Document:

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                                                                   EXHIBIT 10.8

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                   SECOND RESTATED INVESTORS' RIGHTS AGREEMENT

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                               TABLE OF CONTENTS

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1.      REGISTRATION RIGHTS..................................................................3
        1.1    Definitions...................................................................3
        1.2    Request for Registration......................................................3
        1.3    Company Registration..........................................................5
        1.4    Obligations of the Company....................................................6
        1.5    Furnish Information...........................................................7
        1.6    Expenses of Demand Registration...............................................7
        1.7    Expenses of Company Registration..............................................8
        1.8    Underwriting Requirements.....................................................8
        1.9    Indemnification. .............................................................9
        1.10   Reports Under Securities Exchange Act of 1934................................11
        1.11   Form S-3 Registration........................................................12
        1.12   Assignment of Registration Rights............................................13
        1.13   Limitations on Subsequent Registration Rights................................13
        1.14   "Market Stand-Off" Agreement.................................................13
        1.15   Termination of Registration Rights...........................................14

2.      COVENANTS OF THE COMPANY............................................................14

        2.1    Delivery of Financial Statements.............................................14
        2.2    Inspection...................................................................15
        2.3    Termination of Information and Inspection Covenants..........................15
        2.4    Right of First Offer.........................................................15
        2.5    Right of First Refusal.......................................................16
        2.6    Co-Sale Right................................................................18
        2.7    Employee and Other Stock Arrangements........................................20

3.      MISCELLANEOUS.......................................................................20
        3.1    Successors and Assigns.......................................................20
        3.2    Governing Law................................................................21
        3.3    Counterparts.................................................................21
        3.4    Titles and Subtitles.........................................................21
        3.5    Notices......................................................................21
        3.6    Amendments and Waivers.......................................................21
        3.7    Severability.................................................................22
        3.8    Aggregation of Stock.........................................................22
        3.9    Entire Agreement.............................................................22
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                   SECOND RESTATED INVESTORS' RIGHTS AGREEMENT

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               THIS SECOND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of
the 18th day of February, 2000, by and between ACCELERATED NETWORKS, INC. a
California corporation (the "Company"), Suresh Nihalani and Kiran Munj (each, a
"Founder" and collectively, the "Founders"), each of the investors in Series D
Preferred Stock of the Company listed on Schedule A hereto (each of which is
referred to herein as a "Series D Investor"), and each of the shareholders
listed on Schedule B hereto (each of which is referred to herein as a "Prior
Investor"). The Series D Investors and the Prior Investors sometimes are
referred to herein as the "Preferred Stock Investors." The Founders and the
Preferred Stock Investors sometimes are referred to herein as the "Investors."
This Agreement will become effective upon the consummation of the transactions
contemplated by of the Series D Purchase Agreement (as defined below).

                                    RECITALS

               WHEREAS, the Company, the Founders and certain of the Investors
are parties to the Restated Investors' Rights Agreement dated as of May 15, 1998
(the "Restated Investors' Rights Agreement"), which agreement governs the rights
of such Investors to cause the Company to register shares of Common Stock issued
to the Founders and issuable to such Investors and certain other matters as set
forth therein;

               WHEREAS, the Restated Investors' Rights Agreement was
subsequently amended by that certain Amendment No. 1 to Restated Investors'
Rights Agreement dated February 24, 1999 (the "First Amendment") and that
certain Amendment No. 2 to Restated Investors' Rights Agreement dated December
16, 1999 (the "Second Amendment");

               WHEREAS, the Company and the Series D Investors have entered into
that certain Series D Preferred Stock Purchase Agreement dated February 18, 2000
(the "Series D Purchase Agreement"), pursuant to which the Series D Investors
will purchase shares of the Company's Series D Preferred Stock;

               WHEREAS, in order to induce the Company to consummate the
transactions contemplated by the Series D Purchase Agreement and to induce the
Series D Investors to invest funds in the Company pursuant to the Series D
Purchase Agreement, the Investors and the Company hereby agree that the Restated
Investors' Rights Agreement, as amended by the First Amendment and the Second
Amendment, shall be of no further force and effect and that this Agreement shall
govern the rights of the Investors to cause the Company to register shares of
Common Stock issued to the Founders and issuable to the Preferred Stock
Investors and certain other matters as set forth herein.

               NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereto agree as follows:

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1.      REGISTRATION RIGHTS.  The Company covenants and agrees as follows:

        1.1 Definitions. For purposes of this Section 1:

               (a) The term "Act" means the Securities Act of 1933, as amended.

               (b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.

               (c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 hereof.

               (d) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.

               (e) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.

               (f) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
(ii) the Six Million Eight Hundred Thousand (6,800,000) shares of Common Stock
held by the Founders, and (iii) the Common Stock issued or issuable upon
exercise of any Warrants granted from time to time pursuant to that certain
Warrant Issuance Agreement dated as of December 16, 1999, between the Company
and Siemens Information and Communication Networks, Inc., and (iv) any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i), (ii) and (iii) above, excluding in all cases, however, any
Registrable Securities sold by a Holder in a transaction in which such Holder's
rights under this Section 1 are not assigned.

               (g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.

               (h) The term "SEC" shall mean the Securities and Exchange
Commission.

        1.2 Request for Registration.

               (a) If the Company shall receive at any time after the earlier of
(i) July 1, 2002 or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the

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sale of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction) a written request from
the Holders of sixty-six and sixty-six hundredths percent (66.66%) of the
Registrable Securities (not including Founders Stock) then outstanding that the
Company file a registration statement under the Act covering the registration of
at least twenty percent (20%) of the Registrable Securities (not including
Founders Stock) then outstanding (or such lesser number of shares as shall have
an anticipated aggregate offering price to the public of at least $10,000,000,
net of underwriting discounts and commissions), then the Company shall:

                      (i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and

                      (ii) use its best efforts to effect as soon as
practicable, the registration under the Act of all Registrable Securities (not
including Founders Stock) which the Holders request to be registered, subject to
the limitations set forth in subsections 1.2(b), (c) and (d), within twenty (20)
days of the mailing of notice by the Company set forth in (i) above in
accordance with Section 3.5.

               (b) The Holders initiating the registration request hereunder
("Initiating Holders") shall, in accordance with subsection 1.2(f) distribute
the Registrable Securities covered by their request by means of an underwriting
and the Company shall include such information in the written notice referred to
in subsection 1.2(a)(i). The underwriter will be selected by the Company and
shall be reasonably acceptable to a majority in interest of the Initiating
Holders. The right of any Holder to include such Holder's Registrable Securities
in such underwritten registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in usual and customary form with
the underwriter or underwriters selected for such underwriting. Notwithstanding
any other provision of this Section 1.2, if the underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be eliminated or allocated among all Holders thereof,
including the Initiating Holders, in proportion (as nearly as practicable) to
the amount of Registrable Securities of the Company owned by each Holder.

               (c) Notwithstanding subsection 1.2(b), if the Company shall
furnish to Holders requesting a registration pursuant to this Section 1.2, a
certificate signed by the Chief Executive Officer or President of the Company
stating that in the good faith judgment of the Board of Directors of the Company
it would be detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than sixty
(60) days after receipt of the request of the

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Initiating Holders; provided, however, that the Company may not utilize this
right more than twice in any twelve-month period.

               (d) Notwithstanding anything else set forth in this Section
1.2, the Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 1.2:

                      (i) After the Company has effected two (2) registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;

                      (ii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided, however, that the Company
is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;

                      (iii) Within twelve (12) months of the effective date of
another registration effected pursuant to this Section 1.2; or

                      (iv) If the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to Section 1.11 and the Company proceeds with such registration.

