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                                                                  Exhibit 10.3

                           telecom technologies, inc.

                              AMENDED AND RESTATED
                           1998 EQUITY INCENTIVE PLAN

                        (EFFECTIVE AS OF AUGUST 20, 1999)

                                   ARTICLE ONE

                               GENERAL PROVISIONS


I.       PURPOSE OF THE PLAN

         A. This Amended and Restated 1998 Equity Incentive Plan is intended to
promote the interests of TELECOM TECHNOLOGIES, INC., a Texas corporation (the
"Corporation"), by providing eligible persons with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation.

         B. Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

II.      STRUCTURE OF THE PLAN

         A. The Plan will consist of three separate incentive programs based
upon the Corporation's Common Stock:

            1. the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options
to purchase shares of Common Stock,

            2. the Stock Issuance Program under which eligible persons may,
at the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus
for services rendered the Corporation (or any Parent or Subsidiary), and

            3. the Stock Appreciation Right Program under which eligible
persons may, at the discretion of the Plan Administrator, be issued rights to
receive in cash an amount equal to the appreciation in the value of a given
number of shares of the Common Stock between two periods of time or a given
number of shares of the Common Stock that are the subject of grants under the
Discretionary Option Grant Program or the Stock Issuance Program.

         B. The provisions of Articles One and Five shall apply to all of the
Equity Programs and shall accordingly govern the interests of all persons
receiving benefits under the Plan.


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III.     ADMINISTRATION OF THE PLAN

         A. Prior to the Section 12(g) Registration Date, the Plan shall be
administered by the Board.

         B. Beginning with the Section 12(g) Registration Date, the Board shall
have the authority to administer the Discretionary Option Grant, the Stock
Appreciation Rights and Stock Issuance Programs with respect to Section 16
Insiders but may delegate such authority in whole or in part to the Primary
Committee. Administration of the Plan with respect to all other persons eligible
to participate may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer the Plan with respect to all such persons.

         C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

         D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of such Plan and any outstanding options or
stock issuances thereunder as it may deem necessary or advisable. Decisions of
the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Plan or any option or stock issuance thereunder.

         E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.

         F. Prior to the Section 12(g) Registration Date, the Board, in
connection with the grant of any Non-Statutory Option hereunder shall be
entitled in its discretion, to modify any provision hereof with respect to such
grant only, and provide that as to inconsistencies between such Option and this
Plan, that the written provisions of the agreement memorializing such Option
shall control.

IV.      ELIGIBILITY


         A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs shall be as follows:

         1.   Employees,

         2.   non-employee members of the Board or the board of directors of any
              Parent or Subsidiary, and

         3.   consultants and other independent advisors who provide services to
              the Corporation (or any Parent or Subsidiary).

         B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine, (i) with respect to the option grants
under


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the Discretionary Option Grant Program, which eligible persons are to receive
option grants, the time or times when such option grants are to be made, the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding, (ii) with respect to stock issuances under the Stock
Issuance Program, which eligible persons are to receive stock issuances, the
time or times when such issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid for such shares and (iii) with
regard to the grant of rights under the Stock Appreciation Right Program, which
eligible persons are to receive grants, the time or times when such grants are
to be made, the number of shares or the number of shares subject to options to
be covered by each such grant, the applicable time periods during which such
rights shall vest and be exercisable (which need not necessarily be coterminous
with vesting and exercise rights applicable to any underlying options or the
vesting schedules applicable to any stock grants).

         C. The Plan Administrator shall have the absolute discretion either to
make grants under the Discretionary Option Grant or Stock Appreciation Right
Programs or to effect stock issuances in accordance with the Stock Issuance
Program.

V.       STOCK SUBJECT TO THE PLAN

         A. The stock issuable under the Amended Plan shall be shares of
authorized but unissued Common Stock or Common stock acquired by the Corporation
following issuance thereof. The maximum number of shares of Common Stock which
may be issued over the term of the Plan shall not exceed 20,000,000 shares, as
adjusted pursuant to Subsection V.D. below.


         B. No person may be granted options, separately exercisable stock
appreciation rights or direct stock issuances under the Plan aggregating more
than 7,500,000 shares of Common Stock per calendar year beginning with the
calendar year in which the Section 12(g) Registration Date occurs.

         C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are canceled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Stock Issuance Program and subsequently
repurchased by the Corporation at the original issue price paid per share
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan. However,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Common Stock issued to the holder of such option or stock
issuance.

         D. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted options, separately exercisable stock appreciation rights and direct
stock issuances per calendar year, (iii) the number and/or class of


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securities and the exercise price per share in effect under each outstanding
option or stock appreciation right in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

VI.      RIGHT OF FIRST REFUSAL, LIMITATION ON TRANSFERS.

         A. If with respect to any Optionee, at any time prior to the first to
occur of the Section 12(g) Registration Date or the fifth anniversary of the
termination of the Optionee's Service with the Corporation, the Optionee (the
"Selling Shareholder") receives a bona fide offer from a third party (the
"Proposed Transferee") to purchase all or any part of the shares of Common Stock
received pursuant to this Plan (or any other equity securities of the
Corporation into which such shares of Common Stock have been converted) for a
purchase price that has been reached through arms-length negotiation and the
Selling Shareholder wishes to accept such offer (the "Third Party Offer"), the
Selling Shareholder shall, as a condition precedent to his or her right to sell
such shares of the Common Stock to the Proposed Transferee, comply with the
following procedure:


                  1. By written notice (the "Notice"), the Selling Shareholder
shall inform the Corporation of the Third Party Offer. The Notice must contain
the name of the Proposed Transferee, the number of shares of the Common Stock,
or other securities, proposed to be transferred (the "Offered Shares"), the
price per share, the proposed closing date (which shall in no event be sooner
than fifty days from the date of the Notice), all other terms and conditions of
the Third Party Offer and shall further contain an offer to sell some or all of
the Offered Shares to the Corporation or its assign pursuant to the terms and
provisions of this Section VI and on the same terms and conditions contained in
the Third Party Offer.

