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EXHIBIT 4.6
COMMOTION TECHNOLOGY, INC.
1998 FLEXIBLE STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE, AND DEFINITIONS.
(a) There is hereby adopted the 1998 Flexible Stock Incentive Plan (the
"Plan") of COMMOTION TECHNOLOGY, INC., a California corporation (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in Section 4, below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates (as defined
below) an opportunity to purchase shares of Stock pursuant to options which may
qualify as incentive stock options (referred to as "incentive stock options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and employees, officers, directors, independent contractors, and consultants of
the Company and of its Affiliates (as defined below) an opportunity to purchase
shares of Stock pursuant to options which are not described in Sections 422 or
423 of the Code (referred to as "non-qualified stock options"). The Plan also
provides for the sale or bonus of Stock to eligible individuals in connection
with the performance of services for the Company or its Affiliates (as defined
below).
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting the "Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). References in this Plan to the
"Committee" shall mean the Board if the Board has not delegated responsibility
to a separate committee. Members of the Committee shall serve at the pleasure of
the Board. The Committee shall select one of its members as chairman, and shall
hold meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum and acts of the Committee at which a quorum
is present, or acts reduced to or approved in writing by all the members of the
committee, shall be the valid acts of the Committee.
(b) In the event that the Company becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), grants of awards under the Plan to directors or employees who are also
officers or directors of the Company shall be granted and approved in such a
manner as to permit such grants and related transactions under the Plan to be
exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3
promulgated under the Exchange Act ("Rule 16b-3"). The limitations set forth in
this Section 2(b) shall automatically incorporate any additional requirements
that may in the future be necessary for the Plan to comply with Rule 16b-3.
(c) The Committee shall determine which eligible individuals (as
defined in Section 4, below) shall be granted options under the Plan, the timing
of such grants, the terms thereof (including any restrictions on the Stock),
and the number of shares subject to such options.
(d) The Committee may amend the terms of any outstanding option granted
under this Plan, but any amendment which would adversely affect the
participant's rights under an outstanding option shall not be made without the
participant's written consent. The Committee may, with the participant's written
consent, cancel any outstanding stock option or accept any outstanding stock
option in exchange for a new option.
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(e) The Committee shall also determine which eligible individuals (as
defined in Section 4, below) shall be issued Stock under the Plan, the timing of
such grants, the terms thereof (including any restrictions), and the number of
shares to be granted. The Stock shall be issued for such consideration (if any)
as the Committee deems appropriate. Stock issued subject to restrictions shall
be evidenced by a written agreement (the 11 Stock Option Agreement," "Stock
Purchase Agreement," "Stock Bonus Agreement" or "Stock Option Agreement"). The
Committee may amend any Stock Purchase Agreement, Stock Option Agreement or
Stock Bonus Agreement, but any amendment which would adversely affect the
shareholder's rights to the Stock shall not be made without his or her written
consent.
(f) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable for the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants.
(g) without limitation of the foregoing, the Committee shall have the
right, with the participant's consent, to accelerate the exercise date of any
options issued pursuant to the Plan or terminate the restrictions applicable to
any stock issued pursuant to the Plan.
3. STOCK SUBJECT TO THE PLAN.
(a) An aggregate of not more than 3,000,000 shares of Stock shall be
available for the grant of stock options or the issuance of Stock under the
Plan. If an option is surrendered (except surrender for shares of Stock) or for
any other reason ceases to be exercisable in whole or in part, the shares which
were subject to such option but as to which the option had not been exercised
shall continue to be available under the Plan. Any Stock which is retained by
the Company upon exercise of an option in order to satisfy the exercise price
for such option or any withholding taxes due with respect to such option
exercise shall be treated as issued to the participant and will thereafter not
be available under the Plan.
