<PAGE>

                                                                  EXHIBIT 10.01
                                 dsl.net, inc.

                                1999 STOCK PLAN

                                March 30, 1999


SECTION 1.  Purpose.
---------   -------

     The purpose of the 1999 Stock Plan (the "Plan") is to secure for dsl.net,
inc., (the "Company"), its parent (if any) and any subsidiaries of the Company
(collectively the "Related Corporations") the benefits arising from capital
stock ownership by those employees, directors, officers and consultants of the
Company and any Related Corporations who will be responsible for the Company's
future growth and continued success.

     The Plan will provide a means whereby (a)  employees of the Company and any
Related Corporations may purchase stock in the Company pursuant to options which
qualify as "incentive stock options" ("Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), (b)
directors, employees and consultants of the Company and any Related Corporations
may purchase stock in the Company pursuant to options granted hereunder which do
not qualify as Incentive Stock Options ("Non-Qualified Options"); (c) directors,
employees and consultants of the Company and any Related Corporations may be
awarded stock in the Company ("Awards"); (d) directors, employees and
consultants of the Company and any Related Corporations may receive stock
appreciation rights ("SARs"); and (e) directors, employees and consultants of
the Company and any Related Corporations may make direct purchases of stock in
the Company ("Purchases").  Both Incentive Stock Options and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options."  As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation" as those terms are defined in Section
424 of the Code.  Options, Awards, SARs and Purchases are referred to hereafter
individually as a "Plan Benefit" and collectively as "Plan Benefits."
Directors, employees and consultants of the Company and any Related Corporations
are referred to herein as "Participants."


SECTION 2.  Administration.
---------   --------------

     2.1  Board of Directors and the Committee.  The Plan will be administered
          ------------------------------------
by the Board of Directors of the Company whose construction and interpretation
of the terms and provisions hereof shall be final and conclusive.  Any director
to whom a Plan Benefit is awarded shall be ineligible to vote upon his or her
Plan Benefit, but Plan Benefits may be granted any such director by a vote of
the remainder of the directors, except as limited below.  The Board of Directors
may in its sole discretion grant Options, issue shares upon exercise of such
Options, grant Awards, grant SARs and approve Purchases, all as provided in the
Plan.  The Board of Directors shall have authority, subject to the express
provisions of the Plan, to construe the Plan and its related agreements, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Option, Award, SAR and
Purchase
<PAGE>

                                      -2-


agreements, which need not be identical, and to make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of the Plan.  The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any related agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency.  No director shall be liable for any action or determination made in
good faith.  The Board of Directors may delegate any or all of its powers under
the Plan to a Compensation Committee or other Committee (the "Committee")
appointed by the Board of Directors consisting of at least two members of the
Board of Directors.  If the Company has a class of stock registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), then members of the Committee shall at all times be: (i) "outside
directors" as such term is defined in Treas. Reg. (S) 1.162-27(e)(3) (or any
successor regulation); and (ii) "non-employee directors" within the meaning of
Rule 16b-3 (or any successor rule) under the Exchange Act, as such terms are
interpreted from time to time.  If the Committee is so appointed, all references
to the Board of Directors herein shall mean and relate to such Committee, unless
the context otherwise requires.

     2.2  Compliance with Section 162(m) of the Code.  Section 162(m) of the
          ------------------------------------------
Code, added by the Omnibus Budget Reconciliation Act of 1993, generally limits
the tax deductibility to publicly held companies of compensation in excess of
$1,000,000 paid to certain "covered employees" ("Covered Employees").  If the
Company is subject to Section 162(m) of the Code, it is the Company's intention
to preserve the deductibility of such compensation to the extent it is
reasonably practicable and to the extent it is consistent with the Company's
compensation objectives.  For purposes of this Plan, Covered Employees of the
Company shall be those employees of the Company described in Section 162(m)(3)
of the Code.


SECTION 3.  Eligibility.
---------   -----------

     3.1  Incentive Stock Options.  Participants who are employees shall be
          -----------------------
eligible to receive Incentive Stock Options pursuant to the Plan; provided that
no person shall be granted any Incentive Stock Option under the Plan who, at the
time such Option is granted, owns, directly or indirectly, Common Stock of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Related Corporations, unless the
requirements of Section 6.6(b) hereof are satisfied.  In determining whether
this 10% threshold has been reached, the stock attribution rules of Section
424(d) of the Code shall apply.  Directors who are not regular employees are not
eligible to receive Incentive Stock Options.

