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                               U.S. REALTEL, INC.

                       1999 EMPLOYEE EQUITY INCENTIVE PLAN


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                                             TABLE OF CONTENTS

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                                                                                                               PAGE

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1.       Purpose..................................................................................................1
2.       Definitions..............................................................................................1
3.       Scope of the Plan........................................................................................5
4.       Administration...........................................................................................5
5.       Eligibility..............................................................................................7
6.       Conditions to grants.....................................................................................7
         (a)      General conditions..............................................................................7
         (b)      Grant of options and option price...............................................................8
         (c)      Grant of incentive stock options................................................................8
         (d)      Grant of reload options........................................................................10
         (e)      Grant of Restricted Stock......................................................................10
         (f)      Grant of stock appreciation rights.............................................................11
         (g)      Grant of performance units and performance shares..............................................12
         (h)      Grant of stock bonuses.........................................................................13
7.       Grantee's agreement to serve............................................................................13
8.       Non-transferability.....................................................................................13
9.       Exercise................................................................................................13
         (a)      Exercise of options............................................................................13
         (b)      Exercise of stock appreciation rights..........................................................14
         (c)      Exercise of performance units..................................................................14
         (d)      Payment of Performance Shares..................................................................16
         (e)      Notification of Change of Control..............................................................16
         (f)      Full vesting upon Change of Control............................................................16
         (g)      Special rules for Section 16 Grantees..........................................................16
         (h)      Pooling Considerations.........................................................................16
10.      Loans and guarantees....................................................................................16
11.      Notification under Section 83(b)........................................................................17
12.      Mandatory withholding taxes.............................................................................17
13.      Elective share withholding..............................................................................18
14.      Vesting and termination of employment...................................................................18
         (a)      Vesting........................................................................................18
         (b)      For Cause......................................................................................18
         (c)      On account of death............................................................................18
         (d)      On account of Retirement or Disability.........................................................19
         (e)      Any other reason...............................................................................19
15.      Shareholder approval....................................................................................20
16.      Equity incentive plans of foreign subsidiaries..........................................................20
17.      Substituted awards......................................................................................20
18.      Securities law matters..................................................................................21
19.      Funding.................................................................................................21
20.      No employment rights....................................................................................21
21.      Rights as a shareholder.................................................................................21


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22.      Nature of payments......................................................................................21
23.      Non-uniform determinations..............................................................................22
24.      Adjustments.............................................................................................22
25.      Amendment of the Plan...................................................................................22
26.      Termination of the Plan.................................................................................22
27.      No illegal transactions.................................................................................22
28.      Controlling law.........................................................................................23
29.      Severibility............................................................................................23
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         INTRODUCTION.  U.S.  RealTel,  Inc.,  an  Illinois  corporation
(the  "Company"),  establishes  the  U.S. RealTel,  Inc. 1999 Employee Equity
Incentive Plan (the "Plan"),  as set forth herein.  The Plan was adopted by
the Company,  effective  April 20, 1999,  subject to the approval of its
shareholders.  On the  Effective  Date of the Plan, the Company was not
subject to the 1934 Act.

         1.       PURPOSE.

         The Plan is intended to allow those employees, officers, directors and
consultants upon whose judgment and efforts the Company is largely dependent for
the successful conduct of its operations to acquire or increase equity ownership
in the Company, thereby:

         (a) better aligning shareholder and management interests;

         (b) creating incentives for management to achieve growth;

         (c) further focusing management attention on long-term results; and

         (d) helping to assure competitive compensation is available to
attract and retain an outstanding executive team (including outside
consultants).

         2.       DEFINITIONS.

         As used in the Plan, terms defined parenthetically immediately after
their use shall have the respective meanings provided by such definitions and
the terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):

         (a) "Award" means options, shares of Restricted Stock, stock
appreciation rights, performance units, performance shares, or stock bonuses
granted under the Plan.

         (b) "Award Agreement" has the meaning specified in Section 4(c)(v).

         (c) "BCA" means the Illinois Business Corporation Act of 1983, as
amended.

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

         (e) "Cause" means, except as otherwise provided in any Award
Agreement, an action or failure to act by a Grantee which is, in the opinion
of the Committee, likely to result in injury of a material nature to the
Company or a Subsidiary; the material violation by the Grantee of written
policies of the Company or a Subsidiary; the gross and habitual negligence by
the Grantee in the performance of the Grantee's duties to the Company or its
Subsidiaries; or the willful and intentional action or omission to act in
connection with the Grantee's duties to the Company or a Subsidiary
resulting, in the opinion of the Committee, in injury of a material nature to
the Company or a Subsidiary.

         (f) "Change of Control" means any of the following:

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          (i) the acquisition or holding (other than by the Company) by any
     person, entity or "group" within the meaning of Section 13(d)(3) or
     14(d)(2) of the 1934 Act, (excluding, for this purpose, the Company or its
     Subsidiaries) of beneficial ownership (within the meaning of Rule 13d-3
     promulgated under the 1934 Act) of 50% or more of either the
     then-outstanding Stock or the combined voting power of the Company's
     then-outstanding voting securities entitled to vote generally in the
     election of directors ("Voting Power"); except that no Change of Control
     shall be deemed to have occurred solely by reason of any such acquisition
     by a corporation with respect to which, after such acquisition, more than
     50% of both the then-outstanding common shares of such corporation and the
     Voting Power of such corporation are then beneficially owned, directly or
     indirectly, by the persons who were the beneficial owners of the Stock and
     voting securities of the Company immediately before such acquisition in
     substantially the same proportion as their ownership, immediately before
     such acquisition, of the then outstanding Stock or the Voting Power of the
     Company, as the case may be;

          (ii) individuals who, as of the Effective Date, constitute the Board
     (the "Incumbent Board") cease for any reason to constitute at least a
     majority of the Board; provided that any individual who becomes a director
     after the Effective Date whose election or nomination for election by the
     Company's stockholders was (i) pursuant to that certain Shareholders
     Agreement, dated as of October 2, 1998 or (ii) approved by at least a
     majority of the Incumbent Board (other than an election or nomination of an
     individual whose initial assumption of office is in connection with an
     actual or threatened election contest relating to the election of the
     directors of the Company (as such terms are used in Rule 14a-11 under the
     1934 Act)) shall be deemed for the purposes of this Section 2(f)(ii) to
     constitute part of the Incumbent Board; or

          (iii) approval by the stockholders of the Company of (A) a merger,
     reorganization or consolidation with respect to which persons who were the
     respective beneficial owners of the Stock and Voting Power of the Company
     immediately before such merger, reorganization or consolidation do not,
     immediately thereafter, beneficially own, directly or indirectly, more 50%
     of, respectively, the then outstanding common shares and the Voting Power
     of the corporation resulting from such merger, reorganization or
     consolidation, (B) a liquidation or dissolution of the Company or (C) the
     sale or other disposition of all or substantially all of the assets of the
     Company; PROVIDED, HOWEVER, that for the purposes of this Section 2(f)(iii)
     the votes of all Section 16 Grantees shall be disregarded
     in determining whether stockholder approval has been obtained.