                  2. The Corporation, at its option, exercisable within twenty
days of the receipt of the Notice by a Selling Shareholder, to purchase all or
any part of the Offered Shares. In addition, the Corporation shall be entitled
to assign its right to purchase the Offered Shares to one or more third parties.

                  3. If the Corporation shall elect to purchase some or all of
the Offered Shares, it shall deliver notice of the exercise of its option to the
Selling Shareholder not later than the expiration of the twentieth day following
receipt of the Notice. In addition, if the Corporation shall assign some or all
of its right to purchase the Offered Shares to a third party, it shall deliver
notice of such assignment, together with notice of the number of the Offered
Shares to be purchased by such third party not later than the twentieth day
following receipt of the Notice. Following delivery of the Corporation (or the
third party) notice of the exercise of the option granted herein to purchase the
Offered Shares, the Corporation shall set a closing date, which shall be not
later than twenty days following the delivery of the Corporation's (or the third
party's) notice of intent to purchase Offered Shares.

                  4. To the extent that the Corporation and its assigns shall
elect to purchase less than all of the Offered Shares, the Selling Shareholder
shall thereafter be entitled to sell those of the Offered Shares not being so
purchased, upon the terms and conditions set forth in the Notice. Any
modification of such terms and conditions shall require additional compliance
with the provisions of this Section VI.

         B. The purchase price for any Offered Shares purchased by the
Corporation or its assigns shall be identical to the terms contained in the
Third Party Offer; provided, however, to the extent that any of the
consideration described in the Third Party Offer shall consist of property other
than cash, the Board of Directors of the Corporation shall determine, in good
faith, the cash value thereof and the Corporation and the purchasing


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third party, if they shall so elect, shall be entitled to pay such fair value in
cash, in lieu of delivering the property described in the Third Party Offer. To
the extent that any Third Party Offer shall contemplate the delivery of a
promissory note, such promissory note shall be given no value unless it shall be
secured by a letter of credit from a national banking association or a financial
institution having not less than $1 billion in assets.

         C. No transfer of any interest in any Common Stock received pursuant to
this Plan shall relieve the Transferor of its obligations under Sections VII.G,
H and I of Article Two or Section XIV.D of Article Four hereof, and any
transferee shall be bound to perform in the place and stead of its Transferor
and may be required by the Corporation to agree to assume such obligations as a
condition of transfer.

         D. Notwithstanding any of the provisions hereof or of any agreement
representing any option granted under the Plan, until the Section 12(g)
Registration Date, no transfer or attempted transfer of any record or beneficial
interest in any of the Common Stock (or any security to which the Common Stock
shall be converted) shall be effected to any person who is engaged in
Competition (as defined in Section VII.I of Article Two of this Plan) without
the express written consent of the Corporation, which may be withheld for any
reason or no reason. Any transfer in violation of the preceding sentence shall
be null and void ab initio.

                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

VII.     OPTION TERMS.

Each option shall be evidenced by one or more documents in the form approved by
the Plan Administrator; provided, however, that each such document shall comply
with the terms specified below. Each document evidencing an Incentive Option
shall, in addition, be subject to the provisions of this Plan, including Section
VIII below, applicable to such options.

         A.       EXERCISE PRICE.

                  1. The exercise price per share shall be fixed by the Plan
Administrator and may be equal to, greater than or less than the Fair Market
Value per share of Common Stock on the option grant date.

                  2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section XVIII of
Article Five and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12(g) of the 1934 Act at the time the option is exercised, then
the exercise price may also be paid as follows:

                           (a) in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or


                           (b) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (B) to the


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Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

         B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. Options may, in the discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service or upon the attainment of
specific performance objectives. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.

         C. EFFECT OF TERMINATION OF SERVICE. The following provisions shall
govern the exercise of any options held by the Optionee at the time of cessation
of Service or death:

            1. All outstanding and vested options to an Optionee shall
immediately terminate at the beginning of the thirty first (31st) day
following the voluntary termination of Optionee's Service.

            2. Should the Optionee's Service terminate by reason of death or
Permanent Disability, then the Optionee or his or her personal representative
or the persons to whom the option is transferred pursuant to will or the laws
of inheritance, as the case may be, shall have a period of twelve (12) months
following the date of such cessation of Service.

            3. If the Optionee's Service shall end as a result of an
Involuntary Termination, the Optionee shall have a period of one (1) month
following the date of such cessation of Service during which to exercise each
outstanding and vested option held by such Optionee.

            4. Under no circumstances, however, shall any option be
exercisable after the specified expiration of the option term.

                           (a) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable exercise
period or (if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which the option
has not been exercised. However, the option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be outstanding with
respect to any and all option shares for which the option is not otherwise at
the time exercisable or in which the Optionee is not otherwise at that time
vested.

                           (b) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall terminate
immediately and cease to remain outstanding.

                           (c) In the event that Optionee's Service shall
terminate following a Corporate Transaction or Change in Control, the provisions
of Section VIII of this Article Two shall govern the period for which
outstanding options are to remain exercisable following the Optionee's cessation
of Service and shall supersede any provisions to the contrary in this paragraph.


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            5. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option
remains outstanding, to:

               (a) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service or death
from the limited period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or

               (b) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested under the
option had the Optionee continued in Service.

         D. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, subject to Section
VI.D. of Article One, a Non-Statutory Option may, in connection with the
Optionee's estate plan, be assigned in whole or in part during the Optionee's
lifetime to one or more members of the Optionee's immediate family or to a trust
established exclusively for one or more such family members. The assigned
portion may only be exercised by the person or persons who acquire a proprietary
interest in the option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.