               (e) The Company may include in any underwritten registration
under this Section 1.2 any other shares of Common Stock (including, without
limitation, issued and outstanding shares of Common Stock as to which the
holders thereof have contracted with the Company for "piggyback" registration
rights) so long as the inclusion in such registration of such shares (i) will
not, in the opinion of the managing underwriter of such registration, interfere
with the successful marketing in accordance with the intended method of sale or
other disposition of all the shares of Registrable Securities sought to be
registered by the Holder or Holders of Registrable Securities pursuant to this
Section 1.2 and (ii) will not result in the exclusion from such registration of
any Registrable Securities. If it is determined as provided above that there
will be such interference, the other shares of Common Stock sought to be
included shall be excluded to the extent deemed appropriate by the managing
underwriter of such registration.

               (f) Notwithstanding anything else set forth in this Agreement,
the Company shall not be required to effect a registration under this Section
1.2 unless such registration is a firm commitment underwritten offering with a
nationally recognized underwriter.

        1.3 Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than (i) a registration relating solely to the
sale of securities to participants in a Company stock or stock option plan, (ii)
a registration pursuant to a SEC Rule 145 transaction, or (iii) a registration
in which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities

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which are also being registered) the Company shall, at such time, promptly give
each Holder written notice in accordance with Section 3.5 of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.

        1.4 Obligations of the Company. Whenever required under this Agreement
to use its best efforts to register any Registrable Securities, the Company
shall as expeditiously as reasonably possible:

               (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of the
managing underwriter and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Act, permits an offering
on a continuous or delayed basis, and provided further that applicable rules
under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.

               (b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

               (c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.

               (d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Act.

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               (e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

               (f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.

               (g) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange on which similar securities
issued by the Company are then listed.

               (h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

        1.5 Furnish Information.

               (a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.

               (b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.11 if, due to the
operation of subsection 1.5(a), the number of shares does not equal or exceed
the number of shares required to originally trigger the Company's obligation to
initiate such registration as specified in subsection 1.2(a) or Section 1.11,
whichever is applicable.

        1.6 Expenses of Demand Registration. All expenses (other than
underwriting discounts and commissions) incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including,
without limitation, all registration, filing and qualification fees, printers'
and accounting fees, reasonable fees and disbursements of counsel for the
Company (including reasonable fees and disbursements of counsel for the Company
in its capacity as counsel to the selling Holders hereunder; provided, however,
if Company counsel does not make itself available for this purpose, the Company
will pay the reasonable fees and disbursements of one counsel for the selling
Holders selected by them) shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority in interest
of the Registrable Securities to be registered or fails to close (in which case
all Holders initiating such registration

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shall bear such expenses pro rata based upon the total number of Registrable
Securities requested to be included therein by each such Holder), unless such
Holders agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, however, that if at the time of such withdrawal
or failure to close, (a) the Holders proposing to participate in the
registration have learned of a material adverse change in the condition,
business, or prospects of the Company not known to such Holders at the time of
their request other than a change resulting from market factors or other matters
over which the Company has no control, (b) the facts producing such change were
known to the Company at the time of the request or the Company's delay in
disclosing such facts resulted in substantial additional expense, and (c) in the
case of withdrawal, such Holders have withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse change,
then such Holders shall not be required to pay any of such expenses and shall
retain their rights pursuant to Section 1.2.

        1.7 Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registrations pursuant to Section 1.3
for each Holder (which right may be assigned as provided in Section 1.12),
including, without limitation, all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the
reasonable fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holders hereunder (provided, however, if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them), but excluding underwriting discounts and commissions relating
to such Registrable Securities.

        1.8 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 1.3 to include any of the Holders' Registrable
Securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the managing underwriter(s) selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata (A) first to the Company (B) second, pro
rata among the selling Holders according to the total amount of Registrable
Securities owned by each such Holder, and (C) to the extent additional
securities may be included therein, pro rata among the other selling
shareholders according to the total amount of securities owned by each such
selling shareholder, or in such other proportions as shall mutually be agreed to
by such selling shareholders); provided that in no event shall the amount of
Registrable Securities included in the offering be reduced below twenty-five
percent (25%) of the total amount of securities included in such offering,
unless such offering is the initial public offering of the Company's securities
in which case such Registrable Securities may be excluded if the underwriter(s)
make

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the determination described above and no other shareholder's securities are
included. For purposes of the preceding parenthetical concerning apportionment,
for any selling shareholder which is a holder of Registrable Securities and
which is a partnership or corporation, the partners, retired partners and
shareholders of such holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling shareholder" and any
pro rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," as defined in
this sentence.

        1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:

               (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including, without limitation, any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided, further, that if any losses, claims, damages or liabilities arise out
of or are based upon a Violation which did not appear in the final prospectus,
the Company shall not have any liability with respect thereto to (i) the Holder
or any person who controls such Holder within the meaning of Section 15 of the
Act if the Holder delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it has been amended
or supplemented, to such person at or prior to the written confirmation of the
sale to such person or (ii) any underwriter or any person who controls such
underwriter within the meaning of Section 15 of the Act, if such underwriter
delivered a copy of the preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and

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failed to deliver a copy of the final prospectus, as amended or supplemented, if
it has been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person.

               (b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided further,
that, in no event shall any indemnity under this subsection 1.9(b) exceed the
gross proceeds from the offering received by such Holder.

               (c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.

               (d) If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable

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by such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

               (e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

               (f) The obligations of the Company and Holders under this Section
1.9 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.

        1.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:

               (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after sixty (60) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;

               (b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;

               (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and

               (d) furnish to any Holder at any time after ninety (90) days
following the effective date of the first registration statement filed by the
Company, so long as the Holder owns any Registrable Securities, forthwith upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably

                                       11
<PAGE>   13

requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.

        1.11 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders who own at least fifteen percent (15%) of (i) the Registrable
Securities then outstanding or (ii) the Series A Preferred Stock (including the
Common Stock issued upon conversion thereof) then outstanding, a written request
or requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

               (a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and

               (b) as soon as practicable, use its best efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this Section 1.11: (1) if Form S-3 is not available for such offering by the
Holders; (2) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Common Stock at an aggregate price to the public (including any underwriters'
discounts or commissions) of less than $1,000,000; (3) if the Company shall
furnish to the Holder or Holders a certificate signed by the Chief Financial
Officer or President of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be detrimental to the Company
and its shareholders for such Form S-3 Registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than sixty (60) days after
receipt of the request of the Holder or Holders under this Section 1.11;
provided, however, that the Company shall not utilize this right more than twice
in any twelve (12) month period; (4) if the Company has, within the six (6)
month period preceding the date of such request, already effected one (1)
registration on Form S-3 pursuant to this Section 1.11; or (5) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act.

               (c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests set forth in this Section 1.11 of the Holder or Holders. The
Company shall bear and pay all expenses incurred in connection with
registrations requested pursuant to this Section 1.11, including, without
limitation, all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the Company
(including reasonable fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder; provided, however, if
Company counsel

                                       12
<PAGE>   14

does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them), but excluding any underwriters' discounts or commissions
associated with the Registrable Securities. Registrations effected pursuant to
this Section 1.11 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively.

        1.12 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 1 may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
of such securities who, after such assignment or transfer, holds at least
400,000 shares of the Company's capital stock; provided, however, that (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including, without limitation, the provisions
of Section 1.14 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. Any such assignee
shall be subject to all rights and obligations hereunder and, if requested by
the Company, shall agree in writing to be bound by the terms of this Agreement.
The foregoing share limitation shall not apply to transfers to affiliated
entities of the transferor or to distributions from a partnership to partners if
the partner holds at least one percent (1%) of the Company's outstanding capital
stock following such distribution.

        1.13 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of sixty-six and sixty-six hundredths percent (66.66%) percent of
the Registrable Securities then outstanding, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder (a) to include such securities in any
registration filed under Section 1.2, 1.3 or 1.11 hereof, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of such holder's
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.

