XOOM INC
S-8, 1999-08-18
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<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1999
                                                      REGISTRATION NO. 333-_____

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                 ----------------------------------------------

                                 XOOM.COM, INC.
             (Exact name of Registrant as Specified in Its Charter)
                 ----------------------------------------------

           DELAWARE                                   88-0361536
 (State or Other Jurisdiction                      (I.R.S. Employer
of Incorporation or Organization)                  Identification No.)

                        300 MONTGOMERY STREET, SUITE 300
                         SAN FRANCISCO, CALIFORNIA 94104
                    (Address of Principal Executive Offices)

                  LIQUIDMARKET, INC. 1998 STOCK INCENTIVE PLAN
                            (Full Title of the Plan)
                 ----------------------------------------------

                                   CHRIS KITZE
                                    CHAIRMAN
                                 XOOM.COM, INC.
                        300 MONTGOMERY STREET, SUITE 300
                         SAN FRANCISCO, CALIFORNIA 94104
                     (Name and Address of Agent for Service)

                                 (415) 288-2500
          (Telephone Number, Including Area Code, of Agent For Service)

                                   Copies to:
      BRUCE ALAN MANN, ESQ.                                 RAJ AJI
    MORRISON & FOERSTER LLP                              XOOM.COM, INC.
       425 MARKET STREET                        300 MONTGOMERY STREET, SUITE 300
SAN FRANCISCO, CALIFORNIA 94105                 SAN FRANCISCO, CALIFORNIA 94104
        (415) 268-7000                                  (415) 288-2500

               --------------------------------------------------

                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
                                                                               Proposed               Proposed
                                  Amount                Maximum                 Maximum               Amount of
Title of Securities                to be             Offering Price       Aggregate Offering        Registration
to be Registered               Registered(1)          Per Share(2)             Price(3)                  Fee
- ------------------------------------------------------------------------------------------------------------------
<S>                               <C>                         <C>             <C>                        <C>
Common Stock, $.0001 par          54,490                      $0.49           $26,700.10                 $7.43
value per share

Common Stock, $.0001 par          52,948                      $0.78           $41,299.44                $11.49
value per share

Common Stock, $.0001 par          23,133                     $36.87          $852,913.71               $237.11
value per share
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents the shares originally issued under the LiquidMarket, Inc. 1998
     Stock Incentive Plan (the "Assumed Options"), which were assumed in
     connection with the Registrant's acquisition of LiquidMarket, Inc. (the
     "Merger").
(2)  Represents the maximum exercise price per share as converted pursuant to
     the terms of the Merger.
(3)  Estimated in accordance with Rule 457(h) under the Securities Act of 1933,
     as amended. Computation based upon the exercise price of the options, all
     of which were previously granted and as converted pursuant to the terms of
     the Merger.




<PAGE>
                                     PART I

                           INFORMATION REQUIRED IN THE
                            SECTION 10 (A) PROSPECTUS

       The documents containing the information specified in Part 1 of Form S-8
(plan information and registrant information and employee plan annual
information) will be sent or given to employees as specified by Securities and
Exchange Commission Rule 428(b)(1). Such documents need not be filed with the
Securities and Exchange Commission either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424. These
documents and the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act of 1933.

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


ITEM 3.    INCORPORATION OF DOCUMENTS BY REFERENCE.

     The following documents filed by XOOM.com, Inc. (the "Registrant") with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference herein:

     (a) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999, filed on August 13, 1999, pursuant to Section 13(a) of the
Exchange Act.

     (b) The Registrant's Current Report on Form 8-K, filed on August 5, 1999.

     (c) The Registrant's Current Report on Form 8-K/A, filed on July 19, 1999.

     (d) The Registrant's Current Report on Form 8-K/A, filed on July 2, 1999.

     (e) The Registrant's Current Report on Form 8-K, filed on July 1, 1999.

     (f) The Registrant's Current Report on Form 8-K, filed on June 16, 1999.

     (g) The Registrant's Current Report on Form 8-K, filed on May 21, 1999.

     (h) The Registrant's Quarterly Report on Form 10-Q/A for the fiscal quarter
ended March 31, 1999, filed on May 25, 1999, pursuant to Section 13(a) of the
Exchange Act.

     (i) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999, filed on May 17, 1999, pursuant to Section 13(a) of the
Exchange Act.

     (j) The Registrant's Current Report on Form 8-K, filed on May 6, 1999.

     (k) The Registrant's Current Report on Form 8-K, filed on May 5, 1999.


                                      II-1
<PAGE>


     (l) The Registrant's latest Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, filed on March 30, 1999, pursuant to Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").

     (m) The description of the Registrant's Common Stock which is contained in
its Registration Statement on Form 8-A filed under the Exchange Act on December
7, 1998, including any amendment or report filed for the purpose of updating
such description.

     All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.

     Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.

ITEM 4. DESCRIPTION OF SECURITIES.

     Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

     Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Under Section 145 of the General Corporation Law of the State of Delaware,
the Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act. Article VI of the Registrant's Bylaws also provides for
mandatory indemnification of its directors and executive officers, and
permissive indemnification of its employees and agents, to the fullest extent
permissible under Delaware law.

     Article Seven of the Registrant's Amended and Restated Certificate of
Incorporation provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be

                                      II-2
<PAGE>


subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws or state or federal
environmental laws.

