Document:

<PAGE>   1

                                                                   [FINOVA LOGO]

TECHNOLOGY FINANCE

                                                      FINOVA CAPITAL CORPORATION
                                                              TECHNOLOGY FINANCE

                                                              10 WATERSIDE DRIVE
                                                            FARMINGTON, CT 06032

June 2, 2000
                                                                TEL 860 676 1818
                                                                FAX 860 676 1814
                                                                  www.finova.com

Mr. Angelo Gencarelli, III
Vice President - Business
Integration and Administration
AppliedTheory Corporation
224 Harrison Street, 8th Floor
Syracuse, New York 13202

Dear Mr. Gencarelli:

       Reference is hereby made to the following:

              (i)    Master Loan and Security Agreement No. S7700 dated as of
May 12, 2000 (the "Master Agreement") between FINOVA Capital Corporation
("Lender") and AppliedTheory Corporation ("Borrower");

              (ii)   Promissory Note No. 01 dated May 30, 2000 (the "Note") in
the principal amount of $2,997,389.93 executed by Borrower payable to Lender;
and

              (iii)  Schedule No. 01 to Promissory Note No. 01 dated May 30,
2000 (the "Schedule"), which Schedule constitutes a part of and is incorporated
into the Note.

       Contemporaneously herewith, Lender is making a loan to Borrower in the
principal amount of $2,997,389.93 (the "Loan"). The obligation of Borrower to
repay the Loan and all interest thereon is evidenced by the Note.

       Borrower has requested that Lender agree to amend the payment terms of
the Note to reflect the fact that the Loan is being made on the date hereof, and
Lender will agree to the same, on the terms and subject to the conditions
contained herein.

       NOW THEREFORE, the parties hereto agreeing to be legally bound, hereby
agree as follows:

       1.     Paragraph 2 of the Schedule is amended in its entirety to read as
              follows:

              "2. Payments. You will repay the Loan, together with interest at
              the rate of 13.53% per annum (said interest rate being the
              interest rate as adjusted pursuant to Paragraph 3 of the
              Schedule), in thirty-seven (37) consecutive monthly payments of
              principal and interest as follows: (a) one (1) payment of
              principal and interest in the amount of $179,138.24, followed by
              (b) thirty-four (34) consecutive monthly payments of principal and
              interest, each in the amount of $89,569.12, followed by (c) one
              (1) monthly payment of $0.00, followed by (d) a final monthly
              payment of principal and interest in the amount of $449,608.49
              (the "Final Payment"). The amount of $359,686.79

                                        1

<PAGE>   2

                                                                   [FINOVA LOGO]

              shall be withheld from the proceeds of the Loan and applied
              against the Final Payment. A credit equal to five (5%) percent
              simple interest thereon from the date of the Loan to the date
              applied shall be applied to the Final Payment. Provided there is
              no then current default, the net payment due on the Maturity Date
              shall be $31,772.33.

              The first monthly payment of principal and interest ("First
              Payment") will be due and payable on June 2, 2000 (being the date
              on which the Loan is made). Subsequent payments of principal and
              interest are due and payable on a like day in each and every month
              thereafter through and including the date upon which the Final
              Payment is scheduled to be due (the "Maturity Date"). Any
              remaining amount that you owe us is due on the Maturity Date. The
              First Payment of principal and interest shall also be withheld
              from the proceeds of the Loan."

       2.     Paragraph 1(g) of the Master Agreement is amended in its entirety
              to read as follows:

       "(g)   First Payment and Subsequent Payments. The first Payment under a
Note and Advance ("First Payment") is due at the beginning of its Term and
shall, at our option, either be deducted from the proceeds of the Advance or
paid directly to us by you. Subsequent Payments are due on a like day in each
and every month thereafter as set forth on the Schedule until you pay to us in
full all of the Payments and any other fees, costs, charges and expenses that
you owe us."

              3.     Paragraph 1(i) Interim Interest Payment of the Master
Agreement is deleted in its entirety.

              4.     Except as amended hereby, the terms of the Master
Agreement, Schedule and the Note remain in full force and effect.

              5.     An originally executed counterpart of this Amendment shall
be attached to and be a part of the Schedule and Note.

Sincerely,                                     Acknowledged and Agreed to this
                                               2nd day of June, 2000

FINOVA CAPITAL CORPORATION                     APPLIEDTHEORY CORPORATION
/s/ LINDA A. MOSCHITTO
Linda A. Moschitto                             By:/s/ ANGELO GENCARELLI,III
Director, Contract Administration                 -----------------------------
                                                      Angelo Gencarelli, III
                                               Title: Vice President - Business
                                                      Integration and
                                                      Administration

                                        2

<PAGE>   3

                              PROMISSORY NOTE NO. 1

$2,997,389.93                                           May 30, 2000

APPLIEDTHEORY CORPORATION, a Delaware Corporation ("you"), promise to pay to the
order of FINOVA CAPITAL CORPORATION ("we," "us" or "FINOVA") the principal
amount of Two Million, Nine Hundred Ninety-Seven Thousand, Three Hundred
Eighty-Nine and 93/100 Dollars ($2,997,389.93), together with interest on the
unpaid principal balance at the interest rate per annum and on the dates and as
otherwise provided in the "Master Agreement" and "Schedule" referred to below.

If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.

You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.

This Note is executed in connection with a Master Loan and Security Agreement
dated May 12, 2000 (the "Master Agreement"), between you and us. This Note is
one of the Notes referred to in the Master Agreement, is secured as provided
therein, and by all collateral set forth on Exhibit A to the attached Schedule
(the "Schedule"), dated the same date as this Note and made a part hereof, and
is entitled to all of the benefits of the Master Agreement and may be prepaid
only as provided in Exhibit B to the Schedule and Section 1(n) of the Master
Agreement. All of the terms contained in the Schedule are incorporated in full
herein as if set forth in its entirety. This Note may be accelerated by us upon
a payment default or upon another default under the Master Agreement or any
agreement, instrument or document executed in connection herewith or therewith.

TIME IS OF THE ESSENCE.

If you do not make a payment within ten (10) days after the date it is due, you
will also pay us a late charge of five percent (5%) of the amount past due. Your
interest rate will be increased by four percent (4%) per annum, over and above
your regular interest rate if payment is not made at the scheduled or
accelerated maturity of this Note. You will also pay all of our costs of
collection, including our reasonable attorney's fees and expenses. If we
accelerate this Note, you will also owe us a prepayment premium, as set forth in
Exhibit B to the Schedule.

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You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.

THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK. YOU CONSENT TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK. YOU WAIVE TRIAL BY
JURY.

You represent to us that the proceeds of the Loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.

APPLIEDTHEORY CORPORATION                               ATTEST:

By: /s/ ANGELO GENCARELLI, III
   ---------------------------
Name: Angelo Gencarelli, III
     -------------------------
Title: V.P.
      ------------------------
                                                       /s/ DAVID BUCKEL
                                                       -----------------------
                                                       [Assistant] Secretary
                                                       David Buckel

                                       -2-

<PAGE>   5

                     SCHEDULE NO. 1 TO PROMISSORY NOTE NO. 1
                                       AND
                       MASTER LOAN AND SECURITY AGREEMENT

Schedule No. 1, dated May 30, 2000, (this "Schedule") to PROMISSORY NOTE NO. 1
and MASTER LOAN AND SECURITY AGREEMENT dated as of May 12, 2000 (the "Master
Agreement") between APPLIEDTHEORY CORPORATION, a Delaware Corporation, with its
principal place of business at 224 Harrison Street, 8th, Floor, Syracuse, NY
13202 ("you"); and FINOVA CAPITAL CORPORATION, a Delaware corporation, with its
executive office and principal place of business at FINOVA Corporate Center,
4800 North Scottsdale Road, Scottsdale, AZ 85251-7623 ("we," "us", or "FINOVA").

1.     Obligation to pay. You are presently borrowing Two Million, Nine Hundred
Ninety-Seven Thousand, Three Hundred Eighty-Nine and 93/100 Dollars
($2,997,389.93) from us. This borrowing is evidenced by your promissory note
dated the same date as this Schedule in the amount of Two Million, Nine Hundred
Ninety-Seven Thousand, Three Hundred Eighty-Nine and 93/100 Dollars
($2,997,389.93) (the "Note") to which this Schedule is attached and made a part
thereof.

2.     Payments (Subject to adjustment in Paragraph 3). You will repay the Loan,
together with interest at the interest rate described below, in Thirty-Seven
(37) consecutive monthly payments of principal and interest as follows: one
payment of principal and interest in the amount of $178,944.18, followed by
thirty-four (34) consecutive monthly payments of principal and interest, each in
the amount of $89,472.09, followed by one (1) monthly payment at $0.00 to be
followed by one (1) final monthly payment of principal and interest in the
amount $449,608.49 (the "Final Payment"). These payments will be adjusted two
(2) business days prior to the date we make the Loan to you as set forth in
Paragraph 3. Of the Final Payment, an amount equal to $359,686.79 shall be
withheld from the proceeds of the Loan and applied to the Final Payment. A
credit equal to five (5%) percent simple interest thereon from the Closing date
to the date applied shall be applied to the Final Payment. In consideration of
the amount being applied to the Final payment and the interest credit, the net
payment due at the Maturity date shall be equal to $31,772.33.

The first monthly payment of principal and interest ("First Payment") will be
due on the date that we make the Loan to you. Subsequent payments of principal
and interest are due and payable on the thirtieth (30th) day of each and every
month thereafter through and including the date upon which the Final Payment is
scheduled to be due (the "Maturity Date"). Any remaining amount that you owe us
is due on the Maturity  Date. The First Payment of principal and interest (as
well as any interim interest referred to below) shall be withheld from the
proceeds of the Loan.