        1.14 "Market Stand-Off" Agreement. Each Investor hereby agrees that, for
a period of one hundred eighty (180) days following the effective date of the
first registration statement of the Company filed under the Act or ninety (90)
days following the effective date of any other registration statement of the
Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter(s), directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
provided, however, that such Investor shall be subject to the market stand-off
provisions of this Section 1.14 only if the officers and directors of the
Company are subject to

                                       13
<PAGE>   15

similar arrangements and the Company uses reasonable efforts to have all holders
of at least one percent (1%) of the Company's capital stock also subject to
similar arrangements.

               In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. Notwithstanding the
foregoing, the obligations described in this Section 1.14 shall not apply to a
registration relating solely to employee benefit plans on Form S-l or Form S-8
or similar forms which may be promulgated in the future, or a registration
relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms which
may be promulgated in the future.

        1.15 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Section 1.2,
1.3 or 1.11 shall terminate and such Holder's securities shall no longer be
deemed to be Registrable Securities at such time as (i)(A) such Holder holds
less than 1% of the Company's outstanding Common Stock (including the Common
Stock issued or issuable upon conversion of the Company's outstanding Preferred
Stock) and (B) such Holder's Registrable Securities may be sold pursuant to Rule
144(k) or (ii) the expiration of three years after the closing of the first
Company-initiated firm commitment underwritten public offering of Common Stock
of the Company.

2.      COVENANTS OF THE COMPANY.

        2.1 Delivery of Financial Statements. The Company shall deliver to (i)
each Preferred Stock Investor who holds (whether directly or by application of
Section 3.8) at least 1,650,000 shares of the Company's Series A Preferred
Stock, 1,000,000 shares of the Company's Series B Preferred Stock, 1,000,000
shares of the Company's Series C Preferred Stock, 1,000,000 shares of the
Company's Series D Preferred Stock (as adjusted for subsequent stock splits,
stock dividends or recapitalizations of the Company's capital stock) (each, a
"Major Investor") and (ii) MCI WorldCom Venture Fund, Inc., a Delaware
corporation ("MCI") for so long as MCI holds at least 800,000 shares of the
Company's Series D Preferred Stock (as adjusted for subsequent stock splits,
stock dividends or recapitalizations of the Company's capital stock):

               (a) as soon as practicable, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
shareholders' equity as of the end of such year, such year-end financial reports
to be in reasonable detail, prepared in accordance with generally accepted
accounting principles and audited and certified by independent public
accountants.

               (b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, and an unaudited
balance sheet and a statement of shareholders' equity as of the end of such
fiscal quarter.

                                       14
<PAGE>   16

               (c) within thirty (30) days of the end of each month, an
unaudited income statement and schedule as to the sources and application of
funds and balance sheet for and as of the end of such month, in reasonable
detail.

               (d) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for the next
fiscal year showing the Company's projected monthly financial statements and, as
soon as prepared, any other budgets or revised budgets prepared by the Company.

        2.2 Inspection. The Company shall permit MCI, for so long as MCI holds
at least 800,000 shares of the Company's Series D Preferred Stock (as adjusted
for subsequent stock splits, stock dividends or recapitalizations of the
Company's capital stock), and each Major Investor, at such Investor's expense,
to visit and inspect the Company's properties, to examine its books of account
and records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it deems in good faith to
be a trade secret or similar confidential information.

        2.3 Termination of Information and Inspection Covenants. The covenants
set forth in Sections 2.1 and 2.2 shall terminate as to any Major Investor and
MCI and be of no further force or effect (i) in conjunction with or at any time
subsequent to the sale of securities pursuant to a registration statement filed
by the Company under the Act in connection with the underwritten offering of its
securities to the general public, (ii) in conjunction with or at any time
subsequent to the acquisition of more than fifty percent (50%) of the Company's
equity securities by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation), or a sale of all or substantially all of the assets of the
Company, or (iii) after the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever
event shall first occur.

        2.4 Right of First Offer. Subject to the terms and conditions specified
in this Section 2.4, the Company hereby grants to each Major Investor a right of
first offer with respect to future sales by the Company of its Shares (as
hereinafter defined). Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:

               (a) The Company shall deliver a notice by certified mail ("Offer
Notice") to the Major Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.

               (b) By written notification received by the Company, within
thirty (30) calendar days after giving of the Offer Notice, each Major Investor
may elect to purchase or obtain, at the price and on the terms specified in the
Offer Notice, up to that portion of such Shares which equals the proportion that
the number of shares of Common Stock issued and held,

                                       15
<PAGE>   17

or issuable upon conversion of the Preferred Stock then held, by such Major
Investor bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities).

               (c) If all Shares referred to in the Offer Notice are not elected
to be obtained as provided in subsection 2.4(b) hereof, the Company may, during
the 90-day period following the expiration of the period provided in subsection
2.4(b) hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more favorable to
the offeree than those specified in the Offer Notice. If the Company does not
enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within thirty (30) days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Major Investors in
accordance herewith.

               (d) The right of first offer in this Section 2.4 shall not be
applicable (i) to the issuance or sale of Shares (or options therefor) to
employees, consultants, directors, directly or pursuant to a stock option plan
or restricted stock issuance plan approved by the Board of Directors of the
Company, (ii) to or after consummation of a firm commitment underwritten public
offering of shares of Common Stock, registered under the Act pursuant to a
registration statement, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has a
potential or existing customer or supplier relationship, or (vi) to or after the
acquisition of the Company by another entity by means of any bona fide
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation), or a sale of all or substantially
all of the assets of the Company unless the corporation's shareholders of record
as constituted immediately prior to such transaction or series of transactions
will, immediately after such transaction or series of transactions (by virtue of
securities issued as consideration in the transaction or series of transactions)
hold at least 50% of the voting power of the successor to the corporation's
business.

               (e) The right of first offer set forth in this Section 2.4 may
not be assigned or transferred, except that (i) such right is assignable by each
Major Investor to any wholly owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Major Investor, and (ii)
such right is assignable between and among any of the Major Investors.

        2.5 Right of First Refusal. Before any shares of capital stock of the
Company registered in the name of a Founder may be sold or transferred (other
than transfers set forth in paragraph (g)), such shares shall first be offered
to the Company and the Major Investors in the following manner:

               (a) The Founder or his transferee shall deliver a notice by
certified mail ("Transfer Notice") to the principal business office of the
Company and to each Major Investor stating (i) his bona fide intention to sell
or transfer such shares, (ii) the number of such shares to

                                       16
<PAGE>   18

be sold or transferred, (iii) the price and terms, if any, for which he proposes
to sell or transfer such shares, and (iv) the name and address of the proposed
purchaser or transferee (if known).

               (b) The Company shall have the right at any time within twenty
(20) calendar days of the giving of the Transfer Notice to purchase some or all
of the shares to which the Transfer Notice refers at the price per share
specified in the Transfer Notice, or if no price is specified therein, at the
fair market value thereof as determined by the Board of Directors in good faith.
Said right shall be exercised by written notice signed by an officer of the
Company ("Company Exercise Notice") and delivered by certified mail to the
Founder, which notice shall specify the time, place and date for settlement of
such purchase (but in no event shall such date be more than sixty (60) calendar
days from the date the Transfer Notice was delivered to the Company). If the
Company does not exercise its right to purchase all of the shares to which the
Transfer Notice refers, the Company shall within twenty-five (25) calendar days
of the giving of the Transfer Notice deliver by certified mail to each Major
Investor a copy of the Company Exercise Notice or a statement that the Company
has elected not to purchase any of the shares subject to the Transfer Notice.

