustment, the shares subject to the
option shall be rounded

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down to the nearest whole share. Notice of any adjustment shall be given by the
Company to each holder of an option which shall have been so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.

            11. Amendment of the Plan. The Board at any time and from time to
time, may amend the Plan, subject to the limitation, however, that, except as
provided in Section 10 (relating to adjustments upon changes in stock), no
amendment shall be effective, unless approved, within twelve (12) months before
or after the date of such amendment's adoption, by the vote or written consent
of a majority of the outstanding shares of the Company entitled to vote, where
such amendment will:

                        (a) increase the number of shares reserved for options
under the Plan;

                        (b) materially modify the requirements of Section 5 as
to eligibility for participation in the Plan; or

                        (c) materially increase the benefits accruing to
participants under the Plan.

            It is expressly contemplated that the Board may amend the Plan in
any respect necessary to provide the Company's employees with the maximum
benefits provided or to be provided under Section 422 of the Code and the
regulations promulgated thereunder relating to employee incentive stock options
and/or to bring the plan or options granted under it into compliance therewith.

            Rights and obligations under any option granted before any amendment
of the Plan shall not be altered or impaired by amendment of the Plan, except
with the consent, which may be obtained in any manner deemed by the Board to be
appropriate, of the person to whom the option was granted.

            12. Termination or Suspension of the Plan. The Board at any time may
suspend or terminate the Plan. The Plan, unless sooner terminated, shall
terminate at the end of ten (10) years from the date the Plan is adopted by the
Board or approved by the stockholders of the Company, whichever is earlier. An
option may not be granted under the Plan while the Plan is suspended or after it
is terminated.

            Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted,
which may be obtained in any manner that the Board deems appropriate.

            13. Time of Granting Options. The date of grant of an option
hereunder shall, for all purposes, be the date on which the Board (or committee
under authority of the Board) makes the determination granting such option.

            14. Listing, Qualification or Approval of Stock; Approval of
Options. All options granted under the Plan are subject to the requirement that
if at any time the Board shall determine

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in its discretion that the listing or qualification of the shares of stock
subject thereto on any securities exchange or under any applicable law, or the
consent or approval by any governmental regulatory body or the shareholders of
the Company, is necessary or desirable as a condition of or in connection with
the issuance of shares under the option, the 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 condition not acceptable to the
Board.

            15. Binding Effect of Conditions. The conditions and stipulations
hereinabove contained or in any option granted pursuant to the Plan shall be and
constitute a covenant running with all of the shares of the Company owned by the
participant at any time, directly or indirectly whether the same have been
issued or not, and those shares of the Company owned by the participant shall
not be sold, assigned or transferred by any person save and except in accordance
with the terms and conditions herein provided, and the participant shall agree
to use his best efforts to cause the officers of the Company to refuse to record
on the books of the Company any assignment or transfer made or attempted to be
made, except as provided in the Plan and to cause said officers to refuse to
cancel old certificates or to issue or deliver new certificates therefor where
the purchaser or assignee has acquired certificates for the stock represented
thereby, except strictly in accordance with the provisions of this Plan.

            16. Effective Date of Plan. The Plan shall become effective as
determined by the Board but no options granted under it shall be exercisable
until the Plan has been approved by the vote or written consent of the holders
of a majority of the outstanding shares of the Company entitled to vote. If such
shareholder approval is not obtained within twelve (12) months before or after
the date of the Board's adoption of the Plan, then all options previously
granted under the Plan shall terminate,and no further options shall be granted
and no shares shall be issued. Subject to such limitation, the Board may grant
options under the Plan at any time after the effective date and before the date
fixed herein for termination of the Plan.

            17. Gender. The use of any gender specific pronoun or similar term
is intended to be without legal significance as to gender.

            18. Financial Reports. The Company shall provide financial and other
information regarding the Company, on an annual or more frequent basis, to each
individual holding an outstanding option under the Plan as required pursuant to
Section 260.140.46 of Title 10, California Code of Regulations.

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                                    EXHIBIT A

                       Form of Stock Restriction Agreement
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                               NETMOSPHERE, INC.,
                             1997 STOCK OPTION PLAN

                           STOCK RESTRICTION AGREEMENT

            THIS STOCK RESTRICTION AGREEMENT (this "Agreement") is made this ___
day of ____________, 199__, by and between Netmosphere, Inc., a California
corporation (the "Company"), and _______________ (the "Purchaser"), with respect
to those shares of common stock issued to Purchaser pursuant to the Netmosphere,
Inc., 1997 Stock Option Plan as amended (the "Plan").