     Notwithstanding the foregoing, (a) a Change of Control shall be deemed not
to have occurred with respect to any Section 16 Grantee if such Section 16
Grantee is, by agreement (written or otherwise), a participant on such Section
16 Grantee's own behalf in a transaction which causes the Change of Control to
occur and (b) an IPO shall not be deemed to be a Change of Control. For the
purposes hereof, the parties to that certain Shareholders' Agreement dated as of
October 2, 1998 shall not be deemed a group solely as a result of being parties
thereto and bound thereby.


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         (g) "Code" means the Internal Revenue Code of 1986, as amended, and
regulations and rulings thereunder. References to a particular section of the
Code shall include references to successor provisions.

         (h) "Committee" means Board, or, if a committee of the Board has
been appointed pursuant to Section 4, such committee.

         (i) "Company" has the meaning set forth in the introductory
paragraph.

         (j) "Disability" means, as relates to the exercise of an incentive
stock option after termination of employment, a disability within the meaning
of Section 22(e)(3) of the Code, and for all other purposes, a mental or
physical condition which, in the opinion of the Committee, renders a Grantee
unable or incompetent to carry out the job responsibilities which such
Grantee held or the tasks to which such Grantee was assigned at the time the
disability was incurred, and which, in the reasonable judgment of the
Committee is expected to be permanent or for an indefinite duration exceeding
one year.

         (k) "Effective Date" means April 20, 1999 which is the date this
Plan is adopted by the Board.

         (l) "Fair Market Value" means, as of any applicable date (other than
on the IPO Date with respect to the Stock):

                  (i) if the security is listed for trading on a national
         securities exchange or the Nasdaq National Market, the closing price,
         regular way, of the security as reported on the consolidated
         transaction reporting system applicable to such security, or if no such
         reported sale of the security shall have occurred on such date, on the
         next preceding date on which there was such a reported sale, or

                  (ii) if the security is not so listed, but is listed on the
         Nasdaq SmallCap Market, the average of the closing bid and asked
         prices, regular way, on the Nasdaq SmallCap Market or, if no such
         prices shall have been so reported for such date, on the last preceding
         date for which such prices were so reported, or

                  (iii) if the security is not listed for trading on a national
         securities exchange or is not authorized for quotation on a  national
         securities exchange, the Nasdaq National Market or Nasdaq SmallCap
         Market, the fair market value of the security as determined  in good
         faith by the Committee; provided, that in making such determinations,
         the Committee may, but shall not be required to, consider the
         prevailing bid and ask prices of the Stock on any over-the-counter
         market or bulletin board trading.

         Solely as of the IPO Date, Fair Market Value of the Stock means the
price to the public pursuant to the form of final prospectus used in connection
with the IPO, as indicated on the cover page of such prospectus or otherwise.


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         (m) "Grant Date" means the date on which an Award shall be duly
granted, as determined in accordance with Section 6(a)(i).

         (n) "Grantee" means an individual who has been granted an Award.

         (o) "including" or "includes" means "including, without limitation,"
or "includes, without limitation."

         (p) "IPO" means the first public offering of Stock pursuant to a
registration statement on Form S-1 or SB-2 filed by the Company with the
Securities and Exchange Commission.

         (q) "IPO Date" means the effective date of the underwriting
agreement between the Company and the underwriters of the IPO.

         (r) "Measuring Period" has the meaning specified in Section
6(g)(i)(B).

         (s) "1934 Act" means the Securities Exchange Act of 1934. References
to a particular section of, or rule under, the 1934 Act shall include
references to successor provisions.

         (t) "Option Price" means the per share purchase price of Stock
subject to an option.

         (u) "Plan" has the meaning set forth in the introductory paragraph.

         (v) "Retirement" means a termination of employment with the Company
and its Subsidiaries other than for Cause at any time after attaining age 65.

         (w) "Restricted Stock" means shares of Common Stock granted as
Awards pursuant to Section 6(e) of this Plan.

         (x) "SEC" means the Securities and Exchange Commission.

         (y) "Section 16 Grantee" means a person subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of the Company.

         (z) "Stock" means the common stock, $0.001 par value, of the Company.

         (aa) "Subsidiary" means, for purposes of grants of incentive stock
options, a corporation as defined in Section 424(f) of the Code with the
Company being treated as the employer corporation for purposes of this
definition and, for all other purposes, a United States or foreign
corporation, partnership, limited liability company or other entity in which
the Company owns, directly or indirectly, at the time of determination 50% or
more the then-outstanding stock or other ownership interests having ordinary
voting power then outstanding or existing.


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         (bb) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the Company.

         3.       SCOPE OF THE PLAN.

         (a) 484,655 shares of Stock are hereby made available and are
reserved for delivery on account of the exercise of Awards (including stock
appreciation rights) and payment of benefits in connection with Awards under
the Plan. Stock appreciation rights may be granted under the Plan with
respect to 484,655 shares of Stock. Performance Units may be granted under
the Plan based on 484,655 shares of Stock. No more than 484,655 shares shall
be cumulatively available for the grant of Bonus Shares and Restricted Stock
under the Plan. Such shares may be treasury shares or newly issued shares, as
may be determined from time to time by the Board or the Committee.

         (b) If and to the extent an Award shall expire or terminate for any
reason without having been exercised in full (including a cancellation and
regrant of an option pursuant to Section 17), or shall be forfeited, without,
in either case, the Grantee having enjoyed any of the benefits of stock
ownership (other than dividends that are likewise forfeited or voting
rights), the shares of Stock (including Restricted Stock) associated with
such Award shall become available for other Awards. Notwithstanding the
foregoing, if and to the extent tandem stock appreciation rights are
exercised, the shares of Stock subject to the option or stock appreciation
right related to such tandem stock appreciation right shall not again become
available for issuance under this Plan.

         4.       ADMINISTRATION.

         (a) Subject to Section 4(b), the Plan shall be administered (i) by
the Board until such time as the Company has any class of its capital stock
registered pursuant to Section 12 of the Exchange Act and (ii) thereafter, by
a committee which shall consist of not less than two persons who are
directors of the Company. After an IPO (or at such other time (x) as holders
of the Company's Common Stock shall become subject to Section 16 of the
Exchange Act or (y) Code Section 162(m) or the regulations thereunder become
applicable to the Company), to be a member of the Committee, an individual
must qualify as an "outside director" as defined for purposes of the
regulations under Code Section 162(m) and as a "non-employee director" under
Rule 16b-3 in respect of the exemption of grants to Section 16 Grantees from
potential liability under Section 16(b) of the 1934 Act. The number of
members of the Committee shall from time to time be increased or decreased,
and shall be subject to such conditions, in each case as the Board deems
appropriate to permit transactions in Shares pursuant to the Plan to satisfy
such conditions of Rule 16b-3 as are then in effect, and to permit Awards
under the Plan to satisfy the conditions for exemption from the limitations
of Code Section 162(m). In the absence of the appointment of a separate
committee for the Plan, the Board shall be the Committee.