If the Loan is made on a day other than the thirtieth (30th) or thirty-first
(31st) day of a month, you will also pay to us, together with the First
Payment, interest on the Loan at the interest rate for the period from the
date we make the Loan to you until the twenty-ninth (29th) day of the same
month. If the Loan is made on the thirty-first (31st) day of a month, you will
also pay to

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us, together with the First Payment, interest on the Loan at the interest rate
for the period from the date we make the Loan to you until the twenty-ninth
(29th) day of the following month. If the Loan is made on the thirtieth (30th)
day of a month, no such interim interest will be due.

3.     Interest; Indexing. The interest rate in your payments shown above is
calculated at the rate of 6.73% per annum plus an "Index Rate" of 6.73%. The
Index Rate means the highest yield, as published in The Wall Street Journal of
three-year United States Treasury Notes. The Index Rate of 6.73% was the Index
Rate published in The Wall Street Journal on February 1, 2000. Two-business days
prior to the date we make the Loan to you, we will read The Wall Street Journal
to determine the final Index Rate. If the Index Rate is not published in The
Wall Street Journal, we will determine it from another reliable source. We will
increase or decrease the payments set forth above in Paragraph 2 to reflect any
increase or decrease in the Index Rate on such date. We will give you notice of
any increase or decrease as soon as we can. You will pay the increased or
decreased payments unless we have made an obvious mistake in our calculations.
Interest is calculated in advance using a 360-day year of twelve 30-day months.

4.     Purpose of Loan; Security Interest. You are making this borrowing to
finance (or refinance) your purchase of the equipment described in the attached
Exhibit A to this Schedule (the "Equipment"). The Equipment, together with all
other property described on the attached Exhibit A is hereinafter referred to as
the "Collateral". The Collateral includes, without limitation, the Equipment and
all replacement parts, additions, accessories and accessions thereto, all
replacements and substitutions thereof and all proceeds of the foregoing,
including, without limitation, insurance proceeds. In order to secure all of the
Obligations (as defined in the Master Agreement), you grant us a first lien on
and security interest in the Collateral, as well as any additions, accessories
and accessions thereto, all replacements and substitutions and proceeds of the
Collateral, including, without limitation, insurance proceeds. You also grant us
a security interest in any leases and rentals of the Collateral. This security
interest secures the Note. It also secures the full and timely payment and
performance of all of your other Obligations to us, whether under the Master
Agreement, any other agreement, loan or lease that you may have with us, or
otherwise.

5      Collateral Acceptance Date. The Equipment shall be delivered, installed
and accepted no later than May 31, 2000.

6.     Terms of Master Agreement. The terms of the Master Agreement are made a
part of this Schedule as if repeated in its entirety in this Schedule. Any
declaration of default under the Master Agreement is a default under this
Schedule and permits us to exercise all remedies provided by the Master
Agreement.

APPLIEDTHEORY CORPORATION                               ATTEST:

By:[SIG]
   ---------------------------
Name:[ILLEGIBLE]
     -------------------------
Title: VP
      ------------------------
                                                       /s/ David Buckel
                                                       -----------------------
                                                       [Assistant] Secretary
                                                       David Buckel

                                      XXSX
                                      --4--

<PAGE>   7

                                                            FINANCIAL INNOVATORS

                                                                [FINOVA(R) LOGO]

                                                      FINOVA Capital Corporation
                                                              10 Waterside Drive
                                                       Farmington, CT 06032-3065
                                                                  (860) 676-1818

                       MASTER LOAN AND SECURITY AGREEMENT

        Master Loan and Security Agreement No. S7700, dated May 12, 2000

FINOVA CAPITAL CORPORATION ("we," "us" or "FINOVA"), having its principal place
of business at FINOVA Corporate Center, 4800 North Scottsdale Road, Scottsdale,
Arizona 85251-7623 is willing to make a loan (the "Loan") to APPLIEDTHEORY
CORPORATION ("you" or "Borrower"), having its principal place of business at 224
Harrison Street, 8th Floor, Syracuse, NY 13202, in one or more advances made
from time to time (individually, an "Advance" and collectively, the "Advances"),
in the aggregate principal amount of up to Three Million Dollars
($3,000,000.00), under the terms and conditions contained in this Master Loan
and Security Agreement (this "Master Agreement"). The entire Loan will be "cross
collateralized" and secured by the collateral (the "Collateral") described in
each schedule (individually, a "Schedule" and collectively, "Schedules") which
will be executed in connection with each Advance and the related Note (as
hereinafter defined). The Collateral includes the Equipment hereinafter
described and any and all replacement parts, additions, accessories and
accessions that you may add to the Equipment, as well as all replacements and
substitutions of the Equipment and all proceeds of the Equipment, including,
without limitation, insurance proceeds. We may treat any Schedule as a separate
loan and security agreement containing all of the provisions of this Master
Agreement.

1.   THE CREDIT

     (a) ADVANCES. Each Advance shall be evidenced by and the specific terms
applicable thereto set forth in a Note and related Schedule. All of the Notes
and Schedules, taken together, will evidence the entire Loan. We will only make
the Loan to you if all the conditions in this Master Agreement have been met to
our satisfaction. We will rely on your representations and warranties contained
in this Master Agreement, in making the Loan. The terms of this Master Agreement
will each apply to the entire Loan.

     (b) USE OF PROCEEDS. The proceeds of the Advances will be used solely to
reimburse you for your payment of the purchase price for equipment which is
satisfactory to us and which is described in the applicable Schedule
("Equipment"). If you have not yet paid for the Equipment (but the same is
otherwise satisfactory to us), the proceeds of the Advance will be paid by us
directly to the supplier (which you have chosen) to pay the purchase price of
the Equipment.

     (c) NOTES. Your obligation to repay the Advance and to pay interest thereon
will be evidenced by separate secured promissory notes (individually, a "Note"
and collectively, the "Notes"). Each Note will be dated the date of the Schedule
to which the Advance evidenced by the

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Note is related. The related Schedule will be deemed to be part of the Note.

     (d) TERM. The term ("Term") of each Schedule (and the related Advance)
begins upon the date that we make payment for the Collateral covered under the
Schedule (the "Closing Date"). The Term continues until you fully perform all of
your obligations under this Master Agreement, each related Schedule and the
related Note(s).

     (e) LOAN ACCOUNT. We will keep a loan account on our books and records for
the Loan. We will record all payments of principal and interest in the loan
account. Unless the entries in the loan account are clearly in error, the loan
account will definitively indicate the outstanding principal balance and accrued
interest on the Loan.

     (f) PAYMENTS. The scheduled payments of principal and interest (the
"Payments") are indicated on and due and payable in accordance with the terms of
the applicable Note and Schedule. The Payments are payable in advance and
otherwise on the dates and in the amounts set forth on the applicable Schedule.

     (g) FIRST PAYMENT AND SUBSEQUENT PAYMENTS. The first Payment under a Note
and Advance ("First Payment") is due at the beginning of its Term and shall, at
our option, either be deducted from the proceeds of the Advance or paid directly
to us by you. Subsequent Payments are due on the thirtieth (30th) day of each
successive month as set forth on the Schedule until you pay to us in full all of
the Payments and any other fees, costs, charges and expenses that you owe us.

     (h) INTEREST. Prior to Maturity of an Advance, you will pay us interest on
the Advance at the interest rate indicated in the applicable Schedule (the
"Interest Rate"). "Maturity" means the scheduled maturity or any earlier date on
which we accelerate the Loan. The Payment amount indicated in the Schedule
includes interest at the applicable Interest Rate. Interest is calculated in
advance using a year of 360 days with twelve months of 30 days.

     (i) INTERIM INTEREST PAYMENT. If an Advance is made on a day other than the
thirtieth (30th) or thirty-first (31st) day of a month, you will also pay to us,
together with the First Payment, interest on the Advance at the applicable
interest rate for the period from the date the Advance is made until the
twenty-ninth (29th) day of the month in which the Advance is made. If an Advance
is made on the thirty-first (31st) day of a month, you will also pay to us,
together with the First Payment, interest on the Advance at the applicable
interest rate for the period from the date the Advance is made until the
twenty-ninth (29th) day of the following month. If an Advance is made on the
thirtieth (30th) day of a month, no interim interest will be due.

     (j) DEFAULT INTEREST RATE. After Maturity of the Loan or any Advance, you
will pay us interest thereon at a rate of four (4%) percent per year above the
applicable Interest Rate. This is referred to as the "Default Rate."

     (k) USURY. You and we intend to obey the law. If the Interest Rate charged
would exceed the maximum legal rate, you will only have to pay the maximum legal
rate. You do not have to pay any excess interest over and above the maximum
legal rate of interest. However, if it later becomes legal for you to pay all or
part of any excess interest, you will then pay it to us upon our request.

     (l) PAYMENT DETAILS. You will make all Payments due under this Master
Agreement by 12:00 P.M., Connecticut time, on the day they are due. You will
make all Payments in US Dollars (US$) in immediately available funds. We do not
have to make or give "presentment, demand, protest or notice" to get paid. You
waive "presentment, demand, protest and notice."

     (m) APPLICATION OF PAYMENTS. Each Payment under this Master Agreement is to
be applied in the following order: first, to any fees, costs, expenses and
charges you may owe us; second, to any interest due; and third to the principal
balance.

                                        2

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     (n) PREPAYMENT. You may not prepay the Loan or any Advance, in whole or in
part prior to the date that you make the thirteenth timely consecutive monthly
payment. You may prepay the Loan as specifically permitted by Exhibit B to the
applicable Schedule only in the event of your merger or consolidation with
another company which is not consented to by us pursuant to Section 6(a) (vii)
hereof.

     (o) NO SETOFFS. Your obligation to pay us all Payments is absolute and
unconditional. You are not excused from making the Payments, in full, for any
reason. You agree that you have no defense for failure to make the Payments and
you will not make any counterclaims or setoffs to avoid making the Payments.