                                    RECITALS

            WHEREAS, it is in the best interest of the Company and its
shareholders that the shares of the common stock of the Company be owned by
those persons who are engaged in the conduct of its business; and

            WHEREAS, as of the date of this Agreement, Purchaser has exercised
an option to acquire ____________________ (____________) shares of the common
stock of the Company (the "Shares") through the Plan. (The term "Shares" as used
herein refers to all Shares acquired by Purchaser as of the date of this
Agreement or subsequent to the execution of this Agreement pursuant to the Plan,
and includes all securities received (a) in replacement of the Shares; (b) as a
result of stock dividends or stock splits in respect of the Shares; and (c) all
securities received in replacement of the Shares in a recapitalization, merger,
reorganization, or the like.)

            NOW, THEREFORE, in consideration of the obligations herein assumed
by the respective parties, it is mutually agreed as follows:

            1. Restriction Against Transfer.

                        (a) Restrictions Imposed by this Agreement. Purchaser
agrees that he or she will not transfer, assign, hypothecate, or in any way
dispose of any of Purchaser's Shares, or any right or interest therein, whether
voluntarily or by operation of law, or by gift or otherwise, without the prior
written consent of the Company, except to the extent that a transfer is made in
accordance with the terms of this Agreement. Any purported transfer in violation
of any provision of this Agreement shall be void and ineffectual, and shall not
operate to transfer any interest or title to the purported transferee.

                        (b) Federal Law Restrictions on Transfer. Purchaser
hereby acknowledges that in addition to the restrictions imposed by subsection
l(a), above, the following restrictions also apply with respect to Purchaser's
Shares:

                                    (i) The Shares held by Purchaser must be
held indefinitely unless registered under the Securities Act of 1933, as amended
(the "Act"), or unless, in the opinion of counsel of the Company, an exemption
from such registration is available;
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                                    (ii) Only the Company may file a
registration statement with the Securities and Exchange Commission (the "SEC")
and the Company is under no obligation to do so with respect to the Shares;

                                    (iii) Exemption from registration may not be
available or may not permit Purchaser to transfer Shares in the amounts or at
the times proposed by Purchaser;

                                    (iv) Purchaser has been advised that Rule
144 promulgated by the SEC under the Act, ("Rule 144") which provides for
certain limited, routine sales of unregistered securities through brokers, is
not presently available with respect to the Shares and may never be available,
and in any event, requires that the Shares be held and fully paid for within the
meaning of Rule 144 for a minimum of one (1) year, and possibly longer, before
they may be resold under Rule 144;

                                    (v) The Company is under no obligation to
file any disclosure statement with the SEC or to furnish Purchaser with
information to sell any of the Shares under Rule 144;

                                    (vi) In reliance upon the representations of
Purchaser set forth in Section 2 below, the Company has not registered the
Shares with the SEC under the Act.

            2. Representations of Purchaser. Purchaser represents and warrants
to the Company that:

                        (a) Purchaser is purchasing the Shares for Purchaser's
own account for investment only and not with a view to, or for sale in
connection with, a distribution of the Shares within the meaning of the Act;

                        (b) Purchaser has no present intention of selling or
otherwise disposing of all or any portion of the Shares, and no other person has
any beneficial ownership in the Shares;

                        (c) Purchaser has had access to all information
regarding the Company and its present and prospective business, assets,
liabilities and financial condition;

                        (d) Purchaser was not at any time presented with or
solicited by any publicly issued or circulated newspaper, mail, radio or
television advertisement, or any other form of general advertising;

                        (e) Purchaser has had ample opportunity to ask questions
of and receive answers from the Company's representatives concerning this
investment and to obtain any and all documents requested in order to supplement
or verify any of the information supplied,

                        (f) Purchaser recognizes that this investment in the
Shares involves special and substantial risks;

                        (g) Purchaser recognizes (i) the highly speculative
nature of the investment, (ii) the financial hazards involved, (iii) the lack of
liquidity of the Shares and restrictions upon

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transferability thereof (e.g., that the undersigned may not be able to sell or
dispose of them or use them as collateral for loans), and (iv) the
qualifications and backgrounds of the principals of the Company, among other
matters;

                        (h) Purchaser specifically represents and warrants that
Purchaser is financially capable of bearing a total loss of this investment; and

                        (i) If Purchaser is married, Purchaser's spouse shall
execute the consent of spouse form attached hereto and Purchaser understands
that if such form is not signed, then the Company shall be entitled to rely on
such fact that Purchaser is unmarried at the time of purchase.