         (b) The Board may reserve to itself or delegate to another committee
of the Board any or all of the authority and responsibility of the Committee
with respect to Awards to Grantees who are not Section 16 Grantees at the
time any such delegated authority or responsibility is


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exercised. Such other committee may consist of two or more directors who may,
but need not be, officers or employees of the Company or of any of its
Subsidiaries. To the extent that the Board has reserved to itself or
delegated to such other committee the authority and responsibility of the
Committee, all references to the Committee in the Plan shall be to the Board
or such other committee.

         (c) The Committee shall have full and final authority, in its
discretion, but subject to the express provisions of the Plan, as follows:

                  (i) subject to Section 15 hereof, to determine (A) when and
         to whom Awards may be granted and the terms and conditions applicable
         to each Award, including the benefit payable under any stock
         appreciation right, and (B) whether or not specific Awards shall be
         identified with other specific Awards, and if so whether they shall be
         exercisable cumulatively with or alternatively to such other specific
         Awards;

                  (ii) to determine the amount, if any, that a Grantee shall
         pay for Restricted Stock, to determine whether to permit or require the
         payment of cash dividends on any such Restricted Stock to be deferred
         and the terms related to any such deferral to determine when Restricted
         Stock (including Restricted Stock acquired upon the exercise of an
         option) shall vest, and to determine whether such Restricted Stock
         shall be held in escrow;

                  (iii) to interpret the Plan and to make all determinations
         necessary or advisable for the administration of the Plan;

                  (iv) to make, amend, and rescind rules and regulations
         relating to the Plan, including rules with respect to the
         exercisability and nonforfeitability of Awards upon the termination
         of employment of a Grantee;

                  (v) to determine the terms and provisions and any
         restrictions or conditions (including specifying such performance
         criteria as the Committee deems appropriate, and imposing restrictions
         with respect to stock acquired upon exercise of an option, which
         restrictions may continue beyond the Grantee's termination of
         employment) of the written agreements by which all Awards shall be
         evidenced ("Award Agreements") which need not be identical;

                  (vi) to cancel, with the consent of the Grantee, outstanding
         Awards and to grant new Awards in substitution therefor;

                  (vii) to authorize foreign Subsidiaries to adopt plans as
         provided in Section 16;

                  (viii) to accelerate the exercisability of, and to accelerate
         or waive any or all of the restrictions and conditions applicable to,
         any Award, or any group of Awards for any reason;


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                  (ix) subject to Section 6(a)(ii) and 6(c)(ii), to extend the
         time during which any Award or group of Awards may be exercised;

                  (x) to make such adjustments or modifications to Awards to
         Grantees working outside the United States as are necessary and
         advisable to fulfill the purposes of the Plan;

                  (xi) to amend Award Agreements with the consent of the
         Grantee; provided that the consent of the Grantee shall not be required
         for any amendment which (A) does not adversely affect the rights of the
         Grantee, or (B) is necessary or advisable (as determined by the
         Committee) to carry out the purpose of the Award as a result of any
         new or change in existing applicable law, regulation, ruling or
         judicial decision; provided that any such change shall be applicable
         only to Awards which have not been exercised;

                  (xii) to impose such additional conditions, restrictions, and
         limitations upon the grant, exercise or retention of Awards as the
         Committee may, before or concurrently with the grant thereof, deem
         appropriate, including requiring simultaneous exercise of related
         identified Awards, and limiting the percentage of Awards which may
         from time to time be exercised by a Grantee; and

                  (xiii) to certify in writing before the payment of any
         performance based Awards (except for a payment that is attributable
         solely to the increase in the price of the Stock of the Company) that
         the underlying performance goals and any other material terms have
         been satisfied.

The determination of the Committee on all matters relating to the Plan or any
Award Agreement shall be conclusive and final. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Award.

         5.       ELIGIBILITY. Awards may be granted to any director, officer
or full-time employee (including any officer) of or any consultant to the
Company or any of its domestic or foreign Subsidiaries, including, without
limitation, any such person who is on an approved leave of absence, layoff or
has been subject to a physical or mental injury or disease which does not
qualify as a Disability. In selecting the individuals to whom Awards may be
granted, as well as in determining the number of shares of Stock subject to,
and the other terms and conditions applicable to, each Award, the Committee
shall take into consideration such factors as it deems relevant in promoting
the purposes of the Plan; provided that Awards to consultants shall be made
solely for compensatory purposes.

         6.       CONDITIONS TO GRANTS.

                  (a) GENERAL CONDITIONS.

                            (i) The Grant Date of an Award shall be the date on
                  which the Committee grants the Award or such later date as
                  specified in advance by the Committee.


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          (ii)    The term of each Award shall be a period of not more than
                  10 years from the Grant Date, and shall be subject to earlier
                  termination as herein provided.

          (iii)   A Grantee may, if otherwise eligible, be granted
                  additional Awards in any combination.

          (iv)    No Grantee may receive, upon the exercise of options or
                  incentive stock options, the lapse of restrictions on
                  Restricted Stock, the payment of performance units in stock,
                  or the grant of a stock bonus, or any combination thereof, an
                  aggregate number of shares of Stock under the Plan that
                  exceeds 1,000,000 shares over the life of the Plan. In any
                  twelve month period, no Grantee may receive stock appreciation
                  rights relating to more than 100,000 shares of Stock, or
                  performance units relating to more than 100,000 shares of
                  Stock under the Plan. If a previously granted option,
                  incentive stock option, stock appreciation right, or
                  performance unit is canceled or repriced, the canceled or
                  repriced option, incentive stock option, stock appreciation
                  right or performance unit, as the case may be, shall continue
                  to be counted against the maximum number of shares, stock
                  appreciation rights or performance units that may be
                  delivered to any Grantee over the life of the Plan.

                  (b)  GRANT OF OPTIONS AND OPTION PRICE. No later than the
Grant Date of any option, the Committee shall determine the Option Price of
such option. The Option Price of an option shall not be less than 100% of the
Fair Market Value of the Stock on the Grant Date. The Award Agreement may
provide that the option shall be exercisable for Restricted Stock.