               (c) In the event the Company does not, for any reason, exercise
its right to purchase all of the shares to which the Transfer Notice refers in
accordance with subsection 2.5(b), then each Major Investor shall have the
option, exercisable by written notice (the "Investors Exercise Notice")
delivered by certified mail to the Founder and the Company within forty-five
(45) calendar days of the giving of the Transfer Notice, to purchase up to that
portion of such shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by such Major Investor bears to the total number of shares of Common
Stock of the Company then outstanding (assuming full conversion and exercise of
all convertible or exercisable securities). Such purchase shall be at the price
per share specified in the Transfer Notice, or if no price is specified therein,
at the fair market value thereof as determined by the Board of Directors in good
faith. The Investors Exercise Notice shall specify the time, place and date for
settlement of such purchase (but in no event shall such date be more than sixty
(60) calendar days from the date the Transfer Notice was received by the
Company).

               (d) If some or all of the shares to which the Transfer Notice
refers are not purchased, as provided in subsections 2.5(b) and 2.5(c) hereof,
the Founder may sell such shares at the price and terms specified in the
Transfer Notice, provided that such sale or transfer is consummated within one
hundred twenty (120) calendar days from the date of said Transfer Notice to the
Company, and provided, further, that any such sale is in accordance with all the
terms and conditions hereof. If the Founder does not consummate the sale or
transfer within such one hundred twenty (120)-day period, the right provided
hereby shall be deemed to be revived with respect to such shares and no sale or
transfer shall be effected without first offering the shares in accordance
herewith.

               (e) Notwithstanding the foregoing, the right of first refusal of
the Major Investors provided in this Section 2.5 shall not apply to (i) any
pledge of Common Stock made pursuant to a bona fide loan transaction that
creates a mere security interest, (ii) transfers by gift, will or intestate
succession of a Founder to a Founder's spouse or lineal descendants or ancestors

                                       17
<PAGE>   19

or a trust for the benefit of such persons, (iii) any bona fide gift, or (iv)
any transfer by operation of law or other involuntary transfer; provided that,
with respect to clauses (i), (ii) and (iii) above, (A) the Founder shall inform
the Major Investors of such pledge, transfer or gift prior to effecting it and
(B) the pledgee, transferee or donee shall furnish the Major Investors with a
written agreement to be bound by and comply with all provisions of this
Agreement. Such transferred Common Stock shall remain "Founders Stock"
hereunder, and such pledgee, transferee or donee shall be treated as a "Founder"
for purposes of this Agreement.

               (f) Notwithstanding the foregoing, neither the Company nor any
Major Investor shall have any right under this Section 2.5 (i) in conjunction
with or at any time subsequent to the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
underwritten offering of its securities to the general public, (ii) in
conjunction with or at any time subsequent to the acquisition of more than fifty
percent (50%) of the Company's equity securities by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or a sale of all or
substantially all of the assets of the Company, or (iii) after the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.

        2.6 Co-Sale Right.

               (a) Each Founder agrees that in the event it reaches an agreement
to sell more than twenty percent (20%) of the Founders Stock owned by such
Founder by means of any transaction or series of related transactions, it will
provide written notice (the "Co-Sale Notice") to each Major Investor at least
twenty (20) days prior to the closing of such sale or transfer. The Co-Sale
Notice shall describe in reasonable detail the proposed sale or transfer
including, without limitation, the number of shares of Common Stock to be sold
or transferred, the nature of such sale or transfer, the consideration to be
paid, and the name and address of each prospective purchaser or transferee. In
the event that the sale or transfer is being made pursuant to the provisions of
paragraph (g) or (h) hereof, the Co-Sale Notice shall state under which
paragraph the sale or transfer is being made.

               (b) Each Major Investor shall have the right, exercisable upon
written notice to the Founder delivered by certified mail, within fifteen (15)
days after the giving of the Co-Sale Notice to the Major Investor, to
participate in such sale of Common Stock on the same terms and conditions. To
the extent a Major Investor exercises such right of participation in accordance
with the terms and conditions set forth below, the number of shares of Common
Stock that the Founder may sell in the transaction shall be correspondingly
reduced.

               (c) Each Major Investor may sell all or any part of that number
of shares of Common Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Common Stock covered by the Co-Sale Notice by (ii)
a fraction the numerator of which is the number of shares of Common Stock issued
and held on the date of the Co-Sale Notice, or issuable upon conversion of the
Preferred Stock then held, by such Major Investor and the denominator of which
is the total number of shares of Common Stock (on an as-converted basis)

                                       18
<PAGE>   20

owned by all the Preferred Stock Investors and the selling Founder on the date
of the Co-Sale Notice.

               (d) A Major Investor shall effect its participation in the sale
by promptly delivering to the Founder for transfer to the prospective purchaser
one or more certificates, properly endorsed for transfer, which represent:

                      (i) the type and number of shares of Common Stock which
the Major Investor elects to sell; or

                      (ii) that number of shares of Preferred Stock which is at
such time convertible into the number of shares of Common Stock which the Major
Investor elects to sell; provided, however, that if the prospective purchaser
objects to the delivery of Preferred Stock in lieu of Common Stock, the Major
Investor shall convert such Preferred Stock into Common Stock and deliver Common
Stock as provided in subparagraph (i) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser.

               (e) The stock certificate or certificates that a Major Investor
delivers to the Founder pursuant to paragraph (d) shall be transferred to the
prospective purchaser in consummation of the sale of the Common Stock pursuant
to the terms and conditions specified in the Co-Sale Notice, and the Founder
shall concurrently therewith remit to such Major Investor that portion of the
sale proceeds to which the Major Investor is entitled by reason of its
participation in such sale. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase shares or
other securities from a Major Investor exercising its rights of co-sale
hereunder, the Founder shall not sell to such prospective purchaser or
purchasers any Common Stock unless and until, simultaneously with such sale, the
Founder shall purchase such shares or other securities from such Major Investor.

               (f) The exercise or non-exercise of the rights of the Major
Investors hereunder to participate in one or more sales of Common Stock made by
the Founder shall not adversely affect their rights to participate in subsequent
sales of Common Stock subject to paragraph (a).

               (g) Notwithstanding the foregoing, the co-sale rights of the
Major Investors provided in this Section 2.6 shall not apply to (i) any pledge
of Common Stock made pursuant to a bona fide loan transaction that creates a
mere security interest, (ii) transfers by gift, will or intestate succession of
a Founder to a Founder's spouse or lineal descendants or ancestors or a trust
for the benefit of such persons, (iii) any bona fide gift, or (iv) any transfer
by operation of law or other involuntary transfer; provided that, with respect
to clauses (i), (ii) and (iii) above, (A) the Founder shall inform the Major
Investors of such pledge, transfer or gift prior to effecting it and (B) the
pledgee, transferee or donee shall furnish the Major Investor with a written
agreement to be bound by and comply with all provisions of this Agreement. Such
transferred Common Stock shall remain "Founders Stock" hereunder, and such
pledgee, transferee or donee shall be treated as a "Founder" for purposes of
this Agreement.

                                       19
<PAGE>   21

               (h) Notwithstanding the foregoing, the provisions of this Section
2.6 shall not apply to the sale of any Common Stock by a Founder (i) to the
public pursuant to a registration statement filed with, and declared effective
by, the SEC under the Act, or (ii) to the Company, or (iii) if prior to such
sale, the Founder held less than five percent (5%) of the Company's outstanding
capital stock.

               (i) Notwithstanding the foregoing, the co-sale right set forth in
this Section 2.6 shall terminate and be of no further force or effect (i) in
conjunction with or at any time subsequent to the sale of securities pursuant to
a registration statement filed by the Company under the Act in connection with
the underwritten offering of its securities to the general public, (ii) in
conjunction with or at any time subsequent to the acquisition of more than fifty
percent (50%) of the Company's equity securities by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or a sale of all or
substantially all of the assets of the Company, or (iii) after the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.

