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                       THE 2000 EQUITY PARTICIPATION PLAN
                                       OF
                            Z-TEL TECHNOLOGIES, INC.,
                            EFFECTIVE APRIL 10, 2000
                                   AS AMENDED

      Z-Tel Technologies, Inc., a Delaware corporation, has adopted The 2000
Equity Participation Plan of Z-Tel Technologies, Inc. (the "Plan"), effective
April 10, 2000, for the benefit of its eligible employees, consultants and
directors. The Plan consists of two plans, one for the benefit of Employees (as
such term is defined below), Independent Directors (as such term is defined
below) and consultants and one exclusively for the benefit of Independent
Directors.

      The purposes of this Plan are as follows:

      (1) To provide an additional incentive for directors, Employees and
consultants to further the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.

      (2) To enable the Company to obtain and retain the services of directors,
Employees and consultants considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

                                   ARTICLE I.
                                   DEFINITIONS

SECTION 1.1 GENERAL.

      Wherever the following terms are used in this Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise.

SECTION 1.2 AWARD LIMIT.

      "Award Limit" shall mean 550,000 shares of Common Stock.

SECTION 1.3 BOARD OR BOARD OR DIRECTORS.

      "Board" or "Board of Directors" shall mean the Board of Directors of the
Company.

SECTION 1.4 CHANGE IN CONTROL.

      "Change in Control" shall mean a change in ownership or control of the
Company effected through either of the following transactions:

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            (a) any person or related group of persons (other than the Company
      or a person that directly or indirectly controls, is controlled by, or is
      under common control with, the Company) directly or indirectly acquires
      beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
      Act) of securities possessing more than fifty percent (50%) of the total
      combined voting power of the Company's outstanding securities pursuant to
      a tender or

exchange offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept; or;

            (b) there is a change in the composition of the Board over a period
      of thirty-six (36) consecutive months (or less) such that a majority of
      the Board members (rounded up to the nearest whole number) ceases, by
      reason of one or more proxy contests for the election of Board members, to
      be comprised of individuals who either (i) have been Board members
      continuously since the beginning of such period or (ii) have been elected
      or nominated for election as Board members during such period by at least
      a majority of the Board members described in clause (i) who were still in
      office at the time such election or nomination was approved by the Board.

SECTION 1.5 CODE.

      "Code" shall mean the Internal Revenue Code of 1986, as amended.

SECTION 1.6 COMMITTEE.

      "Committee" shall mean the Compensation Committee of the Board, or another
committee of the Board, appointed as provided in Section 9.1.

SECTION 1.7 COMMON STOCK.

      "Common Stock" shall mean the common stock of the Company, par value $0.01
per share, and any equity security of the Company issued or authorized to be
issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.

SECTION 1.8. COMPANY.

      "Company" shall mean Z-Tel Technologies, Inc., a Delaware corporation.

SECTION 1.9. CORPORATE TRANSACTION.

      "Corporate Transaction" shall mean any of the following
stockholder-approved transactions to which the Company is a party:

            (a) a merger or consolidation in which the Company is not the
      surviving entity, except for a transaction the principal purpose of which
      is to change the State in

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      which the Company is incorporated, form a holding company or effect a
      similar reorganization as to form whereupon this Plan and all Options are
      assumed by the successor entity;

            (b) the sale, transfer, exchange or other disposition of all or
      substantially all of the assets of the Company, in complete liquidation or
      dissolution of the Company in a transaction not covered by the exceptions
      to subsection (a), above; or

            (c) any reverse merger in which the Company is the surviving entity
      but in which securities possessing more than fifty percent (50%) of the
      total combined voting power of the Company's outstanding securities are
      transferred or issued to a person or persons different from those who held
      such securities immediately prior to such merger.

SECTION 1.10. DEFERRED STOCK.

      "Deferred Stock" shall mean Common Stock awarded under Article VII of this
Plan.

SECTION 1.11. DIRECTOR.

      "Director" shall mean a member of the Board.

SECTION 1.12. DIVIDEND EQUIVALENT.

      "Dividend Equivalent" shall mean a right to receive the equivalent value
(in cash or Common Stock) of dividends paid on Common Stock, awarded under
Article VII of this Plan.

SECTION 1.13. EMPLOYEE.

      "Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation that is a Subsidiary.

SECTION 1.14. EXCHANGE ACT.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

SECTION 1.15. FAIR MARKET VALUE.

      "Fair Market Value" of a share of Common Stock as of a given date shall be
(i) the closing price of a share of Common Stock on the principal exchange on
which shares of Common Stock are then trading, if any (or as reported on any
composite index which includes such principal exchange), on the trading day
previous to such date, or if shares were not traded on the trading day previous
to such date, then on the next preceding date on which a trade occurred, or (ii)
if Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, the mean between the closing representative bid and
asked prices for the Common Stock on the trading day previous to such date as
reported by Nasdaq or such successor quotation system; or (iii) if Common Stock
is not publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the Fair Market Value of a share of

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Common Stock as established by the Committee (or the Board, in the case of
Options granted to Independent Directors) acting in good faith.

SECTION 1.16. GRANTEE.

      "Grantee" shall mean an Employee, Independent Director or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

SECTION 1.17. INCENTIVE STOCK OPTION.

      "Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.

SECTION 1.18. INDEPENDENT DIRECTOR.

      "Independent Director" shall mean a member of the Board who is not an
Employee of the Company.

SECTION 1.19. NON-QUALIFIED STOCK OPTION.

      "Non-Qualified Stock Option" shall mean an Option that is not designated
as an Incentive Stock Option by the Committee.

SECTION 1.20. OPTION.

      "Option" shall mean a stock option granted under Article III of this Plan.
An Option granted under this Plan shall, as determined by the Committee, be
either a Non-Qualified Stock Option or an Incentive Stock Option; provided,
however, that Options granted to Independent Directors and consultants shall be
Non-Qualified Stock Options.

SECTION 1.21. OPTIONEE.

      "Optionee" shall mean an Employee, consultant or Independent Director
granted an Option under this Plan.

SECTION 1.22. PERFORMANCE AWARD.

      "Performance Award" shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article VII of this Plan.

SECTION 1.23. PLAN.

      "Plan" shall mean The 2000 Equity Participation Plan of Z-Tel
Technologies, Inc.

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SECTION 1.24. RESTRICTED STOCK.

      "Restricted Stock" shall mean Common Stock awarded under Article VI of
this Plan.

SECTION 1.25. RESTRICTED STOCKHOLDER.

      "Restricted Stockholder" shall mean an Employee, Independent Director or
consultant granted an award of Restricted Stock under Article VI of this Plan.

SECTION 1.26. RULE 16b-3.

      "Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended from time to time.

SECTION 1.27. SECTION 162(m) PARTICIPANT.

      "Section 162(m) Participant" shall mean any Employee designated by the
Committee as an Employee whose compensation for the fiscal year in which the
Employee is so designated or a future fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code.

SECTION 1.28. STOCK APPRECIATION RIGHT.

      "Stock Appreciation Right" shall mean a stock appreciation right granted
under Article VIII of this Plan.

SECTION 1.29. STOCK PAYMENT.

      "Stock Payment" shall mean (i) a payment in the form of shares of Common
Stock, or (ii) an option or other right to purchase shares of Common Stock, as
part of a deferred compensation arrangement, made in lieu of all or any portion
of the compensation, including without limitation, salary, bonuses and
commissions, that would otherwise become payable to an Employee, Independent
Director or consultant in cash, awarded under Article VII of this Plan.

SECTION 1.30. SUBSIDIARY.

      "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

SECTION 1.31. TERMINATION OF CONSULTANCY.

      "Termination of Consultancy" shall mean the time when the engagement of an
Optionee, Grantee or Restricted Stockholder as a consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, by resignation, discharge, death or retirement; but
excluding terminations where there is a simultaneous commencement of employment
with the Company or any Subsidiary. The Committee, in its sole discretion, shall
determine the effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the question of whether a
Termination of

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Consultancy resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Consultancy.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.

SECTION 1.32. TERMINATION OF DIRECTORSHIP.