                  (c)  GRANT OF INCENTIVE STOCK OPTIONS. At the time of the
grant of any option to an employee, the Committee may designate that such
option shall be made subject to additional restrictions to permit it to
qualify as an "incentive stock option" under the requirements of Section 422
of the Code. Any option designated as an incentive stock option:

          (i)   shall be granted only to employees of the Company or its
     Subsidiaries (including (i) officers and (ii) directors who are employees);

          (ii)  shall not be granted to a 10% Owner;

          (iii) shall be for a period of not more than 10 years from the Grant
     Date, and shall be subject to earlier termination as provided herein or in
     the applicable Award Agreement;

          (iv)  shall not have an aggregate Fair Market Value (determined for
     each incentive stock option at its Grant Date) of Stock with respect to
     which incentive stock options are exercisable for the first time by such
     Grantee during any calendar year (under the Plan and any other employee
     stock option plan of the Grantee's employer or any


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     parent or Subsidiary thereof ("Other Plans")), determined in accordance
     with the provisions of Section 422 of the Code, which exceeds $100,000
     (the "$100,000 Limit");

          (v)   shall, if the aggregate Fair Market Value of Stock
     (determined on the Grant Date) with respect to the portion of such grant
     which is exercisable for the first time during any calendar year
     ("Current Grant") and all incentive stock options previously granted
     under the Plan and any Other Plans which are exercisable for the first
     time during a calendar year ("Prior Grants") would exceed the $100,000
     Limit, be exercisable as follows:

          (A)   the portion of the Current Grant which would, when added to any
     Prior Grants, be exercisable with respect to Stock which would have an
     aggregate Fair Market Value (determined as of the respective Grant Date
     for such options) in excess of the $100,000 Limit shall, notwithstanding
     the terms of the Current Grant, be exercisable for the first time by the
     Grantee in the first subsequent calendar year or years in which it could
     be exercisable for the first time by the Grantee when added to all Prior
     Grants without exceeding the $100,000 Limit; and

          (B)   if, viewed as of the date of the Current Grant, any portion of a
     Current Grant could not be exercised under the preceding provisions of this
     Section 6(c)(iv) during any calendar year commencing with the calendar year
     in which it is first exercisable through and including the last calendar
     year in which it may by its terms be exercised, such portion of the Current
     Grant shall not be an incentive stock option, but shall be exercisable as
     a separate option at such date or dates as are provided in the Current
     Grant;

          (vi)   shall be granted within 10 years from the earlier of the
     date the Plan is adopted or the date the Plan is approved by the
     stockholders of the Company;

          (vii)  shall require the Grantee to notify the Committee of any
     disposition of any Stock issued pursuant to the exercise of the incentive
     stock option under the circumstances described in Section 421(b) of the
     Code (relating to certain disqualifying dispositions), within 10 days of
     such disposition; and

          (viii)  shall by its terms not be assignable or transferable other
     than by will or the laws of descent and distribution and may be
     exercised, during the Grantee's lifetime, only by the Grantee; provided,
     however, that the Grantee may, to the extent provided in the Plan in any
     manner specified by the Committee, designate in writing a beneficiary to
     exercise his incentive stock option after the Grantee's death.

Notwithstanding the foregoing and Section 4(c)(v), the Committee may, without
the consent of the Grantee, at any time before the exercise of an option
(whether or not an incentive stock option), take any action necessary to prevent
such option from being treated as an incentive stock option.


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(d)    GRANT OF RELOAD OPTIONS. The Committee may provide in an Award Agreement
that a Grantee who exercises an option for shares of Stock which have a Fair
Market Value equal to not less than 100% of the Option Price for such options
("Exercised Options") and pays the Option Price with shares of Stock shall be
granted, subject to Section 3, additional options ("Reload Options") in an
amount equal to the sum ("Reload Number") of the number of shares of Stock
tendered to exercise the Exercised Options plus, if so provided by the
Committee, the number of shares of Stock, if any, retained by the Company in
connection with the exercise of the Exercised Options to satisfy any federal,
state or local tax withholding requirements.

     Reload Options shall be subject to the following terms and conditions:

          (i)   the Grant Date for each Reload Option shall be the date of
     exercise of the Exercised Option to which it relates;

          (ii)  subject to Section 6(d)(iii) below, the Reload Option may be
     exercised at any time during the unexpired term of the Exercised Options
     (subject to earlier termination thereof as provided in the Plan and in the
     applicable Award Agreement); and

          (iii)  the terms of the Reload Option shall be the same as the
     terms of the Exercised Option to which it relates, except that (A) the
     Option Price shall be the Fair Market Value of the Stock on the Grant
     Date of the Reload Option and (B) no Reload Option may be exercised
     within one year after the Grant Date thereof.

     (e)      GRANT OF RESTRICTED STOCK.

          (i)   The Committee shall determine the amount, if any, that a Grantee
     shall pay for shares of Restricted Stock. In the discretion of the
     Committee and to the extent permitted by law, payment may also be made in
     accordance with Section 10.

          (ii)  The Committee may, but need not, provide that all or any portion
     of a Grantee's Award of Restricted Stock, or Restricted Stock acquired upon
     exercise of an option shall be forfeited:

                (A)  except as otherwise specified in the Award Agreement,
            upon the Grantee's termination of employment for reasons other
            than death, disability or any other reason specified in the Award
            Agreement within a specified time period after the Grant Date, or

                (B)  if the Company or the Grantee does not achieve specified
            performance goals (if any) within a specified time period after
            the Grant Date and before the Grantee's termination of
            employment, or

                (C)  upon failure to satisfy such other restrictions as the
            Committee may specify in the Award Agreement.


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          (iii)   If a share of Restricted Stock is forfeited, then if the
     Grantee was required to pay for such share or acquired such Restricted
     Stock upon the exercise of an option, the Grantee shall be deemed to
     have resold such share of Restricted Stock to the Company at the lesser
     of (1) the amount paid or, if the Restricted Stock was acquired on
     exercise of an option, the Option Price paid by the Grantee for such
     share of Restricted Stock, or (2) the Fair Market Value of a share of
     Stock on the date of such forfeiture. The Company shall pay to the
     Grantee the required amount as soon as is administratively practical.
     Such share of Restricted Stock shall cease to be outstanding, and shall
     no longer confer on the Grantee thereof any rights as a stockholder of
     the Company, from and after the later of the date the event causing the
     forfeiture occurred or the date of the Company's tender of the payment
     specified above whether or not such tender is accepted by the Grantee.

          (iv)   The Committee may provide that any share of Restricted Stock
     shall be held (together with a stock power executed in blank by the
     Grantee) in escrow by the Secretary of the Company until such shares become
     nonforfeitable or are forfeited. Any share of Restricted Stock shall bear
     an appropriate legend specifying that such share is non-transferable and
     subject to the restrictions set forth in the Plan and the Award Agreement.
     If any shares of Restricted Stock become nonforfeitable, the Company shall
     cause certificates for such shares to be issued or reissued without such
     legend.

          (v)   The Committee may require the payment of cash dividends on
     Restricted Shares to be deferred and, if the Committee so determines,
     reinvested in additional Restricted Shares. Stock dividends and deferred
     cash dividends issued with respect to Restricted Shares shall be subject to
     the same restrictions and other terms as apply to the Restricted Shares
     with respect to which such dividends are issued. The Committee may provide
     for payment of interest on deferred cash dividends.

     (f)      GRANT OF STOCK APPRECIATION RIGHTS.