2.   SECURITY INTEREST

     (a) You grant us a first and only lien on and security interest in the
Collateral. The Collateral secures the full and timely payment and performance
of all of your now existing or hereafter arising indebtedness, liabilities and
obligations to us, whether under this Master Agreement, the Schedules, the Notes
and any other agreement, loan or lease that you may at any time or times have
with us or otherwise (collectively, the "Obligations"). You also grant us a
security interest in any additional collateral identified in any Schedule. Any
additional collateral is considered to be "Collateral" and it secures all of the
Obligations.

     (b) If we request, you will put labels supplied by us stating "PROPERTY
SUBJECT TO A SECURITY INTEREST HELD BY FINOVA CAPITAL CORPORATION" on the
Collateral where they are clearly visible.

     (c) You give us permission to add to this Master Agreement or any Schedule
the serial numbers and other information about the Collateral.

     (d) You give us permission to file this Master Agreement or Uniform
Commercial Code financing statements, at your expense, in order to perfect our
security interest in the Collateral. You also give us permission to sign your
name on the Uniform Commercial Code financing statements where this is permitted
by law.

     (e) You will pay our reasonable fees and costs for documentation, closing,
administration and termination of this Master Agreement, the Notes and
Schedules. These fees include such items as reasonable attorneys fees and
expenses (not to exceed $10,000) incurred in preparing this Master Agreement and
all agreements, instruments and documents executed in connection herewith, and
all amendments, supplements and waivers hereto and thereto, as well as due
diligence searches and fees for preparing and filing UCC terminations and
releases. You will also pay any filing, recording or stamp fees or taxes
resulting from filing this Master Agreement or Uniform Commercial Code financing
statements.

     (f) At your expense, you will defend our first priority security interest
in the Collateral against, and keep the Collateral free of, any legal process,
liens, other security interests, attachments, levies and executions. You will
give us immediate written notice of any legal process, liens, attachments,
levies or executions, and you will indemnify us against any loss that results to
us from these causes.

     (g) You will notify us at least 15 days before you change the address of
your principal executive office or principal place of business. Your principal
executive office and principal place of business are set forth at the beginning
of this Master Agreement.

     (h) You will notify us at least 15 days before you change your state of
incorporation.

     (i) You will promptly sign and return additional documents that we may
reasonably request in order to protect our first priority security interest in
the Collateral.

     (j) Except as set forth in a Schedule, the Collateral is personal property
and will remain personal property. Except as set forth in a Schedule, you will
not incorporate it into real estate and will not do anything that will cause the

                                        3

<PAGE>   10

Collateral to become part of real estate or a fixture.

3.   CONDITIONS OF LENDING

     (a) See our Commitment Letter to you dated May 12, 2000 (the "Commitment
Letter"), which you and we consider to be a part of this Master Agreement. The
terms and conditions of the Commitment Letter continue following the making of
the first Advance, including, without limitation, conditions to the Loan.
However, if there is a conflict between the terms and conditions of this Master
Agreement, any Schedule or any Note and the terms and conditions of the
Commitment Letter, then you and we agree that the terms and conditions of this
Master Agreement, the Schedules and the Notes control over the Commitment Letter
terms and conditions.

     (b) Before we disburse any proceeds of any Advance, we also require the
following:

          (i) That no payment is past due to us under any other agreement, loan
or lease that you have with us.

          (ii) That you are complying with all terms of this Master Agreement,
the Schedules and the Notes and there are no defaults hereunder or thereunder.

          (iii) That we have received all the documents we requested, including
the signed Schedule and Note.

          (iv) That there has been no material adverse change in your financial
condition, business or operations from the financial condition that you have
disclosed to us.

          (v) All conditions contained in the Commitment Letter have been
satisfied.

4.   REPRESENTATIONS AND WARRANTIES

You represent and warrant to us as follows:

     (a) You are duly organized, existing and in good standing wherever you or
it are required by law to be so qualified. You have full power and authority to
execute, deliver and carry out the provisions of this Master Agreement, the
Schedules and the Notes and to borrow hereunder and thereunder. This Master
Agreement, the Schedules and the Notes are validly executed and delivered by you
and are the legal, valid and binding obligations of yours, each enforceable in
accordance with its terms.

     (b) You are not a defendant under any material litigation and there are no
judgments outstanding against you that would have a material adverse effect on
your ability to make the payments required hereby.

     (c) All of the Equipment has been delivered to you and installed at the
location set forth on the Schedule and you have accepted all of the Equipment
for all purposes of this Master Agreement.

     (d) You have good title to all of your assets, including, without
limitation, the Collateral, and in the case of the Collateral, free and clear of
all security interests, liens and other encumbrances. Upon filing of UCC-1
financing statements in all applicable filing offices, we will be granted a
first and only perfected lien on and security interest in all of the Collateral.
There are no other security interests, liens or encumbrances covering the
Collateral.

     (e) You have supplied us with information about the Collateral. You promise
to us that the amount of our Advance as to each item of Equipment is no more
than the fair and usual price for this kind of Equipment, taking into account
any discounts, rebates and allowances that you or any affiliate of yours may
have been given for the Equipment.

     (f) The Collateral is located at the premises set forth on the Schedule.

     (g) All financial information and other information that you have given us
is true and complete in all material respects. You have not failed to tell us
anything that would make the

                                        4

<PAGE>   11

financial information not misleading. There has been no material adverse change
in your financial condition, business or operations from the financial condition
that you disclosed to us.

     (h) You have complied in all material respects with all "environmental
laws" and will continue to comply with all "environmental laws." No "hazardous
substances" are used, generated, treated, stored or disposed of by you or at
your properties except in compliance with all environmental laws. "Environmental
laws" mean all federal, state or local environmental laws and regulations,
including the following laws: CERCLA, RCRA, Hazardous Materials Transport Act
and The Federal Water Pollution Control Act. "Hazardous substances" means all
hazardous or toxic wastes, materials or substances, as defined in the
environmental laws, as well as oil, flammable substances, asbestos that is or
could become friable, urea formaldehyde insulation, polychlorinated biphenyls
and radon gas.

5.   COVENANTS

You agree to do the following things (or not to do the following things if so
stated) until full payment of all amounts due to us under this Master Agreement,
the Schedules and the Notes:

     (a) CARE, USE, LOCATION, TRANSFER, ENCUMBRANCE, AND ALTERATION OF THE
COLLATERAL.

          (i) You will make sure that the Collateral is maintained in good
operating condition, ordinary wear and tear excepted, and that it is serviced
and repaired when this is necessary to keep the Collateral in good operating
condition. All maintenance must be done according to the Supplier's or
Manufacturer's requirements or recommendations. All maintenance must also comply
with any legal or regulatory requirements.

          (ii) You will maintain service logs for the Collateral, if applicable,
and permit us or our agents to inspect the Collateral, the service logs and
service reports. You give us and our agents permission to make copies of the
service logs and service reports.

          (iii) We will give you prior notice if we, or our agents, want to
inspect the Collateral or the service logs or service reports. We may inspect it
during regular business hours. If we find during an inspection that you are not
complying with this Master Agreement in any material respect or if you are
otherwise in default in any material respect under this Master Agreement, you
(and not us) will pay our travel, meals and lodging costs, and our out-of-pocket
costs and fees and those of our agents for reinspection. You will promptly cure
any problems with the Collateral that are discovered during our inspections.

          (iv) You will use the Collateral only for business purposes. You will
obey all legal and regulatory requirements in your use of the Collateral.

          (v) You will make all additions, modifications and improvements to the
Collateral that are required by law or government regulation. Otherwise, you
will not materially alter the Collateral without our written permission. You
will replace all worn, lost, stolen or destroyed parts of the Collateral with
replacement parts that are as good or better than the original parts. The new
parts will become subject to our security interest upon replacement.

          (vi) You will not remove the Collateral from the location indicated in
the Schedule.

          (vii) You have and will have good and merchantable title to all of the
Collateral.

          (viii) You will not convey, assign, sell, mortgage, transfer,
encumber, pledge, hypothecate, grant a security interest in, grant options with
respect to, lease or otherwise dispose of all or any part of any interest
whatsoever in or to any or all of the Collateral, or any interest therein.

     (b) RISK OF LOSS.

          (i) You have the complete risk of loss or damage to the Collateral.
Loss or damage to the Collateral will not relieve you of your obligation to make
the Payments.

                                        5

<PAGE>   12

          (ii) If any Collateral is lost or damaged, you have two choices
although if you are in default under this Master Agreement, we and not you will
have the two options. The choices are:

          (A) Repair or replace the damaged or lost Collateral so that, once
again, the Collateral is in good operating condition and we have a perfected
first priority security interest in it.

          (B) Pay us the present value (as of the date of payment) of the
remaining Payments. We will calculate the present value using a discount rate of
five (5%) percent per year. Once you have paid us this amount and any other
amount that you may owe us, we will release our security interest in the damaged
or lost Collateral and you (or your insurer) may keep the Collateral for salvage
purposes, on an "AS IS, WHERE IS" basis and without any representation or
warranty whatsoever.

     (c) INSURANCE.

          (i) Until you have made all Payments to us under this Master
Agreement, the Schedules and the Notes and all Obligations have been satisfied
in full, you will keep the Collateral insured. The amount of insurance, the
coverage, and the insurance company must be reasonably acceptable to us.

          (ii) If you do not provide us with written evidence of insurance that
is reasonably acceptable to us, we may buy the insurance ourselves, at your
expense. You will promptly pay us the cost of this insurance. We have no
obligation to purchase any insurance. Any insurance that we purchase will be our
insurance, and not yours, and we may insure the Collateral beyond the date of
satisfaction of the Obligations.

          (iii) Insurance proceeds may be used to repair or replace damaged or
lost Collateral or to pay us the present value of the Payments, as provided
above.

          (iv) You appoint us as your "attorney-in-fact" to make claims under
the insurance policies, to receive payments under the insurance policies, and to
endorse your name on all documents, checks or drafts relating to insurance
claims for Collateral.