            3. Obligations of Subsequent Transferees. On the occurrence of a
transfer of Shares pursuant to the terms of this Agreement, the transferee or
any subsequent transferee shall be required to sell or transfer Purchaser's
Shares as provided in this Agreement in the same manner and to the same extent
as the transferring shareholder would have been required to sell or transfer the
Shares. All references in this Agreement to Shares shall be deemed to include
Shares owned by any transferee, except that payment for the Shares shall be made
to the record owner.

            4.Right of First Refusal. As provided in the Company's bylaws and
any amendments thereto, the Company has the right of first refusal with respect
to any or all of Purchaser's Shares if certain events take place. A copy of the
Company's bylaws detailing the Company's right of first refusal is available for
inspection at the Company's principal place of business.

            5. Company Repurchase Right. If (1) Purchaser has exercised his
option under the Plan and (2) such Purchaser leaves the employment of the
Company, for any or no reason, voluntarily or involuntarily, at any time, then
the Company shall have the right to repurchase the Shares. The Company shall
have the right to repurchase the Shares by offering to pay Purchaser the fair
market value of the Shares purchased under the option. For purposes hereof, the
fair market value of the Shares shall be the price set by the Board of Directors
for incentive stock options or common stock at its most recent meeting at which
options were awarded or common stock was issued. If no such options were awarded
or common stock issued within sixty (60) days prior to the date that the Company
makes the repurchase offer, then the fair market value of the shares to be
repurchased shall be that set by the Board of Directors in good faith. The
repurchase right shall be exercised by Company, if at all, within ninety (90)
days after the later to occur of (a) Purchaser's last date of employment or (b)
the date of this Agreement. The repurchase right shall occur upon the Company's
giving written notice to Purchaser of its desire to repurchase the Shares. The
Company shall pay cash in a lump sum for such stock and/or cancel existing
indebtedness for the repurchase price. The Company may assign such repurchase
right to any other person in its discretion.

            6. Sub-Chapter S Election and Status. Purchasers who have exercised
their options shall cooperate with the Company, at Company's request, in
maintaining its Sub-Chapter S status, to the extent that such status exists at
and after the time the option is exercised. If such Purchaser does not so
execute the requested documents or provide such assistance promptly after

                                       3
<PAGE>   13
Company's request therefor, the Company's President shall be appointed as
Purchaser's attorney-in-fact for the sole and limited purpose of executing any
and all such documents relating to such Sub-Chapter S election in such
Purchaser's name as if Purchaser had actually signed same, all without further
liability to Purchaser.

            7. Restrictions on Purchase by Company. The right of the Company to
exercise its option and to purchase any of the Shares is subject to the
restrictions governing the right of a Company to purchase its own stock
contained in the California Corporations Code, and such other pertinent
governmental restrictions as are now, or may hereafter become effective.

            8. Termination. Except with respect to those restrictions set forth
in subsection l(b), above, the restrictions on the transfer of Shares set forth
in this Agreement shall terminate upon the happening of any of the following
events:

                        (a) All of the Company's outstanding shares are held by
only one person, entity, corporation or association;

                        (b) The parties to this Agreement agree in writing or
the Company's Board of Directors so determines in writing that such restrictions
shall terminate;

                        (c) The Company dissolves; or,

                        (d) At the time of the first sale of common stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the Act.

          9. Notices. All notices required or desired to be given pursuant to
this Agreement shall be in writing and shall be personally served (including by
commercial delivery or courier service) or given by mail. Any notice given by
mail shall be deemed to have been given and received when ninety-six (96) hours
have elapsed from the time such notice was deposited in the United States mails,
certified or registered and first-class postage prepaid, addressed, if intended
to a party to this Agreement, at the address set forth below its signature or to
such other address as such party may have designated by like written notice to
each of the other parties from time to time.

            10. Refusal to Transfer. The Company shall not be required:

                        (a) To transfer on its books any Shares that have been
sold, given away, or otherwise transferred in violation of any provision set
forth in this Agreement; or

                        (b) To treat as owner of such Shares or to accord the
right to receive dividends to any purchaser, donee, or other transferee to whom
such Shares shall have been so transferred.

                                       4
<PAGE>   14
            11. Restriction on Certificates.

                        (a) Legends. The Company and Purchaser agree that all
certificates representing all Shares of the Company which at any time are
subject to the provisions of this Agreement shall have endorsed upon them the
following legends:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
AGAINST TRANSFER UNDER THE TERMS OF AN AGREEMENT ENTERED INTO BY THE CORPORATION
AND THE SHAREHOLDER, DATED _______________, 199__, AND THE COMPANY'S BYLAWS,
COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.

THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED ON _______________,
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 IN RELIANCE UPON THE
EXEMPTION CONTAINED IN SECTION 4(2) THEREOF. NO TRANSFER OF THESE SHARES OR ANY
INTEREST THEREIN MAY BE MADE, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE
ACT. ANY LEGAL OPINION REQUIRED PURSUANT TO THIS LEGEND REQUIREMENT BY THE
COMPANY SHALL BE PREPARED BY THE COMPANY'S COUNSEL.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED
IN THE BYLAWS OF THE CORPORATION.

THE SHARES ARE ISSUED PURSUANT TO A STOCK OPTION PLAN ALL THE TERMS OF WHICH ARE
INCORPORATED BY REFERENCE AS IF FULLY SET FORTH HEREIN.

                        Under no circumstances shall any sale or other transfer
of any Shares be valid until the proposed transferee shall have executed
and become a party to this Agreement, unless this requirement is waived by
written consent of all the parties; and, notwithstanding any other provision of
this Agreement, no such sale or other transfer shall in any event result in the
nonapplicability of the provisions of this Agreement.

                        (b) Stop Transfer Instructions. Purchaser 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, with respect to such certificates or instruments and, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

            12. Severability. In the event that any of the provisions of this
Agreement are held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby.

                                       5
<PAGE>   15
            13. Construction. All pronouns used in this Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as
identification of the person or persons, firm or firms, corporation or
corporations may require.

            14. Governing Law. This Agreement shall be governed by the laws of
the State of California as if fully executed and performed in such State.

            15. Amendment. No amendment or variation of the terms of this
Agreement, with or without consideration, shall be valid unless made in writing
and signed by all of the parties to this Agreement at the time of such
amendment.

            16. Inurement. Subject to the restrictions against transfer or
assignment contained herein, the provisions of this Agreement shall inure to the
benefit of and shall be binding upon the assigns, successors in interest,
personal representatives, estates, heirs, and legatees of each of the parties.
Purchaser agrees that he/she will not hypothecate or otherwise create or suffer
to exist any lien, claim, or encumbrance upon any of Purchaser's Shares at any
time subject hereto, other than an encumbrance created or permitted by this
Agreement.

            17. Entire Agreement. This Agreement contains the entire
understanding between the parties concerning the subject matter contained
herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties, relating to the
subject matter of this Agreement, which are not fully expressed herein.

            18. 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.

                                       6
<PAGE>   16
            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date and year first above written.

                                       COMPANY:

                                       Netmosphere, Inc.
                                       a California corporation

                                       By: ____________________________________
                                            (NAME)
                                            (TITLE)

                                       PURCHASER:

                                       ________________________________________
                                       (signature)

                                       Name: __________________________________
                                             (print)

                                       Address: _______________________________

                                       ________________________________________

                                       ________________________________________

                                       7
<PAGE>   17
                          SPOUSE'S CONSENT TO AGREEMENT

            I acknowledge that I have read the foregoing Agreement, that I know
its contents, and that I have had an opportunity to consult independent counsel.
I am aware that by its provisions, my spouse agrees to sell all shares of the
Company, including any community interest in them, upon the happening of certain
events. I hereby consent to the sale, approve of the provisions of the
Agreement, and agree that I will not bequeath the shares or any of them or any
interest in them by my Will if I predecease my spouse. I further agree that the
Company shall be entitled to rely upon any action or document signed by my
spouse with regard to the Shares the same as if I had taken such action or
signed such document as well. I direct that the residuary clause in my Will
shall not be deemed to apply to my community interest in the shares.

                                       ________________________________________
                                       (signature)

                                       Name: __________________________________<PAGE>   1

                                                                    EXHIBIT 10.2

                                NETMOSPHERE, INC.

                           1999 EQUITY INCENTIVE PLAN
                            AS ADOPTED MARCH 8, 1999
              AND AMENDED SEPTEMBER 17, 1999 AND FEBRUARY 14, 2000

        1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options and Restricted Stock. Capitalized
terms not defined herein are defined in Section 22. This Plan is intended to be
a written compensatory benefit plan within the meaning of Rule 701 promulgated
under the Securities Act; provided, however, that Awards may be granted
hereunder that are intended to comply with a different exemption from the
Securities Act, if such Award specifically states that a different exemption
will be relied upon by the Company in issuing such Award.

        2. SHARES SUBJECT TO THE PLAN.

           2.1 Number of Shares Available. Subject to Sections 2.2 and 17, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 4,100,000 Shares or such lesser number of Shares as permitted
under Section 260.140.45 of Title 10 of the California Code of Regulations.
Subject to Sections 2.2 and 17, Shares will again be available for grant and
issuance in connection with future Awards under this Plan that: (a) are subject
to issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option, (b) are subject to an Award
that otherwise terminates without Shares being issued or ( c) are purchased by
the holder of the Award but are repurchased or reacquired by the Company. At all
times the Company will reserve and keep available a sufficient number of Shares
as will be required to satisfy the requirements of all Awards granted under this
Plan.