      "Termination of Directorship" shall mean the time when an Optionee who is
an Independent Director ceases to be a Director for any reason, including, but
not by way of limitation, a termination by resignation, failure to be elected,
death or retirement. The Board, in its sole discretion, shall determine the
effect of all matters and questions relating to Termination of Directorship with
respect to Independent Directors.

SECTION 1.33. TERMINATION OF EMPLOYMENT.

      "Termination of Employment" shall mean the time when the employee-employer
relationship between an Optionee, Grantee or Restricted Stockholder and the
Company or any Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee,
Grantee or Restricted Stockholder by the Company or any Subsidiary, (ii) at the
discretion of the Committee, terminations which result in a temporary severance
of the employee-employer relationship, and (iii) at the discretion of the
Committee, terminations which are followed by the simultaneous establishment of
a consulting relationship by the Company or a Subsidiary with the former
employee. The Committee, in its sole discretion, shall determine the effect of
all matters and questions relating to Termination of Employment, including, but
not by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether
particular leaves of absence constitute Terminations of Employment; provided,
however, that, unless otherwise determined by the Committee in its discretion, a
leave of absence, change in status from an employee to an independent contractor
or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company or any Subsidiary has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.

                                   ARTICLE II.
                             SHARES SUBJECT TO PLAN

SECTION 2.1. SHARES SUBJECT TO PLAN.

            (a) The shares of stock subject to Options, awards of Restricted
      Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock,
      Stock Payments or Stock Appreciation Rights shall be Common Stock,
      initially shares of the Company's

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      Common Stock, par value $0.01 per share. The aggregate number of such
      shares which may be issued upon exercise of such options or rights or upon
      any such awards under the Plan shall be Nine Hundred Thousand (900,000)
      plus an annual increase to be added on the first day of the Company's
      fiscal year beginning in 2001 equal to the lesser of (i) Six Hundred
      Thousand (600,000) shares of the Company's Common Stock, (ii) 6% of the
      outstanding shares on such date, or (iii) a lesser amount determined by
      the Board. The shares of Common Stock issuable upon exercise of such
      options or rights or upon any such awards may be either previously
      authorized but unissued shares or treasury shares.

            (b) The maximum number of shares which may be subject to Options,
      awards of Restricted Stock, Performance Awards, Dividend Equivalents,
      awards of Deferred Stock, Stock Payments or Stock Appreciation Rights
      granted under the Plan to any individual in any calendar year shall not
      exceed the Award Limit. To the extent required by Section 162(m) of the
      Code, shares subject to Options which are canceled continue to be counted
      against the Award Limit and if, after grant of an Option, the price of
      shares subject to such Option is reduced, the transaction is treated as a
      cancellation of the Option and a grant of a new Option and both the Option
      deemed to be canceled and the Option deemed to be granted are counted
      against the Award Limit. Furthermore, to the extent required by Section
      162(m) of the Code, if, after grant of a Stock Appreciation Right, the
      base amount on which stock appreciation is calculated is reduced to
      reflect a reduction in the Fair Market Value of the Company's Common
      Stock, the transaction is treated as a cancellation of the Stock
      Appreciation Right and a grant of a new Stock Appreciation Right and both
      the Stock Appreciation Right deemed to be canceled and the Stock
      Appreciation Right deemed to be granted are counted against the Award
      Limit.

SECTION 2.2. ADD-BACK OF OPTIONS AND OTHER RIGHTS.

      If any Option, or other right to acquire shares of Common Stock under any
other award under this Plan, expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by this
Plan, the number of shares subject to such Option or other right but as to which
such Option or other right was not exercised prior to its expiration,
cancellation or exercise may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Furthermore, any shares subject to
Options or other awards which are adjusted pursuant to Section 10.3 and become
exercisable with respect to shares of stock of another corporation shall be
considered canceled and may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Shares of Common Stock which are
delivered by the Optionee or Grantee or withheld by the Company upon the
exercise of any Option or other award under this Plan, in payment of the
exercise price thereof, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any share of Restricted Stock is
forfeited by the Grantee or repurchased by the Company pursuant to Section 6.6
hereof, such share may again be optioned, granted or awarded hereunder, subject
to the limitations of Section 2.1. Notwithstanding the provisions of this
Section 2.2, no shares of Common Stock may again be optioned, granted or awarded
if such action would cause an Incentive Stock Option to fail to qualify as an
incentive stock option under Section 422 of the Code.

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                                  ARTICLE III.
                               GRANTING OF OPTIONS

SECTION 3.1. ELIGIBILITY.

      Any Employee, Independent Director or consultant selected by the
Committee(or the Board, in the case of Options granted to Independent Directors)
pursuant to Section 3.4(a)(i) shall be eligible to be granted an Option. In
addition, each Independent Director of the Company shall be eligible to be
granted Options at the times and in the manner set forth in Section 3.4(d).

SECTION 3.2. DISQUALIFICATION FOR STOCK OWNERSHIP.

      No person may be granted an Incentive Stock Option under this Plan if such
person, at the time the Incentive Stock Option is granted, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any then existing Subsidiary or parent corporation
(within the meaning of Section 422 of the Code) unless such Incentive Stock
Option conforms to the applicable provisions of Section 422 of the Code.

SECTION 3.3. QUALIFICATION OF INCENTIVE STOCK OPTIONS.

      No Incentive Stock Option shall be granted to any person who is not an
Employee.

SECTION 3.4. GRANTING OF OPTIONS.

            (a) The Committee (or the Board, in the case of Options granted to
      Independent Directors) shall from time to time, in its sole discretion,
      and subject to applicable limitations of this Plan:

                  (i) Determine which Employees are Employees and select from
            among the Employees, Independent Directors or consultants (including
            Employees or consultants who have previously received Options or
            other awards under this Plan) such of them as in its opinion should
            be granted Options;

                  (ii) Subject to the Award Limit, determine the number of
            shares to be subject to such Options granted to the selected
            Employees, Independent Directors or consultants;

                  (iii) Subject to Section 3.3, determine whether such Options
            are to be Incentive Stock Options or Non-Qualified Stock Options and
            whether such Options are to qualify as performance-based
            compensation as described in Section 162(m)(4)(C) of the Code; and

                  (iv) Determine the terms and conditions of such Options,
            consistent with this Plan; provided, however, that the terms and
            conditions of Options intended to qualify as performance-based
            compensation as described in Section 162(m)(4)(C) of the Code shall
            include, but not be limited to, such terms and conditions as may be
            necessary to meet the applicable provisions of Section 162(m) of the
            Code.

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            (b) Upon the selection of an Employee, Independent Director or
      consultant to be granted an Option, the Committee (or the Board, in the
      case of Options granted to Independent Directors) shall instruct the
      Secretary of the Company to issue the Option and may impose such
      conditions on the grant of the Option as it deems appropriate. Without
      limiting the generality of the preceding sentence, the Committee (or the
      Board, in the case of Options granted to Independent Directors) may, in
      its discretion and on such terms as it deems appropriate, require as a
      condition on the grant of an Option to an Employee, Independent Director
      or consultant that the Employee, Independent Director or consultant
      surrender for cancellation some or all of the unexercised Options, awards
      of Restricted Stock or Deferred Stock, Performance Awards, Stock
      Appreciation Rights, Dividend Equivalents or Stock Payments or other
      rights which have been previously granted to him under this Plan or
      otherwise. An Option, the grant of which is conditioned upon such
      surrender, may have an option price lower (or higher) than the exercise
      price of such surrendered Option or other award, may cover the same (or a
      lesser or greater) number of shares as such surrendered Option or other
      award, may contain such other terms as the Committee (or the Board, in the
      case of Options granted to Independent Directors) deems appropriate, and
      shall be exercisable in accordance with its terms, without regard to the
      number of shares, price, exercise period or any other term or condition of
      such surrendered Option or other award.

            (c) Any Incentive Stock Option granted under this Plan may be
      modified by the Committee to disqualify such option from treatment as an
      "incentive stock option" under Section 422 of the Code.