     (d) TAXES.

          (i) You will pay all sales, use, excise, stamp, documentary and ad
valorum taxes, license, recording and registration fees, assessments, fines,
penalties and similar charges imposed on the ownership, possession, use, lease
or rental of the Collateral or on the Loan.

          (ii) You will pay all taxes (other than our federal or state net
income taxes) imposed on you or on us regarding the Payments.

          (iii) You will reimburse us for any of these taxes that we pay or
advance.

          (iv) You will file and pay for any personal property taxes on the
Collateral.

(e) INFORMATION SUPPLIED BY YOU.

          (i) During the Term you will promptly provide us with copies of any
current, quarterly and annual reports and all proxy (or information) statements
you file with the Securities and Exchange Commission ("SEC").

          (ii) You will also provide us with the following financial statements:

          (A) Quarterly balance sheet and statements of earnings and cash flow -
within 45 days after the end of your first three fiscal quarters in each fiscal
year. These will be certified by the chief financial officer.

          (B) Annual balance sheet and statements of earnings and cash flow -
within 90 days after the end of each fiscal year. These will be audited by a
reputable firm of certified public accountants reasonably acceptable to us such
as Grant Thorton or other firm of national recognition. Their audit report must
be unqualified.

All annual financial statements will be prepared according to generally accepted
accounting principles, consistently applied. All quarterly

                                        6

<PAGE>   13

financial statements will be prepared on a basis consistent with the annual
financial statements, subject to normal year-end adjustments and that the notes
thereto may be summarized in accordance with SEC regulations. All financial
statements and SEC filings that you provide us will be true and complete in all
material respects. They will not fail to tell us anything that would make them
not misleading.

          (iii) At the same time you deliver or cause to deliver the financial
statements described in paragraphs 5(f)(ii)(A) and (B), you will also provide us
with a certificate of your chief financial officer stating that no default
exists, or, if he cannot certify this because a default does exist, he must
specify in reasonable detail the nature of the default.

6.   DEFAULTS

     (a)  DEFAULTS. You are in default if any of the following happens:

          (i) You do not pay us, within ten (10) days of when it is due, any
Payment or other payment that you owe us under this Master Agreement, any
Schedule or any Note or that you owe under any other agreement, loan, lease or
other financial arrangement that you have with us.

          (ii) Any of the financial information that you give us is not true and
complete in all material respects, or you fail to tell us anything that would
make the financial information not misleading.

          (iii) You do something you are not permitted to do, or you fail to do
anything that is required of you, under this Master Agreement, any Schedule or
any other lease, loan or other financial arrangement that you have with us.

          (iv) An event of default occurs for any other lease, loan or
obligation of yours that exceeds $75,000 in the aggregate.

          (v) You file bankruptcy, or involuntary bankruptcy is filed against
you and such involuntary bankruptcy is not dismissed within sixty (60) days.

          (vi) You are subject to any other insolvency proceeding other than
bankruptcy (for example, a receivership action or an assignment for the benefit
of creditors) and such proceeding that is involuntary is not dismissed within
sixty (60) days.

          (vii) Without our permission, you sell all or substantially all of
your assets, merge or consolidate. Permission for merger shall not be
unreasonably withheld. However, without violating the provisions of this clause,
you may consolidate with or merge with a corporation or other entity organized
under the laws of one of the states of the United States or the District of
Columbia (the surviving entity, a "successor"), or sell (except by means of a
sale and leaseback arrangement) all or substantially all of its business and
assets to a transferee (the "transferee"), on the condition that any successor
or transferee either expressly or by operation of law assume in writing all of
your obligations pursuant to this Master Agreement, and that the net tangible
assets and the net worth (determined in accordance with generally accepted
accounting principles) of the successor or transferee after the consolidation,
merger or sale shall be at least equal to your net tangible assets and the net
worth, immediately prior to the consolidation, merger or sale.

          (viii) There is a material adverse change in your consolidated
financial condition, business or operations.

     (b) REMEDIES, DEFAULT INTEREST, LATE FEES.

          If you are in default we may exercise one or more of our "remedies."
Each of our remedies is independent. We may exercise any of our remedies, all of
our remedies or none of our remedies. We may exercise them in any order we
choose. Our exercise of any remedy will not prevent us from exercising any other
remedy or be an "election of remedies." If we do not exercise a remedy, or if we
delay in exercising a remedy, this does not mean that we are forgiving your
default or that we are giving up our right to

                                        7

<PAGE>   14

exercise the remedy. Our remedies allow us to do one or more of the following:

          (i) "Accelerate" the Loan balance under any or all Notes. This means
that we may require you to immediately pay us the entire outstanding principal
balance of the entire Loan.

          (ii) Require you to immediately pay us all amounts that you are
required to pay us for the entire Term of any other agreements, loans, leases or
financial arrangements that you have with us.

          (iii) Sue you for the entire outstanding principal balance of the Loan
and all other amounts you owe us (including, without limitation, all accrued and
unpaid interest, including interest at the Default Rate), outstanding fees,
costs, expenses and charges, plus all prepayment premiums.

          (iv) Require you at your expense to assemble the Collateral at a
location we request in the United States of America.

          (v) Exercise any remedy under the Uniform Commercial Code or otherwise
permitted by law including to the extent permitted retaking and removing the
Collateral. If required, we may disconnect and separate the Collateral from your
other property. You will not be entitled to any damages resulting from removal
or repossession of the Collateral, unless damages resulted from willful
misconduct or gross negligence. We may use, ship, store, repair or lease any
Collateral that we repossess. We may sell any repossessed Collateral at private
or public sale. You give us permission to show the Collateral to buyers at your
location free of charge during normal business hours, so long as we do not
unreasonably disrupt your business. If we do this, we do not have to remove the
Collateral from your location. If we repossess the Collateral and sell it, we
will give you credit for the net sale price, after subtracting our costs of
repossessing and selling the Collateral. If we rent the Collateral to somebody
else, we will give you credit for the net rent received, after subtracting our
costs of repossessing and renting the Collateral, but the credit will be
discounted to present value using a discount rate equal to the Default Rate. The
credit will be applied against what you owe us under this Master Agreement, the
Schedules, the Notes and any other agreements, loans, leases and other financial
arrangements that you have with us. If the credit exceeds the amount you owe
under this Master Agreement, the Schedule, the Notes and any other agreements,
loans, leases or financial arrangements that you have with us, we will refund
the amount of the excess to you.

          (vi) We will have all of our rights and remedies under this Master
Agreement, the Notes, the Schedules and all agreements, instruments and
documents executed in connection herewith and therewith and all of our rights
and remedies under applicable law, whether as a secured party or otherwise.

          (vii) Return conditions:

          (A) Following a default, at our request you will return the
Collateral, freight and insurance prepaid by you, to us at a location we request
in the United States of America. It will be returned in good operating
condition, ordinary wear and tear excepted, as required by Section 5 above. The
Collateral will not be subject to any liens, other than in our favor when it is
returned.

          (B) You will pack or crate the Collateral for shipping in the original
containers, or comparable ones. You will do this carefully and follow all
recommendations of the Supplier and the Manufacturer as to packing or crating.

          (C) You will also return to us the plans, specifications, operating
manuals, software, documentation, discs, warranties and other documents
furnished by the Manufacturer or Supplier that are reasonably available. You
will also return to us all service logs and service reports, as well as all
written materials that you may have concerning the maintenance and operation of
the Collateral.

          (D) At our request, you will provide us with up to 60 days free
storage of the Collateral at your location, and will let us (or our agent) have
access to the Collateral in order to inspect it, display it to others for
purchase and sell it.

                                        8

<PAGE>   15

          (E) You will pay us what it costs us to repair the Collateral if you
do not return it in the required condition.

          (viii) You will also pay us the following:

          (A) All our expenses of enforcing our remedies.  This includes all our
expenses to repossess, store, ship, repair and sell the Collateral.

          (B) Our reasonable attorney's fees and expenses.

          (C) Default interest on everything you owe us from the date of your
default to the date on which we are paid in full at the Default Rate.

          (D) A premium in the amount equal to the prepayment premium as set
forth in Exhibit B to the applicable Schedule.

          (ix) You will pay us a late fee whenever you pay any amount that you
owe us more than ten (10) days after it is due. You will pay the late fee within
one month after the late Payment was originally due. The late fee will be five
(5%) percent of the late Payment. If this exceeds the highest legal amount we
can charge you, you will only be required to pay the highest legal amount. The
late fee is intended to reimburse us for our collection costs that are caused by
late Payment. It is charged in addition to all other amounts you are required to
pay us, including Default Interest.

          (x) You realize that the damages we could suffer as a result of your
default are very uncertain. This is why we have agreed with you in advance on
the Default Rate to be used in calculating the payments you will owe us if you
default. You agree that, for these reasons, the payments you will owe us if you
default are "agreed" or "liquidated" damages. You understand that these payments
are not "penalties" or "forfeitures."

7.   PERFORMING YOUR OBLIGATIONS IF YOU DO NOT

If you do not perform one or more of your obligations under this Master
Agreement or a Schedule or Note, we may perform it for you. We will notify you
in writing at least ten (10) days before we do this. We do not have to perform
any of your obligations for you. If we do choose to perform them, you will pay
us all of our reasonable out-of-pocket expenses to perform the obligations. You
will also reimburse us for any money that we advance to perform your
obligations, together with interest at the Default Rate on that amount. These
will be additional "Payments" that you will owe us and you will pay them at the
same time that your next Payment is due.

8.   INDEMNITY

(a)  You will indemnify us, defend us and hold us harmless from and against any
and all claims, expenses and attorney's fees concerning or arising from the
Collateral, this Master Agreement, any Schedule or Note, or your breach of any
representation, warranty or covenant. It includes, without limitation, any
claims, losses or charges concerning, arising out of or in connection with the
manufacture, selection, delivery, possession, use, operation or return of the
Collateral and any claims, losses or damages concerning, arising out of or in
connection with this Master Agreement, any Schedule or the Notes.