          (i)   When granted, stock appreciation rights may, but need not, be
     identified with shares of Stock subject to a specific option, specific
     shares of Restricted Stock, or specific performance units of the Grantee
     (including any option, shares of Restricted Stock, or performance units
     granted on or before the Grant Date of the stock appreciation rights) in a
     number equal to or different from the number of stock appreciation rights
     so granted. If stock appreciation rights are identified with shares of
     Stock subject to an option, with shares of Restricted Stock, or with
     performance units, then, unless otherwise provided in the applicable Award
     Agreement, the Grantee's associated stock appreciation rights shall
     terminate upon (i) the expiration, termination, forfeiture or cancellation
     of such option, shares of Restricted Stock, or performance units, (ii) the
     exercise of such option or performance units, or (iii) the date such shares
     of Restricted Stock become nonforfeitable.

          (ii)   The strike price ("Strike Price") of any stock appreciation
     right shall equal, for any stock appreciation right that is identified
     with an option, the Option Price of such option, or for any other stock
     appreciation right, 100% of the Fair Market Value of a


                                       11
<PAGE>

     share of Common Stock on the Grant Date of such stock appreciation
     right; PROVIDED that the Committee may (x) specify a higher Strike Price
     in the Award Agreement, or (y) provide that the benefit payable upon
     exercise of any stock appreciation right shall not exceed such
     percentage of the Fair Market Value of a share of Common Stock on such
     Grant Date as the Committee shall specify.

     (g)      GRANT OF PERFORMANCE UNITS AND PERFORMANCE SHARES.

          (i)   Before the grant of any performance unit or performance shares,
     the Committee shall:

                (A)  determine objective performance goals and the amount of
            compensation under the goals applicable to such grant, which must
            be set forth in a written document prior to the commencement of
            the Grantee's services to which the performance goals relate and
            while the outcome is still substantially uncertain;

                (B)  designate a period, of not less than one year nor more
            than seven years, for the measurement of the extent to which
            performance goals are attained, which period may begin prior to
            the Grant Date (the "Measuring Period"); and

                (C)  assign a "Performance Percentage" to each level of
            attainment of performance goals during the Measuring Period, with
            the percentage applicable to minimum attainment being zero
            percent (0%) and the percentage applicable to maximum attainment
            to be determined by the Committee from time to time.

          (ii)   In establishing performance goals, the Committee may
     consider any performance factor or factors it deems appropriate,
     including stock price, market share, sales, earning per share, return on
     equity, costs, or any other business criteria as contemplated in Section
     162(m) of the Code. If a Grantee is promoted, demoted or transferred to
     a different business unit of the Company during a Measuring Period,
     then, to the extent the Committee determines the performance goals or
     Measuring Period are no longer appropriate, the Committee may adjust,
     change or eliminate the performance goals or the applicable Measuring
     Period as it deems appropriate in order to make them appropriate and
     comparable to the initial performance goals or Measuring Period.

          (iii)   When granted, performance units or performance shares may, but
     need not, be identified with shares of Stock subject to a specific option,
     specific shares of Restricted Stock or specific stock appreciation rights
     of the Grantee granted under the Plan in a number equal to or different
     from the number of the performance units or performance shares so granted.
     If performance units or performance shares are identified with shares of
     Stock subject to an option, shares of Restricted Stock or stock
     appreciation rights, then, unless otherwise provided in the applicable
     Award Agreement, the Grantee's associated performance units shall terminate
     upon (A) the expiration, termination, forfeiture or cancellation of such
     option, shares of Restricted Stock or stock appreciation rights, (B) the
     exercise of such option or stock appreciation rights or (C) the date such
     shares of Restricted Stock become nonforfeitable.


                                       12
<PAGE>

          (iv)   Notwithstanding anything herein to the contrary, the maximum
     compensation payable to any Grantee with respect to any performance units
     for any Measuring Period shall not exceed $100,000.

     (h)  GRANT OF STOCK BONUSES. The Committee may grant shares of Stock to any
individual eligible under Section 5 to receive Awards, other than directors and
executive officers of the Company.

      7.   GRANTEE'S AGREEMENT TO SERVE. Each Grantee who is granted an Award
shall, by executing such Grantee's Award Agreement, agree that such Grantee
will remain in the employ of the Company or any of its Subsidiaries (or as a
director or consultant thereto) for at least one year after the Grant Date.
No obligation of the Company or any of its Subsidiaries as to the length of
any Grantee's employment shall be implied by the terms of the Plan, any grant
of an Award hereunder or any Award Agreement. The Company and its
Subsidiaries reserve the same rights to terminate employment of any Grantee
as existed before the Effective Date.

      8.   NON-TRANSFERABILITY. Each Award (other than Restricted Stock)
granted hereunder shall not be assignable or transferable other than by will
or the laws of descent and distribution; provided, however, that a Grantee
may in a manner specified by the Committee and to the extent provided in the
Plan (a) designate in writing a beneficiary to exercise his Award after the
Grantee's death and (b) transfer an option (other than an incentive stock
option), stock appreciation right, or performance unit to (I) a revocable,
inter vivos trust as to which the Grantee is both the settlor and trustee or
(II) Grantee's spouse, children, grandchildren or parents. Each share of
Restricted Stock shall be non-transferable until such share becomes
nonforfeitable.

      9.   EXERCISE.

      (a)  EXERCISE OF OPTIONS. Subject to Sections 4(c)(viii) and such terms
and conditions as the Committee may impose, each option shall be exercisable
in one or more installments commencing not earlier than the first anniversary
of the Grant Date of such option.

      Each option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of shares of Stock subject to
the option. The Option Price of any shares of Stock or shares of Restricted
Stock as to which an option shall be exercised shall be paid in full at the
time of the exercise. Payment may, at the election of the Grantee, be made in
any one or any combination of the following:


         (i)      cash;

         (ii)     Stock held by the Grantee for at least 6 months prior to
      exercise of the option, valued at its Fair Market Value on the date of
      exercise;

         (iii)    with the approval of the Committee, shares of Restricted
      Stock held by the Grantee for at least 6 months prior to exercise of
      the option, each valued at the Fair Market Value of a share of Stock on
      the date of exercise; or


                                       13

<PAGE>

          (iv) through simultaneous sale through a broker of shares acquired on
     exercise, as permitted under Regulation T of the Federal Reserve Board.

In the discretion of the Committee and to the extent permitted by law, payment
may also be made in accordance with Section 10.

     If Restricted Stock ("Tendered Restricted Stock") is used to pay the Option
Price for Stock subject to an option, then the Committee may, but need not,
specify that (i) all the shares of Stock acquired on exercise of the option
shall be subject to the same restrictions as the Tendered Restricted Stock,
determined as of the date of exercise of the option, or (ii) a number of shares
of Stock acquired on exercise of the option equal to the number of shares of
Tendered Restricted Stock shall, unless the Committee provides otherwise, be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the option.

     (b) EXERCISE OF STOCK APPRECIATION RIGHTS. Subject to Section 4(c)(viii)
and such terms and conditions as the Committee may impose, each stock
appreciation right shall be exercisable not earlier than the first anniversary
of the Grant Date of such stock appreciation right, to the extent the option
with which it is identified, if any, may be exercised to the extent the
Restricted Stock with which it is identified, if any, is nonforfeitable, or to
the extent the performance unit with which it is identified, if any, may be
exercised unless otherwise provided by the Committee. Stock appreciation rights
shall be exercised by delivery to the Company of written notice of intent to
exercise a specific number of stock appreciation rights. Unless otherwise
provided in the applicable Award Agreement, the exercise of stock appreciation
rights which are identified with shares of Stock subject to an option, shares of
Restricted Stock or performance units shall result in the cancellation or
forfeiture of such option, shares of Restricted Stock or performance units, as
the case may be, to the extent of such exercise.