            (d) In addition to the discretionary Options provided for by this
      Article III, during the term of the Plan, a person who is initially
      elected to the Board and who is an Independent Director at the time of
      such initial election automatically shall be granted (i) an Option to
      purchase Eleven Hundred (1,100) shares of Common Stock (subject to
      adjustment as provided in Section 10.3) on the date of such initial
      election and (ii) an Option to purchase Eleven Hundred (1,100) shares of
      Common Stock (subject to adjustment as provided in Section 10.3) on the
      date of each annual meeting of stockholders after such initial election at
      which the Independent Director is reelected to the Board; provided,
      however, that, no such grant to an Independent Director shall be made on
      the date of an annual meeting pursuant to the preceding clause (ii) if a
      grant is made to such Independent Director on such date pursuant to the
      corresponding provision of The 1998 Equity Participation Plan Of Z-Tel
      Technologies, Inc. Members of the Board who are employees of the Company
      who subsequently retire from the Company and remain on the Board will not
      receive an initial Option grant pursuant to clause (i) of the preceding
      sentence, but to the extent that they are otherwise eligible, will
      receive, after retirement from employment with the Company, Options as
      described in clause (ii) of the preceding sentence. All the foregoing
      Option grants authorized by this Section 3.4(d) are subject to stockholder
      approval of the Plan.

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                                   ARTICLE IV.
                                TERMS OF OPTIONS

SECTION 4.1. OPTION AGREEMENT.

      Each Option shall be evidenced by a written Stock Option Agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee (or the Board, in
the case of Options granted to Independent Directors) shall determine,
consistent with this Plan. Stock Option Agreements evidencing Options intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code. Stock
Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section
422 of the Code.

SECTION 4.2. OPTION PRICE.

      The price per share of the shares subject to each Option shall be set by
the Committee; provided, however, that such price shall be no less than the par
value of a share of Common Stock, unless otherwise permitted by applicable state
law, and (i) in the case of Incentive Stock Options and Options intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code, such price shall not be less than 100% of the Fair Market Value of
a share of Common Stock on the date the Option is granted; (ii) in the case of
Incentive Stock Options granted to an individual then owning (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section 422 of the Code) such price shall not be
less than 110% of the Fair Market Value of a share of Common Stock on the date
the Option is granted; and (iii) in the case of Options granted to Independent
Directors pursuant to Section 3.4(d), such price shall equal 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted;
provided, however, that the price of each share subject to each Option granted
to Independent Directors on the date of the initial public offering of Common
Stock shall equal the initial public offering price (net of underwriting
discounts and commissions) per share of Common Stock.

SECTION 4.3. OPTION TERM.

      The term of an Option shall be set by the Committee in its discretion;
provided, however, that, (i) in the case of Options granted to Independent
Directors pursuant to Section 3.4(d), the term shall be ten (10) years from the
date the Option is granted, without variation or acceleration hereunder, but
subject to Section 5.6, and (ii) in the case of Incentive Stock Options, the
term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment or
Termination of Consultancy of the Optionee, or amend any other term or condition
of such Option relating to such a termination.
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SECTION 4.4. OPTION VESTING.

            (a)   The period during which the right to exercise an Option in
      whole or in part vests in the Optionee shall be set by the Committee and
      the Committee may determine that an Option may not be exercised in whole
      or in part for a specified period after it is granted; provided, however,
      that, unless the Committee otherwise provides in the terms of the Option
      or otherwise, no Option shall be exercisable by any Optionee who is then
      subject to Section 16 of the Exchange Act within the period ending six
      months and one day after the date the Option is granted; and provided,
      further, that Options granted to Independent Directors pursuant to Section
      3.4(d) shall become exercisable in cumulative annual installments of 25%
      on each of the first, second, third and fourth anniversaries of the date
      of Option grant, without variation or acceleration hereunder except as
      provided in Section 10.3(b). At any time after grant of an Option, the
      Committee may, in its sole discretion and subject to whatever terms and
      conditions it selects, accelerate the period during which an Option
      (except an Option granted to an Independent Director pursuant to Section
      3.4(d)) vests.

            (b)   No portion of an Option which is unexercisable at Termination
      of Employment, Termination of Directorship or Termination of Consultancy,
      as applicable, shall thereafter become exercisable, except as may be
      otherwise provided by the Committee in the case of Options granted to
      Employees, Independent Directors or consultants either in the Stock Option
      Agreement or by action of the Committee following the grant of the Option.

            (c)   To the extent that the aggregate Fair Market Value of stock
      with respect to which "incentive stock options" (within the meaning of
      Section 422 of the Code, but without regard to Section 422(d) of the Code)
      are exercisable for the first time by an Optionee during any calendar year
      (under the Plan and all other incentive stock option plans of the Company
      and any Subsidiary) exceeds $100,000, such Options shall be treated as
      Non-Qualified Options to the extent required by Section 422 of the Code.
      The rule set forth in the preceding sentence shall be applied by taking
      Options into account in the order in which they were granted. For purposes
      of this Section 4.4(c), the Fair Market Value of stock shall be determined
      as of the time the Option with respect to such stock is granted.

SECTION 4.5. CONSIDERATION.

      In consideration of the granting of an Option, the Optionee shall agree,
in the written Stock Option Agreement, to remain in the employ of (or to consult
for or to serve as an Independent Director of, as applicable) the Company or any
Subsidiary for a period of at least one year (or such shorter period as may be
fixed in the Stock Option Agreement or by action of the Committee following
grant of the Option) after the Option is granted (or, in the case of an
Independent Director, until the next annual meeting of stockholders of the
Company). Nothing in this Plan or in any Stock Option Agreement hereunder shall
confer upon any Optionee any right to continue in the employ of, or as a
consultant for, the Company or any Subsidiary, or as a director of the Company,
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Optionee at
any time for any reason whatsoever, with or without good cause.

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                                   ARTICLE V.
                               EXERCISE OF OPTIONS

SECTION 5.1. PARTIAL EXERCISE.

      An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to Independent
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.

SECTION 5.2. MANNER OF EXERCISE.

      All or a portion of an exercisable Option shall be deemed exercised upon
delivery of all of the following to the Secretary of the Company or his office:

            (a)   A written notice complying with the applicable rules
      established by the Committee (or the Board, in the case of Options granted
      to Independent Directors) stating that the Option, or a portion thereof,
      is exercised. The notice shall be signed by the Optionee or other person
      then entitled to exercise the Option or such portion;

            (b)   Such representations and documents as the Committee (or the
      Board, in the case of Options granted to Independent Directors), in its
      sole discretion, deems necessary or advisable to effect compliance with
      all applicable provisions of the Securities Act of 1933, as amended, and
      any other federal or state securities laws or regulations. The Committee
      or Board may, in its sole discretion, also take whatever additional
      actions it deems appropriate to effect such compliance including, without
      limitation, placing legends on share certificates and issuing
      stop-transfer notices to agents and registrars;

            (c)   In the event that the Option shall be exercised pursuant to
      Section 10.1 by any person or persons other than the Optionee, appropriate
      proof of the right of such person or persons to exercise the Option; and

            (d)   Full cash payment to the Secretary of the Company for the
      shares with respect to which the Option, or portion thereof, is exercised.
      However, the Committee (or the Board, in the case of Options granted to
      Independent Directors), may in its discretion (i) allow a delay in payment
      up to thirty (30) days from the date the Option, or portion thereof, is
      exercised; (ii) allow payment, in whole or in part, through the delivery
      of shares of Common Stock owned by the Optionee, duly endorsed for
      transfer to the Company with a Fair Market Value on the date of delivery
      equal to the aggregate exercise price of the Option or exercised portion
      thereof; (iii) allow payment, in whole or in part, through the surrender
      of shares of Common Stock then issuable upon exercise of the Option having
      a Fair Market Value on the date of Option exercise equal to the aggregate
      exercise price of the Option or exercised portion thereof; (iv) allow
      payment, in whole or in part, through the delivery of property of any kind
      which constitutes good and valuable consideration; (v) allow payment, in
      whole or in part, through the delivery of a full recourse promissory note
      bearing interest (at no less than such rate as shall then preclude the
      imputation of interest under the Code) and payable upon such terms as may
      be

<PAGE>

      prescribed by the Committee or the Board; (vi) allow payment, in whole or
      in part, through the delivery of a notice that the Optionee has placed a
      market sell order with a broker with respect to shares of Common Stock
      then issuable upon exercise of the Option, and that the broker has been
      directed to pay a sufficient portion of the net proceeds of the sale to
      the Company in satisfaction of the Option exercise price; or (vii) allow
      payment through any combination of the consideration provided in the
      foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). To the extent
      permitted by applicable law and regulations, the Board and/or the
      Committee may, in their respective discretions, approve an arrangement
      with a brokerage firm under which such brokerage firm, on behalf of the
      person electing to exercise the Options, pays to the Company the full
      purchase price of the shares of Common Stock being purchased together with
      an amount equal to any taxes which the Company is required to withhold in
      connection with the exercise of the Option and the Company, pursuant to an
      irrevocable notice from such person, delivers the shares of Common Stock
      being purchased to such brokerage firm. In the case of a promissory note,
      the Committee (or the Board, in the case of Options granted to Independent
      Directors) may also prescribe the form of such note and the security to be
      given for such note. The Option may not be exercised, however, by delivery
      of a promissory note or by a loan from the Company when or where such loan
      or other extension of credit is prohibited by law.