     The Registrant has entered into agreements with its directors and certain
of its executive officers that require the Registrant to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

     The Registrant has obtained a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

     Not applicable.

ITEM 8. EXHIBITS.

     4.1  Restated Certificate of Incorporation of the Registrant (incorporated
          by reference to Exhibit 3.1 to the Registrant's Registration Statement
          on Form S-1 (Commission File No. 333-62395) which became effective on
          December 8, 1998 (the "Registration Statement on Form S-1")).


                                      II-3
<PAGE>


     4.2  Amended and Restated Bylaws of the Registrant (incorporated by
          reference to Exhibit 3.2 to the Registration Statement on Form S-1).

     5.1  Opinion of Morrison & Foerster LLP.

     23.1 Consent of Ernst & Young LLP, Independent Auditors.

     23.2 Consent of Morrison & Foerster LLP (contained in Exhibit 5.1).

     24.1 Power of Attorney (see signature page of this Registration Statement).

     99.1 LiquidMarket, Inc. 1998 Stock Incentive Plan, including forms of
          agreements thereunder.



ITEM 9. UNDERTAKINGS.

     (a) The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

               (i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

               (ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

               (iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.


                                      II-4
<PAGE>


          (2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold upon the termination
of the LiquidMarket, Inc. 1998 Stock Incentive Plan.

     (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

       (c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the indemnity provisions summarized in Item 6
above or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.




                                      II-5
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on August 18,
1999.


                                 XOOM.COM, INC.


                                 By:    /S/ JOHN HARBOTTLE
                                     --------------------------------------
                                        John Harbottle
                                        Vice President, Finance
                                        and Chief Financial Officer

                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, severally and not jointly, Chris Kitze,
Laurent Massa, and John Harbottle, with full power to act alone, as his or her
true and lawful attorney-in-fact, with the power of substitution, for and in
such person's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that each said attorney-in-fact may lawfully do or cause to
be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>

             SIGNATURE                                       TITLE                                  DATE
             ---------                                       -----                                  ----

<S>                                            <C>                                            <C>
/S/ LAURENT MASSA                              Principal Executive Officer and                August 18, 1999
- ---------------------------                    Director
Laurent Massa

/S/ JOHN HARBOTTLE                             Principal Financial and                        August 18, 1999
- ------------------------------------           Accounting Officer
John Harbottle

/S/ CHRIS KITZE                                Chairman of the Board                          August 18, 1999
- ------------------------------------
Chris Kitze

</TABLE>

                                      II-6
<PAGE>

<TABLE>
<CAPTION>

<S>                                            <C>                                            <C>

/S/ BOB ELLIS                                  Director                                       August 18, 1999
- ---------------------------
Bob Ellis

/S/ JAMES J. HEFFERNAN                         Director                                       August 18, 1999
- ---------------------------
James J. Heffernan

/S/ JEFFREY BALLOWE                            Director                                       August 18, 1999
- ---------------------------
Jeffrey Ballowe

/S/ PHILIP SCHLEIN                             Director                                       August 18, 1999
- ------------------------------------
Philip Schlein

/S/ ROBERT C. HARRIS, JR.                      Director                                       August 18, 1999
- ---------------------------
Robert C. Harris, Jr.


</TABLE>




                                      II-7
<PAGE>


EXHIBIT INDEX


<TABLE>
<CAPTION>

     EXHIBIT
     NUMBER                         DESCRIPTION
     ------                         -----------

       <S>     <C>
       4.1     Restated Certificate of Incorporation of the Registrant
               (incorporated by reference to Exhibit 3.1 to the Registrant's
               Registration Statement on Form S-1 (Commission File No.
               333-62395) which became effective on December 8, 1998 (the
               "Registration Statement on Form S-1")).

       4.2     Amended and Restated Bylaws of the Registrant (incorporated by
               reference to Exhibit 3.2 to the Registration Statement on Form
               S-1).

       5.1     Opinion of Morrison & Foerster LLP.

       23.1    Consent of Ernst & Young LLP, Independent Auditors.

       23.2    Consent of Morrison & Foerster LLP (contained in Exhibit 5.1).

       24.1    Power of Attorney (see signature page of this Registration
               Statement).

       99.1    LiquidMarket, Inc. 1998 Stock Incentive Plan, including forms of
               agreements thereunder.

</TABLE>



<PAGE>


                                                                     Exhibit 5.1

                             MORRISON & FOERSTER LLP
                            San Francisco, California


                                 August 18, 1999




XOOM.com, Inc.
300 Montgomery Street, Suite 300
San Francisco, California 94104

Gentlemen:

       At your request, we have examined the Registration Statement on Form S-8
executed by you on August 18, 1999, and to be filed with the Securities and
Exchange Commission (the "SEC") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 130,571 shares of your
common stock, $.0001 par value (the "Common Stock") which will be issuable under
the LiquidMarket, Inc. 1998 Stock Incentive Plan (the "Plan").

       As your counsel in connection with the Registration Statement, we have
examined the proceedings taken by you in connection with the assumption of the
Plan, of options previously granted pursuant to the Plan (the "Plan Shares"),
and such documents as we have deemed necessary to render this opinion, in
connection with the acquisition of LiquidMarket, Inc. by XOOM.com, Inc.

