Document:

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                                                                    Exhibit 10.3

                              SONUS NETWORKS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

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                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                      <C>
1.       PURPOSE                                                   1

2.       DEFINITIONS                                               1

3.       ELIGIBILITY                                               3

4.       OFFERING PERIODS AND PURCHASE PERIODS                     3

5.       PARTICIPATION                                             4

6.       METHOD OF PAYMENT OF CONTRIBUTIONS                        4

7.       GRANT OF OPTION                                           5

8.       EXERCISE OF OPTION                                        5

9.       DELIVERY                                                  6

10.      VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT           6

11.      AUTOMATIC WITHDRAWAL                                      6

12.      INTEREST                                                  7

13.      STOCK                                                     7

14.      ADMINISTRATION                                            8

15.      DESIGNATION OF BENEFICIARY                                8

16.      TRANSFERABILITY                                           8

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17.      USE OF FUNDS                                              8

18.      REPORTS                                                   9

19.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION;
         CORPORATE TRANSACTIONS                                    9

20.      AMENDMENT OR TERMINATION                                 10

21.      NOTICES                                                  11

22.      CONDITIONS UPON ISSUANCE OF SHARES                       11

23.      TERM OF PLAN; EFFECTIVE DATE                             11
</TABLE>

                              SONUS NETWORKS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

         The following  constitute the provisions of the 2000 Employee Stock
Purchase Plan of Sonus Networks, Inc.

1.       PURPOSE

         The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.

2.       DEFINITIONS

         2.1. BOARD means the Board of Directors of the Company.

         2.2. CODE means the Internal Revenue Code of 1986, as amended.

         2.3. COMMON STOCK means the Common Stock, par value $0.001 per
share, of the Company.

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         2.4. COMPANY means Sonus Networks, Inc., a Delaware corporation.

         2.5. COMPENSATION means all regular straight time compensation
including commissions but shall not include payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses and other irregular
or infrequent compensation or benefits.

         2.6. CONTINUOUS STATUS AS AN EMPLOYEE means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.

         2.7. CONTRIBUTIONS means all amounts credited to the account of a
participant pursuant to the Plan.

         2.8. CORPORATE TRANSACTION means a merger or consolidation of the
Company with and into another person or the sale, transfer, or other disposition
of all or substantially all of the Company's assets to one or more persons
(other than any wholly-owned subsidiary of the Company) in a single transaction
or series of related transactions, unless securities possessing more than 50% of
the total combined voting power of the survivor's or acquiror's outstanding
securities, or the securities of any parent thereof, are held by a person or
persons who held the voting securities of the Company immediately prior to such
transaction.

         2.9. DESIGNATED SUBSIDIARIES means the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

         2.10. EMPLOYEE means any person, including an Officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.

         2.11. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.

         2.12. OFFERING DATE means the first business day of each Offering
Period of the Plan.

         2.13. OFFERING PERIOD means a period of  twenty-four (24) months
commencing on February 1 and August 1 of each year, except for the first
Offering Period as set forth in Section 4.1.

         2.14. OFFICER means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

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         2.15. PLAN means this Employee Stock Purchase Plan.

         2.16. PURCHASE DATE means the last day of each Purchase Period of the
Plan.

         2.17. PURCHASE PERIOD means a period of six (6) months within an
Offering Period, except for the Purchase Periods in the first Offering Period as
set forth in Section 4.2.

         2.18. PURCHASE PRICE means with respect to a Purchase Period an amount
equal to 85% of the Fair Market Value (as defined in Section 7.2 below) of a
Share of Common Stock on the Offering Date or on the Purchase Date, whichever is
lower; provided, however, that in the event (i) of any increase in the number of
Shares available for issuance under the Plan as a result of a
stockholder-approved amendment to the Plan, and (ii) all or a portion of such
additional Shares are to be issued with respect to one or more Offering Periods
that are underway at the time of such increase ("Additional Shares"), and (iii)
the Fair Market Value of a Share of Common Stock on the date of such increase
(the "Approval Date Fair Market Value") is higher than the Fair Market Value on
the Offering Date for any such Offering Period, then in such instance the
Purchase Price with respect to Additional Shares shall be 85% of the Approval
Date Fair Market Value or the Fair Market Value of a Share of Common Stock on
the Purchase Date, whichever is lower.

         2.19. SHARE means a share of Common Stock, as adjusted in accordance
with Section 19 of the Plan.

         2.20. SUBSIDIARY means a corporation, domestic or foreign, of which not
less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

3.       ELIGIBILITY

         3.1. Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5.1 and the limitations imposed
by Section 423(b) of the Code; provided however that eligible Employees may not
participate in more than one Offering Period at a time.

         3.2. Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the

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Company or of any subsidiary of the Company, or (ii) if such option would permit
his or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of the
Fair Market Value (as defined in Section 7.2 below) of such stock (determined at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.