(b) If there is any change in the Stock subject to the Plan, a Stock
Option Agreement, a Stock Purchase Agreement, or a Stock Bonus Agreement through
merger, consolidation, reorganization, recapitalization, re-incorporation, stock
split, stock dividend, or other change in the capital structure of the Company,
appropriate adjustments shall be made by the Committee in order to preserve but
not to increase the benefits to the individual, including adjustments to the
aggregate number, kind and price per share of shares subject to the Plan, a
Stock Option Agreement, a Stock Purchase Agreement or a Stock Bonus Agreement.
4. ELIGIBLE INDIVIDUALS. Individuals who shall be eligible to have
granted to them the options, or Stock provided by the Plan shall be such
employees, officers, directors, independent contractors and consultants of
the Company or an Affiliate, as the Committee, in its discretion, shall
designate from time to time. Notwithstanding the foregoing, only employees of
the Company or an Affiliate (including officers and directors who are bona
fide employees) shall be eligible to receive incentive stock options.
5. THE OPTION PRICE. The exercise price of the Stock covered by each
incentive stock option shall be not less than the per share fair market value
of such Stock on the date the option is granted. The exercise price of the
Stock covered by each non qualified stock option shall be as determined by
the Committee and shall be not less than 85% of the per share fair market
value of such Stock on the date the option is granted. Notwithstanding the
foregoing, in the case of a stock option granted to a person possessing more
than 10% of the combined voting power of the Company or an Affiliate, the
exercise price shall be not less than 110% of the fair market value of the
Stock on the date the option is granted. The exercise price of an option
shall be subject to adjustment to the extent provided in Section 3 (b), above.
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6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each option granted pursuant to the Plan will be evidenced by a
written stock option agreement (the "Stock Option Agreement") which may or may
not contain restrictions executed by the Company and the person to whom such
option is granted.
(b) The Committee shall determine the term of each option granted under
the Plan; provided, however, that the term of an incentive stock option shall
not be for more than 10 years and that, in the case of an incentive stock option
granted to a person possessing more than 10% of the combined voting power of the
Company or an Affiliate, the term shall be for no more than five years.
(c) The Committee shall determine the right of each participant to
exercise the options granted. At the Committee's sole discretion, the grant in
the Stock Option Agreement may include an immediate right to exercise the
options for all shares of Stock or a portion thereof, subject to the option.
Alternatively, in the Stock Option Agreement the Committee may set forth an
accrual time period in months or years during which the percentage number of
shares of Stock which may be purchased pursuant to the option shall
incrementally increase or vest in the participant, up to 100% percent.
(d) In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year (under this Plan and any other plans
of the Company or its Affiliates) shall not exceed $100,000. In the case of an
employee stock purchase plan pursuant to IRS Sec. 423, the maximum fair market
value of stock which an employee can be granted the right to purchase under the
plan in any year may not exceed $25,000.
(e) The Stock Option Agreement may contain such other terms, provisions
and conditions consistent with this Plan as may be determined by the Committee.
If an option, or any part thereof is intended to qualify as an incentive stock
option, the Stock Option Agreement shall contain those terms and conditions
which are necessary to so qualify it. Notwithstanding the foregoing, no option
granted under the Plan may vest at less than the rate required by California
Department of Corporations rules in effect as of the date of the grant.
(f) At the request of the Company, each participant shall execute the
then current Buy/Sell Agreement at the time the participant exercises an option
to purchase any or all of the shares of Stock subject to the Stock Option
Agreement.
7. TERMS AND CONDITIONS OF STOCK PURCHASES AND BONUSES.
(a) Each sale or grant of stock pursuant to the Plan will be evidenced
by a written Stock Purchase Agreement or Stock Bonus Agreement executed by the
Company and the person to whom such stock is sold or granted.
(b) A Stock Purchase Agreement or Stock Bonus Agreement issued by the
Company before may contain such other terms, provisions and conditions
consistent with this Plan as may be determined by the Committee, including, but
not limited to, restrictions on transfer, forfeiture provisions, repurchase
provisions and vesting provisions. Notwithstanding the foregoing, no stock
purchase or stock bonus granted under the Plan may vest at less than the rate
required by the California Department of Corporations rules in effect as of the
date of the grant.