     3.2  Non-Qualified Options, Awards, SARs and Purchases.  Non-Qualified
          -------------------------------------------------
Options, Awards, SARs and authorizations to make Purchases may be granted to any
Participant.

     3.3  Generally.  The Board of Directors may take into consideration a
          ---------
Participant's individual circumstances in determining whether to grant an
Incentive Stock Option, a Non-Qualified Option, an Award or an SAR or to approve
a Purchase.  Granting of any Option, Award or SAR or approval of any Purchase
for any individual shall neither entitle that individual to, nor disqualify that
individual from, participation in any other grant of Plan Benefits.
<PAGE>

                                      -3-

SECTION 4.  Stock Subject to Plan.
---------   ---------------------

     Subject to adjustment as provided in Sections 10 and 11 hereof, the stock
to be offered under the Plan shall consist of shares of the Company's Common
Stock, par value $.001 per share, and the maximum number of shares of stock
which will be reserved for issuance, and in respect of which Plan Benefits may
be granted pursuant to the provisions of the Plan, shall not exceed in the
aggregate 3,700,000 shares.  Such shares may be authorized and unissued shares
or may be treasury shares.  If an Option or SAR granted hereunder shall expire
or terminate for any reason without having been exercised in full, or if the
Company shall reacquire any unvested shares issued pursuant to Awards or
Purchases, the unpurchased shares subject thereto and any unvested shares so
reacquired shall again be available for subsequent grants of Plan Benefits under
the Plan.  Stock issued pursuant to the Plan may be subject to such restrictions
on transfer, repurchase rights or other restrictions as shall be determined by
the Board of Directors.


SECTION 5.  Granting of Options, Awards and SARs and Approvals of Purchases.
---------   ---------------------------------------------------------------

     Options, Awards and SARs may be granted and Purchases may be approved under
the Plan at any time after February __, 1999 and prior to March 30, 2009.  The
date of grant of an Option, Award or SAR or approval of a Purchase under the
Plan will be the date specified by the Board of Directors at the time the Board
of Directors grants such Option, Award or SAR or approves such Purchase;
provided, however, that such date shall not be prior to the date on which the
Board of Directors takes such action.  The Board of Directors shall have the
right, with the consent of a Participant, to convert an Incentive Stock Option
granted under the Plan to a Non-Qualified Option pursuant to Section 6.7.  Plan
Benefits may be granted alone or in addition to other grants under the Plan.


SECTION 6.  Special Provisions Applicable to Options and SARs.
---------   -------------------------------------------------

     6.1  Purchase Price and Shares Subject to Options and SARs.
          -----------------------------------------------------

          (a)  The purchase price per share of stock deliverable upon the
     exercise of an Option shall be determined by the Board of Directors,
     provided, however, that (i) in the case of an Incentive Stock Option, the
     --------  -------
     exercise price shall not be less than 100% of the fair market value of such
     stock on the day the option is granted (except as modified in Section
     6.6(b) hereof), and (ii) in the case of a Non-Qualified Option, the
     exercise price shall not be less than 50% of the fair market value of such
     stock on the day such Option is granted.

          (b)  Options granted under the Plan may provide for the payment of the
     exercise price by delivery of (i) cash or a check payable to the order of
     the Company in an amount equal to the exercise price of such Options, (ii)
     shares of Common Stock of the Company owned by the Participant having a
     fair market value equal in amount to the exercise price of the Options
     being exercised, or (iii) any combination of (i) and (ii).  The
<PAGE>

                                      -4-

     fair market value of any shares of the Company's Common Stock which may be
     delivered upon exercise of an Option shall be determined by the Board of
     Directors. The Board of Directors may also permit Participants, either on a
     selective or aggregate basis, to simultaneously exercise Options and sell
     the shares of Common Stock thereby acquired, either to the Company or
     pursuant to a brokerage or similar arrangement, approved in advance by the
     Board of Directors, and to use the proceeds from such sale as payment of
     the purchase price of such shares.