4.       OFFERING PERIODS AND PURCHASE PERIODS

         4.1. OFFERING PERIODS. The Plan shall be generally implemented by a
series of Offering Periods of twenty-four (24) months' duration, with new
Offering Periods (other than the first Offering Period) commencing on or about
February 1 and August 1 of each year (or at such other time or times as may be
determined by the Board of Directors). The first Offering Period shall commence
on the beginning of the effective date of the Registration Statement on Form S-1
for the initial public offering of the Company's Common Stock (the "IPO Date")
and continue until July 31, 2002. The Plan shall continue until terminated in
accordance with Section 20 hereof. The Board of Directors of the Company shall
have the power to change the duration and/or the frequency of Offering Periods
with respect to future offerings without stockholder approval if such change is
announced to Employees at least five (5) days prior to the scheduled beginning
of the first Offering Period to be affected.

         4.2. PURCHASE PERIODS. Each Offering Period shall generally consist of
four (4) consecutive purchase periods of six (6) months' duration. The last day
of each Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period commencing on February 1 shall end on the next July 31. A
Purchase Period commencing on August 1 shall end on the next January 31. The
first Purchase Period of the first Offering Period shall commence on the IPO
Date and shall end on January 31, 2001 with subsequent Purchase Periods ending
on July 31, 2001, January 31, 2002 and July 31, 2002. The Board of Directors of
the Company shall have the power to change the duration and/or frequency of
Purchase Periods with respect to future purchases without stockholder approval
if such change is announced to Employees at least five (5) days prior to the
scheduled beginning of the first Purchase Period to be affected.

5.       PARTICIPATION

         5.1. An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given Offering Period. The
subscription agreement shall set forth the percentage of the participant's
Compensation (subject to Section 6.1 below) to be paid as Contributions pursuant
to the Plan.

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         5.2. Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the last
Purchase Period of the Offering Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in Section
10.

6.       METHOD OF PAYMENT OF CONTRIBUTIONS

         6.1. A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than twenty percent (20%) (or such other percentage as the Board
may establish from time to time before an Offering Date) of such participant's
Compensation on each payday during the Offering Period. All payroll deductions
made by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.

         6.2. A participant may discontinue his or her participation in the Plan
as provided in Section 10. In addition, if Board of Directors of the Company has
so announced to Employees at least five (5) days prior to the scheduled
beginning of the next Offering Period to be affected, a participant may, on one
occasion only during each Purchase Period, change the rate of his or her
Contributions with respect to the Purchase Period by completing and filing with
the Company a new subscription agreement authorizing a change in the payroll
deduction rate. Any such change in rate shall be effective as of the beginning
of the next calendar month following the date of filing of the new subscription
agreement, if the agreement is filed at least ten (10) business days prior to
such date and, if not, as of the beginning of the next succeeding calendar
month.

         6.3. Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3.2 herein, a participant's
payroll deductions may be decreased during any Purchase Period scheduled to end
during the current calendar year to 0%. Payroll deductions shall re-commence
automatically at the rate provided in such participant's subscription agreement
at the beginning of the first Purchase Period which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in
Section 10.

7.       GRANT OF OPTION

         7.1. On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of Shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the applicable Purchase Price; provided however that the maximum number of
Shares an Employee may purchase during each Purchase Period shall be 2,500
Shares (subject to any adjustment pursuant to Section 19 below), and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3.2 and 13.

         7.2. The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
discretion

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based on the closing sales price of the Common Stock for such date (or, in the
event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported by the National Association of Securities
Dealers Automated Quotation ("Nasdaq") National Market or, if such price is not
reported, the mean of the bid and asked prices per share of the Common Stock as
reported by Nasdaq or, in the event the Common Stock is listed on a stock
exchange, the Fair Market value per share shall be the closing sales price on
such exchange on such date (or, in the event that the Common Stock is not traded
on such date, on the immediately preceding trading date), as reported in The
Wall Street Journal. For purposes of the Offering Date under the first Offering
Period under the Plan, the Fair Market Value of a share of the Common Stock of
the Company shall be the Price to Public as set forth in the final prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.

8.       EXERCISE OF OPTION

         Unless a participant withdraws from the Plan as provided in Section 10,
his or her option for the purchase of Shares will be exercised automatically on
each Purchase Date of an Offering Period, and the maximum number of full Shares
subject to the option will be purchased at the applicable Purchase Price with
the accumulated Contributions in his or her account. No fractional Shares shall
be issued. The Shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase Shares hereunder is exercisable
only by him or her.

9.       DELIVERY

         As promptly as practicable after each Purchase Date of each Offering
Period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the Shares purchased upon exercise of
his or her option. Any payroll deductions accumulated in a participant's account
which are not sufficient to purchase a full Share shall be retained in the
participant's account for the subsequent Purchase Period or Offering Period,
subject to earlier withdrawal by the participant as provided in Section 10
below. Any other amounts left over in a participant's account after a Purchase
Date shall be returned to the participant.