SECTION 5.3. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.

      The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

            (a)   The admission of such shares to listing on all stock exchanges
      on which such class of stock is then listed;

            (b)   The completion of any registration or other qualification of
      such shares under any state or federal law, or under the rulings or
      regulations of the Securities and Exchange Commission or any other
      governmental regulatory body which the Committee or Board shall, in its
      sole discretion, deem necessary or advisable;

            (c)   The obtaining of any approval or other clearance from any
      state or federal governmental agency which the Committee (or Board, in the
      case of Options granted to Independent Directors) shall, in its sole
      discretion, determine to be necessary or advisable;

            (d)   The lapse of such reasonable period of time following the
      exercise of the Option as the Committee (or Board, in the case of Options
      granted to Independent Directors) may establish from time to time for
      reasons of administrative convenience; and

            (e)   The receipt by the Company of full payment for such shares,
      including payment of any applicable withholding tax.

<PAGE>

SECTION 5.4. RIGHTS AS STOCKHOLDERS.

      The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.

SECTION 5.5. OWNERSHIP AND TRANSFER RESTRICTIONS.

      The Committee (or Board, in the case of Options granted to Independent
Directors), in its sole discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of Common Stock acquired by
exercise of an Incentive Stock Option within (i) two years from the date of
granting such Option to such Employee or (ii) one year after the transfer of
such shares to such Employee. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such requirement to
give prompt notice of disposition.

SECTION 5.6. LIMITATIONS ON EXERCISE OF OPTIONS GRANTED TO INDEPENDENT
             DIRECTORS.

      No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:

            (a)   The expiration of twelve (12) months from the date of the
      Optionee's death;

            (b)   the expiration of twelve (12) months from the date of the
      Optionee's Termination of Directorship by reason of his permanent and
      total disability (within the meaning of Section 22(e)(3) of the Code);

            (c)   the expiration of three (3) months from the date of the
      Optionee's Termination of Directorship for any reason other than such
      Optionee's death or his permanent and total disability, unless the
      Optionee dies within said three-month period; or

            (d)   The expiration of ten years from the date the Option was
      granted.

                                   ARTICLE VI.
                            AWARD OF RESTRICTED STOCK

SECTION 6.1. AWARD OF RESTRICTED STOCK.

            (a)   The Committee (or the Board, in the case of awards to
      Independent Directors) may from time to time, in its sole discretion:

                  (i)   Select from among the Employees, Independent Directors
            or consultants (including Employees, Independent Directors or
            consultants who have

<PAGE>

            previously received other awards under this Plan) such of them as in
            its opinion should be awarded Restricted Stock; and

                  (ii)  Determine the purchase price, if any, and other terms
            and conditions applicable to such Restricted Stock, consistent with
            this Plan.

            (b)   The Committee (or the Board, in the case of awards to
      Independent Directors) shall establish the purchase price, if any, and
      form of payment for Restricted Stock; provided, however, that such
      purchase price shall be no less than the par value of the Common Stock to
      be purchased, unless otherwise permitted by applicable state law. In all
      cases, legal consideration shall be required for each issuance of
      Restricted Stock.

            (c)   Upon the selection of an Employee, Independent Director or
      consultant to be awarded Restricted Stock, the Committee (or the Board, in
      the case of awards to Independent Directors) shall instruct the Secretary
      of the Company to issue such Restricted Stock and may impose such
      conditions on the issuance of such Restricted Stock as it deems
      appropriate.

SECTION 6.2. RESTRICTED STOCK AGREEMENT.

      Restricted Stock shall be issued only pursuant to a written Restricted
Stock Agreement, which shall be executed by the selected Employee, Independent
Director or consultant and an authorized officer of the Company and which shall
contain such terms and conditions as the Committee (or the Board, in the case of
awards to Independent Directors) shall determine, consistent with this Plan.

SECTION 6.3. CONSIDERATION.

      As consideration for the issuance of Restricted Stock, in addition to
payment of any purchase price, the Restricted Stockholder shall agree, in the
written Restricted Stock Agreement, to remain in the employ of, as Director of
or to consult for, the Company or any Subsidiary for a period of at least one
year after the Restricted Stock is issued (or such shorter period as may be
fixed in the Restricted Stock Agreement or by action of the Committee (or the
Board, in the case of awards to Independent Directors) following grant of the
Restricted Stock). Nothing in this Plan or in any Restricted Stock Agreement
hereunder shall confer on any Restricted Stockholder any right to continue in
the employ of, as a Director of, or as a consultant for, the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Restricted Stockholder at any time for any reason whatsoever, with or
without good cause.

SECTION 6.4. RIGHTS AS STOCKHOLDERS.

      Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 6.7, the Restricted Stockholder shall have, unless otherwise
provided by the Committee (or the Board, in the case of awards to Independent
Directors), all the rights of a stockholder with respect to said shares, subject
to the restrictions in his Restricted Stock Agreement, including the right to
receive all dividends and other distributions paid or made with respect to the
shares;

<PAGE>

provided, however, that in the discretion of the Committee (or the Board, in the
case of awards to Independent Directors), any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.5.

SECTION 6.5. RESTRICTION.

      All shares of Restricted Stock issued under this Plan (including any
shares received by holders thereof with respect to shares of Restricted Stock as
a result of stock dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Restricted Stock Agreement, be subject to
such restrictions as the Committee (or the Board, in the case of awards to
Independent Directors) shall provide, which restrictions may include, without
limitation, restrictions concerning voting rights and transferability and
restrictions based on duration of employment with the Company, Company
performance and individual performance; provided, however, that, unless the
Committee otherwise provides in the terms of the Restricted Stock Agreement or
otherwise, no share of Restricted Stock granted to a person subject to Section
16 of the Exchange Act shall be sold, assigned or otherwise transferred until at
least six months and one day have elapsed from the date on which the Restricted
Stock was issued, and provided, further, that by action taken after the
Restricted Stock is issued, the Committee (or the Board, in the case of awards
to Independent Directors) may, on such terms and conditions as it may determine
to be appropriate, remove any or all of the restrictions imposed by the terms of
the Restricted Stock Agreement. Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire. Unless provided otherwise by
the Committee (or the Board, in the case of awards to Independent Directors), if
no consideration was paid by the Restricted Stockholder upon issuance, a
Restricted Stockholder's rights in unvested Restricted Stock shall lapse upon
Termination of Employment or, if applicable, upon Termination of Consultancy
with the Company.

SECTION 6.6. REPURCHASE OF RESTRICTED STOCK.

      The Committee (or the Board, in the case of awards to Independent
Directors) shall provide in the terms of each individual Restricted Stock
Agreement that the Company shall have the right to repurchase from the
Restricted Stockholder the Restricted Stock then subject to restrictions under
the Restricted Stock Agreement immediately upon a Termination of Employment or,
if applicable, upon a Termination of Directorship or a Termination of
Consultancy between the Restricted Stockholder and the Company, at a cash price
per share equal to the price paid by the Restricted Stockholder for such
Restricted Stock; provided, however, that provision may be made that no such
right of repurchase shall exist in the event of a Termination of Employment,
Termination of Directorship or Termination of Consultancy without cause, or
following a change in control of the Company or because of the Restricted
Stockholder's retirement, death or disability, or otherwise.