        2.7 Employee and Other Stock Arrangements.

               (a) Except as determined otherwise in the discretion of the Board
of Directors, each acquisition of any option or right to acquire any shares of
capital stock of the Company by an employee, consultant, or director of the
Company pursuant to a Company stock or stock option plan shall be subject to a
four (4)-year vesting schedule, with twenty-five percent (25%) of the shares
vested upon the first anniversary of the commencement of service and the
remaining shares subject to monthly vesting thereafter; provided, however
(except as otherwise determined by the Board of Directors), if the Board of
Directors allows an option holder to exercise an option prior to full vesting,
the unvested shares shall be subject to a repurchase option in favor of the
Company which shall provide that upon termination of employment, with or without
cause, the Company may repurchase, at cost, any unvested shares held by such
shareholder.

               (b) Notwithstanding the foregoing, the provisions set forth in
this Section 2.7 shall terminate and be of no further force or effect after (i)
the sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the underwritten offering of its securities to
the general public, (ii) the acquisition of more than fifty percent (50%) of the
Company's equity securities by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation), or a sale of all or substantially all
of the assets of the Company, or (iii) the Company first becomes subject to the
periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur.

3.      MISCELLANEOUS.

        3.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended

                                       20
<PAGE>   22

to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

        3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within California
without regard to the conflicts of law provisions thereof. The parties hereto
agree to submit to the jurisdiction of the federal and state courts of the State
of California with respect to the breach or interpretation of this Agreement or
the enforcement of any and all rights, duties, liabilities, obligations, powers,
and other relations between the parties arising under this Agreement.

        3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

        3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

        3.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (i) five
(5) days after deposit with the U.S. postal service or other applicable postal
service, if delivered by first class mail, postage prepaid, (ii) upon delivery,
if delivered by hand, (iii) one (1) business day after the day of deposit with
Federal Express or similar overnight courier, freight prepaid, if delivered by
overnight courier or (iv) one (1) business day after the day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed, (a) if to an Investor, at such
Investor's address set forth below its signature, or at such other address as
such Investor shall have furnished the Company in writing, or (b) if to the
Company, at its address as set forth below, or at such other address as the
Company shall have furnished to each Investor in writing.

        3.6 Amendments and Waivers.

               (a) Any term of Section 1 or Section 3 (other than this Section
3.6) of this Agreement may be amended and the observance of any term of Section
1 or Section 3 (other than this Section 3.6) of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (i) the Company, (ii) the
holders of sixty six and sixty six hundreds percent (66.66%) of the Registrable
Securities then outstanding and held by the Preferred Stock Investors, and (iii)
the holders of a majority of the Registrable Securities then held by the
Founders.

               (b) Any term of Section 2 (other than Section 2.6) of this
Agreement may be amended and the observance of any term of Section 2 (other than
Section 2.6) of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of (i) the Company, and (ii) the holders of a majority of the
Registrable Securities then outstanding and held by the Major Investors.

                                       21
<PAGE>   23

               (c) Any term of Section 2.6 may be amended and the observance of
any term of Section 2.6 may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of (i) the holders of a majority of the Registrable Securities then
outstanding and held by the Major Investors, and (ii) the holders of a majority
of the Registrable Securities then outstanding and held by the Founders;
provided, however, any such amendment or waiver that would affect the rights of
any Major Investor or Founder in a manner different than the other Major
Investors or Founders (as applicable) shall also require the written consent of
such differently affected Major Investor or Founder.

               (d) Any term of this Section 3.6 may be amended and the
observance of any term of this Section 3.6 may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the parties whose consent is required to amend or waive a
particular provision.

               (e) Any amendment or waiver effected in accordance with this
Section 3.6 shall be binding upon the Company and each Investor, and their
respective successors and assigns.

        3.7 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

        3.8 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.

        3.9 Entire Agreement. This Agreement (including the Exhibits hereto, if
any) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof. This Agreement supersedes and
replaces the Restated Investors Rights Agreement and, to the extent necessary,
the execution and delivery of this Agreement constitutes a waiver of the
provisions of Section 2.4 of the Restated Investors Rights Agreement.

                                       22
<PAGE>   24

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                        THE COMPANY:

                                        ACCELERATED NETWORKS, INC.

                                        By:  /s/ Suresh Nihalani
                                            ------------------------------------
                                             Suresh Nihalani, President

                                        Address:  301 Science Drive
                                                  Moorpark, CA  93021

<PAGE>   25

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                        SURESH NIHALANI

                                        /s/ Suresh Nihalani
                                        ----------------------------------------
                                        Suresh Nihalani

                                        Address:  c/o Accelerated Networks, Inc.
                                                  301 Science Drive
                                                  Moorpark, CA  93021

                                        KIRAN MUNJ

                                        /s/ Kiran Munj
                                        ----------------------------------------
                                        Kiran Munj

                                        Address:  c/o Accelerated Networks, Inc.
                                                  301 Science Drive
                                                  Moorpark, CA  93021

<PAGE>   26

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                        THE INVESTORS:

                                         MCI WORLDCOM VENTURE FUND, INC.

                                        By:  /s/ Susan Mayer
                                            ------------------------------------
                                             Name:  Susan Mayer
                                             Title: President

                                        Address:  1801 Pennsylvania Avenue
                                                  Washington, DC  20006

<PAGE>   27

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                   WINDWARD VENTURES, L.P.

                                   By:  Windward Ventures Management, L.P.
                                        General Partner

                                   By:  /s/ David Titus
                                       ----------------------------------------
                                        David Titus
                                        General Partner

                                   Address:  12680 High Bluff Drive, Suite 200
                                             San Diego, CA 92130

                                   ONSET ENTERPRISE ASSOCIATES III, L.P.

                                   By:    OEA III MANAGEMENT, LLC
                                    Its:  General Partner

                                    By:  /s/ Robert Kuhling
                                       ----------------------------------------
                                         Name:  Robert Kuhling
                                         Title:

                                   Address:  2490 Sand Hill Road
                                             Menlo Park, CA  94025

<PAGE>   28

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                   SIEMENS INFORMATION AND COMMUNICATION
                                   NETWORKS, INC.

                                   By:  /s/ Dieter Diehn
                                       ----------------------------------------
                                        Name:  Dieter Diehn
                                        Title: Executive V.P. & CFO

                                   Address:  900 Broken Sound Parkway
                                             Boca Raton, FL  33487

<PAGE>   29

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                             SIEMENS AG

                             By:  /s/ Anthony Maher
                                 -----------------------------------------------
                                  Name:   Anthony Maher
                                  Title:  Member of the Group Board ICN

                             By:  /s/ Georg Vollmuth
                                 -----------------------------------------------
                                  Name:   Georg Vollmuth
                                  Title:  Vice President ICN RU

                             Address:       Hofmannstrasse 51, D-81359
                                            Munich, Germany
                                            Attn:  Helmut Hoffmann

                             NEW ENTERPRISE ASSOCIATES VII, Limited Partnership

                             By:    NEA Partners VII, Limited Partnership
                             Its:   General Partner

                             By:  /s/ Peter Morris
                                 -----------------------------------------------
                                  Name:   Peter Morris
                                  Title:  General Partner

                             Address:  2490 Sand Hill Road
                                       Menlo Park, CA 94025

<PAGE>   30

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                             WALDEN-SBIC, L.P.
                             WALDEN TECHNOLOGY VENTURES II, L.P.
                             WALDEN MEDIA & INFORMATION TECHNOLOGY
                                FUND, L.P.
                             WALDEN EDB PARTNERS, L.P.
                             WALDEN JAPAN PARTNERS, L.P.

                             By:  /s/ George Sarlo
                                 -----------------------------------------------
                                  George Sarlo
                                  General Partner

                             Address:  750 Battery Street
                                       Seventh Floor
                                       San Francisco, CA  94111

<PAGE>   31

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                             WALDEN EDB PARTNERS, L.P.
                             WALDEN JAPAN PARTNERS, L.P.