       Based upon the foregoing, it is our opinion that the Plan Shares, when
issued and outstanding pursuant to the terms of the Plan, will be validly
issued, fully paid and non-assessable shares of Common Stock.

       We consent to the use of this opinion as an exhibit to the Registration
Statement.

                                Very truly yours,

                                /S/ MORRISON & FOERSTER LLP





<PAGE>
                                                                    Exhibit 23.1



               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



         We consent to the incorporation by reference in the Registration
Statement (Form S-8) of XOOM.com, Inc. pertaining to the LiquidMarket, Inc. 1998
Stock Incentive Plan, of our report dated January 25, 1999 with respect
to the consolidated financial statements of XOOM.com, Inc., included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.

/S/ ERNST & YOUNG LLP
Palo Alto, California
August 12, 1999



<PAGE>

                               LIQUIDMARKET, INC.

                            1998 STOCK INCENTIVE PLAN

1. PURPOSE

     The purpose of this 1998 Stock Incentive Plan (the "Plan") of LiquidMarket,
Inc., a Delaware corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any present or future
subsidiary corporations of the Company as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code") (a "Subsidiary").

2. ELIGIBILITY

     All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".

3. ADMINISTRATION, DELEGATION

     (1) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable
from time to time. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No member of the Board shall be liable
for any action or determination relating to the Plan. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination under the Plan made in good faith.

     (2) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to make Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of shares
subject to Awards and the maximum number of shares for any one Participant to be
made by such executive officers.

<PAGE>

     (3) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean a Committee or the Board or the executive officer
referred to in Section 3(b) to the extent that the Board's powers or authority
under the Plan have been delegated to such Committee or executive officer.

4. STOCK AVAILABLE FOR AWARDS

     (1) NUMBER OF SHARES. Subject to adjustment under Section 4(b), Awards may
be made under the Plan for up to 2,200,000 shares of Common Stock of the Company
("Common Stock"). If any Award expires or is terminated, surrendered or canceled
without having been fully exercised or is forfeited in whole or in part or
results in any Common Stock not being issued, the unused Common Stock covered by
such Award shall again be available for the grant of Awards under the Plan,
subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitation required under the Code. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

     (2) ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 4(b) applies and Section 8(e)(1)
also applies to any event, Section 8(e)(1) shall be applicable to such event,
and this Section 4(b) shall not be applicable.



                                      -2-
<PAGE>


5. STOCK OPTIONS

     (1) GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

     (2) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

     (3) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.

     (4) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.

     (5) EXERCISE OF OPTION. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

     (6) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as the Board may otherwise provide in an Option, delivery
of an irrevocable and unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price, or
delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price;

          (3) to the extent permitted by the Board and explicitly provided in
the Option (i) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by the Board in good faith
("Fair Market Value"), which Common Stock was owned by the Participant at least
six months prior to such delivery, (ii) by delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or (iii) by payment
of such other lawful consideration as the Board may determine; or



                                      -3-
<PAGE>



          (4) any combination of the above permitted forms of payment.

6. RESTRICTED STOCK

     (1) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").

     (2) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

7. OTHER STOCK-BASED AWARDS

     The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8. GENERAL PROVISIONS APPLICABLE TO AWARDS

     (1) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

     (2) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.


                                      -4-
<PAGE>


     (3) BOARD DISCRETION. Except as otherwise provided by the Plan, each type
of Award may be made alone or in addition or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board need
not treat Participants uniformly.

     (4) TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (5) ACQUISITION EVENTS.

          (1) CONSEQUENCES OF ACQUISITION EVENTS. (A) Subject to Section
8(e)(1)(B) below and except to the extent otherwise provided in the instrument
evidencing the Award or in any other agreement between the Participant and the
Company, upon the occurrence of an Acquisition Event (as defined below), or the
execution by the Company of any agreement with respect to an Acquisition Event,
the Board shall take any one or more of the following actions with respect to
then outstanding Awards: (i) provide that outstanding Options shall be assumed,
or equivalent Options shall be substituted, by the acquiring or succeeding
entity (or an affiliate thereof), provided that any such Options substituted for
Incentive Stock Options shall satisfy, in the determination of the Board, the
requirements of Section 424(a) of the Code; (ii) upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time (the "Acceleration Time") prior to the
Acquisition Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the Participants
between the Acceleration Time and the consummation of such Acquisition Event;
(iii) in the event of an Acquisition Event under the terms of which holders of
Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Acquisition Event (the
"Acquisition Price"), provide that all outstanding Options shall terminate upon
consummation of such Acquisition Event and each Participant shall receive, in
exchange therefor, a cash payment equal to the amount (if any) by which (X) the
Acquisition Price multiplied by the number of shares of Common Stock subject to
such outstanding Options (whether or not then exercisable), exceeds (Y) the
aggregate exercise price of such Options; (iv) provide that all Restricted Stock
Awards then outstanding shall become free of all restrictions prior to the
consummation of the Acquisition Event; and (v) provide that any other
stock-based Awards outstanding (X) shall become exercisable, realizable or
vested in full, or shall be free of all conditions or restrictions, as
applicable to each such Award, prior to the consummation of the Acquisition
Event, or (Y), if applicable, shall be assumed, or equivalent Awards shall be
substituted, by the acquiring or succeeding entity (or an affiliate thereof).