          (c)  If, at the time an Option is granted under the Plan, the
     Company's Common Stock is publicly traded, "fair market value" shall be
     determined as of the last business day for which the prices or quotes
     discussed in this sentence are available prior to the date such Option is
     granted (the "Determination Date") and shall mean (i) the average (on the
     Determination Date) of the high and low prices of the Common Stock on the
     principal national securities exchange on which the Common Stock is traded,
     if such Common Stock is then traded on a national securities exchange; (ii)
     the last reported sale price (on the Determination Date) of the Common
     Stock on the Nasdaq Stock Market if the Common Stock is not then traded on
     a national securities exchange; or (iii) the closing bid price (or average
     of bid prices) last quoted (on the Determination Date) by an established
     quotation service for over-the-counter securities, if the Common Stock is
     not reported on the Nasdaq Stock Market. However, if the Common Stock is
     not publicly traded at the time an Option is granted under the Plan, "fair
     market value" shall be deemed to be the fair value of the Common Stock as
     determined by the Board of Directors after taking into consideration all
     factors which it deems appropriate, including, without limitation, recent
     sale and offer prices of the Common Stock in private transactions
     negotiated at arm's length.

          (d)  If the Company is subject to Section 162(m) of the Code, the
     maximum number of shares with respect to which Options or SARs may be
     granted to any employee, including any cancellations or repricings which
     may occur, shall be limited to 250,000 shares in any calendar year.

     6.2  Duration of Options and SARs.  Subject to Section 6.6(b) hereof, each
          ----------------------------
Option and SAR and all rights thereunder shall be expressed to expire on such
date as the Board of Directors may determine, but in no event later than ten
years from the day on which the Option or SAR is granted and shall be subject to
earlier termination as provided herein.

     6.3  Exercise of Options and SARs.
          ----------------------------

          (a)  Subject to Section 6.6(b) hereof, each Option and SAR granted
     under the Plan shall be exercisable at such time or times and during such
     period as shall be set forth in the instrument evidencing such Option or
     SAR. To the extent that an Option or SAR is not exercised by a Participant
     when it becomes initially exercisable, it shall not expire but shall be
     carried forward and shall be exercisable, on a cumulative basis, until the
     expiration of the exercise period. No partial exercise may be for less than
     ten (10) full shares of Common Stock (or its equivalent).
<PAGE>

                                      -5-

          (b)  The Board of Directors shall have the right to accelerate the
     date of exercise of any installments of any Option or SAR; provided that
     the Board of Directors shall not accelerate the exercise date of any
     installment of any Option granted to a Participant as an Incentive Stock
     Option (and not previously converted into a Non-Qualified Option pursuant
     to Section 6.7) if such acceleration would violate the annual vesting
     limitation contained in Section 422(d)(1) of the Code, which provides
     generally that the aggregate fair market value (determined at the time the
     Option is granted) of the stock with respect to which Incentive Stock
     Options granted to any Participant are exercisable for the first time by
     such Participant during any calendar year (under all plans of the Company
     and any Related Corporations) shall not exceed $100,000.

     6.4  Nontransferability of Options and SARs.
          --------------------------------------

     No Option or SAR granted under the Plan shall be assignable or transferable
by the Participant, either voluntarily or by operation of law, except by will or
the laws of descent and distribution or, with respect to Non-Qualified Options
and SARs, pursuant to a qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act ("ERISA") or the
rules promulgated thereunder or unless the Participant's non-qualified stock
option agreement granting such options (the "Non-Qualified Stock Option
Agreement") or the Participant's SAR agreement granting such SARs (the "SAR
Agreement") provides otherwise.  Unless otherwise provided by the Non-Qualified
Stock Option Agreement or the SAR Agreement, during the life of the Participant,
the Option or SAR shall be exercisable only by him or her.  If any Participant
should attempt to dispose of or encumber his or her Options or SARs, other than
in accordance with the applicable terms of a Non-Qualified Stock Option
Agreement or SAR Agreement, his or her interest in such Options or SARs shall
terminate.