               2.2 Adjustment of Shares. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan, (b) the Exercise Prices of and number of Shares subject to
outstanding Options and (c) the Purchase Prices of and number of Shares subject
to other outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the shareholders of the Company and compliance
with applicable securities laws; provided, however, that fractions of a Share
will not be issued but will either be paid in cash at Fair Market Value of such
fraction of a Share or will be rounded down to the nearest whole Share, as
determined by the Committee.

        3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors and consultants of the Company or any
Parent or Subsidiary of the Company; provided such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. No person will be eligible to receive more than
500,000 Shares (as such number may be adjusted for stock splits, stock dividends
and the like) in any calendar year under this Plan pursuant to the grant of
Awards hereunder, other than new employees of the Company or of a Parent or
Subsidiary of the Company (including new employees who are also officers and
directors of the Company or any Parent or Subsidiary of the Company), who are
eligible to receive up to a maximum of 750,000 Shares (as such number may be
adjusted for stock splits, stock dividends and the like) in the calendar year in
which they commence their employment. A person may be granted more than one
Award under this Plan.

        4. ADMINISTRATION.

               4.1 Committee Authority. This Plan will be administered by the
Committee or the Board acting as the Committee. Subject to the general purposes,
terms and conditions of this Plan, and to the direction of

<PAGE>   2
the Board, the Committee will have full power to implement and carry out this
Plan. Without limitation, the Committee will have the authority to:

               (a) construe and interpret this Plan, any Award Agreement and any
        other agreement or document executed pursuant to this Plan;

               (b) prescribe, amend and rescind rules and regulations relating
        to this Plan;

               (c) select persons to receive Awards;

               (d) determine the form and terms of Awards;

               (e) determine the number of Shares or other consideration subject
        to Awards;

               (f) determine whether Awards will be granted singly, in
        combination with, in tandem with, in replacement of, or as alternatives
        to, other Awards under this Plan or awards under any other incentive or
        compensation plan of the Company or any Parent or Subsidiary of the
        Company;

               (g) grant waivers of Plan or Award conditions;

               (h) determine the vesting, exercisability and payment of Awards;

               (i) correct any defect, supply any omission, or reconcile any
        inconsistency in this Plan, any Award, any Award Agreement, any Exercise
        Agreement or any Restricted Stock Purchase Agreement;

               (j) determine whether an Award has been earned; and

               (k) make all other determinations necessary or advisable for the
        administration of this Plan.

               4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, and subject to Section 5.9, at any later time, and such determination
will be final and binding on the Company and on all persons having an interest
in any Award under this Plan. The Committee may delegate to one or more officers
of the Company the authority to grant an Award under this Plan to Participants
who are not Insiders of the Company.

        5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following.

               5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

               5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

               5.3 Exercise Period. Options may be exercisable immediately
(whether or not subject to repurchase pursuant to Section 11 of this Plan) or
may be exercisable within the times or upon the events determined by the
Committee as set forth in the Stock Option Agreement governing such Option;
provided, however, that no Option will be exercisable after the expiration of
ten (10) years from the date the Option is granted; and provided further that no
ISO granted to a person who directly or by attribution owns more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary of the Company ("TEN PERCENT
SHAREHOLDER") will be exercisable after the expiration of five (5) years from
the date the ISO is granted. The Committee also may provide for Options to
become exercisable at one time

                                       2
<PAGE>   3
or from time to time, periodically or otherwise, in such number of Shares or
percentage of Shares as the Committee determines. Subject to earlier termination
of the Option as provided herein, each Participant who is not an officer,
director or consultant of the Company or of a Parent or Subsidiary of the
Company shall have the right to exercise an Option granted hereunder at the rate
of at least twenty percent (20%) per year over five (5) years from the date such
Option is granted.

               5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant; provided that
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
Option granted to a Ten Percent Shareholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 7 of this Plan.

               5.5 Method of Exercise. Options may be exercised only by delivery
to the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.

               5.6 Termination. Subject to earlier termination pursuant to
Sections 17 and 18 and notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:

               (a) If the Participant is Terminated for any reason except death,
        Disability or for Cause, then the Participant may exercise such
        Participant's Options only to the extent that such Options are
        exercisable upon the Termination Date and must be exercised no later
        than three (3) months after the Termination Date (or within such shorter
        time period, not less than thirty (30) days, or such longer time period
        not exceeding five (5) years after the Termination Date as may be
        determined by the Committee and set forth in the Stock Option Agreement,
        with any exercise beyond three (3) months after the Termination Date
        deemed to be an NQSO), but in any event, no later than the expiration
        date of the Options.