The benefit for each stock appreciation right exercised shall be equal to the
Fair Market Value of a share of Stock on the date of such exercise minus the
Strike Price of such stock appreciation right. The benefit upon the exercise of
a stock appreciation right shall be payable in cash, except that the Committee,
may provide in the Award Agreement that benefits, with respect to any particular
exercise, may be paid wholly or partly in Stock.

     (c) EXERCISE OF PERFORMANCE UNITS.

          (i) Subject to Section 4(c)(viii) and such terms and conditions as the
     Committee may impose, if, with respect to any performance unit, the minimum
     performance goals have been achieved during the applicable Measuring
     Period, then such performance unit shall be exercisable commencing on the
     later of (A) the first anniversary of the Grant Date or (B) the first day
     after the end of the applicable Measuring Period. Performance units shall
     be exercised by delivery to the Company of written notice of intent to
     exercise a specific number of performance units; provided, however, that
     performance units not identified with shares of Stock subject to an option,
     shares of Restricted Stock or stock appreciation rights shall be deemed
     exercised on the date on which they first become exercisable. Unless
     otherwise provided in the applicable


                                       14
<PAGE>

     Award Agreement, the exercise of performance units which are identified
     with shares of Stock subject to an option, shares of Restricted Stock or
     stock appreciation rights shall result in the cancellation or forfeiture of
     such shares of Stock subject to option, shares of Restricted Stock or stock
     appreciation rights, as the case may be, to the extent of such exercise.

          (ii) The benefit for each performance unit exercised shall be an
     amount equal to the product of:

               (A) the Unit Value (as defined below)

          multiplied by

               (B) the Performance Percentage attained during the Measuring
          Period for such performance unit.

          (iii) The Unit Value shall be, as specified by the Committee,

               (A) a dollar amount,

               (B) an amount equal to the Fair Market Value of a share of Stock
          on the Grant Date,

               (C) an amount equal to the Fair Market Value of a share of Stock
          on the exercise date of the performance unit, including, if so
          provided in the Award Agreement, an amount ("Dividend Equivalent
          Amount") equal to the value that would result if dividends paid on a
          share of Stock on or after the Grant Date and on or before the
          exercise date were invested in shares of Stock as of each respective
          dividend payment date, or

               (D) an amount equal to the Fair Market Value of a share of Stock
          on the exercise date of the performance unit (plus, if so specified in
          the Award Agreement, a Dividend Equivalent Amount), reduced by the
          Fair Market Value of a share of Stock on the Grant Date of the
          performance unit.

          (iv) The benefit upon the exercise of a performance unit shall be
     payable as soon as is administratively practicable after the later of (A)
     the date the Grantee exercises or is deemed to exercise such performance
     unit, or (B) the date (or dates in the event of installment payments) as
     provided in the applicable Award Agreement. Such benefit shall be payable
     in cash, except that the Committee may provide in the Award Agreement that
     benefits, with respect to any particular exercise, may be paid wholly or
     partly in Stock. In the event the Award Agreement provides that the benefit
     may be paid wholly in Stock unless the Committee specifies at the time of
     exercise that the benefit shall be paid partly or wholly in cash, the
     number of shares of Stock payable in lieu of cash shall be determined by
     valuing the Stock at its Fair Market Value on the date such benefit is to
     be paid.


                                       15
<PAGE>

     (d) PAYMENT OF PERFORMANCE SHARES. Subject to Articles 4(c)(viii), 14 and
18 and such terms and conditions as the Committee may impose, if the minimum
performance goals specified by the Committee with respect to an Award of
performance shares have been achieved during the applicable Measuring Period,
then the Company shall pay to the Grantee of such Award shares of Stock equal in
number to the product of the number of performance shares specified in the
applicable Award Agreement multiplied by the Performance Percentage achieved
during such Measuring Period, except to the extent that the Committee in its
discretion determines that cash be paid in lieu of some or all of such shares of
Stock. The amount of cash payable in lieu of a share of Stock shall be
determined by valuing such share at its Fair Market Value on the business day
next preceding the date such cash is to be paid. Payments pursuant to this
Article 9(d) shall be made as soon as administratively practical after the end
of the applicable Measuring Period. Any performance shares with respect to which
the performance goals have not been achieved by the end of the applicable
Measuring Period shall expire.

     (e) NOTIFICATION OF CHANGE OF CONTROL. The Company shall notify all
Grantees of the occurrence of a Change of Control promptly after its occurrence,
but any failure of the Company so to notify shall not deprive any Grantee of any
rights accruing hereunder by virtue of a Change of Control.

     (f) FULL VESTING UPON CHANGE OF CONTROL. In the event of a Change of
Control, all unvested Awards shall become immediately vested and exercisable.

     (g) SPECIAL RULES FOR SECTION 16 GRANTEES. No option, stock appreciation
right, or performance unit (if the benefit payable with respect to such
performance unit is to be determined by reference to the Fair Market Value of
the Stock on the date the performance unit is exercised) shall be exercisable by
a Section 16 Grantee during the first six months after its Grant Date, unless
the grant is otherwise exempt from Section 16 of the 1934 Act.

     (h) POOLING CONSIDERATIONS. Any provision of the Plan to the contrary
notwithstanding, if the Committee determines, in its discretion exercised prior
to a sale or merger of the Company that in the Committee's judgment is
reasonably likely to occur, that the exercise of stock appreciation rights or
performance units would preclude the use of pooling-of-interests accounting
("pooling") after the consummation of such sale or merger and that such
preclusion of pooling would have a material adverse effect on such sale or
merger, the Committee may either unilaterally cancel such stock appreciation
rights or performance units prior to the consummation of such sale or merger or
cause the Company to pay the benefit attributable to such stock appreciation
right or performance unit in the form of Stock if the Committee determines that
such payment would not cause the transaction to become ineligible for pooling.

     10. LOANS AND GUARANTEES. The Committee may

     (a) allow a Grantee to defer payment to the Company of all or any portion
of (i) the Option Price of an option, (ii) the purchase price of a share of
Restricted Stock, or (iii) any taxes associated with a benefit hereunder which
is not a cash benefit at the time such benefit is so taxable, or


                                       16
<PAGE>

     (b) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option Price, purchase
price, or any related taxes.