10.      VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT

         10.1. A participant may withdraw all but not less than all of the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of Shares will be made during the Offering
Period.

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         10.2. Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 15, and his or her option will
be automatically terminated.

         10.3. In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.

         10.4. A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.

11.      AUTOMATIC WITHDRAWAL

         If the Fair Market Value of the Shares on any Purchase Date of an
Offering Period is less than the Fair Market Value of the Shares on the Offering
Date for such Offering Period, then every participant shall automatically (i) be
withdrawn from such Offering Period at the close of such Purchase Date and after
the acquisition of Shares for such Purchase Period, and (ii) be enrolled in the
Offering Period commencing on the first business day subsequent to such Purchase
Period. Accordingly, participants shall automatically be withdrawn as of January
31, 2001 from the Offering Period beginning on the IPO Date and re-enrolled in
the Offering Period beginning on February 1, 2001 if the Fair Market Value of
the Shares on the IPO Date is greater than the Fair Market Value of the Shares
on January 31, 2001, unless a participant notifies the Administrator prior to
January 31, 2001 that he or she does not wish to be withdrawn and re-enrolled.

12.      INTEREST

         No interest shall accrue on the Contributions of a participant in the
Plan.

13.      STOCK

         13.1. Subject to adjustment as provided in Section 19, the maximum
number of Shares which shall be made available for sale under the Plan shall be
1,200,000 Shares plus an automatic annual increase on January 1, 2001 and each
January 1 thereafter equal to the lesser of (i) two percent (2%) of the Shares
outstanding on the last day of the immediately preceding fiscal year, and (ii)
such number as the Board may determine. Notwithstanding the foregoing, and
subject to adjustment in accordance with Section 19 no more than an aggregate of
25,000,000 Shares may be issued pursuant to this Plan. If the Board determines
that, on a given Purchase Date, the number of shares with respect to which
options are to be exercised may exceed (i) the number of shares of Common Stock
that were available

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for sale under the Plan on the Offering Date of the applicable Offering Period,
or (ii) the number of shares available for sale under the Plan on such Purchase
Date, the Board may in its sole discretion provide (x) that the Company shall
make a pro rata allocation of the Shares of Common Stock available for purchase
on such Offering Date or Purchase Date, as applicable, in as uniform a manner as
shall be practicable and as it shall determine in its sole discretion to be
equitable among all participants exercising options to purchase Common Stock on
such Purchase Date, and continue all Offering Periods then in effect, or (y)
that the Company shall make a pro rata allocation of the shares available for
purchase on such Offering Date or Purchase Date, as applicable, in as uniform a
manner as shall be practicable and as it shall determine in its sole discretion
to be equitable among all participants exercising options to purchase Common
Stock on such Purchase Date, and terminate any or all Offering Periods then in
effect pursuant to Section 20 below. The Company may make pro rata allocation of
the Shares available on the Offering Date of any applicable Offering Period
pursuant to the preceding sentence, notwithstanding any authorization of
additional Shares for issuance under the Plan by the Company's stockholders
subsequent to such Offering Date.

         13.2. The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.

         13.3. Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse, as directed by the participant.

14.      ADMINISTRATION

         The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any
rules deemed desirable and appropriate for the administration of the Plan and
not inconsistent with the Plan, to construe and interpret the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's determinations made in good faith on matters referred to in
this Plan shall be final, binding and conclusive on all persons having or
claiming any interest under this Plan or an Award made pursuant hereto.

15.      DESIGNATION OF BENEFICIARY

         15.1. A participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period.

         15.2. Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the

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absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such Shares and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such Shares and/or cash to
the spouse or to any one or more dependents or relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

16.      TRANSFERABILITY

         Neither Contributions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution, or as provided in
Section 15) by the participant. Any such attempt at assignment, transfer, pledge
or other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 10.

17.      USE OF FUNDS

         All Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such Contributions.

18.      REPORTS

         Individual accounts will be maintained for each participant in the
Plan. Statements of account will be given to participating Employees at least
annually, which statements will set forth the amounts of Contributions, the per
Share Purchase Price, the number of Shares purchased and the remaining cash
balance, if any.

19.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS

         19.1. ADJUSTMENT. Subject to any required action by the stockholders of
the Company, the number of shares covered by each option under the Plan which
has not yet been exercised and the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the maximum number of shares of
Common Stock which may be purchased by a participant in a Purchase Period, the
number of shares of Common Stock set forth in Section 13.1 above, and the price
per Share of Common Stock covered by each option under the Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected in
connection with a change in domicile of the

<PAGE>

Company), or any other increase or decrease in the number of Shares effected
without receipt of consideration by the Company; provided however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive.