               (b) If the Participant is Terminated because of Participant's
        death or Disability (or the Participant dies within three (3) months
        after a Termination other than because of Participant's Disability) and
        other than a Termination for Cause, then Participant's Options may be
        exercised only to the extent that such Options are exercisable by
        Participant on the Termination Date and must be exercised by Participant
        (or Participant's legal representative or authorized assignee) no later
        than twelve (12) months after the Termination Date (or within such
        shorter time period, not less than six (6), or such longer time period
        not exceeding five (5) years after the Termination Date, as may be
        determined by the Committee and set forth in the Stock Option Agreement,
        with any exercise beyond (a) three (3) months after the Termination Date
        when the Termination is for any reason other than the Participant's
        death or disability, within the meaning of Section 22(e)(3) of the Code,
        or (b) twelve (12) months after the Termination Date when the
        Termination is for Participant's disability, within the meaning of
        Section 22(e)(3) of the Code, deemed to be an NQSO), but in any event no
        later than the expiration date of the Options.

               (c) If the Participant is terminated for Cause, then
        Participant's Options shall expire on such Participant's Termination
        Date, or at such later time and on such conditions as determined by the
        Committee.

               5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.

               5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar

                                       3
<PAGE>   4
year (under this Plan or under any other incentive stock option plan of the
Company or any Parent or Subsidiary of the Company) will not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date (as defined in Section 18 below) to provide
for a different limit on the Fair Market Value of Shares permitted to be subject
to ISOs, then such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.

               5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.

               5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

        6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the Purchase Price, the restrictions to which the Shares
will be subject, and all other terms and conditions of the Restricted Stock
Award, subject to the following:

               6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The Restricted Stock Award will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.

               6.2 Purchase Price. The Purchase Price of Shares sold pursuant to
a Restricted Stock Award will be determined by the Committee and will be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted or at the time the purchase is consummated, except in the
case of a sale to a Ten Percent Shareholder, in which case the Purchase Price
will be 100% of the Fair Market Value on the date the Restricted Stock Award is
granted or at the time the purchase is consummated. Payment of the Purchase
Price must be made in accordance with Section 7 of this Plan.

               6.3 Restrictions. Restricted Stock Awards may be subject to the
restrictions set forth in Section 11 of this Plan or such other restrictions not
inconsistent with Section 25102(o) of the California Corporations Code.

        7. PAYMENT FOR SHARE PURCHASES.

               7.1 Payment. Payment for Shares purchased pursuant to this Plan
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:

                                       4
<PAGE>   5
               (a) by cancellation of indebtedness of the Company to the
        Participant;

               (b) provided that a public market for the Company's stock exists,
        by surrender of shares that either: (1) have been owned by Participant
        for more than six (6) months and have been paid for within the meaning
        of SEC Rule 144 (and, if such shares were purchased from the Company by
        use of a promissory note, such note has been fully paid with respect to
        such shares); or (2) were obtained by Participant in the public market;

               (c) by waiver of compensation due or accrued to the Participant
        for services rendered;

               (d) with respect only to purchases upon exercise of an Option,
        and provided that a public market for the Company's stock exists:

                      (1) through a "same day sale" commitment from the
               Participant and a broker-dealer that is a member of the National
               Association of Securities Dealers (an "NASD DEALER") whereby the
               Participant irrevocably elects to exercise the Option and to sell
               a portion of the Shares so purchased to pay for the Exercise
               Price, and whereby the NASD Dealer irrevocably commits upon
               receipt of such Shares to forward the Exercise Price directly to
               the Company; or

                      (2) through a "margin" commitment from the Participant and
               an NASD Dealer whereby the Participant irrevocably elects to
               exercise the Option and to pledge the Shares so purchased to the
               NASD Dealer in a margin account as security for a loan from the
               NASD Dealer in the amount of the Exercise Price, and whereby the
               NASD Dealer irrevocably commits upon receipt of such Shares to
               forward the Exercise Price directly to the Company;

               (e) for stock purchases described in Section 6 above and for
        options that are exercisable in full on the date of the grant and
        subject to repurchase by the Company in whole or in part, by tender of a
        full recourse promissory note having such terms as may be approved by
        the Committee and bearing interest at a rate sufficient to avoid
        imputation of income under Sections 483 and 1274 of the Code; provided,
        however, that Participants who are not employees or directors of the
        Company will not be entitled to purchase Shares with a promissory note
        unless the note is adequately secured by collateral other than the
        Shares; or

               (f) by any combination of the foregoing.