SECTION 6.7. ESCROW.

      The Secretary of the Company or such other escrow holder as the Committee
(or the Board, in the case of awards to Independent Directors) may appoint shall
retain physical custody of each certificate representing Restricted Stock until
all of the restrictions imposed under the

<PAGE>

Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.

SECTION 6.8. LEGEND.

      In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee (or the Board, in the case of awards to
Independent Directors) shall cause a legend or legends to be placed on
certificates representing all shares of Restricted Stock that are still subject
to restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby.

                                  ARTICLE VII.
                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS
                         DEFERRED STOCK, STOCK PAYMENTS

SECTION 7.1. PERFORMANCE AWARDS.

      Any Employee, Independent Director or consultant selected by the Committee
may be granted one or more Performance Awards. The value of such Performance
Awards may be linked to the market value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee (or the Board, in the case of grants to
Independent Directors), in each case on a specified date or dates or over any
period or periods determined by the Committee (or the Board, in the case of
grants to Independent Directors), or may be based upon the appreciation in the
market value, book value, net profits or other measure of the value of a
specified number of shares of Common Stock over a fixed period or periods
determined by the Committee (or the Board, in the case of grants to Independent
Directors). In addition to valuing such Performance Awards upon the value of
Common Stock, the value of such Performance Awards may also be linked to the
performance criteria of the Company's Subsidiaries or divisions, or to the
performance of particular individuals. In making such determinations, the
Committee (or the Board, in the case of grants to Independent Directors) shall
consider (among such other factors as it deems relevant in light of the specific
type of award) the contributions, responsibilities and other compensation of the
particular Employee, Independent Director or consultant.

SECTION 7.2. DIVIDEND EQUIVALENTS.

      Any Employee, Independent Director or consultant selected by the Committee
may be granted Dividend Equivalents based on the dividends declared on Common
Stock, to be credited as of dividend payment dates, during the period between
the date an Option, Stock Appreciation Right, Deferred Stock or Performance
Award is granted, and the date such Option, Stock Appreciation Right, Deferred
Stock or Performance Award is exercised, vests or expires, as determined by the
Committee (or the Board, in the case of grants to Independent Directors). Such
Dividend Equivalents shall be converted to cash or additional shares of Common
Stock by such formula and at such time and subject to such limitations as may be
determined by the Committee (or the Board, in the case of grants to Independent
Directors). With respect to Dividend Equivalents granted with respect to Options
intended to be qualified performance-

<PAGE>

based compensation for purposes of Section 162(m) of the Code, such Dividend
Equivalents shall be payable regardless of whether such Option is exercised.

SECTION 7.3. STOCK PAYMENTS.

      Any Employee, Independent Director or consultant selected by the Committee
(or the Board, in the case of grants to Independent Directors) may receive Stock
Payments in the manner determined from time to time by the Committee (or the
Board, in the case of grants to Independent Directors). The number of shares
shall be determined by the Committee (or the Board, in the case of grants to
Independent Directors) and may be based upon the Fair Market Value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee (or the Board, in
the case of grants to Independent Directors), determined on the date such Stock
Payment is made or on any date thereafter

SECTION 7.4. DEFERRED STOCK.

      Any Employee, Independent Director or consultant selected by the Committee
may be granted an award of Deferred Stock in the manner determined from time to
time by the Committee (or the Board, in the case of grants to Independent
Directors). The number of shares of Deferred Stock shall be determined by the
Committee (or the Board, in the case of grants to Independent Directors) and may
be linked to the market value, book value, net profits or other measure of the
value of Common Stock or other specific performance criteria determined to be
appropriate by the Committee (or the Board, in the case of grants to Independent
Directors), in each case on a specified date or dates or over any period or
periods determined by the Committee (or the Board, in the case of grants to
Independent Directors). Common Stock underlying a Deferred Stock award will not
be issued until the Deferred Stock award has vested, pursuant to a vesting
schedule or performance criteria set by the Committee (or the Board, in the case
of grants to Independent Directors). Unless otherwise provided by the Committee
(or the Board, in the case of grants to Independent Directors), a Grantee of
Deferred Stock shall have no rights as a Company stockholder with respect to
such Deferred Stock until such time as the award has vested and the Common Stock
underlying the award has been issued.

SECTION 7.5. PERFORMANCE AWARD AGREEMENT, DIVIDEND EQUIVALENT AGREEMENT,
             DEFERRED STOCK AGREEMENT, STOCK PAYMENT AGREEMENT.

      Each Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment shall be evidenced by a written agreement, which shall be
executed by the Grantee and an authorized Officer of the Company and which shall
contain such terms and conditions as the Committee shall determine, consistent
with this Plan.

SECTION 7.6. TERM.

      The term of a Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment shall be set by the Committee (or the Board, in the
case of grants to Independent Directors) in its discretion.

<PAGE>

SECTION 7.7. EXERCISE UPON TERMINATION OF EMPLOYMENT.

      A Performance Award, Dividend Equivalent, award of Deferred Stock and/or
Stock Payment is exercisable or payable only while the Grantee is an Employee,
Independent Director or consultant; provided that the Committee (or the Board,
in the case of grants to Independent Directors) may determine that the
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment may be exercised or paid subsequent to Termination of Employment,
Termination of Directorship or Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.

SECTION 7.8. PAYMENT ON EXERCISE.

      Payment of the amount determined under Section 7.1 or 7.2 above shall be
in cash, in Common Stock or a combination of both, as determined by the
Committee (or the Board, in the case of grants to Independent Directors). To the
extent any payment under this Article VII is effected in Common Stock, it shall
be made subject to satisfaction of all provisions of Section 5.3.

SECTION 7.9. CONSIDERATION.

      In consideration of the granting of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment, the Grantee shall
agree, in a written agreement, to remain in the employ of, or to consult for,
the Company or any Subsidiary for a period of at least one year after such
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment is granted (or such shorter period as may be fixed in such agreement or
by action of the Committee following such grant). Nothing in this Plan or in any
agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a Director or consultant for, the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.

SECTION 7.10. PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.

            (a)   Notwithstanding anything in the Plan to the contrary, the
      Committee may grant any performance or incentive awards described in
      Article VII to a Section 162(m) Participant that vest or become
      exercisable upon the attainment of performance targets for the Company
      which are related to one or more of the following performance goals: (i)
      pre-tax income, (ii) operating income, (iii) cash flow, (iv) earnings per
      share, (v) return on equity, (vi) return on invested capital or assets and
      (vii) cost reductions or savings.

            (b)   To the extent necessary to comply with the performance-based
      compensation requirements of Section 162(m)(4)(C) of the Code, with
      respect to performance or incentive awards described in Article VII which
      may be granted to one or more Section 162(m) Participants, no later than
      ninety (90) days following the commencement of any fiscal year in question
      or any other designated fiscal period (or such other time as may be
      required or permitted by Section 162(m) of the Code), the

<PAGE>

      Committee shall, in writing, (i) designate one or more Section 162(m)
      Participants, (ii) select the performance goal or goals applicable to the
      fiscal year or other designated fiscal period, (iii) establish the various
      targets and bonus amounts which may be earned for such fiscal year or
      other designated fiscal period and (iv) specify the relationship between
      performance goals and targets and the amounts to be earned by each Section
      162(m) Participant for such fiscal year or other designated fiscal period.
      Following the completion of each fiscal year or other designated fiscal
      period, the Committee shall certify in writing whether the applicable
      performance targets have been achieved for such fiscal year or other
      designated fiscal period. In determining the amount earned by a Section
      162(m) Participant, the Committee shall have the right to reduce (but not
      to increase) the amount payable at a given level of performance to take
      into account additional factors that the Committee may deem relevant to
      the assessment of individual or corporate performance for the fiscal year
      or other designated fiscal period.

                                  ARTICLE VIII.
                            STOCK APPRECIATION RIGHTS

SECTION 8.1. GRANT OF STOCK APPRECIATION RIGHTS.