         19.2. CORPORATE TRANSACTIONS. In the event of a dissolution or
liquidation of the Company, any Purchase Period and Offering Period then in
progress will terminate immediately prior to the consummation of such action,
unless otherwise provided by the Board. In the event of a Corporate Transaction,
each option outstanding under the Plan shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or Subsidiary of
such successor corporation. In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "New Purchase Date"), as of which date any Purchase Period and
Offering Period then in progress will terminate. The New Purchase Date shall be
on or before the date of consummation of the transaction and the Board shall
notify each participant in writing, at least ten (10) days prior to the New
Purchase Date, that the Purchase Date for his or her option has been changed to
the New Purchase Date and that his or her option will be exercised automatically
on the New Purchase Date, unless prior to such date he or she has withdrawn from
the Offering Period as provided in Section 10. For purposes of this Section 19,
an option granted under the Plan shall be deemed to be assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon
a Corporate Transaction, each holder of an option under the Plan would be
entitled to receive upon exercise of the option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to the transaction, the
holder of the number of Shares of Common Stock covered by the option at such
time (after giving effect to any adjustments in the number of Shares covered by
the option as provided for in this Section 19); provided however that if the
consideration received in the transaction is not solely common stock of the
successor corporation or its parent (as defined in Section 424(e) of the Code),
the Board may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in Fair Market Value to
the per Share consideration received by holders of Common Stock in the
transaction.

         The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per Share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of Shares of its outstanding Common
Stock, and in the event of the Company's being consolidated with or merged into
any other corporation.

<PAGE>

20.      AMENDMENT OR TERMINATION

         (a) The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of the Plan. Except as provided
in Section 19 and in this Section 20, no amendment to the Plan shall make any
change in any option previously granted which adversely affects the rights of
any participant.

         (b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.

21.      NOTICES

         All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.

22.      CONDITIONS UPON ISSUANCE OF SHARES

         Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such Shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, applicable state
securities laws and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.

         As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such

<PAGE>

exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

23.      TERM OF PLAN; EFFECTIVE DATE

         The Plan shall become effective upon the IPO Date. It shall continue in
effect for a term of twenty (20) years unless sooner terminated under Section
20.

<PAGE>

                                                                          SAMPLE

                              SONUS NETWORKS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

                                                              New Election ___

                                                        Change of Election ___

          1. I, __________________, hereby elect to participate in the Sonus
Networks, Inc. 2000 Employee Stock Purchase Plan (the "Plan") for the Offering
Period __________, _____ to ______________, _____, and subscribe to purchase
shares of the Company's Common Stock in accordance with this Subscription
Agreement and the Plan.

         2. I elect to have Contributions in the amount of _____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 20% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).

         3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated, without
interest or earnings, for the purchase of shares of Common Stock at the
applicable purchase price determined in accordance with the Plan. I further
understand that, except as otherwise set forth in the Plan, shares will be
purchased for me automatically on the Purchase Date of each Offering Period
unless I otherwise withdraw from the Plan by giving written notice to the
Company for such purpose.

         4. I understand that I may discontinue at any time prior to the
Purchase Date my participation in the Plan as provided in Section 10 of the
Plan. I acknowledge that, unless I discontinue my participation in the Plan as
provided in Section 10 of the Plan, my election will continue to be effective
for each successive Purchase Period.

         5. I have received a copy of the complete Sonus Networks, Inc. 2000
Employee Stock Purchase Plan. I understand that my participation in the Plan is
in all respects subject to the terms of the Plan.

         6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):

<PAGE>

         7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:

NAME: (Please print)
                                     (First)           (Middle)         (Last)

(Relationship)                                                (Address)

         8. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within 1 year after the
Purchase Date, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the
Purchase Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.

         I hereby agree to notify the Company in writing within 30 days after
the date of any such disposition, and I will make adequate provision for
federal, state or other tax withholding obligations, if any, which arise upon
the disposition of the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.

         9. If I dispose of such shares at any time after expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) 15% of the fair market
value of the shares on the Offering Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss.

         I understand that this tax summary is only a summary and is subject to
change. I further understand that I should consult a tax advisor concerning
certain tax implications of the purchase and sale of stock under the Plan.

         10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.

SIGNATURE:

SOCIAL SECURITY #:

DATE:

<PAGE>

                                                                         SAMPLE

                              SONUS NETWORKS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

         I, _____________, hereby elect to withdraw my participation in the
Sonus Networks, Inc. 2000 Employee Stock Purchase Plan (the "Plan") for the
Offering Period that began on _________________, ________. This withdrawal
covers all Contributions credited to my account and is effective on the date
designated below.

         I understand that all Contributions credited to my account will be paid
to me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.

         The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding Offering Periods only by delivering to the
Company a new Subscription Agreement.