               7.2 Loan Guarantees. The Committee may help the Participant pay
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.

        8. WITHHOLDING TAXES.

               8.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

               8.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.

                                       5
<PAGE>   6
        9. PRIVILEGES OF STOCK OWNERSHIP.

               9.1 Voting and Dividends. No Participant will have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a shareholder and have all the rights of a shareholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Unvested
Shares that are repurchased pursuant to Section 11. The Company will comply with
Section 260.140.1 of Title 10 of the California Code of Regulations with respect
to the voting rights of Common Stock.

               9.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding, or as otherwise required or permitted under
Section 260.140.46 of Title 10 of the California Code of Regulations.
Notwithstanding the foregoing, the Company will not be required to provide such
financial statements to Participants whose services in connection with the
Company assure them access to equivalent information.

        10. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable, and any elections with respect to an
Award may be made, only by the Participant.

        11. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(o) of the California Corporations Code,
provided, that such right of first refusal terminates upon the Company's initial
public offering of Common Stock pursuant an effective registration statement
filed under the Securities Act and/or (b) a right to repurchase Shares held by a
Participant for cash and/or cancellation of purchase money indebtedness
following such Participant's Termination at any time within the later of ninety
(90) days after Participant's Termination Date and the date the Participant
purchases shares under the Plan, at: (A) with respect to Vested Shares, the Fair
Market Value of such Shares on Participant's Termination Date, provided, that
such right of repurchase terminates when the Company's securities become
publicly traded; or (B) with respect to Unvested Shares, the Participant's
Exercise Price or Purchase Price, as the case may be, provided, that unless the
Participant is an officer, director or consultant of the Company or of a Parent
or Subsidiary of the Company, such right of repurchase at the Exercise Price or
Purchase Price, as the case may be, lapses at the rate of at least twenty
percent (20%) per year over five (5) years from: (i) the date of grant of the
Option or (ii) in the case of Restricted Stock, the date the Participant
purchases the Shares.

        12. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable securities law, or any rules,
regulations and other requirements of the SEC or any stock exchange or automated
quotation system upon which the Shares may be listed or quoted.

        13. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided,

                                       6
<PAGE>   7
however, that the Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.

        14. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company or other consideration, based on such terms and conditions
as the Committee and the Participant may agree.

        15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan is
intended to comply with Section 25102(o) of the California Corporations Code,
although grants pursuant to Section 25102(f) of such Code, or any other
exemption provided by such Code or the regulations thereunder, may be made under
this Plan. Any provision of the Plan which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) compliance with any exemption, completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

        16. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
Cause.

        17. CORPORATE TRANSACTIONS.

                      17.1 Assumption or Replacement of Awards by Successor. In
the event of (a) a merger or consolidation (other than a merger or consolidation
with a wholly owned subsidiary of the Company), in which the shareholders of the
Company immediately prior to such merger or consolidation cease to hold at least
a majority of the voting power of the surviving corporation; (c) the sale of all
or substantially all of the assets of the Company as a going concern in a single
transaction or series of related transactions; or (d) the sale or transfer by
the shareholders of the Company of at least a majority of the voting power of
the Company in a single transaction or a series of related transactions other
than market transactions to unrelated purchasers, then any or all outstanding
Awards may be assumed, converted or replaced by the successor corporation (if
any), which assumption, conversion or replacement will be binding on all
Participants. In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to shareholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participant, substantially similar
shares or other property subject to repurchase restrictions and other provisions
no less favorable to the Participant than those which applied to such
outstanding Shares immediately prior to such transaction described in this
Subsection 17.1. In the event such successor corporation (if any) does not
assume or substitute Awards, as provided above, pursuant to a transaction
described in this Subsection 17.1, then notwithstanding any other provision in
this Plan to the contrary, if such

                                       7
<PAGE>   8
Awards are not exercised prior to the consummation of the corporate transaction,
they shall terminate and cease to be exercisable at such consummation in
accordance with the provisions of this Plan.

               17.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 17, in
the event of the occurrence of any transaction described in Section 17.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of assets.

               17.3 Assumption of Awards by the Company. The Company, from time
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assume an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

        18. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective
on the date that it is adopted by the Board (the "EFFECTIVE DATe"). This Plan
will be approved by the shareholders of the Company (excluding Shares issued
pursuant to this Plan), consistent with applicable laws, within twelve (12)
months before or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to this Plan; provided, however, that no Option may be
exercised prior to shareholder approval of this Plan. In the event that initial
shareholder approval is not obtained within twelve (12) months before or after
the date this Plan is adopted by the Board, all Awards granted hereunder will be
canceled, any Shares issued pursuant to any Award will be canceled and any
purchase of Shares hereunder will be rescinded.