Any such payment deferral or guarantee by the Company pursuant to this Section
10 shall be on such terms and conditions as the Committee may determine;
provided that the interest rate applicable to any such payment deferral shall
not be more favorable to the Grantee than the terms applicable to funds borrowed
by the Company. Notwithstanding the foregoing, a Grantee shall not be entitled
to defer the payment of such Option Price, purchase price or any related taxes
unless the Grantee enters into a binding obligation to pay the deferred amount.
If the Committee has permitted a payment deferral or caused the Company to
guarantee a loan pursuant to this Section 10, then the Committee may require the
immediate payment of such deferred amount or the immediate release of such
guarantee upon the Grantee's termination of employment or if the Grantee sells
or otherwise transfers the Grantee's shares of Stock purchased pursuant to such
deferral or guarantee.

     11. NOTIFICATION UNDER SECTION 83(b). The Committee may, on the Grant Date
or any later date, prohibit a Grantee from making the election described below.
If the Committee has not prohibited such Grantee from making such election, and
the Grantee, in connection with the exercise of any option, or the grant of any
share of Restricted Stock, makes the election permitted under Section 83(b) of
the Code (i.e., an election to include in such Grantee's gross income in the
year of transfer the amounts specified in Section 83(b) of the Code), such
Grantee shall notify the Company of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.

     12. MANDATORY WITHHOLDING TAXES.

     (a) Whenever under the Plan, cash or shares of Stock are to be delivered
upon exercise or payment of an Award or upon a share of Restricted Stock
becoming nonforfeitable, or any other event with respect to rights and benefits
hereunder, the Company shall be entitled to require as a condition of delivery
(i) that the Grantee remit an amount sufficient to satisfy all federal, state,
and local withholding tax requirements related thereto, (ii) the withholding of
such sums from compensation otherwise due to the Grantee or from any shares of
Stock due to the Grantee under the Plan or (iii) any combination of the
foregoing.

     (b) If any disqualifying disposition described in Section 6(c)(vi) is made
with respect to shares of Stock acquired under an incentive stock option granted
pursuant to the Plan or any election described in Section 11 is made, then the
person making such disqualifying disposition or election shall remit to the
Company an amount sufficient to satisfy all federal, state, and local
withholding taxes thereby incurred; provided that, in lieu of or in addition to
the foregoing, the Company shall have the right to withhold such sums from
compensation otherwise due to the Grantee or from any shares of Stock due to the
Grantee under the Plan.


                                       17
<PAGE>

     13. ELECTIVE SHARE WITHHOLDING.

     (a) Subject to Section 13(b), the Committee may provide in any grant that
the Grantee may elect the withholding ("Share Withholding") by the Company of a
portion of the shares of Stock otherwise deliverable to such Grantee upon the
exercise or payment of an Award or upon a share of Restricted Stock becoming
non-forfeitable (each a "Taxable Event") having a Fair Market Value equal to:

          (i) the minimum amount necessary to satisfy required federal, state,
     or local withholding tax liability attributable to the Taxable Event; or

          (ii) such greater amount, not to exceed the estimated total amount of
     such Grantee's tax liability with respect to the Taxable Event.

     (b) Each Share Withholding election by a Grantee shall be subject to the
following restrictions:

          (i) any Grantee's election shall be subject to the Committee's right
     to revoke such election of Share Withholding by such Grantee at any time
     before the Grantee's election if the Committee has reserved the right to do
     so in the Award Agreement;

          (ii) the Grantee's election must be made before the date (the "Tax
     Date") on which the amount of tax to be withheld is determined; and

          (iii) the Grantee's election shall be irrevocable.

     14. VESTING AND TERMINATION OF EMPLOYMENT. Except as otherwise provided in
the Award Agreement,

     (a) VESTING. Awards shall vest and become exercisable in [four]
installments, with a 25% of the Award cumulatively vesting and becoming
exercisable on each of the first [four] anniversaries of the Grant Date with
respect to the Award.

     (b) FOR CAUSE. If a Grantee has a termination of employment for Cause,

          (i) the Grantee's shares of Restricted Stock that are forfeitable
     shall thereupon be forfeited, subject to the provisions of Section 6(e)(iv)
     regarding repayment of certain amounts to the Grantee; and

          (ii) any unexercised option, stock appreciation right, or performance
     unit shall thereupon terminate.

     (c) ON ACCOUNT OF DEATH. If a Grantee has a termination of employment on
account of the Grantee's death,


                                       18
<PAGE>

          (i) the Grantee's shares of Restricted Stock that were forfeitable
     shall thereupon become vested and nonforfeitable;

          (ii) any unexercised option or stock appreciation right shall be fully
     exercisable and may be exercised, in whole or in part, at any time within
     one (1) year after the death of the Grantee, by (A) his personal
     representative or by the person to whom the option, stock appreciation
     right is transferred by will or the applicable laws of descent and
     distribution, (B) the Grantee's beneficiary designated in accordance with
     Sections 6(c)(vii) or 8, or (C) the then-acting trustee of the trust
     described in Section 8; and

          (iii) any unexercised performance unit shall become exercisable and
     may be exercised in whole or in part, at any time within one (1) year after
     the Grantee's death, by (A) his personal representative or by the person to
     whom the performance unit is transferred by will or the applicable laws of
     descent and distribution, (B) the Grantee's beneficiary designated in
     accordance with Section 8, or (C) the then-serving trustee of the trust
     described in Section 8; provided that the benefit payable with respect to
     any performance unit with respect to which the Measuring Period has not
     ended as of the date of the Grantee's death shall be equal to the product
     of the Unit Value multiplied successively by each of the following:

               (1) a fraction, the numerator of which is the number of months
          (including as a whole month any partial month) that have elapsed since
          the beginning of such Measuring Period until the Grantee's death and
          the denominator of which is the number of months (including as a whole
          month any partial month) in the Measuring Period (the "Time Proration
          Factor"); and

               (2) a percentage equal to the greater of the target percentage,
          if any, specified in the applicable Award Agreement or the maximum
          percentage, if any, that would be earned under the terms of the
          applicable Award Agreement assuming that the rate at which the
          performance goals have been achieved as of the date of the Grantee's
          death would continue until the end of the Measuring Period (the
          "Performance Percentage Factor").

     (d) ON ACCOUNT OF RETIREMENT OR DISABILITY. If a Grantee has a termination
of employment on account of Retirement or Disability, any unexercised option or
stock appreciation right (other than a stock appreciation right identified with
a share of Restricted Stock or a performance unit) shall become fully
exercisable and may be exercised, in whole or in part, at any time within ninety
(90) days after such Retirement or termination of employment on account of
Disability. The nonforfeitability and exercisability of the Grantee's Restricted
Stock and performance units (and any stock appreciation rights identified
therewith) shall be determined under Section 14(c).