Dated:
                                                     Signature of Employee

                                                     Social Security Number<PAGE>

                                 1998 AMERICORP
                                STOCK OPTION PLAN
                                   AS AMENDED

     1.   PURPOSE OF THE PLAN.

     The purpose of this 1998 Americorp Stock Option Plan (the "Plan") is to
advance the interests of the Company through providing select Participants with
the opportunity to acquire Shares. By encouraging such stock ownership, the
Company seeks to attract, retain and motivate the best available personnel for
positions of substantial responsibility and to provide additional incentive to
Directors, Consultants and key Employees of the Company or any Affiliate to
promote the success of the business.

     2.   DEFINITIONS.

     As used herein, the following definitions shall apply:

     (a)  "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Company, as such terms are defined in Section 424(e) and
(f), respectively, of the Code, and any other subsidiary corporations of a
parent corporation of the Company.

     (b)  "Agreement" shall mean a written agreement entered into in accordance
with Paragraph 5(c).

     (c)  "Award" shall mean an Option evidenced by a written agreement entered
into in accordance with Paragraph 5(c).

     (d)  "Bank" shall mean American Commercial Bank.

     (e)  "Board" shall mean the Board of Directors of the Company.

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

     (g)  "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with Paragraph 5(a) hereof.

     (h)  "Common Stock" shall mean the common stock, $1.00 par value, of the
Company.

     (i)  "Company" shall mean Americorp.

     (j)  "Continuous Service" shall mean the absence of any interruption or
termination of service as an Employee or Director of the Company or an
Affiliate. Continuous Service shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by the Company
or between the Company, an Affiliate or a successor.

<PAGE>

     (k)  "Director" shall mean any member of the Board, and any member of the
board of directors of any Affiliate that the Board has by resolution designated
as being eligible for participation in this Plan.

     (l)  "Non-Employee Director" shall mean any member of the Board who is a
"non-employee director" within the meaning of Rule 16b-3.

     (m)  "Effective Date" shall mean the date specified in Paragraph 13 hereof.

     (n)  "Employee" shall mean any person employed by the Company, the Bank or
an Affiliate who is an employee for federal tax purposes.

     (o)  "Exercise Price" shall mean the price per Optioned Share at which an
Option may be exercised.

     (p)  "ISO" means an option to purchase Common Stock which meets the
requirements set forth in the Plan, and which is intended to be and is
identified as an "incentive stock option" within the meaning of Section 422 of
the Code.

     (q)  "Market Value" shall mean the fair market value of the Common Stock,
as determined under Paragraph 7(b) hereof.

     (r)  "Non-ISO" means an option to purchase Common Stock which meets the
requirements set forth in the Plan but which is not intended to be and is not
identified as an ISO.

     (s)  "Option" means an ISO and/or a Non-ISO.

     (t)  "Optioned Shares" shall mean Shares subject to an Award granted
pursuant to this Plan.

     (u)  "Participant" shall mean any key Employee, Director, Consultant or
other person who receives an Award pursuant to the Plan. For purposes of this
Plan, the term "Consultant" shall mean a consultant, business associate or other
person or entity with an important business relationship with the Company, the
Bank or an Affiliate.

     (v)  "Plan" shall mean this 1998 Americorp Stock Option Plan.

     (w)  "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.

     (x)  "Share" shall mean one share of Common Stock.

     3.   TERM OF THE PLAN AND AWARDS.

     (a)  Term of the Plan. The Plan shall continue in effect for a term of 10
years from the

<PAGE>

Effective Date or the date the Plan is adopted by the Board (whichever period
ends earlier), unless sooner terminated pursuant to Paragraph 15 hereof. No
Award shall be granted under the Plan after such 10 year term.

     (b)  Term of Awards. The term of each Award granted under the Plan shall be
established by the Committee, but shall not exceed 10 years; provided, however,
that in the case of an Employee who owns Shares representing more than 10% of
the outstanding Common Stock at the time an ISO is granted, the term of such ISO
shall not exceed five years, subject to the provisions of Section 8(e) hereof.

     4.   SHARES SUBJECT TO THE PLAN.

     Except as otherwise required by the provisions of Paragraph 10 hereof, the
aggregate number of Shares deliverable pursuant to Awards shall not exceed
480,000 Shares [ADJUSTED FROM 110,000 TO 220,000 SHARES PURSUANT TO A 2-FOR-1
STOCK SPLIT ON APRIL 15, 1999 AND ADJUSTED TO 480,000 SHARES PURSUANT TO A VOTE
OF THE SHAREHOLDERS ON MAY 16, 2000]. Such Shares will be authorized but
unissued Shares. If any Awards should expire, become unexercisable, or be
forfeited, for any reason without having been exercised or become vested in
full, the Optioned Shares shall, unless the Plan shall have been terminated, be
available for the grant of additional Awards under the Plan.