     (b) This obligation of yours to indemnify us continues even after the Term
is over.

9.   MISCELLANEOUS

     (a) ASSIGNMENT.

WE MAY ASSIGN OR GRANT A SECURITY INTEREST IN THIS MASTER AGREEMENT, ANY
SCHEDULE, ANY NOTE OR ANY PAYMENTS WITHOUT YOUR PERMISSION. EXCEPT TO A
COMPETITOR OF YOURS. THE PERSON TO WHOM WE ASSIGN IS CALLED THE "ASSIGNEE." THE
ASSIGNEE WILL NOT HAVE ANY OF OUR OBLIGATIONS UNDER THIS MASTER AGREEMENT. YOU
WILL NOT BE ABLE TO

                                        9

<PAGE>   16

RAISE ANY DEFENSE, COUNTERCLAIM OR OFFSET AGAINST THE ASSIGNEE. NOTWITHSTANDING
ANY SUCH ASSIGNMENT OR GRANTING OF A SECURITY INTEREST, WE WILL CONTINUE TO BE
LIABLE FOR ALL OF OUR OBLIGATIONS UNDER THIS MASTER AGREEMENT.

UNLESS YOU RECEIVE OUR WRITTEN PERMISSION, YOU MAY NOT ASSIGN OR TRANSFER YOUR
RIGHTS UNDER THIS MASTER AGREEMENT OR ANY SCHEDULE. YOU ALSO ARE NOT ALLOWED TO
LEASE OR RENT COLLATERAL OR LET ANYBODY ELSE USE IT UNLESS WE GIVE YOU OUR
WRITTEN PERMISSION. THIS ANY NOT THE ELSE OUR

     (b) ACCEPTANCE BY FINOVA, GOVERNING LAW, JURISDICTION, VENUE, SERVICE OF
PROCESS, WAIVER OF JURY TRIAL.

THIS MASTER AGREEMENT WILL ONLY BE BINDING WHEN WE HAVE ACCEPTED IT IN WRITING.

THIS MASTER AGREEMENT IS GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK (NOT INCLUDING THE "CHOICE OF LAW" DOCTRINE). HOWEVER, IF THIS MASTER
AGREEMENT IS UNENFORCEABLE UNDER NEW YORK LAW, IT WILL INSTEAD BE GOVERNED BY
THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED.

YOU MAY ONLY SUE US IN A FEDERAL OR STATE COURT THAT IS LOCATED IN THE STATE OF
NEW YORK OR ANY STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK. THIS APPLIES
TO ALL LAWSUITS UNDER ALL LEGAL THEORIES, INCLUDING CONTRACT, TORT AND STRICT
LIABILITY. YOU CONSENT TO THE PERSONAL JURISDICTION OF THESE NEW YORK COURTS.
YOU WILL NOT CLAIM THAT NEW YORK COUNTY, NEW YORK, IS AN "INCONVENIENT FORUM" OR
THAT IT IS NOT A PROPER "VENUE."

WE MAY SUE YOU IN ANY COURT THAT HAS JURISDICTION. WE MAY SERVE YOU WITH PROCESS
IN A LAWSUIT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO YOUR ADDRESS
INDICATED AFTER YOUR SIGNATURE BELOW.

YOU AND WE EACH WAIVE ANY RIGHT YOU OR WE MAY HAVE TO A JURY TRIAL IN ANY
LAWSUIT BETWEEN YOU AND US.

     (c) NOTICES. Your address for notices is your address set forth below your
name on the signature page of this Master Agreement. We may give you written
notice in person, by mail, by overnight delivery service, or by fax. Mail notice
will be effective three (3) days after we deposit it with the U.S. Postal
Service. Overnight delivery notice requires a receipt and tracking number. Fax
notice requires a receipt from the sending machine showing that it has been sent
to your fax number and received.

Our address for notices is our address set forth below our name on the signature
page   of  this   Master   Agreement,   with   Attention:   Director,   Contract
Administration.  You will also give copies of all notices to us at our principal
place of business at the  address  set forth in the  opening  paragraph  of this
Master Agreement, with attention to Vice President, Law Department. You may give
us notice the same way that we may give you notice.

     (d) GENERAL.

This Master Agreement benefits our successors and assigns. This Master Agreement
benefits only those successors and assigns of yours that we have approved in
writing.

This Master Agreement binds your successors and assigns. This Master Agreement
binds only those successors and assigns of ours that clearly assume our
obligations in writing.

TIME IS OF THE ESSENCE OF THIS MASTER AGREEMENT

                                       10

<PAGE>   17

This Master Agreement, all of the Schedules and the Notes and the Commitment
Letter are together the entire agreement between you and us concerning the
Collateral.

Only an employee of FINOVA who is authorized by corporate resolution or policy
may modify or amend this Master Agreement or any Schedule or Note on our behalf,
and this must be in writing. Only he or she may give up any of our rights, and
this must be in writing. If more than one person is the Borrower under this
Master Agreement, then each of you is jointly and severally liable for your
obligations under this Master Agreement and all Schedules and Notes.

This Master Agreement is only for your benefit and for our benefit, as well as
our successors and assigns. It is not intended to benefit any other person.

If any provision in this Master Agreement is unenforceable, then that provision
must be deleted. Only unenforceable provisions are to be deleted. The rest of
this Master Agreement will remain as written.

We may make press releases and publish a tombstone announcing this transaction
and its total amount. You may publicize this transaction with our prior written
consent.

<TABLE>
<S>                                                   <C>
LENDER:                                                 BORROWER:

FINOVA CAPITAL CORPORATION                              APPLIEDTHEORY CORPORATION
10 Waterside Drive                                      224 Harrison Street, 8th Floor
Farmington, CT 06032-3065                               Syracuse, NY 13202

BY: /s/ LINDA A. MOSCHITTO                              BY: /s/ ANGELO A. GRNCARELLI
   -----------------------                                 ------------------------------

PRINTED NAME: Linda A. Moschitto                        PRINTED NAME: Angelo A. Gencarelli
             -------------------                                     ---------------------
              Director - Contract Administration
TITLE:                                                  TITLE:   V.P.
      --------------------                                    ----------------------
FAX NUMBER:(860)676-1814                                Taxpayer ID#
                                                                    ----------------
DATE ACCEPTED: May 30, 2000                             FAX NUMBER:(315)479-0824
               -------                                             -----------------
                                                        DATED: 5/30/00         ,2000
                                                              -----------------

STATE OF New York
        ----------------
COUNTY OF New York
         ---------------
</TABLE>

I acknowledge that Angelo Gencarelli, who stated that he/she is Vice President
of the Borrower named above, signed this Master Loan and Security Agreement in
my presence today: 30 May 2000. He/She acknowledged to me that his/her
signature on this Master Loan and Security Agreement was authorized by a valid
resolution or other valid authorization from Borrower's board of directors or
other governing body.

                                             /s/ DIANE BARKER
    [NOTARY PUBLIC SEAL]                     ---------------------------------
                                             Notary Public<PAGE>   1

                                                                    EXHIBIT 10.7

                                CGA GROUP, LTD.
                             2000 STOCK OPTION PLAN

                                   ARTICLE I

                                    PURPOSE

     This CGA Group, Ltd. 2000 Stock Option Plan is intended to advance the
interests of the Company and its stockholders by attracting, retaining and
motivating key personnel of the Company and its Subsidiaries upon whose
judgment, initiative and effort the Company is largely dependent for the
successful conduct of its business, and to encourage and enable such persons to
acquire and retain a proprietary interest in the Company by ownership of its
stock. Options granted under the Plan may either be "incentive stock options"
intended to qualify as such under the Internal Revenue Code, or "nonqualified
stock options," which are not intended to so qualify.

                                   ARTICLE II

                                  DEFINITIONS

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

     (b) "Change in Control" shall have the meaning set forth in Section 9.4.

     (c) "Code" means the Internal Revenue Code of 1986, as amended.

     (d) "Common Stock" means the Company's Common Stock, par value U.S. $.01
per share, and any other securities into which or for which any of the Company's
Common Stock may be converted or exchanged as set forth in the Company's
Bye-laws.

     (e) "Committee" means the Compensation Committee of the Board or any other
committee of the Board appointed by the Board to administer the Plan from time
to time.

     (f) "Company" means CGA Group, Ltd., a Company with limited liability
organized under the laws of Bermuda, and any company which shall succeed to or
assume the obligations of the Company hereunder.

     (g) "Date of Grant" means the date on which an Option becomes effective in
accordance with Section 6.1 hereof.

     (h) "Eligible Person" means any person who is an employee of the Company or
any Subsidiary, or any person who is determined by the Committee to be a
prospective employee of the Company or any Subsidiary.

     (i) "Employee" means any person who is an employee of the Company or any
Subsidiary; provided, however, that with respect to Incentive Stock Options,
"Employee" means

<PAGE>   2

any person who is considered an employee of the Company or any Subsidiary for
purposes of Treasury Regulation sec. 1.421-7(h).

     (j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (k) "Fair Market Value" of a share of Common Stock as of a given date means
the fair market value of the Common Stock as determined by the Committee in
whatever manner it considers appropriate.

     (l) "Incentive Stock Option" means a stock option granted under the Plan
that is intended to meet the requirements of section 422 of the Code and the
regulations promulgated thereunder.

     (m) "IPO" shall mean the consummation of an initial public offering
registered under the Securities Exchange Act of 1933 of any class of the
Company's common equity securities in which the Company receives net proceeds of
at least $50,000,000.00.

     (n) "Liquidity Event" means the consummation of (i) an IPO or (ii) a Change
In Control (as defined in Section 9.4 hereof).