         E. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.


         F. UNVESTED SHARES. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock and
enter into any agreement relating to any Non-Statutory Option permitting the
exercise thereof with respect to unvested shares. Except to the extent otherwise
specifically set forth by the Plan Administrator in writing, should the Optionee
cease Service while holding such unvested shares, the Corporation shall have the
right to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

         G. FIRST REFUSAL RIGHTS. Until the Section 12(g) Registration Date, the
Corporation shall have the right of first refusal with respect to any proposed
sale, assignment, transfer or other disposition by the Optionee (or any
successor in interest) of any shares of Common Stock, or any interest therein,
issued upon the exercise of any Options. The right of first refusal contemplated
in this Subsection G shall be exercisable in accordance with the terms
established in Section VI of Article One above.

         H. MARKET STAND-OFF. In connection with any underwritten public
offering by the Corporation of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, including the
Corporation's initial public offering, the Optionee may not sell, make any short
sale of, loan, hypothecate, pledge, grant any option for the purchase of, or
otherwise dispose or transfer for value or otherwise agree to engage in any of
the foregoing transactions with respect to, any shares of Common Stock


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acquired upon exercise of an option granted under the Plan without the prior
written consent of the Corporation or its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time from and after
the effective date of the final prospectus for the offering as may be requested
by the Corporation or such underwriters. The Optionee shall be required to
execute such agreements as the Corporation or the underwriters request in
connection with the Market Stand-Off.


         I. COMPETITION. If, at any time while the Optionee remains in Service
or after the Optionee's termination of Service while the option remains
outstanding, the Optionee provides services to or for the benefit of a
competitor of the Corporation (or any Parent or Subsidiary), whether as an
employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected to
involve the skills and experience used or developed by the Optionee while in the
Corporation's Service or obtains a direct or indirect financial interest,
whether as a lender, stockholder, partner, adviser or consultant in any such
competitor, (collectively, engaging in "Competition") then the Optionee's rights
under any options outstanding under the Plan shall be forfeited and terminated,
subject to a determination to the contrary by the Plan Administrator. In
addition, in the event that the Optionee shall engage in Competition with the
Corporation at any time prior to the first to occur of the Section 12(g)
Registration Date or the fifth anniversary of the termination of Optionee's
Service, the Optionee shall, not less than five days following request therefor
from the Corporation, assign, transfer and convey to the Corporation, free and
clear of all liens, claims or other encumbrances, all shares of the Common Stock
(or any securities into which such Common Stock shall have been converted)
acquired by the Optionee pursuant to options or grants under the Plan for an
aggregate consideration equal to the aggregate consideration paid by the
Optionee for such shares. Any consideration paid by the Corporation for shares
purchased from the Optionee pursuant to this Section VII.I shall be purchased
for cash not later than the tenth day following the delivery of notice by the
Corporation to the Optionee. The Optionee hereby appoints the Corporation its
lawful attorney-in-fact to execute and deliver such documentation as shall be
necessary or convenient in the sole opinion of the Corporation to the
accomplishment of the foregoing provisions of this Subsection I, which
appointment shall be deemed coupled with an interest and irrevocable, to the
extent that the Optionee shall fail to respond to notice from the Corporation by
delivering all certificates representing shares acquired from the Corporation
pursuant to this Plan.

         J. INCENTIVE OPTIONS. The terms specified below shall be applicable to
all Incentive Options. Except as modified by the provisions of this Section
VII.J, all the provisions of the Plan shall be applicable to Incentive Options.
Options which are specifically designated as Non-Statutory Options shall not be
subject to the terms of this Section VII.J.

            1. Incentive Options may only be granted to Employees.

            2. The exercise price per share shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

            3. (a) The aggregate Fair Market Value of the shares of Common
Stock (determined as of the respective date or dates of grant) for which one
or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000).

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                     (b) To the extent the Employee holds two (2) or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such options are
granted.

                  4. If any Employee to whom an Incentive Option is granted is a
10% Stockholder, then the option term shall not exceed five (5) years measured
from the option grant date and the exercise price per share of the option shall
be equal to at least one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date.

VIII.    CORPORATE TRANSACTION/CHANGE IN CONTROL


         A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall NOT so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such option or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall be
made by the Plan Administrator, and its determination shall be final, binding
and conclusive.

         B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

         C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

         D. If an outstanding option is assumed by the successor corporation (or
parent thereof) in connection with a Corporate Transaction, and the
Corporation's repurchase rights with respect to the unvested option shares are
assigned to such successor corporation (or parent thereof), and at the time of
or within twelve (12) months following such Corporate Transaction either (i) the
Optionee is offered a Lesser Position in replacement of the position held by him
or her immediately prior to the Corporate Transaction or (ii) the Optionee's
Service terminates by reason of an Involuntary Termination, then, effective as
of the date on which such Lesser Position is offered to the Optionee or the
effective date of such Involuntary Termination, respectively, the option shall
automatically accelerate in part so that, in addition to the number of vested
shares of Common Stock for which the option is exercisable at such time, the
option shall become exercisable with respect to the next annual installment of
option shares for which the option is scheduled to become exercisable in
accordance with the exercise schedule established for the option (and the
Corporation's repurchase rights shall automatically lapse with respect to such
option shares). Following such acceleration, to the extent the Optionee
continues in Service,


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the exercise schedule for the option shall be adjusted so that the option shall
become exercisable, with respect to each subsequent annual installment of option
shares under the original exercise schedule, on each subsequent anniversary of
the effective date of such option acceleration. In the event that both the offer
of a Lesser Position and a subsequent Involuntary Termination of an Optionee's
Service occur within twelve (12) months following a Corporate Transaction, then
acceleration of the option shares shall occur only in connection with the offer
of such Lesser Position and no additional acceleration shall occur in connection
with such subsequent Involuntary Termination. Following an Involuntary
Termination that occurs within twelve (12) months following a Corporate
Transaction, the option shall remain exercisable for any or all of the vested
option shares until the earlier of (i) the expiration of the option term or (ii)
the expiration of the one (1)-year period measured from the effective date of
the Involuntary Termination.