     5.   ADMINISTRATION OF THE PLAN.

     (a)  Composition of the Committee. The Plan shall be administered by the
Committee, which shall consist of not less than three (3) members of the Board
who are Non-Employee Directors. Members of the Committee shall serve at the
pleasure of the Board. In the absence at any time of a duly appointed Committee,
the Plan shall be administered by those members of the Board who are
Non-Employee Directors.

     (b)  Powers of the Committee. Except as limited by the express provisions
of the Plan or by resolutions adopted by the Board, the Committee shall have
sole and complete authority and discretion (i) to select Participants and grant
Awards, (ii) to determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan, (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan, (v) to
make other determinations necessary or advisable for the administration of the
Plan. The Committee shall have and may exercise such other power and authority
as may be delegated to it by the Board from time to time. A majority of the
entire Committee shall constitute a quorum and the action of a majority of the
members present at any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall be deemed the
action of the Committee.

     (c)  Agreement. Each Award shall be evidenced by a written agreement
containing such provisions as may be approved by the Committee. Each such
Agreement shall constitute a binding contract between the Company and the
Participant, and every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement shall be in accordance with the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise Price of an Option,
(ii) the number of Shares subject to,

<PAGE>

and the expiration date of, the Award, (iv) the restrictions, if any, to be
placed upon such Award, or upon Shares which may be issued upon exercise of such
Award, and (v) whether the Option is intended to be an ISO or a Non-ISO.

     The Chairman of the Committee and such other Directors and officers as
shall be designated by the Committee are hereby authorized to execute Agreements
on behalf of the Company and to cause them to be delivered to the recipients of
Awards.

     (d)  Effect of the Committee's Decisions. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.

     (e)  Indemnification. In addition to such other rights of indemnification
as they may have, the members of the Committee shall be indemnified by the
Company in connection with any claim, action, suit or proceeding relating to any
action taken or failure to act under or in connection with the Plan or any
Award, granted hereunder to the full extent provided for under the Company's
governing instruments with respect to the indemnification of Directors.

     6.   GRANT OF OPTIONS.

     (a)  General Rule. Only key Employees, Directors and Consultants shall be
eligible to receive grants of Options pursuant to the Plan.

     (b)  Special Rules for ISOs. The aggregate Market Value, as of the date the
option is granted, of the Shares with respect to which ISOs are exercisable for
the first time by an Employee during any calendar year (under all incentive
stock option plans, as defined in Section 422 of the Code, of the Company or any
present or future Parent or Subsidiary of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may grant Options in
excess of the foregoing limitations, in which case such Options granted in
excess of such limitations shall be Options which are Non-ISOs.

     (c)  Delivery of Information. The Company shall deliver to each Optionee at
the times required the information and financial statements provided for in Rule
428(b) of the Securities and Exchange Commission's Regulation C and by Section
260.140.46 of the Rules of the California Corporations Commissioner.

     7.   EXERCISE PRICE FOR OPTIONS

     (a)  Limits on Committee Discretion. The Exercise Price as to any
particular Option shall not be less than 100% of the Market Value of the Options
Shares on the date of grant without taking into account any restrictions on the
Optioned Shares. In the case of an Employee who owns Shares representing more
than 10% of the Company's outstanding Shares of Common Stock at the time an ISO
is granted, the Exercise Price shall not be less than 110% of the Market Value
of the Optioned Shares at the time the ISO is granted.

     (b)  Standards for Determining Exercise Price. If the Common Stock is
listed on a national

<PAGE>

securities exchange (including NASDAQ National Market or Small Cap System) on
the date in question, then the Market Value per Share will be the average of the
highest and lowest selling price on such exchange on such date, or if there were
no sales on such date, then the Exercise Price shall be the mean between the bid
and asked price on such date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the Market Value per
Share shall be the mean between the bid and asked price on such date, or, if
there is no bid and asked price on such date, then on the next prior business
day on which there was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair market value as
determined by the Committee, in its sole and absolute discretion.

     8.   EXERCISE OF OPTIONS.

     (a)  Generally. Subject to (e) below, any Option granted hereunder shall be
exercisable at such times and under such conditions as shall be permissible
under the terms of the Plan and of the Agreement granted to a Participant. An
Option may not be exercised for a fractional Share.

     (b)  Procedure for Exercise. A Participant may exercise Options, subject to
provisions relative to its termination and limitations on its exercise, only by
(1) written notice of intent to exercise the Option with respect to a specified
number of Shares, and (2) payment to the Company (contemporaneously with
delivery of such notice) in cash, in Common Stock, or a combination of cash and
Common Stock, of the amount of the Exercise Price for the number of Shares with
respect to which the Option is then being exercised. Each such notice shall be
delivered, or mailed by prepaid registered or certified mail, addressed to the
Chief Financial Officer of the Company at the Company's executive offices.
Common Stock utilized in full or partial payment of the Exercise Price for
Options shall be valued at its Market Value per Share at the date of exercise.