               (B) Notwithstanding anything to the contrary contained in Section
8(e)(1)(A) above and except to the extent otherwise provided in the instrument
evidencing the


                                      -5-
<PAGE>

Award or in any other agreement between the Participant and the Company, all
Restricted Stock Awards then outstanding shall be deemed to have become
immediately free of all restrictions and all other stock-based Awards shall be
deemed to have become immediately exercisable, realizable or vested in full, or
shall be deemed to have become immediately free of all restrictions or
conditions, as the case may be, immediately prior to a Termination Event (as
defined below) in the event that, in contemplation of, upon or within 12 months
after, the occurrence of an Acquisition Event, the Participant's employment with
the Company or the acquiring or succeeding entity in such Acquisition Event is
(or (in the case that the Participant is a consultant) the Participant's
services to or for the Company or the acquiring or succeeding entity are)
terminated (i) by the Participant, within 60 days after the occurrence of Good
Reason (as defined below) or (ii) by the Company or the acquiring or succeeding
entity, without Cause (as defined below) (each of the events described in this
Section 8(e)(1)(B)(i) and (ii), a "Termination Event").

          (C) Notwithstanding the foregoing provisions of Section 8(e)(1)(B)
above, in the event that the Board of Directors of the Company or the acquiring
or succeeding entity is advised in writing by its independent public accountants
that the removal of restrictions on, or the acceleration of the exercise or
vesting dates of, outstanding Awards pursuant to Section 8(e)(1)(B) above would
prevent the transaction resulting in the Acquisition Event described above in
Section 8(e)(1)(B) from being accounted for under the "pooling of interests"
method of accounting, the Board of Directors of the Company or the acquiring or
succeeding entity, as the case may be, shall have the right to determine that
such removal of restrictions on, or such acceleration of the exercise or vesting
dates of, outstanding Awards pursuant to Section 8(e)(1)(B) above, as the case
may be, shall not apply with respect to such Acquisition Event.

          (D) The Company hereby covenants and agrees that it shall not enter
into any binding agreement with respect to an Acquisition Event, unless the
acquiring or succeeding entity in such Acquisition Event agrees in writing to be
bound by the terms, conditions and obligations imposed on such acquiring or
succeeding entity by this Section 8(e).

     (2) CERTAIN DEFINITIONS.

          (A) An "Acquisition Event" shall mean: (I) any merger or consolidation
which results in the voting securities of the Company outstanding immediately
prior thereto representing (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than
60% of the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such merger or
consolidation; (II) any sale of all or substantially all of the assets of the
Company; (III) the complete liquidation of the Company; or (IV) the acquisition
of "beneficial ownership" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities (other than through a merger or consolidation or an
acquisition of securities directly from the Company) by any "person," as such


                                      -6-
<PAGE>


term is used in Sections 13(d) and 14(d) of the Exchange Act, other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company.

          (B) "Good Reason" shall mean any (i) material and adverse diminution,
on a cumulative basis, of the Participant's duties, authority, position,
compensation (other than bonus or other discretionary elements of the
Participant's compensation, if any) or aggregate benefits, without Cause or (ii)
relocation (other than upon the Participant's request) of the principal
executive offices of the Company or the acquiring or succeeding entity to a
location more than 50 miles outside the city limits of Los Angeles, California.

          (C) "Cause" shall mean (i) the Participant's dishonesty, gross
negligence or misconduct relating to his employment with, or services to or for,
the Company or the acquiring or succeeding entity, (ii) the conviction of the
Participant of, or the entry of a pleading of guilty or nolo contendere by the
Participant to, any felony or (iii) the Participant's breach or threatened
breach of any provision of any nondisclosure and assignment of inventions
agreement, non-competition agreement or other similar agreement entered into by
the Participant and the Company or the acquiring or succeeding entity.

     (3) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may grant Awards
under the Plan in substitution for stock and stock-based awards held by
employees of another corporation who become employees of the Company as a result
of a merger or consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.

     (a) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

     (b) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.


                                      -7-
<PAGE>


     (c) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

     (d) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

9. MISCELLANEOUS

     (1) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award. (1)

     (2) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.

     (3) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the earlier of (i) the date on which
the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company's stockholders, but Awards previously granted may extend beyond that
date.

     (4) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

     (5) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.


                                            Adopted by the Board of Directors on

                                      -8-
<PAGE>

                                                       August 24, 1998

                                               Approved by the stockholders on
                                                        August 24, 1998















                                      -9-


<PAGE>

                               LIQUIDMARKET, INC.

                        Incentive Stock Option Agreement
                     GRANTED UNDER 1998 STOCK INCENTIVE PLAN

1. GRANT OF OPTION.

     This agreement evidences the grant by LiquidMarket, Inc., a Delaware
corporation (the "Company") on [ ], 1998 to [ ], an employee of the Company (the
"Participant"), of an option to purchase, in whole or in part, on the terms
provided herein and in the Company's 1998 Stock Incentive Plan (the "Plan"), a
total of [ ] shares of common stock, $.001 par value of the Company ("Common
Stock") (the "Shares") at $[____] per Share. Unless earlier terminated, this
option shall expire on [_______] (the "Final Exercise Date ").

     It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.