                             By:  /s/ Lip-Bu Tan
                                 ----------------------------------------------
                                  Name:  Lip-Bu Tan
                                  Title:  General Partner

                             Address:  750 Battery Street
                                       Seventh Floor
                                       San Francisco, CA  94111

                             PACVEN WALDEN VENTURES III, L.P.

                             By:  Pacven Walden Management, L.P.
                                  General Partner

                                  By:  /s/ Lip-Bu Tan
                                      -----------------------------------------
                                       Lip-Bu Tan
                                       Director

                                  Of Pacven Walden Management Co., Ltd.
                                  As General Partner of Pacven Walden
                                  Management, L P.
                                  As General Partner of Pacven Walden
                                  Ventures III, L.P.

                             Address:  750 Battery Street
                                       Seventh Floor
                                       San Francisco, CA  94111

                             WALDEN-NIKKO MAURITIUS CO.

                             By:  /s/ Lip-Bu Tan
                                 ----------------------------------------------
                                  Lip-Bu Tan
                                  Director

                             Address:  750 Battery Street, Seventh Floor
                                       San Francisco, CA  94111

<PAGE>   32

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                             U.S. VENTURE PARTNERS V, L.P.
                             USVP V INTERNATIONAL, L.P.
                             2180 ASSOCIATES FUND V, L.P.
                             USVP V ENTREPRENEUR PARTNERS, L.P.

                             By:  Presidio Management Group V, L.L.C.

                                  By:  /s/ Steve Krausz
                                      -----------------------------------------
                                       Name:  Steve Krausz
                                       Title: General Partner

                             Address:  2180 Sand Hill Road, Suite 300
                                       Menlo Park, CA 94025

<PAGE>   33

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                             U.S. VENTURE PARTNERS VII, L.P.

                             By:   Presidio Management Group, L.L.C.
                             Its:  General Partner

                                   By:  /s/ Steve Krausz
                                       -----------------------------------------
                                        Name:  Steve Krausz
                                        Title: General Partner

                             Address:  2180 Sand Hill Road, Suite 300
                                       Menlo Park, CA 94025

<PAGE>   34

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                          H.R. JOHNSON AND STEVEN C. JOHNSON, AS
                                          TENANTS IN COMMON

                                          By:  /s/ H.R. Johnson
                                              ---------------------------------
                                               H. R. Johnson

                                          Address:  11105 Bellavista Drive
                                                    Potomac, MD  20854

                                          By:  /s/ Steven C. Johnson
                                              ---------------------------------
                                               Steven C. Johnson

                                          Address:  5707 Ridgefield Road
                                                    Bethesda, MD  20816

<PAGE>   35

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            BRUCE R. HALLETT

                                            /s/ Bruce R. Hallett
                                            ------------------------------------

                                            Address:  1115 Ebbtide
                                                      Corona del Mar, CA  92625

                                            GABRIELLE WIRTH

                                            /s/ Gabrielle Wirth
                                            ------------------------------------

                                            Address:  212 Via Eboli
                                                      Newport Beach, CA  92663

                                            JIM DIBERNARDO

                                            /s/ S. James DiBernardo
                                            ------------------------------------

                                            Address:  14110 Baleri Ranch Road
                                                      Los Altos Hills, CA  94022

                                            ZAITUN POONJA

                                            /s/ Zaitun Poonja
                                            ------------------------------------

                                            Address:  630 Milverton Road
                                                      Los Altos, CA  94022

                                            JOSEPH H. CHI

                                            ------------------------------------
                                            /s/ Joseph H. Chi

                                            Address:  1223 Via Visalia
                                                      San Clemente, CA  92672

<PAGE>   36

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                         ELIZABETH T. HALL

                                         /s/ Elizabeth T. Hall
                                         ------------------------------------

                                         Address:  12441 N. LaCoste Drive
                                                   Tustin, CA  92782

                                         CRAIG S. GUNTHER

                                         /s/ Craig S. Gunther
                                         ------------------------------------

                                         Address:  25476 Rodeo Circle
                                                   Laguna Hills, CA  92653

                                         BARBARA MILLER

                                         /s/ Barbara Miller
                                         ------------------------------------

                                         Address:  6515 Park Royal Circle
                                                   Huntington Beach, CA  92648

                                         LISA GOON

                                         /s/ Lisa Goon
                                         ------------------------------------

                                         Address:  1412 Seacrest Drive
                                                   Corona del Mar, CA  92625

<PAGE>   37

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            UMB BANK, N.A., TRUSTEE OF THE
                                            BROBECK, PHLEGER & HARRISON LLP
                                            RETIREMENT SAVINGS PLAN FBO
                                            GABRIELLE WIRTH

                                            /s/ Melissa Whited
                                            ------------------------------------

                                            Address:  1010 Grand Blvd.
                                                      Kansas City, MO  64106

                                            UMB BANK, N.A., TRUSTEE OF THE
                                            BROBECK, PHLEGER & HARRISON LLP
                                            RETIREMENT SAVINGS PLAN FBO
                                            JOSEPH H. CHI

                                            /s/ Melissa Whited
                                            ------------------------------------

                                            Address:  1010 Grand Blvd.
                                                      Kansas City, MO  64106

<PAGE>   38

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            PETE PATEL

                                            /s/ Pete Patel
                                            ------------------------------------

                                            Address:  4337 Clearwood Road
                                                      Moorpark, CA 93021

                                            HITENDRA SONI

                                            /s/ Hitendra Soni
                                            ------------------------------------

                                            Address:  11443 Amber Ridge
                                                      Moorpark, CA 93021

                                            KEVIN WALSH

                                            /s/ Kevin Walsh
                                            ------------------------------------

                                            Address:  11850 Silvercrest
                                                      Moorpark, CA 93021

<PAGE>   39

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            PAUL FERRIS

                                            /s/ Paul Ferris
                                            ------------------------------------

                                            Address:  375 Green Street
                                                      San Francisco, CA 94133

                                            RYAN DRANT

                                            /s/ Ryan Drant
                                            ------------------------------------

                                            Address:  1119 St. Paul Street
                                                      Baltimore, Maryland 21202

                                            TONY FISCH

                                            /s/ Tony Fisch
                                            ------------------------------------

                                            Address:  17027 Adlon Road
                                                      Encino, CA 91403

<PAGE>   40

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                         RIVER OAKS INVESTMENTS, L.L.C.

                                         /s/ Timothy R. Huff
                                         ------------------------------------
                                         By:    Timothy R. Huff, Member

                                         Address:  131 Jefferson Street
                                                   St. Charles, Missouri 63301

                                         ROBERT J. FABBRICATORE & PARTNERS

                                         /s/ Robert J. Fabbricatore
                                         ------------------------------------
                                         Address:  c/o CTC Communications
                                                   220 Bear Hill Road
                                                   Waltham, MA 02451

<PAGE>   41

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            ANTARES INVESTMENTS, LLC

                                            /s/ Ari J. Spar
                                            ------------------------------------
                                            By:   Ari J. Spar
                                            Its:  President

                                            Address:  Antares Investments, LLC
                                                      c/o Ari Spar
                                                      604 Douglas Road
                                                      Chappaqua, NY  10514

<PAGE>   42

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                  MMK INVESTMENTS, LLC

                                  /s/ Alan M. Schrager
                                  ----------------------------------------------
                                  By:   Alan M. Schrager
                                  Its:  Manager

                                  Address:  c/o National Registered Agents, Inc.
                                            9 East Loockerman Street
                                            Dover, County of Kent, DE 19901

<PAGE>   43

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                        UA VENTURES, LLC

                                        /s/ S. Andrew McKay
                                        ----------------------------------------
                                        By:    S. Andrew McKay

                                        Address:  1401 Elm Road
                                                  Louisville, Kentucky  40223
                                                  Attention:  S. Andrew McKay

<PAGE>   44

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            ROY WILKENS

                                            /s/ Roy Wilkens
                                            -----------------------------------
                                            Roy Wilkens

                                            Address:  8 Courtney Circle
                                                      Emory, Texas 75440

<PAGE>   45

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                       BRUCE AND SUSAN YUILLE, HUSBAND AND WIFE

                                       /s/ Bruce Yuille
                                       -----------------------------------------
                                       Bruce Yuille

                                       /s/ Susan Yuille
                                       -----------------------------------------
                                       Susan Yuille

                                       Address:
                                                 -------------------------------
                                                 -------------------------------

<PAGE>   46

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                         SAUL AND LINA ANUZIS, HUSBAND AND WIFE

                                         /s/ Saul Anuzis
                                         --------------------------------------
                                         Saul Anuzis

                                         /s/ Lina Anuzis
                                         --------------------------------------
                                         Lina Anuzis

                                         Address:  5 Locust Lane
                                                   Lansing, MI  48911

<PAGE>   47

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                  JMI, INC.