     (o) "Net Income" means the dollar amount reported on the corresponding line
item of the Company's audited statement of operations for the applicable fiscal
years, as determined according to U.S. Generally Accepted Accounting Principles,
adjusted by the amount determined by the Committee, in good faith, to represent
(i) capital gains or losses from investment activity, (ii) savings or expenses
from a refinancing of the Company's Preferred A shares (unless such refinancing
is by an independent third-party and is not associated with a recapitalization
of the Company's equity capital structure), (iii) business acquisitions and
dispositions and (iv) any other extraordinary, unusual or nonrecurring items of
income or expense, change in accounting principles or revaluation of assets.

     (p) "Nonqualified Stock Option" means a stock option granted under the Plan
that is not an Incentive Stock Option.

     (q) "Option" means an Incentive Stock Option or a Nonqualified Stock Option
granted under the Plan.

     (r) "Optionee" means an Eligible Person to whom an Option has been granted,
which Option has not expired, under the Plan.

     (s) "Option Price" means the price at which each share of Common Stock
subject to an Option may be purchased, determined in accordance with Section 6.2
hereof.

     (t) "Partial Sale" means a transfer, in one transaction or a series of
related transactions, of a majority of the Common Stock by the shareholders of
such Common Stock in a transaction which is subject to a "Tag Along Right"
pursuant to Section (1)(d) of the Shareholders Agreement.

     (u) "Plan" means this CGA Group, Ltd. 2000 Stock Option Plan.

                                      2

<PAGE>   3

     (v) "Prior Warrant" means any outstanding warrant to purchase Common Stock
that was granted under the CGA Group, Ltd. Employee Stock Warrant Plan.

     (w) "Option Agreement" means an agreement between the Company and an
Optionee under which the Optionee may purchase Common Stock under the Plan.

     (x) "Shareholders Agreement" means the CGA Group, Ltd. Shareholders
Agreement, dated June 12, 1997, as amended and restated as of March 31, 1999.

     (y) "Subsidiary" means a subsidiary corporation of the Company, within the
meaning of section 424(f) of the Code.

                                  ARTICLE III

                                  ELIGIBILITY

     All Eligible Persons are eligible to receive a grant of an Option under the
Plan. Only those Eligible Persons designated by the Company's Chief Executive
Officer and approved by the Committee from time to time shall be granted an
Option.

                                   ARTICLE IV

                                 ADMINISTRATION

     4.1 Committee Members.  The Plan shall be administered by the Committee
acting upon the recommendations of the Company's Chief Executive Officer.

     4.2 Committee Authority.  Subject to the express provisions of the Plan,
the Committee shall have the authority, in its discretion, to determine the
Eligible Persons to whom an Option shall be granted, the time or times at which
an Option shall be granted, the number of shares of Common Stock subject to each
Option, the Option Price of the shares subject to each Option, the time or times
when each Option shall become exercisable and the duration of the exercise
period.

     Subject to the express provisions of the Plan, the Committee shall also
have discretionary authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the details and
provisions of each Option Agreement, and to make all the determinations
necessary or advisable in the administration of the Plan. All such actions and
determinations by the Committee shall be conclusively binding for all purposes
and upon all persons. No Committee member shall be liable for any action or
determination made in good faith with respect to the Plan, any Option or any
Option Agreement entered into hereunder.

     4.3 Majority Rule.  A majority of the members of the Committee (or, if less
than three, all of the members) shall constitute a quorum, and any action taken
by a majority present at a meeting at which a quorum is present or any action
taken without a meeting evidenced by a writing executed by a majority of the
whole Committee shall constitute the action of the Committee.

                                        3
<PAGE>   4

     4.4 Company Assistance.  The Company shall supply full and timely
information to the Committee on all matters relating to Eligible Persons, their
employment with the Company or a Subsidiary, their death, disability or other
termination of employment, and such other pertinent facts as the Committee may
require.

                                   ARTICLE V

                             SHARES SUBJECT TO PLAN

     5.1 Number of Shares.  Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the maximum aggregate number of shares of Common Stock which
may be issued and sold hereunder shall be 8,400,000 shares. Shares of Common
Stock issued and sold under the Plan may be either authorized but unissued
shares or shares held in the Company's treasury. The number of shares of Common
Stock reserved for issuance under the Plan shall at no time be less than the
maximum number of shares which may be purchased at any time pursuant to
outstanding options. Shares of Common Stock covered by an Option that shall have
been exercised shall not again be available for an Option grant. If an Option
shall terminate or expire for any reason without being wholly exercised, the
number of shares to which such Option termination relates shall again be
available for grant hereunder.

     5.2 Maximum Individual Limit.  An Eligible Employee may be granted multiple
Options under the Plan. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the maximum number of shares of Common Stock subject to all
Options granted under the Plan to any one individual during the Plan's term
shall be limited to 1,500,000 shares.

     5.3 Adjustments.  In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger or consolidation, or the
sale, conveyance, or other transfer by the Company of all or substantially all
of its assets, or any other change in the corporate structure or shares of the
Company, pursuant to any of which events the then outstanding shares of Common
Stock are split up or combined, or are changed into, become exchangeable at the
holder's election for other shares of stock or any other consideration, or in
the case of any other transaction described in section 424(a) of the Code, the
Committee shall change the number and kind of shares (including by substitution
of shares of another corporation) subject to the Options, the Option Price of
such shares and/or the maximum number of shares that may be granted to any one
individual during the Plan's term in the manner that it shall deem to be
equitable and appropriate. In no event may any such change be made to an
Incentive Stock Option which would constitute a "modification" within the
meaning of section 424(h)(3) of the Code without the consent of any affected
Optionee. In the event of any merger, consolidation, reorganization or similar
corporate event in which shares of the Common Stock are to be exchanged for
payment of cash (the "Cash Consideration"), the Committee may, in its
discretion, (i) make equitable adjustments as provided above, or (ii) cancel any
outstanding Option in exchange for payment in cash equal to the excess, if any,
of the Cash Consideration per share for the shares underlying such Option over
the Option Price for such shares.

                                        4
<PAGE>   5

                                   ARTICLE VI

                                 STOCK OPTIONS

     6.1 Grant of Options.  An Option may be granted to any Eligible Person
designated by the Company's Chief Executive Officer and approved by the
Committee. The grant of an Option shall first be effective upon the date it is
approved by the Committee, except to the extent the Committee shall specify a
later date upon which the grant of an Option shall first be effective. Each
Option shall be designated, at the discretion of the Chief Executive Officer and
Committee, as an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may condition the grant of an Option upon the consent of an Eligible
Person to the cancellation of his rights under a Prior Warrant in exchange for
rights granted under such Option. The Company and the Optionee shall execute an
Option Agreement which shall set forth such terms and conditions of the Option
as may be determined by the Committee to be consistent with the Plan, and which
may include additional provisions and restrictions that are not inconsistent
with the Plan.

     6.2 Option Price.  The Option Price shall be determined by the Committee;
provided, however, that, in the case of an Incentive Stock Option, the Option
Price shall not be less than 100 percent of the Fair Market Value of a share of
Common Stock on the Date of Grant.

     6.3 Vesting.  Unless otherwise provided by the Committee in an Option
Agreement, Options shall vest and become exercisable as to 25% of the number of
shares covered thereby on the December 31st next following the Date of Grant and
on each of the three following December 31sts, provided that the Optionee is an
Eligible Person on each of the respective vesting dates. For the avoidance of
doubt, if the Date of Grant of an Option is in calendar year 2000, 25% of the
number of shares covered thereby will vest on each of December 31, 2000, 2001,
2002 and 2003. Notwithstanding the foregoing, with respect to any Option that is
granted in cancellation of a Prior Warrant, the Option shall be vested on the
Date of Grant as to the same number of shares that had become vested and
exercisable under the Prior Warrant as of such date, and any remaining shares
shall become vested and exercisable thereafter as to 25% of the number of shares
covered thereby on the December 31st next following the Date of Grant and on
each of the three following December 31sts, provided that the Optionee is an
Eligible Person on each of the respective vesting dates, unless provided
otherwise by the Committee in an Option Agreement. The Committee, in its sole
discretion, may accelerate the exercisability of any Option at any time and for
any reason.

     6.4 Term of Option.  The period during which a vested Option may be
exercised shall be determined by the Committee, subject to a maximum term of ten
years from the Date of Grant and such other limitations as may apply upon the
termination of an Optionee's employment, as provided in Article VIII hereof.

     6.5 Option Exercise; Withholding.  Subject to such terms and conditions as
shall be specified in an Option Agreement, an Option may be exercised in whole
or in part at any time, with respect to whole shares only, within the period
permitted for the exercise thereof, and shall be exercised by written notice of
intent to exercise the Option with respect to a specified

                                      5

<PAGE>   6

number of shares delivered to the Company at its principal office, and payment
in full to the Company at said office of the amount of the Option Price for the
number of shares of Common Stock with respect to which the Option is then being
exercised. Payment of the Option Price shall be made (i) in cash or by cash
equivalent acceptable to the Committee, (ii) at the discretion of the
Committee, in Common Stock that has been held by the Optionee for at least six
months (or such other period as the Committee may deem appropriate for purposes
of applicable accounting rules), valued at the Fair Market Value of such shares
determined on the date of exercise, (iii) at the discretion of the Committee,
by having the Company withhold a sufficient number of shares of Common Stock
otherwise issuable to the Optionee upon exercise of an Option under the Plan,
or any other stock option held by the Eligible Person with respect to the
Common Stock, so that the value of such option shares so withheld will equal
the aggregate Option Price (or portion thereof) to be paid by the Optionee,
(iv) at the discretion of the Committee, by a combination of the methods
described above, or (v) by such other method as may be approved by the
Committee and set forth in the Option Agreement. In addition to and at the time
of payment of the Option Price, the Optionee shall pay to the Company the full
amount of all federal and state withholding and other employment taxes required
to be withheld in connection with such exercise, in any manner consistent with
the foregoing that is approved by the Committee and set forth in the Option
Agreement.