     (e) ANY OTHER REASON. If a Grantee has a termination of employment for a
reason other than for Cause, death, Disability, or Retirement,


                                       19
<PAGE>

          (i) the Grantee's shares of Restricted Stock (and any stock
     appreciation rights identified therewith), to the extent forfeitable on the
     date of the Grantee's termination of employment, shall be forfeited on such
     date;

          (ii) any unexercised option or stock appreciation right (other than a
     stock appreciation right identified with a share of Restricted Stock or
     performance unit) to the extent exercisable on the date of the Grantee's
     termination of employment, may be exercised in whole or in part, not later
     than the 30th day following the Grantee's termination of employment;
     provided, however, that (x) if such 30th day is not a business day, such
     option or stock appreciation right may be exercised not later than the
     first business day following such 30th day and (y) if the Grantee has
     entered into an agreement with the Company not to sell any shares of Stock
     (or the capital stock of a successor to the Company) for a specified period
     following the consummation of a business combination between the Company
     and another corporation or entity (the "Specified Period"), such option or
     stock appreciation right may be exercised in whole or in part until the
     later of such 30th day following the termination of the Grantee's
     employment or 10 business days following the expiration of the Specified
     Period; and

          (iii) the Grantee's performance units (and any stock appreciation
     rights identified therewith) shall become non-forfeitable and may be
     exercised in whole or in part, but only if and to the extent determined by
     the Committee.

     15. SHAREHOLDER APPROVAL. No Award shall become exercisable until after the
Plan has been approved by the holders of a majority of the shares of Stock
present and entitled to vote thereon at a meeting of the stockholders of the
Company or by consent without a meeting, in the manner authorized by the
Company's bylaws. If such approval is not obtained on or before the first
anniversary of the date the Plan is adopted by the Board, all outstanding Awards
shall terminate, and no additional Awards shall be granted.

     16. EQUITY INCENTIVE PLANS OF FOREIGN SUBSIDIARIES. The Committee may
authorize any foreign Subsidiary to adopt a plan for granting Awards ("Foreign
Equity Incentive Plan"). All awards granted under such Foreign Equity Incentive
Plans shall be treated as grants under the Plan. Such Foreign Equity Incentive
Plans shall have such terms and provisions as the Committee permits not
inconsistent with the provisions of the Plan and which may be more restrictive
than those contained in the Plan. Awards granted under such Foreign Equity
Incentive Plans shall be governed by the terms of the Plan except to the extent
that the provisions of the Foreign Equity Incentive Plans are more restrictive
than the terms of the Plan, in which case such terms of the Foreign Equity
Incentive Plans shall control.

     17. SUBSTITUTED AWARDS. If the Committee cancels any Award (granted under
this Plan or any plan of any entity acquired by the Company or any of its
Subsidiaries), and a new Award is substituted therefor, then the Committee may
determine the terms and conditions of such new Award; provided that (a) the
Option Price of any new option shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant of the new Award; and (b) no
Award shall be cancelled without the consent of the Grantee if the terms and
conditions of the new Award to be substituted are not at least as favorable as
the terms and conditions of the Award to


                                       20
<PAGE>

be cancelled (and the Grant Date of the new Award shall be the date on which
such new Award is granted).

     18. SECURITIES LAW MATTERS.

     (a) If the Committee deems necessary to comply with the Securities Act of
1933, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.

     (b) If, based upon the opinion of counsel for the Company, the Committee
determines that the exercise or non-forfeitability of, or delivery of benefits
pursuant to, any Award would violate any applicable provision of (i) federal or
state securities laws or (ii) the listing requirements of any national
securities exchange or national market system on which are listed any of the
Company's equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall use its
best efforts to cause such exercise, nonforfeitability or delivery to comply
with all such provisions at the earliest practicable date.

     19. FUNDING. Benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or otherwise
segregate assets to be used for payment of, benefits under the Plan.

     20. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
granting of any Award shall be construed to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits not
specifically provided by the Plan or (b) in any manner modify the right of the
Company or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.

     21. RIGHTS AS A SHAREHOLDER. A Grantee shall not, by reason of any Award
(other than Restricted Stock) have any right as a shareholder of the Company
with respect to the shares of Stock which may be deliverable upon exercise or
payment of such Award until such shares have been delivered to him. Unless
otherwise provided in the Award Agreement, the delivery of any shares of Stock
pursuant to an Award shall be subject to the Grantee's becoming a party to the
Shareholders Agreement dated October 2, 1998, or such other shareholder
agreement to which shareholders may become subject. Shares of Restricted Stock
held by a Grantee or held in escrow by the Secretary of the Company shall confer
on the Grantee all rights of a stockholder of the Company, except as otherwise
provided in the Plan. Unless otherwise provided in the Award Agreement or any
applicable shareholders agreement, Awards do not include any registration
rights.

     22. NATURE OF PAYMENTS. Any and all grants, payments of cash, or deliveries
of shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company or
any Subsidiary, on the


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<PAGE>

one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.

     23. NON-UNIFORM DETERMINATIONS. Neither the Committee's nor the Board's
determinations under the Plan need be uniform and may be made by the Committee
or the Board selectively among persons who receive, or are eligible to receive,
Awards (whether or not such persons are similarly situated). Without limiting
the generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, to enter into
non-uniform and selective Award Agreements as to (a) the identity of the
Grantees, (b) the terms and provisions of Awards, and (c) the treatment, under
Section 14, of terminations of employment. Notwithstanding the foregoing, the
Committee's interpretation of Plan provisions shall be uniform as to similarly
situated Grantees.

     24. ADJUSTMENTS. The Committee shall make equitable adjustment of:

     (a) the aggregate numbers of shares of Stock, shares of Restricted Stock,
and bonus stock, and the aggregate numbers of stock appreciation rights and
Performance Units available under Sections 3(a) and 3(b);

     (b) the number of shares of Stock, shares of Restricted Stock, stock
appreciation rights or performance units covered by an Award;

     (c) the Option Price; and

     (d) the Fair Market Value of Stock to be used to determine the amount of
the benefit payable upon exercise of stock appreciation rights or performance
units

to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of property or
shares, separation, asset spin-off, reorganization, stock rights offering,
liquidation or similar event, of or by the Company.

     25. AMENDMENT OF THE PLAN. The Board may from time to time in its
discretion amend or modify the Plan without the approval of the shareholders of
the Company, except as such shareholder approval may be required under the
listing requirements of any national market system or securities exchange on
which are listed the Company's equity securities or under the Code in order to
preserve the intended tax effects of an Award on the Company and the Grantee.

     26. TERMINATION OF THE PLAN. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect any
Award then outstanding under the Plan.

     27. NO ILLEGAL TRANSACTIONS. The Plan and all Awards granted pursuant to it
are subject to all laws and regulations of any governmental authority which may
be applicable thereto; and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the benefits
thereof and the Company shall not be obligated to deliver any Stock or pay any
benefits to a Grantee if such exercise, delivery, receipt or payment


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<PAGE>

of benefits would constitute a violation by the Grantee or the Company of any
provision of any such law or regulation.

     28. CONTROLLING LAW. The law of the State of Illinois, except its law with
respect to choice of law, shall be controlling in all matters relating to the
Plan.

     29. SEVERIBILITY. If all or any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of the Plan not declared to
be unlawful or invalid. Any Section or part of a Section so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

     Executed as of this 20th day of April, 1999.

                                          U.S. REALTEL, INC.


                                          By:/s/ Jordan E. Glazov

                                          Title: President

ATTEST:

/s/ Ilene Dobrow Davidson

Title: Assistant Secretary


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