      A Stock Appreciation Right may be granted to any Employee, Independent
Director or consultant selected by the Committee. A Stock Appreciation Right may
be granted (i) in connection and simultaneously with the grant of an Option,
(ii) with respect to a previously granted Option, or (iii) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with this Plan as the Committee (or the Board, in the case of
grants to Independent Directors) shall impose and shall be evidenced by a
written Stock Appreciation Right Agreement, which shall be executed by the
Grantee and an authorized officer of the Company. The Committee (or the Board,
in the case of grants to Independent Directors), in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock
Appreciation Right Agreements evidencing Stock Appreciation Rights intended to
so qualify shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code. Without limiting the
generality of the foregoing, the Committee (or the Board, in the case of grants
to Independent Directors) may, in its discretion and on such terms as it deems
appropriate, require as a condition of the grant of a Stock Appreciation Right
to an Employee, Independent Director or consultant that the Employee,
Independent Director or consultant surrender for cancellation some or all of the
unexercised Options, awards of Restricted Stock or Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments, or
other rights which have been previously granted to him under this Plan or
otherwise. A Stock Appreciation Right, the grant of which is conditioned upon
such surrender, may have an exercise price lower (or higher) than the exercise
price of the surrendered Option or other award, may cover the same (or a lesser
or greater) number of shares as such surrendered Option or other award, may
contain such other terms as the Committee (or the Board, in the case of grants
to Independent Directors) deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.

<PAGE>

SECTION 8.2. COUPLED STOCK APPRECIATION RIGHTS

            (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
      a particular Option and shall be exercisable only when and to the extent
      the related Option is exercisable.

            (b) A CSAR may be granted to the Grantee for no more than the number
      of shares subject to the simultaneously or previously granted Option to
      which it is coupled.

            (c) A CSAR shall entitle the Grantee (or other person entitled to
      exercise the Option pursuant to this Plan) to surrender to the Company
      unexercised a portion of the Option to which the CSAR relates (to the
      extent then exercisable pursuant to its terms) and to receive from the
      Company in exchange therefor an amount determined by multiplying the
      difference obtained by subtracting the Option exercise price from the Fair
      Market Value of a share of Common Stock on the date of exercise of the
      CSAR by the number of shares of Common Stock with respect to which the
      CSAR shall have been exercised, subject to any limitations the Committee
      may impose.

SECTION 8.3. INDEPENDENT STOCK APPRECIATION RIGHTS.

            (a) An Independent Stock Appreciation Right ("ISAR") shall be
      unrelated to any Option and shall have a term set by the Committee (or the
      Board, in the case of grants to Independent Directors). An ISAR shall be
      exercisable in such installments as the Committee (or the Board, in the
      case of grants to Independent Directors) may determine. An ISAR shall
      cover such number of shares of Common Stock as the Committee (or the
      Board, in the case of grants to Independent Directors) may determine;
      provided, however, that unless the Committee (or the Board, in the case of
      grants to Independent Directors) otherwise provides in the terms of the
      ISAR or otherwise, no ISAR granted to a person subject to Section 16 of
      the Exchange Act shall be exercisable until at least six months have
      elapsed from (but excluding) the date on which the Option was granted. The
      exercise price per share of Common Stock subject to each ISAR shall be set
      by the Committee (or the Board, in the case of grants to Independent
      Directors). An ISAR is exercisable only while the Grantee is an Employee,
      Independent Director or consultant; provided that the Committee (or the
      Board, in the case of grants to Independent Directors) may determine that
      the ISAR may be exercised subsequent to Termination of Employment,
      Termination of Directorship or Termination of Consultancy without cause,
      or following a change in control of the Company, or because of the
      Grantee's retirement, death or disability, or otherwise.

            (b) An ISAR shall entitle the Grantee (or other person entitled to
      exercise the ISAR pursuant to this Plan) to exercise all or a specified
      portion of the ISAR (to the extent then exercisable pursuant to its terms)
      and to receive from the Company an amount determined by multiplying the
      difference obtained by subtracting the exercise price per share of the
      ISAR from the Fair Market Value of a share of Common Stock on the date of
      exercise of the ISAR by the number of shares of Common Stock with respect
      to which the ISAR shall have been exercised, subject to any limitations
      the Committee (or the Board, in the case of grants to Independent
      Directors) may impose.

<PAGE>

SECTION 8.4. PAYMENT AND LIMITATIONS ON EXERCISE.

            (a) Payment of the amount determined under Section 8.2(c) and 8.3(b)
      above shall be in cash, in Common Stock (based on its Fair Market Value as
      of the date the Stock Appreciation Right is exercised) or a combination of
      both, as determined by the Committee (or the Board, in the case of grants
      to Independent Directors). To the extent such payment is effected in
      Common Stock it shall be made subject to satisfaction of all provisions of
      Section 5.3 above pertaining to Options.

            (b) Grantees of Stock Appreciation Rights may be required to comply
      with any timing or other restrictions with respect to the settlement or
      exercise of a Stock Appreciation Right, including a window-period
      limitation, as may be imposed in the discretion of the Board or Committee
      (or the Board, in the case of grants to Independent Directors).

SECTION 8.5. CONSIDERATION.

      In consideration of the granting of a Stock Appreciation Right, the
Grantee shall agree, in the written Stock Appreciation Right Agreement, to
remain in the employ of, as a Director of, or to consult for, the Company or any
Subsidiary for a period of at least one year after the Stock Appreciation Right
is granted (or such shorter period as may be fixed in the Stock Appreciation
Right Agreement or by action of the Committee (or the Board, in the case of
grants to Independent Directors) following grant of the Restricted Stock).
Nothing in this Plan or in any Stock Appreciation Right Agreement hereunder
shall confer on any Grantee any right to continue in the employ of, as a
Director or a consultant for, the Company or any Subsidiary or shall interfere
with or restrict in any way the rights of the Company and any Subsidiary, which
are hereby expressly reserved, to discharge any Grantee at any time for any
reason whatsoever, with or without good cause.

                                  ARTICLE IX.
                                 ADMINISTRATION

SECTION 9.1. COMPENSATION COMMITTEE.

      To the extent the Board of Directors determines it to be desirable for
certain awards granted under the Plan to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) solely of two or more Independent Directors within the meaning of Section
162(m) of the Code with respect to such awards. To the extent the Board of
Directors determines it to be desirable to qualify transactions under the Plan
as exempt under Rule 16b-3, the transactions comtempleted hereunder shall be
structured to satisfy the requirements for exemption under Rule 16b-3. Other
than as provided above, the Plan shall be administered by (i) the Board, or (ii)
a Committee appointed by the Board. Appointment of Committee members shall be
effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.

<PAGE>

SECTION 9.2. DUTIES AND POWERS OF COMMITTEE.

      It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan and the agreements pursuant to which
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments are granted or
awarded, and to adopt such rules for the administration, interpretation, and
application of this Plan as are consistent therewith and to interpret, amend or
revoke any such rules. Notwithstanding the foregoing, the full Board, acting by
a majority of its members in office, shall conduct the general administration of
the Plan with respect to grants to Independent Directors. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its sole discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
this Plan except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee. The Committee shall
have the explicit power to construe and interpret the terms of the Plan and any
awards granted pursuant to the Plan.

SECTION 9.3. MAJORITY RULE; UNANIMOUS WRITTEN CONSENT.

      The Committee shall act by a majority of its members in attendance at a
meeting at which a quorum is present or by a memorandum or other written
instrument signed by all members of the Committee.

SECTION 9.4. COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS.

      Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, and all members of the Committee
and the Board shall be fully protected by the Company in respect of any such
action, determination or interpretation.

<PAGE>

                                   ARTICLE X.
                            MISCELLANEOUS PROVISIONS

SECTION 10.1. NOT TRANSFERABLE.

      Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments under
this Plan may not be sold, pledged, assigned, or transferred in any manner other
than by will or the laws of descent, unless and until such rights or awards have
been exercised, or the shares underlying such rights or awards have been issued,
and all restrictions applicable to such shares have lapsed. No Option,
Restricted Stock award, Deferred Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee,
Grantee or Restricted Stockholder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

      During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under the
Plan. After the death of the Optionee or Grantee, any exercisable portion of an
Option or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.