     (c)  Period of Exercisability. Except to the extent otherwise provided in
more restrictive terms of an Agreement, an Option may be exercised by a
Participant only with respect to the vested portion of such Option and (in the
case of an Employee or a Director) only while he is an Employee or Director and
has maintained Continuous Service from the date of the grant of the Option, or
within three months after termination of such Continuous Service (but not later
than the date on which the Option would otherwise expire), except if the
Employee's or Director's Continuous Service terminates by reason of:

          (1)  "Just Cause" which for purposes hereof shall mean termination
     because of the Employee's or Director's personal dishonesty (meaning
     material dishonesty with respect to any aspect of the Company's, the Bank's
     or an Affiliate's affairs or business), incompetence (which actually
     results in substantial harm to the Company, the Bank or an Affiliate or
     which could reasonably be expected to result in such harm), willful
     misconduct, breach of fiduciary duty involving personal profit, intentional
     failure to perform stated duties, willful violation of any law, rule or
     regulation (other than traffic violations or similar offenses) or final
     cease-and-desist order, then the Participant's rights to exercise such
     Option shall expire on the date of such termination;

          (2)  death, then all Options of the deceased Participant shall become
     immediately

<PAGE>

     exercisable and may be exercised within one year from the date of his death
     (but not later than the date on which the Option would otherwise expire) by
     the personal representatives of his estate or person or persons to whom his
     rights under such Option shall have passed by will or by laws of descent
     and distribution;

          (3)  Permanent and Total Disability (as such term is defined in
     Section 22(e)(3) of the Code), then all Options of the disabled Participant
     shall become immediately exercisable and may be exercised within one year
     from the date of such Permanent and Total Disability, but not later than
     the date on which the Option would otherwise expire.

     (d)  Effect of the Committee's Decisions. The Committee's determination
whether a Participant's Continuous Service has ceased, and the effective date
thereof, shall be final and conclusive on all persons affected thereby.

     (e)  The vesting period of an Option shall be provided for in the Agreement
and shall be determined in the sole discretion of the Committee; provided,
however, that a minimum of 20% of the Option shall be exercisable in each year
over a five year period from the date the option is granted. The vesting periods
for Options need not be identical. Vesting shall cease immediately upon the
termination of employment or directorship of an optionee. If an optionee shall
not in any given period exercise any of an Option which has become exercisable
during that period, the optionee's right to exercise such part of the Option
shall continue until expiration of the Option.

     9.   SUBSTITUTE OPTIONS.

     Notwithstanding any other provisions of this Plan to the contrary, where
the outstanding shares of another corporation are changed into or exchanged for
shares of Common Stock of the Company in a merger, consolidation, reorganization
or similar transaction, then, subject to the approval of the Board, Options may
be granted in exchange for unexercised, unexpired stock options of the other
corporation, and the exercise price of the Optioned Shares subject to such
Option so granted may be fixed at a price less than one hundred percent of the
Market Value of the Common Stock at the time such Option is granted if said
Exercise Price has been computed to be not less than the Exercise Price set
forth in the stock option of the other corporation, with appropriate adjustment
to reflect the exchange ratio of the shares of stock of the other corporation
into the shares of Common Stock of the Company. The number of shares of the
options of the other corporation shall also be adjusted in accordance with the
exchange ratio so that any substituted Option shall reflect such adjustment.

     10.  EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.

     (a)  Recapitalizations; Stock Splits, Etc. The number and kind of shares
reserved for issuance under the Plan, and the number and kind of shares subject
to outstanding Awards (and the Exercise Price thereof), shall be proportionately
adjusted for any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the Company which
results from a merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of shares, or similar
event in which the number or kind of shares is changed

<PAGE>

without the receipt or payment of consideration by the Company.

     (b)  Transactions in which the Company Is Not the Surviving Entity. In the
event of (i) the liquidation or dissolution of the Company, (ii) a merger or
consolidation in which the Company is not the surviving entity, (iii) the sale
or disposition of all or substantially all of the Company's assets or (iv) a
tender offer or acquisition by one person or a group of persons acting in
concert of more than 50% of the Company's outstanding Shares (any of the
foregoing to be referred to herein as a "Transaction"), the Committee shall
notify each optionee of the pendency of the Transaction. Upon delivery of said
notice, any Award granted prior to the Transaction shall be, notwithstanding the
provisions of Paragraph 8(e), exercisable in full and not only as to those
Shares with respect to which installments, if any, have been accrued, subject,
however, to earlier expiration or termination as provided elsewhere in the Plan.
Upon the date thirty (30) days after delivery of such notice, any option or
portion thereof not exercised shall terminate, and upon the effective date of
the Transaction, this Plan shall terminate, unless provision is made in
connection with the Transaction for assumption of Options theretofore granted,
or payment therefor, or substitution for such Options of new options covering
stock of a successor corporation, or a parent or subsidiary corporation thereof,
solely at the option of such successor corporation or parent or subsidiary
corporation, with appropriate adjustments as to number and kind of shares and
prices. Notwithstanding the foregoing, if the Company is the surviving entity in
any such Transaction, the options shall not terminate.