         E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction, (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same and (iii) the maximum number of securities
and/or class of securities for which any one person may be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances under the Plan.

         F. Notwithstanding Sections VIII.A., VIII.B. and VIII.D of this Article
Two, the Plan Administrator shall have the discretion, exercisable either at the
time the option is granted or at any time while the option remains outstanding,
to provide for the automatic acceleration of one or more outstanding options
(and the automatic termination of one or more outstanding repurchase rights with
the immediate vesting of the shares of Common Stock subject to those rights)
upon the occurrence of a Corporate Transaction, whether or not those options are
to be assumed or replaced (or those repurchase rights are to be assigned) in the
Corporate Transaction. The Plan Administrator shall also have the discretion to
grant options which do not accelerate whether or not such options are assumed
(and to provide for repurchase rights that do not terminate whether or not such
rights are assigned) in connection with a Corporate Transaction.

         G. The Plan Administrator shall also have the discretion, exercisable
at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration, of any options which are
assumed or replaced in a Corporate Transaction and do not otherwise accelerate
at that time (and the termination of any of the Corporation's outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate
Transaction) in the event that within twelve (12) months following the effective
date of such Corporate Transaction either (i) the Optionee should be offered a
Lesser Position in replacement of the position held by him or her immediately
prior to the Corporate Transaction or (ii) the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination. Following an
Involuntary Termination that occurs within twelve (12) months following a
Corporate Transaction, any options accelerated under this Section VIII.G shall
remain exercisable for the vested option shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one (1) year period
measured from the effective date of the Involuntary Termination.


         H. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with


                                      -10-

<PAGE>

the immediate vesting of the shares of Common Stock subject to those rights)
upon the occurrence of a Change in Control or (ii) condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the
occurrence of either of the following events within a specified period (not to
exceed twelve (12) months) following the effective date of such Change in
Control: (a) the offer to the Optionee of a Lesser Position in replacement of
the position held by him or her immediately prior to the Change in Control or
(b) the Involuntary Termination of the Optionee's Service. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term;
provided, however, that following an Involuntary Termination that occurs within
twelve (12) months following a Change in Control, any options accelerated under
this Section VIII.H shall remain exercisable for the vested option shares until
the earlier of (i) the expiration of the option term or (ii) the expiration of
the one (1)-year period measured from the effective date of the Involuntary
Termination.

         I. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.

         J. The grant of options under the Option Grant Program shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

IX.      CANCELLATION AND REGRANT OF OPTIONS.

The Plan Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected option holders, the cancellation
of any or all outstanding options under the Plan and to grant in substitution
therefor new options covering the same or different number of shares of Common
Stock but with an exercise price per share based on the Fair Market Value per
share of Common Stock on the new option grant date.

                                  ARTICLE THREE

                        STOCK APPRECIATION RIGHT PROGRAM

X.       STOCK APPRECIATION RIGHT TERMS.

The Plan Administrator shall be entitled, from time to time, to issue stock
appreciation rights in tandem with options granted under the Discretionary
Option Grant Program or as independent rights. In addition, the Plan
Administrator may cause stock appreciation rights to be limited in the fashion
contemplated in Section XI below. Stock appreciation rights shall be evidenced
by one or more documents in the form approved by the Plan Administrator;
provided, however, that each such document shall comply with the terms specified
below.


         A. The following terms shall govern the grant and exercise of stock
appreciation rights granted in tandem with options:

            1. One or more Optionees may be granted the right, exercisable
upon such terms as the Plan Administrator may establish, to elect between the
exercise of the underlying Option for shares of Common Stock and the
surrender of that option in exchange for a distribution from the Corporation
in an amount equal to the

                                      -11-

<PAGE>

excess of (a) the Fair Market Value (on the option surrender date) of the number
of shares in which the Optionee is at the time vested under the surrendered
option (or surrendered portion thereof) over (b) the aggregate exercise price
payable for such shares.

                  2. No such option surrender shall be effective unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall be entitled may be made in shares of
Common Stock valued at Fair Market Value on the option surrender date, in cash,
or partly in shares and partly in cash, as the Plan Administrator shall in its
sole discretion deem appropriate.

                  3. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(a) five (5) business days after the receipt of the rejection notice or (b) the
last day on which the option is otherwise exercisable in accordance with the
terms of the documents evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the option grant date.

         B. The following terms shall govern the grant and exercise of limited
stock appreciation rights:

            1. One or more Section 16 Insiders may be granted limited stock
appreciation rights with respect to their outstanding options.

            2. Upon the occurrence of a Hostile Take-Over, each such
individual holding one or more options with such a limited stock appreciation
right shall have the unconditional right (exercisable for a thirty (30) day
period following such Hostile Take-Over) to surrender each such option to the
Corporation, to the extent the option is at the time exercisable for vested
shares of Common Stock. In return for the surrendered option, the Optionee
shall receive a cash distribution from the Corporation in an amount equal to
the excess of (a) the Take-Over Price of the shares of Common Stock which are
at the time vested under each surrendered option (or surrendered portion
thereof) over (b) the aggregate exercise price payable for such shares. Such
cash distribution shall be paid within five (5) days following the option
surrender date.

            3. The Plan Administrator shall pre-approve, at the time the
limited right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section X.B. No
additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution.