(c) The purchase price of Stock sold hereunder pursuant to a Stock
Purchase Agreement shall be the price determined by the Committee on the date
the right to purchase Stock is granted; provided, however that (i) such price
shall not be less than 85% of the per share fair market value of such Stock on
the date the right to purchase Stock is granted and (ii) in the case of any
person possessing more than 10% of the total combined voting
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power of all classes of stock of the Company or an Affiliate, such price shall
be not less than 110% of the per share fair market value of such Stock at the
time the right to purchase Stock is granted, or at the time the purchase is
consummated.
(d) In the event of a bonus of stock provided by the Company to
Optionee or Optionee's exercise of any options hereunder, Optionee shall sign
the then current Buy/Sell Agreement in effect. as of the date of the exercise of
the option.
8. USE OF PROCEEDS. Cash proceeds realized from the sale of Stock under
the Plan shall constitute general funds of the Company.
9. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the Company's shareholders, and provided further that, except as provided in
Section 3 (b), above, the Board shall in no event amend the Plan in the
following respects without the consent of shareholders then sufficient to
approve the Plan in the first instance:
(i) To increase the maximum number of shares subject to
incentive stock options issued under the Plan; or
(ii) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan during
any suspension or after the termination of the Plan, and no amendment,
suspension or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate on August 31, 2008 unless
previously terminated by the Board pursuant to this Section 9.
10. ASSIGNABILITY. Each option granted pursuant to this Plan shall, during
participant's lifetime, be exercisable only by participant, and neither the
option nor any right hereunder shall. be transferable by participant by
operation of law or otherwise other than by will or the laws of descent and
distribution. Stock subject to a Stock Purchase Agreement or a Stock Bonus
Agreement shall be transferable only as provided in such Agreement.
11. PAYMENT UPON EXERCISE OF OPTIONS.
(a) Payment of the purchase price upon exercise of any option granted
under this Plan shall be made in cash, certified check or wire transfer;
provided, however, that the Committee, in its sole discretion, may permit a
participant to pay the option price in whole or in part (i) with shares of Stock
owned by the participant; (ii) by delivery of an irrevocable direction on a form
prescribed by the Committee to a securities broker approved by the Committee to
sell shares and deliver all or a portion of the proceeds to the Company in
payment for the stock; (iii) by delivery of the participant's promissory note
with such recourse, interest, security, and redemption provisions as the
Committee in its discretion determines appropriate; (iv) in cancellation of
deferral compensation obligations of the Company or (v) in any combination of
the foregoing. Any Stock used to exercise options shall be valued at its fair
market value on the date of the exercise of the option. In addition, the
Committee, in its sole discretion, may authorize the surrender by a participant
of all or part of an unexercised option and authorize a payment in consideration
thereof of an amount equal to the difference between the aggregate fair market
value of the Stock subject to such option and the aggregate option price of such
Stock. In the Committee's discretion, such payment may be made in cash, shares
of Stock with a fair market value on the date of surrender equal to the payment
amount, or any combination thereof.
(b) In the event that the exercise price is satisfied by the Committee
retaining from the shares of Stock otherwise to be issued to participant shares
of Stock having a value equal to the exercise price, the Committee may, in its
sole discretion, issue participant an additional option, entitling participant
to purchase additional Stock in an amount equal to the number of shares so
retained.
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12. CORPORATE TRANSACTIONS.
(a) DEFINITION. For purposes of this Section 12, a "Corporate
Transaction" shall include any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for (1) a transaction the principal purpose of which is
to change the state of the Company's incorporation, or (2) a transaction in
which the Company's shareholders immediately prior to such merger or
consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more than
fifty percent (50%) of the total voting power of such surviving entity
immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's shareholders
immediately prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities of
the purchaser or other transferee representing more than fifty percent (50%) of
the total voting power of such entity immediately after such transaction; or
(iii) any merger in which the Company is the surviving entity
but in which the Company's shareholders immediately prior to such merger do not
hold (by virtue of their shares in the Company held immediately prior to such
transaction) securities of' the surviving entity (by virtue of their shares in
the Company held immediately prior to such transaction) representing more than
fifty percent (50%) of the total voting power of the surviving entity
immediately after such transaction.