     6.6 Cancellation, Substitution and Amendment of Options.  The Committee
shall have the authority to effect, at any time and from time to time, with the
consent of the affected Optionees, (i) the cancellation of any or all
outstanding Options and the grant in substitution therefor of new Options
covering the same or different numbers of shares of Common Stock and having an
Option Price which may be the same as or different than the Option Price of the
cancelled Options or (ii) the amendment of the terms of any and all outstanding
Options.

                                  ARTICLE VII

                           ADDITIONAL RULES FOR ISOS

     7.1 Annual Limits.  No Incentive Stock Option shall be granted to an
Optionee as a result of which the aggregate fair market value (determined as of
the date of grant) of the stock with respect to which incentive stock options
are exercisable for the first time in any calendar year under the Plan, and any
other stock option plans of the Company, any Subsidiary or any parent
corporation, would exceed $100,000, determined in accordance with Section 422(d)
of the Code. This limitation shall be applied by taking options into account in
the order in which granted.

     7.2 Ten-Percent Owners.  Notwithstanding any other provisions of this Plan
to the contrary, in the case of an Incentive Stock Option granted to a
Ten-Percent Owner (defined below), (i) the period during which any such
Incentive Stock Option may be exercised shall not be greater than five years
from the Date of Grant and (ii) the Option Price of such Incentive Stock Option
shall not be less than 110 percent of the Fair Market Value of a share of Common
Stock on the Date of Grant. For purposes hereof, a Ten-Percent Owner means an
Optionee who, at the time an Incentive Stock Option is granted, owns stock
possessing more than ten percent of

                                      6

<PAGE>   7

the total combined voting power of all classes of stock of the Company, its
parent, if any, or any Subsidiary, within the meaning of Sections 422(b)(6) and
424(d) of the Code.

     7.3 Other Terms and Conditions; Nontransferability.  Any Incentive Stock
Option granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of this Plan, shall be
intended and interpreted to cause such Incentive Stock Option to qualify as an
incentive stock option under section 422 of the Code. An Option Agreement for an
Incentive Stock Option may provide that such Option shall be treated as a
Nonqualified Stock Option to the extent that certain requirements applicable to
"incentive stock options" under the Code shall not be satisfied. An Incentive
Stock Option shall by its terms be nontransferable otherwise than by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of an Optionee only by such Optionee.

     7.4 Disqualifying Dispositions.  If shares of Common Stock acquired by
exercise of an Incentive Stock Option are disposed of within two years following
the Date of Grant or one year following the transfer of such shares to the
Optionee upon exercise, the Optionee shall, promptly following such disposition,
notify the Company in writing of the date and terms of such disposition and
provide such other information regarding the disposition as the Committee may
reasonably require.

                                  ARTICLE VIII

                           TERMINATION OF EMPLOYMENT

     8.1 Death.  Unless otherwise provided by the Committee and set forth in the
Option Agreement, if an Optionee shall die at any time after the Date of Grant
or within ninety-days following the termination of employment, the executor or
administrator of the estate of the decedent, or the person or persons to whom an
Option shall have been validly transferred in accordance with Section 10.1
hereof pursuant to will or the laws of descent and distribution, shall have the
right, during the time period specified below, subject to the maximum term of
the Option, to exercise the Optionee's Option to the extent that it was
exercisable at the date of the Optionee's death and shall not have been
previously exercised. Subject to Section 9.2 hereof, if death shall occur prior
to a Liquidity Event, such period shall be the period ending ninety days from
the occurrence of a Liquidity Event, and if death shall occur on or after a
Liquidity Event, such period shall be the period ending two years from the date
of death.

     8.2 Disability.  Unless otherwise provided by the Committee and set forth
in the Option Agreement, if an Optionee's employment shall be terminated as a
result of his permanent and total disability (within the meaning of section
22(e)(3) of the Code) at any time after the Date of Grant or within ninety days
following such termination of employment, the Optionee (or in the case of an
Optionee who is legally incapacitated, his guardian or legal representative)
shall have the right, during the time period specified below, subject to the
maximum term of the Option, to exercise the Optionee's Option to the extent that
it was exercisable at the date of the Optionee's termination of employment as a
result of his permanent and total disability and shall not have been previously
exercised. Subject to Section 9.2 hereof, if the Optionee's termination of
employment as a result of permanent and total disability shall

                                      7

<PAGE>   8

occur prior to a Liquidity Event, such period shall be the period ending ninety
days from the occurrence of a Liquidity Event, and if the Optionee's
termination of employment as a result of permanent and total disability shall
occur on or after a Liquidity Event, such period shall be the period ending one
year from the date of such termination.

     8.3 Termination for Cause.  Unless otherwise provided by the Committee and
set forth in the Option Agreement, if an Optionee's employment shall be
terminated for "cause," the Optionee shall forfeit all vested and unvested
Options granted under the Plan and all rights thereunder shall cease. As used in
this Plan, termination for "cause" shall mean a termination of the Optionee's
employment by the Company or a Subsidiary for "cause" as defined under such
Optionee's employment agreement with the Company or a Subsidiary, or, in the
case of an Optionee who is not employed pursuant to an employment agreement,
termination for "cause" shall include, but not be limited to, the following acts
by the Optionee: (i) embezzlement or misappropriation of corporate funds, (ii)
any acts resulting in a conviction for, or plea of guilty or nolo contendere to,
a charge of commission of a felony, (iii) misconduct resulting in material
injury to the Company or any Subsidiary, (iv) significant activities harmful to
the reputation of the Company or any Subsidiary, (v) a significant violation of
Company or Subsidiary operating guidelines or policies, (vi) willful refusal to
perform, or substantial disregard of, the duties properly assigned to the
Optionee, or (vi) a significant violation of any contractual, statutory or
common law duty of loyalty to the Company or any Subsidiary. The Committee shall
have the power to determine whether the Optionee has been terminated for cause
and the date upon which such termination for cause occurs. Any such
determination shall be final, conclusive and binding upon the Optionee.

     8.4 Other Termination of Employment.  Unless otherwise provided by the
Committee and set forth in the Option Agreement, if an Optionee's employment
with the Company or any Subsidiary shall be terminated for any reason other than
death, permanent and total disability or termination for "cause," the Optionee
shall have the right, during the time period specified below, subject to the
maximum term of the Option, to exercise the Option to the extent that it was
exercisable at the date of the Optionee's termination of employment and shall
not have been exercised. Subject to Section 9.2 hereof, if the Optionee's
termination of employment shall occur prior to a Liquidity Event, such period
shall be the period ending ninety-days from the occurrence of a Liquidity Event,
and if the Optionee's termination of employment shall occur on or after a
Liquidity Event, such period shall be the period ending ninety days from the
date of such termination. For purposes of this Section 8.4, an Optionee shall
not be considered to have terminated employment with the Company or any
Subsidiary until the expiration of the period of any military, sick leave or
other bona fide leave of absence, up to a maximum period of ninety days (or such
greater period during which the Optionee is guaranteed reemployment either by
statute or contract).

     8.5 Noncompetition Restriction.  In the event the Optionee terminates
employment with the Company or a Subsidiary and, within the one year period
following such termination of employment, becomes employed by an entity engaged
in any business that competes with the business(es) then being conducted by the
Company and its Subsidiaries (which, for the avoidance of doubt, shall include
attempting to start up a business enterprise intended to compete with the
business(es) then being conducted by the Company and its Subsidiaries)
("Competing Entity"), the Optionee shall (i) immediately forfeit the right to

                                        8
<PAGE>   9

exercise any Options that are outstanding at the time of the violation and (ii)
remit to the Company in cash, payable within five days of the Optionee's
employment by such Competing Entity, the amount of any gains (measured by the
difference between the aggregate Fair Market Value on the date of exercise of
shares of Common Stock underlying the Option and the aggregate exercise price of
such shares of Common Stock underlying the Option) realized by the Optionee upon
the exercise of Options at any time following his termination of employment or
within the one year period prior to termination of employment with the Company
or a Subsidiary.

                                   ARTICLE IX

                LIQUIDITY EVENT, CASH-OUT RIGHT AND PARTIAL SALE

     9.1 Full Vesting.  Unless otherwise provided by the Committee and set forth
in the Option Agreement, upon a Liquidity Event, each share of Common Stock
covered by an outstanding Option, to the extent that it shall not previously
have become vested and exercisable, or shall have been cashed-out pursuant to
Section 9.2, shall automatically become immediately vested and exercisable
without regard to any otherwise applicable vesting requirement.

     9.2 Cash-Out Right.  In the event that (i) a Liquidity Event does not occur
on or prior to June 30, 2004 (or such later date as may be specified by the
Committee in an Option Agreement) and (ii) the actual aggregate Net Income of
the Company for the five fiscal years 2000 through 2004 is equal to or greater
than 85 percent of the current aggregate projected amount of Net Income for such
period of $93.1 million (as adjusted by the Committee, in its discretion and in
good faith, taking into account the anticipated affect on the value of the
Common Stock upon the Company's receipt of a AAA rating from Fitch IBCA, Inc.),
then each Optionee shall be entitled to elect, on a one-time basis in the manner
specified by the Committee between April 1, 2004 and June 30, 2004, to receive a
"cash-out" payment in exchange for the cancellation of all or a portion of
vested shares of Common Stock subject to the Option. Shares of Common Stock
subject to the Option that are not vested as of June 30, 2004 shall be
cancelled. The Company shall notify each Optionee, in writing, by May 31, 2004,
of the right to make a cash-out election.