            4. The balance of the option (if any) shall continue in full
force and effect in accordance with the documents evidencing such option.

XI.      INDEPENDENT STOCK APPRECIATION RIGHTS.

Each stock appreciation right which is not granted in tandem with an option
existing under this Plan shall comply with the terms specified below.

         A. EXERCISE PRICE.

            1. The exercise price per share to which an Independent
Appreciation Right shall be fixed by the Plan Administrator and may be equal
to, greater than or less than the Fair Market Value per share of the Common
Stock on the grant date to which such stock appreciation rights relate.

                                      -12-

<PAGE>

            2. The exercise price shall become immediately due upon exercise
of the stock appreciation right and shall be payable in cash or check made
payable to the Corporation. Notwithstanding the foregoing, at the option of
the Corporation, the Corporation may settle stock appreciation rights, upon
the exercise thereof, in cash by delivering to the holder an amount equal to
the excess of the value of the underlying Common Stock to which such stock
appreciation rights relate over the exercise price, less all applicable
Federal, state and local income and employment taxes required to be withheld
by the Corporation by reason of such exercise.

         B. EXERCISE AND TERM OF STOCK APPRECIATION RIGHTS. Each stock
appreciation right shall be exercisable at such time or times, and during such
period with respect to such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing such grant. However, no
such grant shall have a term in excess of ten (10) years measured from the date
of grant.

         C. VESTING PROVISIONS. Independent Appreciation Rights issued under the
Stock Appreciation Right Program may, in the discretion of the Plan
Administrator, be fully and immediately vested upon issuance or may vest in one
or more installments over the Participant's period of service or upon the
attainment of specified performance objectives. Notwithstanding the foregoing,
no stock appreciation right shall have a term in excess of ten (10) years
measured from the date of grant.

         D. EFFECT OF TERMINATION OF SERVICE.

            1. The following provisions shall govern the exercise of any
Independent Appreciation Right held by an Optionee at the time of cessation
of Service or death:

               (a) Should the Optionee cease to remain in Service for any
reason other than Permanent Disability or Misconduct, then the Optionee shall
have a period of three (3) months following the date of such cessation of
Service during which to exercise each outstanding Independent Appreciation
Right held by such Optionee.

               (b) Should the Optionee's Service terminate by reason of
Permanent Disability, then the Optionee shall have a period of twelve (12)
months following the date of such cessation of Service during which to
exercise each outstanding Independent Appreciation Right held by such
Optionee.

               (c) If the Optionee dies while holding an outstanding
Independent Appreciation Right, then the personal representative of his or
her estate or the person or persons to whom the stock appreciation right is
transferred pursuant to the Optionee's will or the laws of inheritance shall
have a twelve (12)-month period following the date of the Optionee's death to
exercise such Independent Appreciation Right.

               (d) Under no circumstances, however, shall any such
Independent Appreciation Right be exercisable after the specified expiration
of the Independent Appreciation Right term.

               (e) During the applicable post-Service exercise period, the
Independent Appreciation Right may not be exercised in the aggregate for more
than, with respect to more shares of underlying Common Stock, than the vested
number of such shares on the date of the Optionee's cessation of Service.
Upon the expiration of the applicable exercise period or (if earlier) upon
the expiration of the Independent Appreciation Right term, the Independent
Appreciation Right shall terminate and cease to be outstanding for any vested
shares for which the Independent Appreciation Right has not been exercised.
However, the Independent Appreciation Right shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be outstanding with

                                      -13-

<PAGE>

respect to any and all underlying shares of Common Stock for which the
Independent Appreciation Right is not otherwise at the time exercisable or in
which the Optionee is not otherwise at that time vested.

                  2. Should the Optionee's Service be terminated for Misconduct,
then all outstanding Independent Appreciation Rights held by the Optionee shall
terminate immediately and cease to remain outstanding.

                  3. In the event that Optionee's Service shall terminate
following Corporate Transaction or Change in Control, the provisions of Section
XII of this Article III shall govern the period for which outstanding
Independent Appreciation Rights are to remain exercisable following the
Optionee's cessation of Service and shall supersede any provisions to the
contrary in this paragraph.


                  4. The Plan Administrator shall have the discretion,
exercisable either at the time a stock appreciation right is granted or at any
time while the Independent Appreciation Right remains outstanding, to:

                     (a) extend the period of time for which the Independent
Appreciation Right is to remain exercisable following the Optionee's
cessation of Service or death from the limited period otherwise in effect for
that Independent Appreciation Right to such greater period of time as the
Plan Administrator shall deem appropriate, but in no event beyond the
expiration of the stock appreciation right term, and/or

                     (b) permit the Independent Appreciation Right to be
exercised, during the applicable post-Service exercise period, not only with
respect to the number of underlying shares of Common Stock for which such
stock appreciation right is vested and exercisable at the time of the
Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested under the
Independent Appreciation Right had the Optionee continued in Service.

         E. LIMITED TRANSFERABILITY OF INDEPENDENT APPRECIATION RIGHTS. During
the lifetime of the Optionee, Independent Appreciation Rights shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by will or by the laws of descent and distribution following the
Optionee's death. However, Independent Appreciation Rights may, in connection
with the Optionee's estate plan, be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the Independent Appreciation Rights pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the Independent Appreciation Rights immediately prior to
such assignment and shall be set forth in such documents issued to the assignee
as the Plan Administrator may deem appropriate.