SECTION 10.2. AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN.

      Except as otherwise provided in this Section 10.2, this Plan may be wholly
or partially amended or otherwise modified, suspended or terminated at any time
or from time to time by the Board or the Committee. However, without approval of
the Company's stockholders given within twelve months before or after the action
by the Board or the Committee, no action of the Board or the Committee may,
except as provided in Section 10.3, increase the limits imposed in Section 2.1
on the maximum number of shares which may be issued under this Plan or modify
the Award Limit, and no action of the Board or the Committee may be taken that
would otherwise require stockholder approval as a matter of applicable law,
regulation or rule. No amendment, suspension or termination of this Plan shall,
without the consent of the holder of Options, Restricted Stock awards, Deferred
Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, alter or impair any rights or obligations under
any Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments theretofore
granted or awarded, unless the award itself otherwise expressly so provides. No
Options, Restricted Stock, Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments may be granted or
awarded during any period of suspension or after termination of this Plan, and
in no event may any Incentive Stock Option be granted under this Plan after the
first to occur of the following events:

<PAGE>

            (a) The expiration of ten years from the date the Plan is adopted by
      the Board; or

            (b) The expiration of ten years from the date the Plan is approved
      by the Company's stockholders under Section 10.4.

SECTION 10.3. CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION OR
              LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.

            (a) Subject to Section 10.3(d), in the event that the Committee (or
      the Board, in the case of grants to Independent Directors) determines that
      any dividend or other distribution (whether in the form of cash, Common
      Stock, other securities, or other property), recapitalization,
      reclassification, stock split, reverse stock split, reorganization,
      merger, consolidation, split-up, spin-off, combination, repurchase,
      liquidation, dissolution, or sale, transfer, exchange or other disposition
      of all or substantially all of the assets of the Company (including, but
      not limited to, a Corporate Transaction), or exchange of Common Stock or
      other securities of the Company, issuance of warrants or other rights to
      purchase Common Stock or other securities of the Company, or other similar
      corporate transaction or event, in the Committee's sole discretion (or in
      the case of grants to Independent Directors, the Board's sole discretion),
      affects the Common Stock such that an adjustment is determined by the
      Committee (or the Board, in the case of grants to Independent Directors)
      to be appropriate in order to prevent dilution or enlargement of the
      benefits or potential benefits intended to be made available under the
      Plan or with respect to an Option, Restricted Stock award, Performance
      Award, Stock Appreciation Right, Dividend Equivalent, Deferred Stock award
      or Stock Payment, then the Committee (or the Board, in the case of grants
      to Independent Directors) shall, in such manner as it may deem equitable,
      adjust any or all of

                  (i) the number and kind of shares of Common Stock (or other
            securities or property) with respect to which Options, Performance
            Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
            Payments may be granted under the Plan, or which may be granted as
            Restricted Stock or Deferred Stock (including, but not limited to,
            adjustments of the limitations in Section 2.1 on the maximum number
            and kind of shares which may be issued and adjustments of the Award
            Limit),

                  (ii) the number and kind of shares of Common Stock (or other
            securities or property) subject to outstanding Options, Performance
            Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock
            Payments, and in the number and kind of shares of outstanding
            Restricted Stock or Deferred Stock, and

                  (iii) the grant or exercise price with respect to any Option,
            Performance Award, Stock Appreciation Right, Dividend Equivalent or
            Stock Payment.

            (b) Subject to Sections 10.3(b)(vii) and 10.3(d), in the event of
      any Corporate Transaction or other transaction or event described in
      Section 10.3(a) or any unusual or nonrecurring transactions or events
      affecting the Company, any affiliate of the Company, or the financial
      statements of the Company or any affiliate, or of changes in applicable
      laws, regulations, or accounting principles, the Committee (or the Board,
      in the case of grants to Independent Directors) in its discretion is
      hereby authorized to take any one or

<PAGE>

      more of the following actions whenever the Committee (or the Board, in the
      case of grants to Independent Directors) determines that such action is
      appropriate in order to prevent dilution or enlargement of the benefits or
      potential benefits intended to be made available under the Plan or with
      respect to any option, right or other award under this Plan, to facilitate
      such transactions or events or to give effect to such changes in laws,
      regulations or principles:

                  (i) In its sole discretion, and on such terms and conditions
            as it deems appropriate, the Committee (or the Board, in the case of
            grants to Independent Directors) may provide, either by the terms of
            the agreement or by action taken prior to the occurrence of such
            transaction or event and either automatically or upon the Optionee's
            request, for either the purchase of any such Option, Performance
            Award, Stock Appreciation Right, Dividend Equivalent, or Stock
            Payment, or any Restricted Stock or Deferred Stock for an amount of
            cash equal to the amount that could have been attained upon the
            exercise of such option, right or award or realization of the
            Optionee's rights had such option, right or award been currently
            exercisable or payable or fully vested or the replacement of such
            option, right or award with other rights or property selected by the
            Committee (or the Board, in the case of grants to Independent
            Directors) in its sole discretion;

                  (ii) In its sole discretion, the Committee (or the Board, in
            the case of grants to Independent Directors) may provide, either by
            the terms of such Option, Performance Award, Stock Appreciation
            Right, Dividend Equivalent, or Stock Payment, or Restricted Stock or
            Deferred Stock or by action taken prior to the occurrence of such
            transaction or event that it cannot be exercised after such event;

                  (iii) In its sole discretion, and on such terms and conditions
            as it deems appropriate, the Committee (or the Board, in the case of
            grants to Independent Directors) may provide, either by the terms of
            such Option, Performance Award, Stock Appreciation Right, Dividend
            Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock
            or by action taken prior to the occurrence of such transaction or
            event, that for a specified period of time prior to such transaction
            or event, such option, right or award shall be exercisable as to all
            shares covered thereby, notwithstanding anything to the contrary in
            (i) Section 4.4 or (ii) the provisions of such Option, Performance
            Award, Stock Appreciation Right, Dividend Equivalent, or Stock
            Payment, or Restricted Stock or Deferred Stock;

                  (iv) In its sole discretion, and on such terms and conditions
            as it deems appropriate, the Committee (or the Board, in the case of
            grants to Independent Directors) may provide, either by the terms of
            such Option, Performance Award, Stock Appreciation Right, Dividend
            Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock
            or by action taken prior to the occurrence of such transaction or
            event, that upon such event, such option, right or award be assumed
            by the successor or survivor corporation, or a parent or subsidiary
            thereof, or shall be substituted for by similar options, rights or
            awards covering the stock of the

<PAGE>

            successor or survivor corporation, or a parent or subsidiary
            thereof, with appropriate adjustments as to the number and kind of
            shares and prices; and

                  (v) In its sole discretion, and on such terms and conditions
            as it deems appropriate, the Committee (or the Board, in the case of
            grants to Independent Directors) may make adjustments in the number
            and type of shares of Common Stock (or other securities or property)
            subject to outstanding Options, Performance Awards, Stock
            Appreciation Rights, Dividend Equivalents, or Stock Payments, and in
            the number and kind of outstanding Restricted Stock or Deferred
            Stock and/or in the terms and conditions of (including the grant or
            exercise price), and the criteria included in, outstanding options,
            rights and awards and options, rights and awards which may be
            granted in the future.

                  (vi) In its sole discretion, and on such terms and conditions
            as it deems appropriate, the Committee (or the Board, in the case of
            grants to Independent Directors) may provide either by the terms of
            a Restricted Stock award or Deferred Stock award or by action taken
            prior to the occurrence of such event that, for a specified period
            of time prior to such event, the restrictions imposed under a
            Restricted Stock Agreement or a Deferred Stock Agreement upon some
            or all shares of Restricted Stock or Deferred Stock may be
            terminated, and, in the case of Restricted Stock, some or all shares
            of such Restricted Stock may cease to be subject to repurchase under
            Section 6.6 or forfeiture under Section 6.5 after such event.