     6.5  Effect of Termination of Employment or Death.
          --------------------------------------------

          (a)  If a Participant ceases to be employed by the Company or a
     Related Corporation for any reason, including retirement but other than
     death, any Option or SAR granted to such Participant under the Plan shall
     immediately terminate; provided, however, that any portion of such Option
                            --------  -------
     or SAR which was otherwise exercisable on the date of termination of the
     Participant's employment may be exercised within the three-month period
     following the date on which the Participant ceased to be so employed, but
     in no event after the expiration of the exercise period. Any such exercise
     may be made only to the extent of the number of shares subject to the
     Option or SAR which were purchasable on the date of such termination of
     employment. If the Participant dies during such three-month period, the
     Option or SAR shall be exercisable by the Participant's personal
     representatives, heirs or legatees to the same extent and during the same
     period that the Participant could have exercised the Option or SAR on the
     date of his or her death.

          (b)  If the Participant dies while an employee of the Company or any
     Related Corporation, any Option or SAR granted to such Participant under
     the Plan shall be exercisable by the Participant's personal
     representatives, heirs or legatees, for the
<PAGE>

                                      -6-

     purchase of that number of shares and to the same extent that the
     Participant could have exercised the Option or SAR on the date of his or
     her death. The Option or SAR or any unexercised portion thereof shall
     terminate unless so exercised prior to the earlier of the expiration of six
     months from the date of such death or the expiration of the exercise
     period.

     6.6  Designation of Incentive Stock Options; Limitations.
          ---------------------------------------------------

     Options granted under the Plan which are intended to be Incentive Stock
Options qualifying under Section 422 of the Code shall be designated as
Incentive Stock Options and shall be subject to the following additional terms
and conditions:

          (a)  Dollar Limitation.  The aggregate fair market value (determined
               -----------------
     at the time the option is granted) of the Common Stock for which Incentive
     Stock Options are exercisable for the first time during any calendar year
     by any person under the Plan (and all other incentive stock option plans of
     the Company and any Related Corporations) shall not exceed $100,000. In the
     event that Section 422(d)(1) of the Code is amended to alter the limitation
     set forth therein so that following such amendment such limitation shall
     differ from the limitation set forth in this Section 6.6(a), the limitation
     of this Section 6.6(a) shall be automatically adjusted accordingly.

          (b)  10% Stockholder.  If any employee to whom an Incentive Stock
               ---------------
     Option is to granted pursuant to the provisions of the Plan is on the date
     of grant the owner of stock possessing more than 10% of the total combined
     voting power of all classes of stock of the Company or any Related
     Corporations, then the following special provisions shall be applicable to
     the Incentive Stock Option granted to such individual:

               (i)    The option price per share of the Common Stock subject to
          such Incentive Stock Option shall not be less than 110% of the fair
          market value of one share of Common Stock on the date of grant; and

               (ii)   The option exercise period shall not exceed five years
          from the date of grant.

     In determining whether the 10% threshold has been reached, the stock
     attribution rules of Section 424(d) of the Code shall apply.

          (c)  Except as modified by the preceding provisions of this Section
     6.6, all of the provisions of the Plan shall be applicable to Incentive
     Stock Options granted hereunder.

     6.7  Conversion of Incentive Stock Options into Non-Qualified Options;
          -----------------------------------------------------------------
Termination of Incentive Stock Options.  The Board of Directors, at the written
--------------------------------------
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior
<PAGE>

                                      -7-

to the expiration of such Incentive Stock Options, regardless of whether the
Participant is an employee of the Company or a Related Corporation at the time
of such conversion. Such actions may include, but not be limited to, extending
the exercise period or reducing the exercise price of the appropriate
installments of such Options. At the time of such conversion, the Board of
Directors (with the consent of the Participant) may impose such conditions on
the exercise of the resulting Non-Qualified Options as the Board of Directors in
its discretion may determine, provided that such conditions shall not be
inconsistent with the Plan. Nothing in the Plan shall be deemed to give any
Participant the right to have such Participant's Incentive Stock Options
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board of Directors takes appropriate action. The Board of
Directors, with the consent of the Participant, may also terminate any portion
of any Incentive Stock Option that has not been exercised at the time of such
termination.

     6.8  Stock Appreciation Rights.  An SAR is the right to receive, without
          -------------------------
payment, an amount equal to the excess, if any, of the fair market value of a
share of Common Stock on the date of exercise over the grant price, which amount
will be multiplied by the number of shares with respect to which the SARs shall
have been exercised.  The grant of SARs under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the Board of
Directors shall deem desirable:

          (a)  Grant.  SARs may be granted in tandem with, in addition to or
               -----
     completely independent of any Plan Benefit.