                                  /s/ Charles Noell
                                  -------------------------------------------
                                  By:  Charles Noell, President

                                  Address:  12680 High Bluff Drive, Suite 200
                                            San Diego, CA  92130

<PAGE>   48

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            WEATHERS INVESTMENTS, LLC

                                            /s/ Helen D. Weathers
                                            ------------------------------------
                                            By:    Helen D. Weathers, Manager

                                            Address:  1967 Willeo Creek Point
                                                      Marietta, GA  30068

<PAGE>   49

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            FRANCIS X. DZUBECK AND KATHRYN A.
                                            DZUBECK, JTWROS

                                            /s/ Francis X. Dzubeck
                                            -----------------------------------
                                            Francis X. Dzubeck

                                            /s/ Kathryn A. Dzubeck
                                            -----------------------------------
                                            Kathryn A. Dzubeck

                                            Address:  2440 Virginia Avenue, NW
                                                      Suite D-309
                                                      Washington, DC  20037

<PAGE>   50

           SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE

                                            VIKRAM & MAYA SHETH FAMILY TRUST
                                            DATED FEBRUARY 9, 1994

                                            /s/ Vikram K. Sheth
                                            -----------------------------------
                                            Vikram K. Sheth

                                            /s/ Maya V. Sheth
                                            -----------------------------------
                                            Maya V. Sheth

                                            Address:  18153 Chatham Lane
                                                      Northridge, CA  91326

<PAGE>   51

                                   SCHEDULE A
                               SERIES D INVESTORS

NAME OF INVESTOR
MCI Worldcom Venture Fund, Inc.
Windward Ventures, L.P.
Siemens AG
New Enterprise Associates VII, Limited Partnership
US Venture Partners VII, L.P.
ONSET Enterprise Associates III, L.P.
Pacven Walden Ventures III, L.P.
Walden EDB Partners II, L.P.
Walden-Nikko Mauritius Co.
H.R. Johnson & Steven C. Johnson, as Tenants in Common
Pete Patel
Hitendra Soni
Kevin Walsh
Bruce R. Hallett
UMB Bank, n.a., Trustee of the Brobeck, Phleger & Harrison LLP Retirement
Savings Plan FBO Gabrielle
Wirth
Gabrielle Wirth
Jim DiBernardo
Zaitun Poonja
UMB Bank, n.a., Trustee of the Brobeck, Phleger & Harrison LLP Retirement
Savings Plan FBO Joseph H. Chi
Joseph H. Chi
Elizabeth T. Hall
Craig S. Gunther
Barbara Miller
Lisa Goon
Paul Ferris
Ryan Drant
Tony Fisch
River Oaks Investments L.L.C.
Antares Investments, L.L.C.
Robert J. Fabbricatore & Partners
MMK Investors, LLC
UA Ventures, LLC
Roy A. Wilkens
Bruce and Susan Yuille, husband and wife Saul & Lina Anuzis, husband and wife
JMI, Inc.
Weathers Investments LLC
Francis X. Dzubeck and Kathryn A. Dzubeck, JTWROS
Vikram and Maya Sheth Family Trust dtd February 9, 1994

<PAGE>   52

                                   SCHEDULE B

                                 PRIOR INVESTORS

<TABLE>
<S>                                               <C>
Brobeck, Phleger & Harrison LLP                   Stanford University

Brobeck Investment Company V, L.P.                Deepak Samtani

Susan N. Cayley                                   Ashok Samtani

Rob Coneybeer                                     Bharat Samtani

Michael R. D'Amour, Trustee of the D'Amour        2180 Associates Fund V, L.P.
Family Trust

Defta Partners                                    U.S. Venture Partners V, L.P.

Richard A. Fink                                   USVP V International, L.P.

Lee J. Leslie                                     USVP V Entrepreneur Partners, L.P.

NEA Presidents Fund, L.P.                         Pacven Walden Ventures III, L.P.

NEA Ventures 1997, Limited Partnership            Walden EDB Partners, L.P.

New Enterprise Associates VII, Limited            Walden Japan Partners, L.P.
Partnership

Rajesh Nihal                                      Walden Media & Information Technology
                                                  Fund, L.P.

Chandi Nihalani and Ishwari Nihalani              Walden-Nikko Mauritius Co.

Onset Enterprise Associates III, L.P.             Walden-SBIC, L.P.

Frederic A. Randall, Jr.                          Walden Technology Ventures II, L.P.

United Missouri Bank of Kansas City,              Windward Ventures, L.P.
Successor Trustee for Brobeck, Phleger &
Harrison LLP Retirement Savings Trust,
F.B.O Frederic A. Randall, Jr.

Siemens AG

Siemens Information and Communication
Networks, Inc.
</TABLE>

<PAGE>   53

                               AMENDMENT NO. 1 TO
                   SECOND RESTATED INVESTORS' RIGHTS AGREEMENT

        THIS AMENDMENT NO. 1 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Amendment") is made as of March 2, 2000, by and between Accelerated
Networks, Inc., a California corporation (the "Company") and Williams
Communications, Inc., a Delaware corporation ("Williams"). This Amendment will
become effective upon the date hereof. All capitalized terms used herein without
definition shall have the meanings ascribed to them in that certain Second
Restated Investors' Rights Agreement dated as of February 18, 2000 (the
"Existing Rights Agreement"), among the Company and certain of its shareholders.

        WHEREAS, the Company and Williams have entered into a Second Series D
Preferred Stock Purchase Agreement dated as of February 24, 2000, pursuant to
which the Company will issue to Williams, and Williams will purchase from the
Company, shares of the Company's Series D Preferred Stock;

        WHEREAS, as a condition precedent to such issuance and purchase, the
Company and Williams are required to enter into this Amendment;

        WHEREAS, the consent of the following shareholders of the Company is
required to approve this Amendment: (a) holders of a majority of the outstanding
Registrable Securities held by the Major Investors, (b) the holders of 66.66% of
the Registrable Securities currently outstanding and held by the Preferred Stock
Investors, and (c) the holders of a majority of the Registrable Securities
currently held by the Founders; and

        WHEREAS, the Company has obtained such requisite consent to approve this
Amendment.

        NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby the parties hereto agree
as follows:

        1. The Existing Agreement is hereby amended as follows:

        (a) The term "Preferred Stock Investor" as used therein shall be deemed
to include Williams.