                  (vii) None of the foregoing discretionary actions taken under
            this Section 10.3(b) shall be permitted with respect to grants to
            Independent Directors to the extent that such discretion would be
            inconsistent with the applicable exemptive conditions of Rule 16b-3.
            In the event of a Change in Control or a Corporate Transaction, to
            the extent that the Board does not have the ability under Rule 16b-3
            to take or to refrain from taking the discretionary actions set
            forth in Section 10.3(b)(iii) above, each Option granted to an
            Independent Director shall be exercisable as to all shares covered
            thereby upon such Change in Control or during the five days
            immediately preceding the consummation of such Corporate Transaction
            and subject to such consummation, notwithstanding anything to the
            contrary in Section 4.4 or the vesting schedule of such Options. In
            the event of a Corporate Transaction, to the extent that the Board
            does not have the ability under Rule 16b-3 to take or to refrain
            from taking the discretionary actions set forth in Section
            10.3(b)(ii) above, no Option granted to an Independent Director may
            be exercised following such Corporate Transaction unless such Option
            is, in connection with such Corporate Transaction, either assumed by
            the successor or survivor corporation (or parent or subsidiary
            thereof) or replaced with a comparable right with respect to shares
            of the capital stock of the successor or survivor corporation (or
            parent or subsidiary thereof).

            (c) Notwithstanding Sections 10.3(a) and 10.3(b), in the event of
      any Corporate Transaction, each outstanding Option, Performance Award,
      Stock Appreciation Right, Dividend Equivalent, Stock Payment, Restricted
      Stock, or Deferred

<PAGE>

      Stock award shall, immediately prior to the effective date of the
      Corporate Transaction, automatically become fully exercisable for all of
      the shares of Common Stock at the time subject to such rights or fully
      vested, as applicable, and may be exercised for any or all of those shares
      as fully-vested shares of Common Stock. However, an outstanding right
      shall not so accelerate if and to the extent: (i) such right is, in
      connection with the Corporate Transaction, either to be assumed by the
      successor or survivor corporation (or parent thereof) or to be replaced
      with a comparable right with respect to shares of the capital stock of the
      successor or survivor corporation (or parent thereof) or (ii) the
      acceleration of exercisability of such right is subject to other
      limitations imposed by the Plan Administrator at the time of grant. The
      determination of comparability of rights under clause (i) above shall be
      made by the Plan Administrator, and its determination shall be final,
      binding and conclusive.

            (d) Subject to Section 10.3(d) and 10.8, the Committee (or the
      Board, in the case of grants to Independent Directors) may, in its
      discretion, include such further provisions and limitations in any Option,
      Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
      Payment, or Restricted Stock or Deferred Stock agreement or certificate,
      as it may deem equitable and in the best interests of the Company.

            (e) With respect to Options, Stock Appreciation Rights and
      performance or incentive awards described in Article VII which are granted
      to Section 162(m) Participants and are intended to qualify as
      performance-based compensation under Section 162(m)(4)(C), no adjustment
      or action described in this Section 10.3 or in any other provision of the
      Plan shall be authorized to the extent that such adjustment or action
      would cause the Plan to violate Section 422(b)(1) of the Code or would
      cause such option or stock appreciation right to fail to so qualify under
      Section 162(m)(4)(C), as the case may be, or any successor provisions
      thereto. Furthermore, no such adjustment or action shall be authorized to
      the extent such adjustment or action would result in short-swing profits
      liability under Section 16 or violate the exemptive conditions of Rule
      16b-3 unless the Committee (or the Board, in the case of grants to
      Independent Directors) determines that the option or other award is not to
      comply with such exemptive conditions. The number of shares of Common
      Stock subject to any option, right or award shall always be rounded to the
      next whole number.

SECTION 10.4. APPROVAL OF PLAN BY STOCKHOLDERS.

      This Plan will be submitted for the approval of the Company's stockholders
within twelve months after the date of the Board's initial adoption of this
Plan. Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments may be granted and Restricted Stock or Deferred
Stock may be awarded prior to such stockholder approval, provided that such
Options, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments shall not be exercisable and such Restricted Stock or Deferred
Stock shall not vest prior to the time when this Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments previously granted
and all Restricted Stock or Deferred Stock previously awarded under this Plan
shall thereupon be canceled and become null and void.

<PAGE>

SECTION 10.5. TAX WITHHOLDING.

      The Company shall be entitled to require payment in cash or deduction from
other compensation payable to each Optionee, Grantee or Restricted Stockholder
of any sums required by federal, state or local tax law to be withheld with
respect to the issuance, vesting or exercise of any Option, Restricted Stock,
Deferred Stock, Performance Award, Stock Appreciation Right, Dividend Equivalent
or Stock Payment. The Committee (or the Board, in the case of grants to
Independent Directors) may in its discretion and in satisfaction of the
foregoing requirement allow such Optionee, Grantee or Restricted Stockholder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option or other award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.

SECTION 10.6. LOANS.

      The Committee may, in its discretion, extend one or more loans to
Employees in connection with the exercise or receipt of an Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment granted
under this Plan, or the issuance of Restricted Stock or Deferred Stock awarded
under this Plan. The terms and conditions of any such loan shall be set by the
Committee.

SECTION 10.7. FORFEITURE PROVISIONS.

      Pursuant to its general authority to determine the terms and conditions
applicable to awards under the Plan, the Committee (or the Board, in the case of
grants to Independent Directors) shall have the right (to the extent consistent
with the applicable exemptive conditions of Rule 16b-3) to provide, in the terms
of Options or other awards made under the Plan, or to require the recipient to
agree by separate written instrument, that (i) any proceeds, gains or other
economic benefit actually or constructively received by the recipient upon any
receipt or exercise of the award, or upon the receipt or resale of any Common
Stock underlying such award, must be paid to the Company, and (ii) the award
shall terminate and any unexercised portion of such award (whether or not
vested) shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable). In this regard, unless the terms of an Option or
other award made under the Plan provides otherwise, in the event of an award
recipient's Termination of Employment, Termination of Consultancy or Termination
of Directorship, and within eighteen (18) months after the date thereof accepts
employment with any competitor of, or otherwise engages in competition with, the
Company, the Committee, in its sole discretion, may require such award recipient
to return, or (if not received) to forfeit, to the Company the economic value of
any award under the Plan that is realized or obtained (measured at the date of
exercise, vesting or payment) by such recipient (i) at any time after the date
which is six months prior to the date of such recipient's Termination of
Employment, Termination of Consultancy or Termination of Directorship, or (ii)
during such other period as the Committee (or the Board, in the case of grants
to Independent Directors) may determine.

<PAGE>

SECTION 10.8. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND PERFORMANCE-BASED
              COMPENSATION.

      Notwithstanding any other provision of this Plan, this Plan, and any
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted, or Restricted Stock or Deferred Stock awarded, to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan, Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, Stock Payments,
Restricted Stock and Deferred Stock granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
Furthermore, notwithstanding any other provision of this Plan, any Option, Stock
Appreciation Right or performance or incentive award described in Article VII
which is granted to a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.

SECTION 10.9. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS.

      The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (i) to establish any
other forms of incentives or compensation for Employees, Directors or
consultants of the Company or any Subsidiary or (ii) to grant or assume options
or other rights otherwise than under this Plan in connection with any proper
corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.

SECTION 10.10. COMPLIANCE WITH LAWS.

      This Plan, the granting and vesting of Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan and the issuance and delivery of
shares of Common Stock and the payment of money under this Plan or under
Options, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments granted or Restricted Stock or Deferred Stock awarded hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law,

<PAGE>

the Plan, Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments
granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

SECTION 10.11. TITLES.

      Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Plan.

SECTION 10.12. GOVERNING LAW.

      This Plan and any agreements hereunder shall be administered, interpreted
and enforced under the internal laws of the State of Delaware without regard to
conflicts of laws thereof.

                                    * * * * *

I hereby certify that the foregoing Plan was duly adopted by a majority of the
Stockholders of Z-Tel Technologies, Inc. on May 30, 2001. Inc.

Executed effective the 30th day of May 2001.

                                                ________________________________
                                                Jeffrey H. Kupor
                                                General Counsel and Secretary