(b) EFFECT. In the event of any Corporate Transaction all outstanding
unexercised options under the Plan to the extent they are not assumed by the
successor corporation or its parent company shall terminate upon the effective
date of the Corporate Transaction; provided, however, that if all outstanding
unexercised options under the Plan are not assumed by the successor corporation
or its parent company, all outstanding options shall vest in their entirety and
become exercisable immediately prior to the specified effective date of the
Corporate Transaction. For purposes of this Plan, options shall be deemed
assumed in a Corporate Transaction if (i) the successor corporation or its
parent company assumes the Company's obligations under the Plan and replaces
outstanding options under the Plan with options providing substantially equal
value and having substantially equivalent provisions as the options granted
pursuant to this Plan; or (ii) the Company or its outstanding securities are
acquired for cash consideration and the successor corporation or its parent
company agrees to pay to each holder of outstanding options as such options
would otherwise have become exercisable, the cash consideration per share for
shares of the Company's Common Stock otherwise payable pursuant to such
Corporate Transaction, less the exercise price per share of such options.
13. WITHHOLDING TAXES.
(a) No Stock shall be granted or sold under the Plan to any
participant, until the participant has made arrangements acceptable to the
Committee for the satisfaction of federal, state, and local income and social
security tax withholding obligations, including without limitation obligations
incident to the receipt of Stock under the Plan, the lapsing of restrictions
applicable to such Stock, the failure to satisfy the conditions for treatment as
incentive stock options under applicable tax law, or the receipt of cash
payments. Upon exercise of a stock option or lapsing or restriction on Stock
issued under the Plan, the Company may satisfy its withholding obligations by
withholding from the participant or requiring the participant to surrender
shares of the Company's Stock sufficient to satisfy federal, state, and local
income and social security tax withholding obligations.
(b) In the event that such withholding is satisfied by the Company or
the participant's employer retaining from the shares of Stock otherwise to be
issued to participant shares of Stock having a value equal to such withholding
tax, the Committee may, in its sole discretion, issue participant an additional
option, entitling participant to purchase additional Stock in an amount equal to
the number of shares so retained.
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14. RESTRICTIONS ON TRANSFER OF SHARES. The Stock acquired pursuant to the
Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances or other transfer as are in effect among the
shareholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
15. SHAREHOLDER APPROVAL. This Plan shall only become effective with
regard to incentive stock options upon its approval by a majority of the
shareholders within 12 months of the Board's adoption of the Plan. The Committee
may grant incentive stock options under the Plan prior to such approval by the
shareholders, but until shareholder approval of the Plan is obtained, no
incentive stock option shall be exercisable. Any non-qualified stock option that
is exercised before shareholder approval is obtained must be rescinded if
shareholder approval is not obtained within 12 months before or after the Plan
is adopted.
16. INFORMATION TO PLAN PARTICIPANTS. The Company shall provide, at least
annually, to each Plan participant, during any period for which said participant
has one or more options or shares acquired pursuant to the Plan outstanding,
copies of financial statements of the Company issued during said period.
17. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
impose no obligation upon the optionee to exercise such option.
18. SECURITIES LAWS COMPLIANCE. Notwithstanding anything contained herein,
the Corporation shall not be obligated to grant any option under this Plan, or
to sell or issue any shares pursuant to any option agreement executed pursuant
to the Plan, unless the grant or sale is effectively registered or exempt from
registration under the Securities Act of 1933, as amended, and is qualified or
exempt from qualification under the California Corporate Securities Law of 1968,
as amended.
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