2. VESTING SCHEDULE.

     This option will become exercisable ("vest") as to: (i) 25% of the original
number of Shares on [_______________], 1999, the first anniversary of the
vesting commencement date of the option, and (ii) an additional 2.0833333% of
the original number of Shares on the last day of each full calendar month after
[_______________], 1999, until the option has become fully vested. This option
shall expire on, and will not be exercisable after, the Final Exercise Date.

     The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.

3. EXERCISE OF OPTION.

     (1) FORM OF EXERCISE. Each election to exercise this option shall be in the
form attached hereto as EXHIBIT A (or in such other form acceptable to the
Company), signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full in the
manner provided in the Plan. The Participant may purchase less than the number
of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share or for fewer than ten whole shares. (1)

     (2) CONTINUOUS RELATIONSHIP WITH THE COMPANY REQUIRED. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the date of grant of this option, an


<PAGE>

employee, officer or director of, or consultant or advisor to, the Company or
any parent or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an "Eligible Participant").

     (3) TERMINATION OF RELATIONSHIP WITH THE COMPANY. If the Participant ceases
to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Final Exercise
Date), PROVIDED THAT this option shall be exercisable only to the extent that
the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition, nondisclosure, assignment of
inventions or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing
such violation.

     (4) EXERCISE PERIOD UPON DEATH OR DISABILITY. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "Cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant by the
Participant, PROVIDED THAT this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.

     (5) DISCHARGE FOR CAUSE. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for "Cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean (i) the Participant's dishonesty, gross negligence
or misconduct (including the willful failure by the Participant to perform his
or her responsibilities to the Company) relating to his employment with, or
services to or for, the Company, (ii) the conviction of the Participant of, or
the entry of a pleading of guilty or nolo contendere by the Participant to, any
felony or (iii) the Participant's breach of any provision of any employment,
consulting, advisory, nondisclosure, non-competition, assignment of inventions
or other similar agreement between the Participant and the Company), as
determined by the Company, which determination shall be conclusive. The
Participant shall be considered to have been discharged for "Cause" if the
Company determines, within 30 days after the Participant's resignation, that
discharge for Cause was warranted.

4. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.

     (1) GENERAL. The Company shall, upon payment of the option price for the
number of shares purchased and paid for, make prompt delivery of such shares to
the Participant, PROVIDED THAT if any law or regulation requires the Company to
take any action with respect to such shares before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to complete such action.


                                      -2-
<PAGE>



     (2) LISTING, QUALIFICATION, ETC. This option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.

     (3) LEGENDS ON STOCK CERTIFICATES. All stock certificates representing
shares of Common Stock issued to the Participant upon exercise of this option
shall have affixed thereto legends substantially in the following forms, in
addition to any other legends required by applicable state law:

         "The shares of stock represented by this certificate have not been
         registered under the Securities Act of 1933 and may not be transferred,
         sold or otherwise disposed of in the absence of an effective
         registration statement with respect to the shares evidenced by this
         certificate, filed and made effective under the Securities Act of 1933,
         or an opinion of counsel satisfactory to the Company to the effect that
         registration under such Act is not required."

         "The shares of stock represented by this certificate are subject to
         certain restrictions on transfer contained in an Option Agreement, a
         copy of which will be furnished upon request by the issuer."

5. RIGHT OF FIRST REFUSAL.

     (a) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this option,
then the Participant shall first give written notice of the proposed transfer
(the "Transfer Notice") to the Company. The Transfer Notice shall name the
proposed transferee and state the number of such Shares the Participant proposes
to transfer (the "Offered Shares"), the price per share and all other material
terms and conditions of the transfer.

     (b) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the Offered
Shares at the price and upon the terms set forth in the Transfer Notice. In the
event the Company elects to purchase all of the Offered Shares, it shall give
written notice of such election to the Participant within such 30-day period.
Within 10 days after his receipt of such notice, the Participant shall tender to
the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Upon receipt of such certificate
or certificates, the Company shall deliver or mail to the Participant a check in
payment

                                      -3-
<PAGE>


of the purchase price for the Offered Shares; PROVIDED THAT if the terms of
payment set forth in the Transfer Notice were other than cash against delivery,
the Company may pay for the Offered Shares on the same terms and conditions as
were set forth in the Transfer Notice.

     (c) At the time at which the Offered Shares are required to be delivered to
the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Offered Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Offered Shares.

     (d) If the Company does not elect to acquire all of the Offered Shares, the
Participant may, within the 30-day period following the expiration of the option
granted to the Company under subsection (b) above, transfer the Offered Shares
to the proposed transferee, PROVIDED THAT such transfer shall not be on terms
and conditions more favorable to the transferee than those contained in the
Transfer Notice. Notwithstanding any of the above, all Offered Shares
transferred pursuant to this Section 5 shall remain subject to the right of
first refusal set forth in this Section 5) and such transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Section 5.

     (e) The following transactions shall be exempt from the provisions of this
Section 5:

          (1) any transfer of Shares to or for the benefit of any spouse, child
or grandchild of the Participant, or to a trust for their benefit;

          (2) any transfer pursuant to an effective registration statement filed
by the Company under the Securities Act of 1933, as amended (the "Securities
Act"); and

          (3) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company;

PROVIDED, HOWEVER, that in the case of a transfer pursuant to clause 1 above,
such Shares shall remain subject to the right of first refusal set forth in this
Section 5 and such transferee shall, as a condition to such transfer, deliver to
the Company a written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Section 5.