     The aggregate amount available for all such cash-outs to Optionees shall be
equal to ten (10) percent of the actual aggregate Net Income of the Company for
the five fiscal years 2000 through 2004 (the "Cash-Out Pool"). The cash-out
amount for an Optionee shall be an amount equal to (A) the Cash-Out Pool
multiplied by (B) a fraction, the numerator of which is (1) the number of vested
shares of Common Stock subject to an Option that the Optionee has elected to
cash-out pursuant to this Section 9.2, and (2) the denominator of which equals
8,400,000. The cash-out payment shall be made as promptly as reasonably
practicable after the release of the Company's audited financial results for the
year ending December 31, 2004. The Company shall deduct the full amount of all
federal and state withholding and other employment taxes required to be withheld
in connection with such cash-out election.

     9.3 Partial Sale.  If at any time or from time to time there is a Partial
Sale of the Company, then the Company shall notify each Optionee, in writing, of
such transfer and its

                                      9
<PAGE>   10

terms and conditions. Within twenty-days of the date that such notice is given
to such Optionees, each Optionee shall notify the Company of the Optionee's
intent to cash-out a percentage of the shares of Common Stock covered by
Options equal to the percentage of shares of Common Stock being transferred by
the shareholders of the Company (exclusive of the shares of Common Stock
covered by Options). The cash-out amount per share shall be the same price per
share received by the shareholders of the Company in the Partial Sale (with the
value of any non-cash proceeds being determined by the Committee in its sole
discretion), less the exercise price per share of Common Stock covered by the
Option. For purposes of this Section 9.3, any outstanding Options shall, to the
extent not previously vested, be deemed vested for that number of shares which
may be cashed-out in accordance with the preceding sentences.

     9.4 Definitions.  For purposes of this Article 9, the following definitions
shall apply.

     (1)  A "Change in Control" shall be deemed to have occurred when:

          (a) The consummation of the acquisition by any person (as such term is
     defined in Section 13(d) or 14(d) of the Exchange Act) of beneficial
     ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
     Act) of more than fifty percent (50%) of the combined voting power of the
     then outstanding voting securities of the Company;

          (b) The cessation, for any reason, by individuals who, as of the date
     hereof, are members of the Board who constitute a majority of such Board,
     unless the designation of any new individual as a director is pursuant to
     the right to designate a director granted to certain members under the
     Bye-laws of the Company, and such new director shall be considered as a
     member of such Board; or

          (c) Approval by stockholders and consummation of: (1) a merger or
     consolidation if the stockholders of the Company immediately before such
     merger or consolidation do not, as a result of such merger or
     consolidation, own, directly or indirectly, more than fifty percent (50%)
     of the combined voting power of the then outstanding voting securities of
     the entity resulting from such merger or consolidation; or (2) an agreement
     for the sale or other disposition of all or substantially all of the assets
     of the Company other than an agreement for such sale or disposition to a
     corporation which, immediately prior to such sale or disposition, is owned
     directly or indirectly by the stockholders of the Company in materially the
     same proportion as their ownership of stock immediately prior to such sale
     or disposition.

     Notwithstanding anything to the contrary contained above, a Change in
Control shall not be deemed to occur solely because more than fifty percent
(50%) of the combined voting power of the then outstanding securities is, or all
or substantially all of the assets of the Company are, acquired by: (i) a
trustee or other fiduciary holding securities under one or more employee benefit
plans maintained for employees of the Company; or (ii) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly by the
stockholders of the

                                      10

<PAGE>   11

Company in materially the same proportion as their ownership of stock
immediately prior to such acquisition.

                                   ARTICLE X

                             TRANSFER RESTRICTIONS

     10.1 Limited Transferability of Nonqualified Stock Options.  All Options
shall be nontransferable except (i) upon the Optionee's death, by the Optionee's
will or the laws of descent and distribution or (ii) in the case Nonqualified
Stock Options only, on a case-by-case basis as may be approved by the Committee
in its discretion, in accordance with the terms provided below. As determined by
the Committee in its sole discretion, an Option Agreement for a Nonqualified
Stock Option may provide that the Optionee shall be permitted to, during his or
her lifetime and subject to the prior approval of the Committee at the time of
proposed transfer, transfer all or part of the Option to the Optionee's family
member or trust or entity for the benefit of a family member or members. The
transfer of a Nonqualified Stock Option shall be subject to Section 10.2 hereof
and may be subject to such other terms and conditions as the Committee may in
its discretion impose from time to time, including a condition that the portion
of the Option to be transferred be vested and exercisable by the Optionee at the
time of the transfer. Subsequent transfers by a transferee of an Option shall be
prohibited other than by will or the laws of descent and distribution upon the
death of the transferee.

     10.2 Shareholders Agreement.  As a condition to the Optionee's right to
acquire shares of Common Stock under this Plan, the Optionee shall be required
to execute and agree to be bound by the terms and conditions of the Shareholders
Agreement, and the Company agrees that Optionee shall be afforded the rights and
privileges set forth in such Shareholders Agreement with respect to the Common
Stock.

                                   ARTICLE XI

                               STOCK CERTIFICATES

     11.1 Issuance of Certificates.  Subject to Section 11.2 hereof, the Company
shall issue a stock certificate in the name of the Optionee (or other person
exercising the Option in accordance with the provisions of the Plan) for the
shares of Common Stock purchased by exercise of an Option as soon as practicable
after due exercise and payment of the aggregate Option Price for such shares. A
separate stock certificate or separate stock certificates shall be issued for
any shares of Common Stock purchased pursuant to the exercise of an Option that
is an Incentive Stock Option, which certificate or certificates shall not
include any shares of Common Stock that were purchased pursuant to the exercise
of an Option that is a Nonqualified Stock Option. The Committee may require the
Optionee to enter into an escrow agreement providing that the certificates
representing Common Stock issued pursuant to the Plan will remain in the
physical custody of an escrow holder until all restrictions are removed or
expire.

                                        11
<PAGE>   12

     11.2 Conditions.  The Company shall not be required to issue or deliver any
certificate for shares of Common Stock purchased upon the exercise of any Option
granted hereunder or any portion thereof prior to fulfillment of all of the
following conditions:

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

     (ii) the Optionee's execution of the Shareholders Agreement in accordance
with Section 10.2 hereof;

     (iii) the obtaining of any approval or other clearance from any federal or
state governmental agency which the Committee shall in its sole discretion
determine to be necessary or advisable;

     (iv) the lapse of such reasonable period of time following the exercise of
the Option as the Committee from time to time may establish for reasons of
administrative convenience;

     (v) satisfaction by the Optionee of all applicable withholding taxes or
other withholding liabilities; and

     (vi) if required by the Committee, in its sole discretion, the receipt by
the Company from an Optionee of (i) a representation in writing that the shares
of Common Stock received upon exercise of an Option are being acquired for
investment and not with a view to distribution and (ii) such other
representations and warranties as are deemed necessary by counsel to the
Company.

     11.3 Legends.  The Company reserves the right to legend any certificate for
shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations. The Committee may
require that certificates representing Common Stock issued under the Plan bear a
legend making appropriate reference to the restrictions imposed under the Plan
and the Option Agreement.

                                  ARTICLE XII

                   EFFECTIVE DATE, TERMINATION AND AMENDMENT

     12.1 Effective Date; Stockholder Approval.  The Plan shall become effective
as of March 2, 2000, the date of its adoption by the Board; provided, however,
that no Incentive Stock Option shall be exercisable by an Optionee unless and
until the Plan shall have been approved by the stockholders of the Company,
which approval shall be obtained within 12 months before or after the adoption
of the Plan by the Board.

                                     12
<PAGE>   13

     12.2 Termination.  The Plan shall terminate on the date immediately
preceding the fifth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall in any
manner affect any Option theretofore granted without the consent of the Optionee
or the permitted transferee of the Option.

     12.3 Amendment.  The Board may at any time and from time to time and in any
respect, amend or modify the Plan. Solely to the extent deemed necessary or
advisable by the Board, for purposes of complying with section 422 of the Code
or rules of any securities exchange or for any other reason, the Board may seek
the approval of any such amendment by the Company's stockholders.
Notwithstanding the foregoing, no amendment or modification of the Plan shall in
any manner affect any Option theretofore granted without the consent of the
Optionee or the permitted transferee of the Option.

                                  ARTICLE XIII

                                 MISCELLANEOUS

     13.1 Employment.  Nothing in the Plan, in the grant of any Option or in any
Option Agreement shall confer upon any Eligible Person the right to continue in
the capacity in which he is employed by the Company or any Subsidiary.
Notwithstanding anything contained in the Plan to the contrary, unless otherwise
provided in an Option Agreement, no Option shall be affected by any change of
duties or position of the Optionee (including a transfer to or from the Company
or any Subsidiary), so long as such Optionee continues to be an Eligible Person.

     13.2 Rights as Stockholder.  An Optionee or the permitted transferee of an
Option shall have no rights as a stockholder with respect to any shares subject
to such Option prior to the purchase of such shares by exercise of such Option
as provided herein. Nothing contained herein or in the Option Agreement relating
to any Option shall create an obligation on the part of the Company to
repurchase any shares of Common Stock purchased hereunder.

     13.3 Other Compensation and Benefit Plans.  The adoption of the Plan shall
not affect any other stock option or incentive or other compensation plans in
effect for the Company or any Subsidiary, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Subsidiary. The amount of any compensation
deemed to be received by an Optionee as a result of the exercise of an Option or
the sale of shares received upon such exercise shall not constitute compensation
with respect to which any other employee benefits of such Optionee are
determined, including, without limitation, benefits under any bonus, pension,
profit sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Committee or provided by the terms of such plan.

     13.4 Plan Binding on Successors.  The Plan shall be binding upon the
Company, its successors and assigns, and the Optionee, his executor,
administrator and permitted transferees.

                                     13
<PAGE>   14

     13.5 Construction and Interpretation.  Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

     13.6 Severability.  If any provision of the Plan or any Option Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

     13.7 Governing Law.  The validity and construction of this Plan and of the
Option Agreements shall be governed by the laws of the State of New York.

                                       14

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