XII.     CORPORATE TRANSACTION/CHANGE IN CONTROL

         A. In the event of any Corporate Transaction, each outstanding stock
appreciation right shall automatically accelerate so that each such stock
appreciation right shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to such stock appreciation right and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. However,
an outstanding stock appreciation right shall NOT so accelerate if and to the
extent: (i) such stock appreciation right is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable stock appreciation right to
purchase shares of the capital stock of the successor corporation (or parent
thereof), (ii) such stock appreciation right is to be replaced with a cash
incentive program of the successor corporation which preserves the spread


                                      -14-

<PAGE>

existing on the unvested stock appreciation right shares at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to such stock appreciation right or (iii) the
acceleration of such stock appreciation right is subject to other limitations
imposed by the Plan Administrator at the time of the stock appreciation right
grant. The determination of stock appreciation right comparability under clause
(i) above shall be made by the Plan Administrator, and its determination shall
be final, binding and conclusive.

         B. Immediately following the consummation of the Corporate Transaction,
all outstanding stock appreciation rights shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

         C. If an outstanding stock appreciation right is assumed by the
successor corporation (or parent thereof) in connection with a Corporate
Transaction, and at the time of or within twelve (12) months following such
Corporate Transaction either (i) the Optionee is offered a Lesser Position in
replacement of the position held by him or her immediately prior to the
Corporate Transaction or (ii) the Optionee's Service terminates by reason of an
Involuntary Termination, then, effective as of the date on which such Lesser
Position is offered to the Optionee or the effective date of such Involuntary
Termination, respectively, the stock appreciation right shall automatically
accelerate in part so that, in addition to the number of vested shares of Common
Stock for which the stock appreciation right is exercisable at such time, the
stock appreciation right shall become exercisable with respect to the next
annual installment of stock appreciation right shares for which the stock
appreciation right is scheduled to become exercisable in accordance with the
exercise schedule established for the stock appreciation right. Following such
acceleration, to the extent the Optionee continues in Service, the exercise
schedule for the stock appreciation right shall be adjusted so that the stock
appreciation right shall become exercisable, with respect to each subsequent
annual installment of stock appreciation right shares under the original
exercise schedule, on each subsequent anniversary of the effective date of such
stock appreciation right acceleration. In the event that both the offer of a
Lesser Position and a subsequent Involuntary Termination of an Optionee's
Service occur within twelve (12) months following a Corporate Transaction, then
acceleration of the stock appreciation right shares shall occur only in
connection with the offer of such Lesser Position and no additional acceleration
shall occur in connection with such subsequent Involuntary Termination.
Following an Involuntary Termination that occurs within twelve (12) months
following a Corporate Transaction, the stock appreciation right shall remain
exercisable for any or all of the vested portion thereof until the earlier of
(i) the expiration of the stock appreciation right term or (ii) the expiration
of the one (1) year period measured from the effective date of the Involuntary
Termination.

         D. Each stock appreciation right which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply (when determining the value of the securities to
which it relates) to the number and class of securities which would have been
issuable to the Optionee in consummation of such Corporate Transaction had the
stock appreciation right been an Option and been exercised immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be made to (i)
the number and class of securities available for issuance under the Plan
following the consummation of such Corporate Transaction, (ii) the exercise
price payable per share under each outstanding stock appreciation right,
provided the aggregate exercise price payable for such securities shall remain
the same and (iii) the maximum number of securities and/or class of securities
for which any one person may be granted stock options, separately exercisable
stock appreciation rights and direct stock issuances under the Plan.

         E. Notwithstanding Sections XI.A., XI.B. and XI.D of this Article
Three, the Plan Administrator shall have the discretion, exercisable either at
the time the stock appreciation right is granted or at any time while


                                      -15-

<PAGE>

the stock appreciation right remains outstanding, to provide for the automatic
acceleration of all or any portion of such outstanding stock appreciation rights
upon the occurrence of a Corporate Transaction, whether or not those stock
appreciation rights are to be assumed or replaced in the Corporate Transaction.
The Plan Administrator shall also have the discretion to grant stock
appreciation rights which do not accelerate whether or not such stock
appreciation rights are assumed in connection with a Corporate Transaction.

         F. The Plan Administrator shall also have the discretion, exercisable
at the time any stock appreciation right is granted or at any time while that
stock appreciation right remains outstanding, to provide for the automatic
acceleration, of all or any part of any stock appreciation rights which are
assumed or replaced in a Corporate Transaction and do not otherwise accelerate
at that time in the event that within twelve (12) months following the effective
date of such Corporate Transaction either (i) the Optionee should be offered a
Lesser Position in replacement of the position held by him or her immediately
prior to the Corporate Transaction or (ii) the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination. Following an
Involuntary Termination that occurs within twelve (12) months following a
Corporate Transaction, any stock appreciation rights which are accelerated under
this Section XII.F shall remain exercisable for the vested portion thereof until
the earlier of (i) the expiration of the option term or (ii) the expiration of
the one (1)-year period measured from the effective date of the Involuntary
Termination.

         G. The Plan Administrator shall have the discretion, exercisable either
at the time the stock appreciation right is granted or at any time while the
stock appreciation right remains outstanding, to (i) provide for the automatic
acceleration of one or more outstanding stock appreciation rights upon the
occurrence of a Change in Control or (ii) condition any such stock appreciation
right acceleration upon the occurrence of either of the following events within
a specified period (not to exceed twelve (12) months) following the effective
date of such Change in Control: (a) the offer to the Optionee of a Lesser
Position in replacement of the position held by him or her immediately prior to
the Change in Control or (b) the Involuntary Termination of the Optionee's
Service. Any stock appreciation rights which are accelerated in connection with
a Change in Control shall remain fully exercisable until the expiration or
sooner termination of the stock appreciation right term; provided, however, that
following an Involuntary Termination that occurs within twelve (12) months
following a Change in Control, any stock appreciation rights accelerated under
this Section XII.G shall remain exercisable for the vested stock appreciation
right shares until the earlier of (i) the expiration of the stock appreciation
right term or (ii) the expiration of the one (1) year period measured from the
effective date of the Involuntary Termination.