     (f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 5 to one or more persons or entities.

     (g) The provisions of this Section 5 shall terminate upon the earlier of
the following events:

          (1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or

                                      -4-
<PAGE>

          (2) the sale of all or substantially all of the capital stock, assets
or business of the Company, by merger, consolidation, sale of assets or
otherwise.

     (h) The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Section 5, or (b) to treat as owner of such Shares
or to pay dividends to any transferee to whom any such Shares shall have been so
sold or transferred.

6. AGREEMENT IN CONNECTION WITH PUBLIC OFFERING.

     The Participant agrees, in connection with the initial underwritten public
offering of the Company's securities pursuant to a registration statement under
the Securities Act of 1933, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, and
(ii) to execute any agreement reflecting clause (i) above as may be requested by
the Company or the managing underwriters at the time of such initial offering.

7. WITHHOLDING.

     No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

8. NONTRANSFERABILITY OF OPTION.

     This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.

9. DISQUALIFYING DISPOSITION.

     If the Participant disposes of Shares acquired upon exercise of this option
within two years from the date of grant of the option or one year after such
Shares were acquired pursuant to exercise of this option, the Participant shall
notify the Company in writing of such disposition.

10. PROVISIONS OF THE PLAN.

     This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.



                                      -5-
<PAGE>



         [The remainder of this page has intentionally been left blank]






                                      -6-
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.

                                        LIQUIDMARKET, INC.



Dated:                                  By:
      -----------------------              ------------------------------------
                                              Gauthier H. Groult, President




                            PARTICIPANT'S ACCEPTANCE

         The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1998 Stock Incentive Plan.

                                       PARTICIPANT

                                       -----------------------------------------

                                       Address:
                                               ---------------------------------

                                       -----------------------------------------


<PAGE>



                                                                       EXHIBIT A


                    NOTICE OF INCENTIVE STOCK OPTION EXERCISE

                                Date: ___________


LiquidMarket, Inc.
Attention: President

Dear Sir or Madam:

I am the holder of an Incentive Stock Option granted to me under LiquidMarket,
Inc. (the "Company") 1998 Stock Incentive Plan on _________ for the purchase of
_________ shares of Common Stock of the Company at a purchase price of
$_________ per share.

I hereby exercise my option to purchase ________ shares of Common Stock (the
"Shares"), for which I have enclosed _________ in the amount of _______. Please
register my stock certificate as follows:

         Name(s):
                    ------------------------------------

                    ------------------------------------

         Address:
                    -------------------------------------
         Tax I.D. #:
                     ------------------------------------

         I REPRESENT, WARRANT AND COVENANT AS FOLLOWS:

1. I AM PURCHASING THE SHARES FOR MY OWN ACCOUNT FOR INVESTMENT ONLY, AND NOT
WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION OF THE SHARES
IN VIOLATION OF THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY RULE
OR REGULATION UNDER THE SECURITIES ACT.

2. I HAVE HAD SUCH OPPORTUNITY AS I HAVE DEEMED ADEQUATE TO OBTAIN FROM
REPRESENTATIVES OF THE COMPANY SUCH INFORMATION AS IS NECESSARY TO PERMIT ME TO
EVALUATE THE MERITS AND RISKS OF MY INVESTMENT IN THE COMPANY.

3. I HAVE SUFFICIENT EXPERIENCE IN BUSINESS, FINANCIAL AND INVESTMENT MATTERS TO
BE ABLE TO EVALUATE THE RISKS INVOLVED IN THE PURCHASE OF THE SHARES AND TO MAKE
AN INFORMED INVESTMENT DECISION WITH RESPECT TO SUCH PURCHASE.



<PAGE>



4. I CAN AFFORD A COMPLETE LOSS OF THE VALUE OF THE SHARES AND AM ABLE TO BEAR
THE ECONOMIC RISK OF HOLDING SUCH SHARES FOR AN INDEFINITE PERIOD.

5. I UNDERSTAND THAT (I) THE SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144
UNDER THE SECURITIES ACT, (II) THE SHARES CANNOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE; (III) IN ANY
EVENT, THE EXEMPTION FROM REGISTRATION UNDER RULE 144 WILL NOT BE AVAILABLE FOR
AT LEAST TWO YEARS AND EVEN THEN WILL NOT BE AVAILABLE UNLESS A PUBLIC MARKET
THEN EXISTS FOR THE COMMON STOCK, ADEQUATE INFORMATION CONCERNING THE COMPANY IS
THEN AVAILABLE TO THE PUBLIC, AND OTHER TERMS AND CONDITIONS OF RULE 144 ARE
COMPLIED WITH; AND (IV) THERE IS NOW NO REGISTRATION STATEMENT ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO ANY STOCK OF THE COMPANY AND
THE COMPANY HAS NO OBLIGATION OR CURRENT INTENTION TO REGISTER THE SHARES UNDER
THE SECURITIES ACT.

Very truly yours,



- -----------------------------
(Signature)




<PAGE>

                               LIQUIDMARKET, INC.