          (b)  Grant Price.  The grant price of an SAR may be the fair market
               -----------
     value of a share of Common Stock on the date of grant or such other price
     as the Board of Directors may determine.

          (c)  Exercise.  An SAR may be exercised by a Participant in
               --------
     accordance with procedures established by the Board of Directors or as
     otherwise provided in any agreement evidencing any SARs. The Board of
     Directors may provide that an SAR shall be automatically exercised on one
     or more specified dates.

          (d)  Form of Payment.  Payment upon exercise of an SAR may be made
               ---------------
     in cash, in shares of Common Stock or any combination thereof, as the Board
     of Directors shall determine.

          (e)  Fair Market Value. Fair market value shall be determined in
               -----------------
     accordance with Section 6.1(c) with the "Determination Date" being
     determined by reference to the date of grant or the date of exercise of an
     SAR, as applicable.

     6.9  Rights as a Stockholder.
          -----------------------

     The holder of an Option or SAR shall have no rights as a stockholder with
respect to any shares covered by the Option or SAR until the date of issue of a
stock certificate to him or her for such shares.  Except as otherwise expressly
provided in the Plan, no adjustment shall be made for
<PAGE>

                                      -8-

dividends or other rights for which the record date is prior to the date such
stock certificate is issued.

     6.10 Special Provisions Applicable to Non-Qualified Options and SARs
          ---------------------------------------------------------------
          Granted to Covered Employees.
          ----------------------------

     If the Company is subject to Section 162(m) of the Code, in order for the
full value of Non- Qualified Options or SARs granted to Covered Employees to be
deductible by the Company for federal income tax purposes, the Company may
intend for such Non-Qualified Options or SARs to be treated as  "qualified
performance-based compensation" as described in Treas. Reg. (S)1.162-27(e) (or
any successor regulation). In such case, Non-Qualified Options or SARs granted
to Covered Employees shall be subject to the following additional requirements:

          (a)  such options and rights shall be granted only by the Committee;
     and

          (b)  the exercise price of such Options and the grant price of such
     SARs granted shall in no event be less than the fair market value of the
     Common Stock as of the date of grant of such Options or SARs.


SECTION 7.  Special Provisions Applicable to Awards
---------   ---------------------------------------

     7.1  Grants of Awards.  The Board of Directors may grant a Participant an
          ----------------
Award subject to such terms and conditions as the Board of Directors deems
appropriate, including, without limitation, restrictions on the pledging, sale,
assignment, transfer or other disposition of such shares and the requirement
that the Participant forfeit all or a portion of such shares back to the Company
upon termination of employment.

     7.2  Conditions.  Approvals of Awards may be subject to the following
          ----------
conditions:

          (a)  Each Participant receiving an Award shall enter into an agreement
     (a "Stock Restriction Agreement") with the Company, if required by the
     Board of Directors, in a form specified by the Board of Directors agreeing
     to such terms and conditions of the Award as the Board of Directors deems
     appropriate.

          (b)  Shares issued and transferred to a Participant pursuant to an
     Award may, if required by the Board of Directors, be deposited with the
     Treasurer or other officer of the Company designated by the Board of
     Directors to be held until the lapse of the restrictions upon such shares,
     and each Participant shall execute and deliver to the Company stock powers
     enabling the Company to exercise its rights hereunder.

          (c)  Certificates for shares issued pursuant to an Award shall, if the
     Company shall deem it advisable, bear a legend to the effect that they are
     issued subject to specified restrictions.
<PAGE>

                                      -9-

          (d)  Certificates representing the shares issued pursuant to an Award
     shall be registered in the name of the Participant and shall be owned by
     such Participant. Such Participant shall be the holder of record of such
     shares for all purposes, including voting and receipt of dividends paid
     with respect to such shares.


     7.3  Nontransferability.  Shares issued pursuant to an Award may not be
          ------------------
sold, assigned, transferred, alienated, commuted, anticipated, or otherwise
disposed of (except, subject to the provisions of such Participant's Stock
Restriction Agreement, by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA or the rules promulgated thereunder), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or
be otherwise encumbered, and are not subject to attachment, garnishment,
execution or other legal or equitable process, prior to the lapse of
restrictions on such shares, and any attempt at action in contravention of this
Section shall be null and void. If any Participant should attempt to dispose of
or encumber his or her shares issued pursuant to an Award prior to the lapse of
the restrictions imposed on such shares, his or her interest in such shares
shall terminate.