         H. The grant of stock appreciation rights under this Plan shall in no
way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

XIII.    CANCELLATION OF STOCK APPRECIATION RIGHTS

The Plan Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected holders, the cancellation of any
or all outstanding stock appreciation rights under the Plan.

                                  ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM

XIV.     STOCK ISSUANCE TERMS


                                      -16-

<PAGE>

Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below.

         A.       PURCHASE PRICE.

                  1. The purchase price per share shall be fixed by the Plan
Administrator and may be less than, equal to or greater than the Fair Market
Value per share of Common Stock on the issue date.

                  2. Subject to the provisions of Section XVIII of Article Five,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

                           (a) cash or check made payable to the Corporation, or

                           (b) past services rendered to the Corporation (or any
Parent or Subsidiary).

         B.       VESTING PROVISIONS.

                  1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives.

                  2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

                  3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

                  4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.

                  5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the


                                      -17-

<PAGE>

immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or
non-attainment of the applicable performance objectives.

         C. FIRST REFUSAL RIGHTS. Until the Section 12(g) Registration Date, the
Corporation shall have the right of first refusal with respect to any proposed
sale, assignment, transfer or other disposition by the Participant (or any
successor in interest) of any shares of Common Stock issued under the Stock
Issuance Program. The right of first refusal contemplated in this Subsection C
shall be exercisable in accordance with the terms established in Section VI of
Article One above.

         D. COMPETITION. If, at any time while the Participant remains in
Service or after Participant's termination of Service while the option remains
outstanding, the Participant provides services to or for the benefit of a
competitor of the Corporation (or any Parent or Subsidiary), whether as an
employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected to
involve skills and experience used or developed by the Participant while in the
Corporation's service or obtains a direct or indirect financial interest,
whether as a lender, stockholder, partner, advisor or consultant in any
competitor (collectively, engaging in "Competition") then the Participant shall,
upon five days written notice from the Corporation, assign, transfer and convey
to the Corporation, free and clear of all liens, claims or encumbrances, all
shares of Common Stock (and any securities into which such shares have been
converted) issued to Participant under the Stock Issuance Program and all of
Participant's rights therein shall be forfeited and terminated, subject to a
determination to the contrary by the Plan Administrator. The Participant hereby
appoints the Corporation as its lawful attorney-in-fact to execute and deliver
such certificates and other instruments and to take such actions as shall be
necessary or convenient to the accomplishment of the foregoing, such appointment
to be coupled with an interest and irrevocable, to the extent that the
Participant shall not respond to a notice from the Corporation under this
Section XIV.D.

XV.      CORPORATE TRANSACTION/CHANGE IN CONTROL

         A. All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
in connection with such Corporate Transaction or (ii) such accelerated vesting
is precluded by other limitations imposed in the Stock Issuance Agreement.

         B. Notwithstanding Section XV.A of this Article Three, the Plan
Administrator shall have the discretionary authority, exercisable either at the
time the unvested shares are issued or any time while the Corporation's
repurchase rights remain outstanding under the Stock Issuance Program, to
provide that those rights shall automatically terminate in whole or in part, and
the shares of Common Stock subject to those terminated rights shall immediately
vest, in the event of a Corporate Transaction, whether or not those repurchase
rights are to be assigned to the successor corporation (or its parent) in
connection with such Corporate Transaction. The Plan Administrator shall also
have the discretion to provide for repurchase rights with terms different from
those in effect under this Section XV in connection with a Corporate
Transaction.

         C. The Plan Administrator shall have the discretion, exercisable either
at the time the unvested shares are issued or at any time while the
Corporation's repurchase rights remain outstanding, to provide that any
repurchase rights that are assigned in the Corporate Transaction shall
automatically terminate, and the shares


                                      -18-

<PAGE>

of Common Stock subject to those terminated rights shall immediately vest in
full, in the event that either of the following events should occur either at
the time of or within a specified period (not to exceed twelve (12) months)
following the effective date of the Corporate Transaction: (a) the Participant
is offered a Lesser Position in replacement of the position held by him or her
immediately prior to the Corporate Transaction or (b) the Participant's Service
terminates by reason of an Involuntary Termination.


         D. The Plan Administrator shall have the discretion, exercisable either
at the time the unvested shares are issued or at any time while the
Corporation's repurchase right remains outstanding, to (i) provide for the
automatic termination of one or more outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those rights upon the
occurrence of a Change in Control or (ii) condition any such accelerated vesting
upon the occurrence of either of the following events at the time of or within a
specified period (not to exceed twelve (12) months) following the effective date
of such Change in Control: (a) the Participant is offered a Lesser Position in
replacement of the position held by him or her immediately prior to the Change
in Control or (b) the Involuntary Termination of the Participant's Service.

XVI.     SHARE ESCROW/LEGENDS.

Unvested shares may, in the Plan Administrator's discretion, be held in escrow
by the Corporation until the Participant's interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

XVII.    MARKET STAND-OFF.

In connection with any underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration statement filed under
the Securities Act of 1933, including the Corporation's initial public offering,
the Participant may not sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any shares of Common Stock acquired under the Plan without the prior written
consent of the Corporation or its underwriters. Such restriction (the "Market
Stand-Off") shall be in effect for such period of time from and after the
effective date of the final prospectus for the offering as may be requested by
the Corporation or such underwriters. The Participant shall be required to
execute such agreements as the Corporation or the underwriters request in
connection with the Market Stand-Off.

                                  ARTICLE FIVE

                                  MISCELLANEOUS

XVIII.  FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option
exercise price under the Discretionary Option Grant Program or the purchase
price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased


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<PAGE>

shares (less the par value, if any, of those shares) plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

XIX.     TAX WITHHOLDING

         A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or upon the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.