     (c)  Special Rule for ISOs. Any adjustment made pursuant to subparagraphs
(a) or (b) hereof shall be made in such a manner as not to constitute a
modification, within the meaning of Section 424(h) of the Code, of outstanding
ISOs.

     (d)  Conditions and Restrictions on New, Additional or Difference Shares or
Securities. If, by reason of any adjustment made pursuant to this Paragraph, a
Participant becomes entitled to new, additional or different shares of stock or
securities, such new, additional or different shares of stock or securities
shall thereupon be subject to all of the conditions and restrictions which were
applicable to the Shares pursuant to the Award before the adjustment was made.

     (e)  Other Issuances. Except as expressly provided in this Paragraph, the
issuance by the Company or an Affiliate of shares of stock of any class, or of
securities convertible in to Shares or stock of another class, for cash or
property or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect and no adjustment
shall be made with respect to, the number, class, Exercise Price of Shares then
subject to Awards or reserved for issuance under the Plan.

     11.  NON-TRANSFERABILITY OF AWARDS.

     Awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution, or pursuant to the terms of a "qualified domestic relations order"
(within the meaning of Section 414(p) of the Code and the regulations and
rulings thereunder). An Award may be exercised only by a Participant, the
Participant's personal representative or a permitted transferee.

<PAGE>

     12.  TIME OF GRANTING AWARDS.

     The date of grant of an Award shall, for all purposes, be the later of the
date on which the Committee makes the determination of granting such Award, and
the Effective Date. Notice of the determination shall be given to each
Participant to whom an Award is so granted within a reasonable time after the
date of such grant.

     13.  EFFECTIVE DATE.

     The Plan shall become effective immediately upon its approval by a
favorable vote of stockholders owning at least a majority of the Shares eligible
to be cast at a meeting duly held in accordance with applicable laws.

     14.  MODIFICATION OF AWARDS.

     At any time, and from time to time, the Board may authorize the Committee
to direct execution of an instrument providing for the modification of any
outstanding Award, provided no such modification shall confer on the holder of
said Award any right or benefit which could not be conferred on him by the grant
of a new Award at such time, or impair the Award without the consent of the
holder of the Award.

     15.  AMENDMENT AND TERMINATION OF THE PLAN.

     The Board may from time to time amend the terms of the Plan and, with
respect to any Shares at the time not subject to Awards, suspend or terminate
the Plan.

     Except for any changes that may be required to be made at the direction of
the Department of Corporations in connection with a permit procedure under the
California Corporate Securities Law, shareholder approval must be obtained for
any amendment of the Plan that would change the number of Shares subject to the
Plan (except in accordance with Paragraph 10 above), change the category of
persons eligible to be Participants, or materially increase the benefits under
the Plan.

     No amendment, suspension or termination of the Plan shall, without the
consent of any affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.

     16.  CONDITIONS UPON ISSUANCE OF SHARES.

     (a)  Compliance with Securities Laws. Shares of Common Stock shall not be
issued with respect to any Award unless the issuance and delivery of such Shares
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities law, and the requirements of any
stock exchange upon which the Shares may then be listed.

<PAGE>

     (b)  Special Circumstance. The inability of the Company to obtain approval
from any regulatory body or authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder shall relieve
the Company of any liability in respect of the non-issuance or sale of such
Shares.

     (c)  Committee Discretion. The Committee shall have the discretionary
authority to impose in Agreements such restrictions on Shares as it may deem
appropriate or desirable.

     17.  RESERVATION OF SHARES.

     The Company, during the term of the Plan, will reserve and keep available a
number of Shares sufficient to satisfy the requirements of the Plan.

     18.  WITHHOLDING TAX.

     The Company's obligation to deliver Shares upon exercise of Options shall
be subject to the Participant's satisfaction of all applicable federal, state
and local income and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the obligation, in whole
or in part, by irrevocably electing to have the Company withhold Shares, or to
deliver to the Company Shares that he already owns, having a value equal to the
amount required to be withheld. The value of Shares to be with withheld, or
delivered to the Company, shall be based on the Market Value of the Shares on
the date the amount of tax to be withheld is to be determined. As an
alternative, the Company may retain, or sell without notice, a number of such
Shares sufficient to cover the amount required to be withheld.

     19.  NO EMPLOYMENT OR OTHER RIGHTS.

     In no event shall an Employee's or Director's eligibility to participate or
participation in the Plan create or be deemed to create any legal or equitable
right of the Employee, Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations.

     20.  GOVERNING LAW.

     The Plan shall be governed by and construed in accordance with the laws of
the State of California, except to the extent that federal law shall be deemed
to apply.

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