     7.4  Effect of Termination of Employment or Death on Awards.  If, prior to
          ------------------------------------------------------
the lapse of restrictions applicable to Awards, the Participant ceases to be an
employee of the Company or the Related Companies for any reason, Awards to such
Participant, as to which restrictions have not lapsed, shall be forfeited to the
Company, effective on the date of the Participant's termination of employment.
The Board of Directors shall have the sole power to decide in each case to what
extent leaves of absence shall be deemed a termination of employment.


SECTION 8.  Special Provisions Applicable to Purchases.
---------   ------------------------------------------

     All approvals of Purchases which provide that the Company has a right to
repurchase the shares subject to such Purchase (the "Restricted Shares") shall
be subject to the terms and conditions set forth in the related agreement (the
"Stock Purchase Restriction Agreement") approved by the Board of Directors, and
shall be subject to the other terms and conditions of this Section 8.

     8.1  Conditions.  All approvals of Purchases shall be subject to the
          ----------
following conditions:

          (a)  Prior to the issuance and transfer of Restricted Shares, the
     Participant shall pay to the Company the purchase price (the "Purchase
     Price") of the Restricted Shares in cash or in such other manner as shall
     be as approved by the Board of Directors.

          (b)  Restricted Shares issued and transferred to a Participant may, if
     required by the Board of Directors, be deposited with the Treasurer or
     other officer of the Company designated by the Board of Directors to be
     held until the lapse of the
<PAGE>

                                      -10-

     restrictions upon such Restricted Shares, and each Participant shall
     execute and deliver to the Company stock powers enabling the Company to
     exercise its rights hereunder.

          (c)  Certificates for Restricted Shares shall, if the Company shall
     deem it advisable, bear a legend to the effect that they are issued subject
     to specified restrictions.

          (d)  Certificates representing the Restricted Shares shall be
     registered in the name of the Participant and shall be owned by such
     Participant. Such Participant shall be the holder of record of such
     Restricted Shares for all purposes, including voting and receipt of
     dividends paid with respect to such Restricted Shares.

     8.2  Nontransferability.  A Participant's Restricted Shares may not be
          ------------------
sold, assigned, transferred, alienated, commuted, or otherwise disposed of
(except, subject to the provisions of such Participant's Stock Purchase
Restriction Agreement, by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA or the rules promulgated thereunder), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or
be otherwise encumbered, and are not subject to attachment, garnishment,
execution or other legal or equitable process, prior to the lapse of
restrictions on such Restricted Shares, and any attempt at action in
contravention of this Section shall be null and void. If any Participant should
attempt to dispose of or encumber his or her Restricted Shares prior to the
lapse of the restrictions imposed on such Restricted Shares, his or her interest
in the Restricted Shares awarded to him or her shall terminate.


SECTION 9.  Requirements of Law.
---------   -------------------

     9.1  Violations of Law.  No shares shall be issued and delivered upon
          -----------------
exercise of any Option or the making of any Award or Purchase or the payment of
any SAR unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act of l933, as amended,
any applicable listing requirements of any national securities exchange on which
stock of the same class is then listed, and any other requirements of law or of
any regulatory bodies having jurisdiction over such issuance and delivery, shall
have been fully complied with. Each Participant may, by accepting Plan Benefits,
be required to represent and agree in writing, for himself or herself and for
his or her transferees by will or the laws of descent and distribution, that the
stock acquired by him, her or them is being acquired for investment. The
requirement for any such representation may be waived at any time by the Board
of Directors.

     9.2  Compliance with Rule 16b-3.  If the Company has a class of stock
          --------------------------
registered pursuant to Section 12 of the Exchange Act, the intent of this Plan
is to qualify for the exemption provided by Rule 16b-3 under the Exchange Act.
To the extent any provision of the Plan does not comply with the requirements of
Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and
deemed advisable by the Board of Directors and shall not affect the validity of
the Plan.  In the event Rule 16b-3 is revised or replaced, the Board of
Directors may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.
<PAGE>

                                      -11-


SECTION 10.  Recapitalization.
----------   ----------------

     In the event that dividends are payable in Common Stock of the Company or
in the event there are splits, sub-divisions or combinations of shares of Common
Stock of the Company, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of any Option previously granted
shall be increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price, and the number of shares to which
granted SARs relate shall be increased or decreased proportionately, as the case
may be, and the grant price of such SARs shall be decreased or increased
proportionately, as the case may be.