         B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:

                  1. STOCK WITHHOLDING: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.

                  2. STOCK DELIVERY: The election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.

XX.      EFFECTIVE DATE AND TERM OF PLAN

         A. This Plan shall become effective as of August 16, 1999 and amends
and restates in its entirety the 1998 Equity Incentive Plan adopted by the Board
of Directors of telecom technologies, inc., a Texas corporation, on April 10,
1998. In the event that none of the circumstances set forth in clauses B(ii) or
(iii) below have previously occurred, the Board of Directors of the Corporation
may not later than April 10, 2008, amend this Plan, effective as of such date,
to extend its term for an additional period not exceeding ten years from the
effective date of such extension.

         B.   The Plan shall terminate upon the earliest of (i) April 10, 2008,
              (ii) the date on which all shares available for issuance under the
              Plan shall have been issued as vested shares or (iii) the
              termination of all outstanding options in connection with a
              Corporate Transaction. All options and unvested stock issuances
              outstanding at that time under the Plan shall continue to have
              full force and effect in accordance with the provisions of the
              documents evidencing such options or issuances.

         C.   XXI. AMENDMENT OF THE PLAN


         A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the


                                      -20-

<PAGE>

Optionee or the Participant consents to such amendment or modification. In
addition, certain amendments may require stockholder approval pursuant to
applicable laws and regulations.

         B. Options may be granted under the Discretionary Option Grant Program
and shares may be issued under the Stock Issuance Program which are in each
instance in excess of the number of shares of Common Stock then available for
issuance under the Plan, provided any excess shares actually issued under those
programs shall be held in escrow until there is obtained stockholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically canceled and cease to be outstanding.

XXII.    USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.

XXIII.  WITHHOLDING

The Corporation's obligation to deliver shares of Common Stock upon the exercise
of any options or upon the vesting of any shares issued under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

XXIV.  REGULATORY APPROVALS

       A. The implementation of the Plan, the granting of any options under
the Plan and the issuance of any shares of Common Stock (i) upon the exercise of
any option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.

       B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws and all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which Common Stock is then listed for trading.


XXV.   NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's Service at any time for any reason, with or without cause.


                                      -21-

<PAGE>

                                    APPENDIX


The following definitions shall be in effect under the Plan:

         A. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

         B. 1933 ACT shall mean the Securities Act of 1933, as amended.

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

         D. BOARD shall mean the Corporation's Board of Directors.

         E. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

            1 the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders, or

            2 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 ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) 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 (A) who were still in office
at the time the Board approved such election or nomination.

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

         G. COMMITTEE shall mean a committee of one (1) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

         H. COMMON STOCK shall mean the Corporation's Class B Common Stock.

         I. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:


            1. a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or

            2. the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.

         J. CORPORATION shall mean telecom technologies, inc., a Texas
corporation.


                                      -22-

<PAGE>

         K. DISCRETIONARY OPTION GRANT PROGRAM shall mean the program described
in Section II.A.1 of Article One.

         L. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

         M. EQUITY PLANS shall mean the Discretionary Option Grant Program, the
Stock Issuance Program and the Stock Appreciation Right Program.

         N. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.

         O. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

            1. If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.

            2. If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.

            3. For purposes of any option grants made on the Underwriting
Date, the Fair Market Value shall be deemed to be equal to the price per share
at which the Common Stock is sold in the initial public offering pursuant to the
Underwriting Agreement.

            4. For purposes of any option grants made prior to the
Underwriting Date, the Fair Market Value shall be determined by the Plan
Administrator after taking into account such factors as the Plan Administrator
shall deem appropriate.

         P. HOSTILE TAKE-OVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.

         Q. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

         R. INDEPENDENT APPRECIATION RIGHT shall mean a stock appreciation right
issued pursuant to Section XI of Article Three.


                                      -23-

<PAGE>

         S. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:

            1. such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or

            2. such individual's voluntary resignation following the offer to
such individual of a Lesser Position in replacement of the position held by him
or her immediately prior to the Corporate Transaction or Change in Control.

         T. LESSER POSITION for an Optionee or Participant shall mean a new
position or a change in the Optionee or Participant's position which, compared
with such individual's position with the Corporation immediately prior to the
Corporate Transaction or Change in Control, (i) offers a lower level of
compensation (including base salary, fringe benefits and target bonuses under
any corporate-performance based bonus or incentive programs), or (ii) materially
reduces such individual's duties or level of responsibility.

         U. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).


         V. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

         W. OPTION shall mean a Non-Statutory Option or an Incentive Option.

         X. OPTIONEE shall mean any person to whom an option or stock
appreciation right is granted under the Plan.

         Y. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

         Z. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

         AA. PERMANENT DISABILITY or PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more.

         BB. PLAN shall mean the Corporation's Amended and Restated 1998 Equity
Incentive Plan, as set forth in this document.

         CC. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Option Grant and Stock Issuance Programs


                                      -24-

<PAGE>

with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under those programs with
respect to the persons under its jurisdiction.

         DD. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Option Grant
and Stock Issuance Programs with respect to Section 16 Insiders.

         EE. SECONDARY COMMITTEE shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Option Grant and Stock Issuance
Programs with respect to eligible persons other than Section 16 Insiders.

         FF. SECTION 12(G) REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12(g) of the 1934 Act.

         GG. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

         HH. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.

         II. STOCK APPRECIATION RIGHT PROGRAM shall mean the program described
in Section X of Article Three.

         JJ. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

         KK. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

         LL. STOCK ISSUANCE PROGRAM shall mean the program described in Section
XIV of Article Four.

         MM. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

         NN. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

         OO. TAXES shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.

         PP. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

         QQ. UNDERWRITING DATE shall mean the date on which the Underwriting
Agreement is executed and the initial public offering price of the Common Stock
is established.

                                       -25-