                       Nonstatutory Stock Option Agreement
                     GRANTED UNDER 1998 STOCK INCENTIVE PLAN

1. GRANT OF OPTION.

     This agreement evidences the grant by LiquidMarket, Inc., a Delaware
corporation (the "Company") on [ ], 1998 to [ ], an [employee], [consultant],
[director] of the Company (the "Participant"), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company's 1998 Stock
Incentive Plan (the "Plan"), a total of [ ] shares of common stock, $.001 par
value per share, of the Company ("Common Stock") (the "Shares") at $[ ] per
Share. Unless earlier terminated, this option shall expire on [_______] (the
"Final Exercise Date ").

     It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations as promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.

2. VESTING SCHEDULE.

     This option will become exercisable ("vest") as to (i) 25% of the original
number of Shares on [________________], 1999, the first anniversary of the
vesting commencement date of the option, and (ii) an additional 2.0833333% of
the original number of Shares on the last day of each full calendar month after
[________________], 1999, until the option has become fully vested. This option
shall expire upon, and will not be exercisable after, the Final Exercise Date.

     The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the earlier
termination of this option under Section 3 hereof or the Plan.

3. EXERCISE OF OPTION.

     (1) FORM OF EXERCISE. Each election to exercise this option shall be in the
form attached hereto as EXHIBIT A (or in such other form acceptable to the
Company), signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full in the
manner provided in the Plan. The Participant may purchase less than the number
of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share or for fewer than ten whole shares.

     (2) CONTINUOUS RELATIONSHIP WITH THE COMPANY REQUIRED. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he

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or she exercises this option, is, and has been at all times since the date of
grant of this option, an employee, officer or director of, or consultant or
advisor to, the Company or any parent or subsidiary of the Company as defined in
Section 424(e) or (f) of the Code (an "Eligible Participant").

     (3) TERMINATION OF RELATIONSHIP WITH THE COMPANY. If the Participant ceases
to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Final Exercise
Date), PROVIDED THAT this option shall be exercisable only to the extent that
the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition, nondisclosure, assignment of
inventions or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing
such violation.

     (4) EXERCISE PERIOD UPON DEATH OR DISABILITY. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "Cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant, PROVIDED THAT this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.

     (5) DISCHARGE FOR CAUSE. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for "Cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean (i) the Participant's dishonesty, gross negligence
or misconduct (including the willful failure by the Participation to perform his
or her responsibilities to the Company) relating to his employment with, or
services to or for, the Company, (ii) the conviction of the Participant of, or
the entry of a pleading of guilty or nolo contendere by the Participant to, any
felony or (iii) the Participant's breach of any provision of any employment,
consulting, advisory, nondisclosure, non-competition, assignment of inventions
or other similar agreement between the Participant and the Company), as
determined by the Company, which determination shall be conclusive. The
Participant shall be considered to have been discharged for "Cause" if the
Company determines, within 30 days after the Participant's resignation, that
discharge for Cause was warranted.

4. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.

     (1) GENERAL. The Company shall, upon payment of the option price for the
number of shares purchased and paid for, make prompt delivery of such shares to
the Participant, PROVIDED THAT if any law or regulation requires the Company to
take any action with respect to such shares before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to complete such action.


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     (2) LISTING, QUALIFICATION, ETC. This option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.

     (3) LEGENDS ON STOCK CERTIFICATES. All stock certificates representing
shares of Common Stock issued to the Participant upon exercise of this option
shall have affixed thereto legends substantially in the following forms, in
addition to any other legends required by applicable state law:

         "The shares of stock represented by this certificate have not been
         registered under the Securities Act of 1933 and may not be transferred,
         sold or otherwise disposed of in the absence of an effective
         registration statement with respect to the shares evidenced by this
         certificate, filed and made effective under the Securities Act of 1933,
         or an opinion of counsel satisfactory to the Company to the effect that
         registration under such Act is not required."

         "The shares of stock represented by this certificate are subject to
         certain restrictions on transfer contained in an Option Agreement, a
         copy of which will be furnished upon request by the issuer."

5. RIGHT OF FIRST REFUSAL.

     (1) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this option,
then the Participant shall first give written notice of the proposed transfer
(the "Transfer Notice") to the Company. The Transfer Notice shall name the
proposed transferee and state the number of such Shares the Participant proposes
to transfer (the "Offered Shares"), the price per share and all other material
terms and conditions of the transfer.

     (2) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the Offered
Shares at the price and upon the terms set forth in the Transfer Notice. In the
event the Company elects to purchase all of the Offered Shares, it shall give
written notice of such election to the Participant within such 30-day period.
Within 10 days after his receipt of such notice, the Participant shall tender to
the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all


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in a form suitable for transfer of the Offered Shares to the Company. Upon
receipt of such certificate or certificates, the Company shall deliver or mail
to the Participant a check in payment of the purchase price for the Offered
Shares; PROVIDED THAT if the terms of payment set forth in the Transfer Notice
were other than cash against delivery, the Company may pay for the Offered
Shares on the same terms and conditions as were set forth in the Transfer
Notice.

     (3) After the time at which the Offered Shares are required to be delivered
to the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Offered Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Offered Shares.

     (4) If the Company does not elect to acquire all of the Offered Shares, the
Participant may, within the 30-day period following the expiration of the option
granted to the Company under subsection (b) above, transfer the Offered Shares
to the proposed transferee, PROVIDED THAT such transfer shall not be on terms
and conditions more favorable to the transferee than those contained in the
Transfer Notice. Notwithstanding any of the above, all Offered Shares
transferred pursuant to this Section 5 shall remain subject to the right of
first refusal set forth in this Section 5 and such transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Section 5.