SECTION 11.  Reorganization.
----------   --------------

          (a)  In case the Company is merged or consolidated with another
     corporation and the Company is not the surviving corporation, or, in case
     the property or stock of the Company is acquired by any other corporation,
     or in case of a reorganization or liquidation of the Company, the Board of
     Directors of the Company, or the board of directors of any corporation
     assuming the obligations of the Company hereunder, shall, as to outstanding
     Plan Benefits, either (i) make appropriate provision for the protection of
     any such outstanding Plan Benefits by the substitution on an equitable
     basis of appropriate stock of the Company or of the merged, consolidated or
     otherwise reorganized corporation which will be issuable in respect of the
     shares of Common Stock of the Company, provided only that the excess of the
     aggregate fair market value of the shares subject to the Plan Benefits
     immediately after such substitution over the purchase price thereof is not
     more than the excess of the aggregate fair market value of the shares
     subject to such Plan Benefits immediately before such substitution over the
     purchase price thereof, (ii) upon written notice to the Participants,
     provide that all unexercised Plan Benefits must be exercised within a
     specified number of days of the date of such notice or such Plan Benefits
     will be terminated, or (iii) upon written notice to the Participants,
     provide that the Company or the merged, consolidated or otherwise
     reorganized corporation shall have the right, upon the effective date of
     any such merger, consolidation, sale of assets or reorganization, to
     purchase all Plan Benefits held by each Participant and unexercised as of
     that date at an amount equal to the aggregate fair market value on such
     date of the shares subject to the Plan Benefits held by such Participant
     over the aggregate purchase price therefor, such amount to be paid in cash
     or, if stock of the merged, consolidated or otherwise reorganized
     corporation is issuable in respect of the shares of the Common Stock of the
     Company, then, in the discretion of the Board of Directors, in stock of
     such merged, consolidated or otherwise reorganized corporation equal in
     fair market value to the aforesaid amount. In any such case the Board of
     Directors shall, in good faith, determine fair market value and may, in its
     discretion, advance the lapse of any waiting or installment periods and
     exercise dates.

          (b)  Notwithstanding anything herein to the contrary, in the event
     that following or in connection with a Change-in-Control (as defined
     below), a Participant's employment with, or service as a director or
     consultant of, the Company is (i) terminated by the Company for any reason
     other than Cause (as defined below), or (ii) terminated by the Participant
     for Good Reason
<PAGE>

                                      -12-

     (as defined below), any portion of a Participant's Plan Benefit which would
     otherwise vest or become exercisable solely with the passage of time and
     the Participant's continued employment with or service as a director or
     consultant of the Company, shall immediately vest and become fully
     exercisable and all rights relevant to such Plan Benefit shall accrue
     immediately to such Participant, unless otherwise explicitly provided in
     the applicable Award agreement. The term "Cause" shall mean (i) habitual
     intoxication, (ii) illegal drug use or addiction, (iii) conviction of a
     felony (or plea of guilty or nolo contendere), (iv) material failure or
     inability to perform one's agreements, duties or obligations as an
     employee, director or consultant, other than from illness or injury, and
     (v) willful misconduct or negligence in the performance of one's
     agreements, duties or obligations as an employee, director or consultant.
     The term "Change-in-Control" shall mean: (i) any sale, lease, exchange or
     other transfer (in one transaction or series of transactions) of all or
     substantially all of the assets of the Company; (ii) individuals who, as of
     the date hereof, constitute the entire Board of Directors of the Company
     (the "Incumbent Directors") cease for any reason to constitute at least a
     majority of the Board of Directors, provided that any individual becoming a
     director subsequent to the date hereof whose election or nomination for
     election was approved by a vote of at least a majority of the then
     Incumbent Directors shall be, for the purposes of this provision,
     considered as though such individual were an Incumbent Director; (iii) any
     consolidation or merger of the Company with any other entity (including,
     without limitation, a triangular merger) where the stockholders of the
     Company immediately prior to the consolidation or merger, would not,
     immediately after the consolidation or merger, beneficially own, directly
     or indirectly, shares representing fifty percent (50%) of the combined
     voting power of all of the outstanding securities of the entity issuing
     cash or securities in the consolidation or merger (or its ultimate parent
     corporation, if any); (iv) a person, including a "person" as defined in
     Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act"), other than the Company or an employee benefit plan
     sponsored by the Company, becomes the beneficial owner (as defined in Rule
     13d-3 under the Exchange Act), directly or indirectly, of securities of the
     Company representing forty percent (40%) or more of the total voting power
     represented by the Company's then outstanding voting securities, except for
     a person who was a beneficial owner of forty percent (40%) or more of the
     total voting power of the Company's outstanding voting securities on April
     29, 1999; or (v) the Board of Directors of the Company, by a vote of a
     majority of all the Directors, adopts a resolution to the effect that a
     "Change-in-Control" has occurred for purposes of this Agreement. The term
     "Good Reason" shall mean that (i) the Participant's compensation has been
     materially reduced, (ii) the Participant's position, duties or
     responsibilities have been materially changed, (iii) the Participant, if an
     employee of the Company, has been required to move his or her principal
     residence because his primary place of employment is moved to a location
     greater than thirty (30) miles away from its then current location, (iv)
     the Company has not paid to the Participant when due any salary, bonus or
     other material benefit due to him or her, or (v) there exists a breach by
     the Company of any material term or provision of any employment agreement
     between it and the Participant, provided, however, that, in any such event,
     the Participant shall notify the Company of such event and give it fifteen
     (15) days to remedy the situation before terminating his or her employment.
<PAGE>