        19. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the Effective Date or, if
earlier, the date of shareholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California.

        20. AMENDMENT OR TERMINATION OF PLAN. Subject to Section 5.9, the Board
may at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the shareholders of the Company, amend this Plan in any manner that
requires such shareholder approval pursuant to Section 25102(o) of the
California Corporations Code or the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.

        21. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.

        22. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:

               "AWARD" means any award under this Plan, including any Option or
Restricted Stock Award.

               "AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

               "BOARD" means the Board of Directors of the Company.

                                       8
<PAGE>   9

               "CAUSE" means Termination because of (a) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the Participant's
conviction of, or guilty plea to, a felony or a crime involving moral turpitude,
any willful perpetration by the Participant of a common law fraud, (b) the
Participant's commission of an act of personal dishonesty which involves
personal profit in connection with the Company or any other entity having a
business relationship with the Company, (c) any material breach by the
Participant of any provision of any agreement or understanding between the
Company, or any Parent or Subsidiary of the Company and the Participant
regarding the terms of the Participant's service as an employee, director or
consultant to the Company or a Parent or Subsidiary of the Company, including
without limitation, the willful and continued failure or refusal of the
Participant to perform the material duties required of such Participant as an
employee, director or consultant of the Company or a Parent or Subsidiary of the
Company, other than as a result of having a Disability, or a breach of any
applicable invention assignment and confidentiality agreement or similar
agreement between the Company and the Participant, (d) Participant's disregard
of the policies of the Company, or any Parent or Subsidiary of the Company, so
as to cause loss, damage or injury to the property, reputation or employees of
the Company or a Parent or Subsidiary of the Company, or (e) any other
misconduct by the Participant which is materially injurious to the financial
condition or business reputation of, or is otherwise materially injurious to,
the Company or a Parent or Subsidiary of the Company.

               "CODE" means the Internal Revenue Code of 1986, as amended.

               "COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no committee is appointed, the Board.

               "COMPANY" means Netmosphere, Inc., or any successor corporation.

               "DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.

               "EXERCISE PRICE" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.

               "FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:

               (a)    if such Common Stock is then quoted on the Nasdaq National
                      Market, its closing price on the Nasdaq National Market on
                      the date of determination as reported in The Wall Street
                      Journal;

               (b)    if such Common Stock is publicly traded and is then listed
                      on a national securities exchange, its closing price on
                      the date of determination on the principal national
                      securities exchange on which the Common Stock is listed or
                      admitted to trading as reported in The Wall Street
                      Journal;

               (c)    if such Common Stock is publicly traded but is not quoted
                      on the Nasdaq National Market nor listed or admitted to
                      trading on a national securities exchange, the average of
                      the closing bid and asked prices on the date of
                      determination as reported by The Wall Street Journal (or,
                      if not so reported, as otherwise reported by any newspaper
                      or other source as the Board may determine); or

               (d)    if none of the foregoing is applicable, by the Committee
                      in good faith.

               "INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Securities and Exchange Act of 1934, as amended.

               "OPTION" means an award of an option to purchase Shares pursuant
to Section 5.

               "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

               "PARTICIPANT" means a person who receives an Award under this
Plan.

                                       9
<PAGE>   10

               "PLAN" means this 1998 Equity Incentive Plan, as amended from
time to time.

               "PURCHASE PRICE" the price at which a Participant may purchase
Restricted Stock.

               "RESTRICTED STOCK" means Shares purchased pursuant to a
Restricted Stock Award.

               "RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.

               "SEC" means the Securities and Exchange Commission.

               "SECURITIES ACT" means the Securities Act of 1933, as amended.

               "SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 17, and any
successor security.

               "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

               "TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company
or a Parent or Subsidiary of the Company. An employee will not be deemed to have
ceased to provide services in the case of (a) sick leave, (b) military leave, or
(c) any other leave of absence approved by the Committee, provided that such
leave is for a period of not more than ninety (90) days unless reinstatement
(or, in the case of an employee with an ISO, reemployment) upon the expiration
of such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to formal policy adopted from time to time by the Company and issued
and promulgated in writing. In the case of any participant on (a) sick leave,
(b) military leave or (c) on an approved leave of absence, the Committee may
make such provisions respecting suspension of vesting of the Award while on
leave from the Company or a Parent or Subsidiary of the Company as it may deem
appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the Stock Option Agreement. The Committee
will have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "TERMINATION DATE").

               "UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.

               "VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.

                                   ----------

                                       10

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