     (5) The following transactions shall be exempt from the provisions of this
Section 5:

          (1) a transfer of Shares to or for the benefit of any spouse, child or
grandchild of the Participant, or to a trust for their benefit;

          (2) any transfer pursuant to an effective registration statement filed
by the Company under the Securities Act of 1933, as amended (the "Securities
Act"); and

          (3) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company;

PROVIDED, HOWEVER, that in the case of a transfer pursuant to clause 1 above,
such Shares shall remain subject to the right of first refusal set forth in this
Section 5 and such transferee shall, as a condition to such transfer, deliver to
the Company a written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Section 5.

     (6) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 5 to one or more persons or entities.

     (7) The provisions of this Section 5 shall terminate upon the earlier of
the following events:


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          (1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or

          (2) the sale of all or substantially all of the capital stock, assets
or business of the Company, by merger, consolidation, sale of assets or
otherwise.

     (h) The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Section 5, or (b) to treat as owner of such Shares
or to pay dividends to any transferee to whom any such Shares shall have been so
sold or transferred.

6. AGREEMENT IN CONNECTION WITH PUBLIC OFFERING.

     The Participant agrees, in connection with the initial underwritten public
offering of the Company's securities pursuant to a registration statement under
the Securities Act of 1933, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, and
(ii) to execute any agreement reflecting clause (i) above as may be requested by
the Company or the managing underwriters at the time of such offering.

7. WITHHOLDING.

     No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

8. NONTRANSFERABILITY OF OPTION.

     This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.

9. PROVISIONS OF THE PLAN.

     This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.


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     IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.

                                  LIQUIDMARKET, INC.


Dated: ________________________     By:_______________________________________
                                          Gauthier H. Groult, President



                            PARTICIPANT'S ACCEPTANCE

     The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof. The undersigned hereby acknowledges receipt of a copy of
the Company's 1998 Stock Incentive Plan.

                                   PARTICIPANT


                                   ------------------------------------------

                                    Address:
                                            ---------------------------------

                                   ------------------------------------------




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                                                                       EXHIBIT A


                  NOTICE OF NONSTATUTORY STOCK OPTION EXERCISE

                                Date: ___________


LiquidMarket, Inc.
Attention: President

Dear Sir or Madam:

I am the holder of a Nonstatutory Stock Option granted to me under LiquidMarket,
Inc. (the "Company") 1998 Stock Incentive Plan on _________ for the purchase of
_________ shares of Common Stock of the Company at a purchase price of
$_________ per share.

I hereby exercise my option to purchase ________ shares of Common Stock (the
"Shares"), for which I have enclosed _________ in the amount of _______. Please
register my stock certificate as follows:

         Name(s):
                  ---------------------------------

                  ---------------------------------
         Address:
                  ---------------------------------
         Tax I.D. #:
                    -------------------------------

         I REPRESENT, WARRANT AND COVENANT AS FOLLOWS:

1. I AM PURCHASING THE SHARES FOR MY OWN ACCOUNT FOR INVESTMENT ONLY, AND NOT
WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION OF THE SHARES
IN VIOLATION OF THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY RULE
OR REGULATION UNDER THE SECURITIES ACT.

2. I HAVE HAD SUCH OPPORTUNITY AS I HAVE DEEMED ADEQUATE TO OBTAIN FROM
REPRESENTATIVES OF THE COMPANY SUCH INFORMATION AS IS NECESSARY TO PERMIT ME TO
EVALUATE THE MERITS AND RISKS OF MY INVESTMENT IN THE COMPANY.

3. I HAVE SUFFICIENT EXPERIENCE IN BUSINESS, FINANCIAL AND INVESTMENT MATTERS TO
BE ABLE TO EVALUATE THE RISKS INVOLVED IN THE PURCHASE OF THE SHARES AND TO MAKE
AN INFORMED INVESTMENT DECISION WITH RESPECT TO SUCH PURCHASE.




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4. I CAN AFFORD A COMPLETE LOSS OF THE VALUE OF THE SHARES AND AM ABLE TO BEAR
THE ECONOMIC RISK OF HOLDING SUCH SHARES FOR AN INDEFINITE PERIOD.

5. I UNDERSTAND THAT (I) THE SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144
UNDER THE SECURITIES ACT, (II) THE SHARES CANNOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE; (III) IN ANY
EVENT, THE EXEMPTION FROM REGISTRATION UNDER RULE 144 WILL NOT BE AVAILABLE FOR
AT LEAST TWO YEARS AND EVEN THEN WILL NOT BE AVAILABLE UNLESS A PUBLIC MARKET
THEN EXISTS FOR THE COMMON STOCK, ADEQUATE INFORMATION CONCERNING THE COMPANY IS
THEN AVAILABLE TO THE PUBLIC, AND OTHER TERMS AND CONDITIONS OF RULE 144 ARE
COMPLIED WITH; AND (IV) THERE IS NOW NO REGISTRATION STATEMENT ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO ANY STOCK OF THE COMPANY AND
THE COMPANY HAS NO OBLIGATION OR CURRENT INTENTION TO REGISTER THE SHARES UNDER
THE SECURITIES ACT.

Very truly yours,



- -----------------------------
(Signature)






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