                                      -13-

SECTION 12.  No Special Employment Rights.
----------   ----------------------------

     Nothing contained in the Plan or in any Plan Benefit documentation shall
confer upon any Participant receiving a grant of any Plan Benefit any right with
respect to the continuation of his or her employment by the Company (or any
Related Corporation) or interfere in any way with the right of the Company (or
any Related Corporation), subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of any Plan Benefit.  Whether an authorized
leave of absence, or absence in military or government service, shall constitute
termination of employment shall be determined by the Board of Directors.


SECTION 13.  Amendment of the Plan.
----------   ---------------------

     The Board of Directors may at any time and from time to time modify or
amend the Plan in any respect. The termination or any modification or amendment
of the Plan shall not, without the consent of a recipient of any Plan Benefit,
affect his or her rights under any Plan Benefit previously granted. With the
consent of the affected Participant, the Board of Directors may amend
outstanding agreements relating to any Plan Benefit, in a manner not
inconsistent with the Plan. The Board of Directors hereby reserves the right to
amend or modify the terms and provisions of the Plan and of any outstanding
Options to the extent necessary to qualify any or all Options under the Plan for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, provided, however, that the consent of an optionee is required if such
amendment or modification would cause unfavorable income tax treatment for such
optionee.


SECTION 14.  Withholding.
----------   -----------

     The Company's obligation to deliver shares of stock upon the exercise of
any Option or the granting of an Award or to make payment upon any exercise of
any SAR or making of a Purchase shall be subject to the satisfaction by the
Participant of all applicable federal, state and local income and employment tax
withholding requirements.


SECTION 15.  Effective Date and Duration of the Plan.
----------   ---------------------------------------

     15.1 Effective Date.  The Plan shall become effective when adopted by the
          --------------
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's stockholders.  If such stockholder approval is not obtained within l2
months after the date of the Board's adoption of the Plan, then any Incentive
Stock Options previously granted under the Plan shall terminate and no further
Incentive Stock Options shall be granted.  Subject to such limitation, Options
may be granted under the Plan at any time after the effective date and before
the date fixed herein for termination of the Plan.
<PAGE>

                                      -14-

     15.2 Duration.  Unless sooner terminated in accordance with Section l1
          --------
hereof, the Plan shall terminate upon the earlier of (i) the tenth anniversary
of the date of its  adoption by the Board of Directors or (ii) the date on which
all shares available for issuance under the Plan shall have been issued pursuant
to any Awards or Purchases or the exercise or cancellation of Options and SARs
granted hereunder.  If the date of termination is determined under (i) above,
then Plan Benefits outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such Plan
Benefits.


SECTION 16.  Governing Law.
----------   -------------

The Plan and all actions taken thereunder shall be governed by the laws of the
State of Connecticut.