        (b) The portion of Section 2.1 of the Existing Rights Agreement which
immediately precedes subsection (a) thereof shall be amended and restated in its
entirety as follows:

               3.11 "Delivery of Financial Statements. The Company shall deliver
        to (i) each Preferred Stock Investor who holds (whether directly or by
        application of Section 3.8) at least 1,650,000 shares of the Company's
        Series A Preferred Stock, 1,000,000 shares of the Company's Series B
        Preferred Stock, 1,000,000 shares of the Company's Series C Preferred
        Stock, 1,000,000 shares of the Company's Series D Preferred Stock (as
        adjusted for subsequent stock splits, stock dividends or
        recapitalizations of the

                                       1
<PAGE>   54

        Company's capital stock) (each, a "Major Investor") and (ii) each of MCI
        WorldCom Venture Fund, Inc., a Delaware corporation ("MCI") and Williams
        Communications, Inc., a Delaware corporation ("Williams") and for so
        long as MCI or Williams, as the case may be, holds at least 800,000
        shares of the Company's Series D Preferred Stock (as adjusted for
        subsequent stock splits, stock dividends or recapitalizations of the
        Company's capital stock):"

        (c) Section 2.2 of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:

        "Inspection. The Company shall permit each of MCI or Williams, for so
        long as MCI or Williams, as the case may be, holds at least 800,000
        shares of the Company's Series D Preferred Stock (as adjusted for
        subsequent stock splits, stock dividends or recapitalizations of the
        Company's capital stock), and each Major Investor, at such Investor's
        expense, to visit and inspect the Company's properties, to examine its
        books of account and records and to discuss the Company's affairs,
        finances and accounts with its officers, all at such reasonable times as
        may be requested by the Investor; provided, however, that the Company
        shall not be obligated pursuant to this Section 2.2 to provide access to
        any information which it deems in good faith to be a trade secret or
        similar confidential information."

        (d) Section 2.3 of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:

               3.12 "Termination of Information and Inspection Covenants. The
        covenants set forth in Sections 2.1 and 2.2 shall terminate as to any
        Major Investor, MCI and Williams and be of no further force or effect
        (i) in conjunction with or at any time subsequent to the sale of
        securities pursuant to a registration statement filed by the Company
        under the Act in connection with the underwritten offering of its
        securities to the general public, (ii) in conjunction with or at any
        time subsequent to the acquisition of more than fifty percent (50%) of
        the Company's equity securities by another entity by means of any
        transaction or series of related transactions (including, without
        limitation, any reorganization, merger or consolidation), or a sale of
        all or substantially all of the assets of the Company, or (iii) after
        the Company first becomes subject to the periodic reporting requirements
        of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first
        occur."

        2. In all other respects, the Existing Rights Agreement shall remain in
full force and effect and shall apply to the parties hereto.

                                       2

<PAGE>   55

         AMENDMENT NO. 1 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
                                 SIGNATURE PAGE

        IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.

                                 THE COMPANY:

                                 ACCELERATED NETWORKS, INC.

                                 By:  /s/ Suresh Nihalani
                                     ------------------------------------------
                                      Suresh Nihalani, President

                                 Address:  301 Science Drive
                                           Moorpark, CA 93021

                                 WILLIAMS:

                                 WILLIAMS COMMUNICATIONS, INC.

                                 By:  /s/ Delwin L. Bothoff
                                     ------------------------------------------
                                      Name & Title:  Delwin L. Bothoff,
                                      President, Domestic Strategic Investments

                                 Address:  One Williams Center
                                           Tulsa, OK 74172

<PAGE>   56

                               AMENDMENT NO. 2 TO
                   SECOND RESTATED INVESTORS' RIGHTS AGREEMENT

         THIS AMENDMENT NO. 2 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Amendment") is made as of May 15, 2000, among Accelerated Networks,
Inc., a California corporation (the "Company"), U S WEST Internet Ventures,
Inc., a Colorado corporation ("U S WEST") and each of the parties on Schedule A
hereto (the "Prior Investors"). This Amendment will become effective upon, and
only in the event of, the closing of the Company's initial public offering (the
"IPO") and the closing of the transactions contemplated by the Subscription
Agreement (as defined below). All capitalized terms used herein without
definition shall have the meanings ascribed to them in that certain Second
Restated Investors' Rights Agreement dated as of February 18, 2000, among the
Company and certain of its shareholders, as amended by that certain Amendment No
1 to Second Restated Investors' Rights Agreement dated as of March 2, 2000, by
and between the Company and Williams Communications Inc. (as so amended, the
"Existing Rights Agreement").

         WHEREAS, the Company and U S WEST have entered into a Common Stock
Subscription Agreement dated as of May 15, 2000 (the "Subscription Agreement"),
pursuant to which the Company has agreed to issue to U S WEST, and U S WEST has
agreed to purchase from the Company, shares of the Company's Common Stock
immediately following the closing of the Company's IPO.

         WHEREAS, the Company and an affiliate of U S WEST have also entered
into a Memorandum of Understanding dated as of May 10, 2000 (the "MOU"),
pursuant to which the Company has agreed to issue to U S WEST a warrant (the
"Warrant") to purchase shares of the Company's Common Stock immediately
following the closing of the Company's IPO.

         WHEREAS, as a condition precedent to the Subscription Agreement, the
Company and U S WEST are required to enter into this Amendment;

         WHEREAS, the consent of the following shareholders of the Company is
required to approve this Amendment: (a) holders of a majority of the outstanding
Registrable Securities held by the Major Investors, (b) the holders of 66.66% of
the Registrable Securities currently outstanding and held by the Preferred Stock
Investors, and (c) the holders of a majority of the Registrable Securities
currently held by the Founders; and

         WHEREAS, the Company has obtained, or will obtain, the requisite
consent to approve this Amendment.

         NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

                                       1

<PAGE>   57

1.    The Existing Rights Agreement is hereby amended as follows:

     (a) The term "Preferred Stock Investor" as used therein shall be deemed to
include U S WEST Internet Ventures, Inc., a Colorado corporation. U S WEST
hereby agrees to be bound by all of the terms and conditions set forth in the
Existing Rights Agreement, as amended by this Amendment, as though it were a
Preferred Stock Investor thereunder.

     (b) Section 1.1(f) of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:

         "The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred Stock, (ii) the
Six Million Eight Hundred Thousand (6,800,000) shares of Common Stock held by
the Founders, and (iii) the Common Stock issued or issuable upon exercise of any
warrants granted from time to time pursuant to that certain Warrant Issuance
Agreement dated as of December 16, 1999, between the Company and Siemens
Information and Communication Networks, Inc., (iv) the Common Stock issued to U
S WEST Internet Ventures, Inc. ("U S WEST") pursuant to that certain Common
Stock Subscription Agreement dated as of May 15, 2000, (v) the Common Stock
issuable to U S WEST upon exercise of the warrant to be issued to U S WEST upon
the closing of the Company's initial public offering, and (vi) any Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i), (ii), (iii), (iv) and (v) above, excluding in all cases,
however, any Registrable Securities sold by a Holder in a transaction in which
such Holder's rights under this Section 1 are not assigned; provided, that
notwithstanding anything herein to the contrary, the securities described in
(iv) and (v) (and any related securities described in (vi) with respect to (iv)
and (v)) shall not be deemed Registrable Securities during the one-year period
beginning on the closing of the Company's initial public offering and ending on
the first anniversary of such date, it being understood that the securities
described in (iv) and (v) (and any related securities described in (vi) with
respect to (iv) and (v)) will be deemed Registrable Securities thereafter,
subject to the other terms and conditions set forth in this Agreement."

2.    In all other respects, the Existing Rights Agreement shall remain in
full force and effect and shall apply to the parties hereto.

                                       2

<PAGE>   58

         AMENDMENT NO. 2 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
                                 SIGNATURE PAGE

         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.

                                   THE COMPANY:
                                   -----------

                                   ACCELERATED NETWORKS, INC.

                                   By:        /s/ Suresh Nihalani
                                       -----------------------------------------
                                         Suresh Nihalani, President

                                   Address:     301 Science Drive
                                                Moorpark, CA 93021

                                   U S WEST:
                                   ---------

                                   U S WEST INTERNET VENTURES, INC.

                                   By:     /s/ Janice Aune
                                       -----------------------------------------
                                         Janice Aune, President

                                   Address:   1801 California Street, Suite 3400
                                              Denver, Colorado 80202<PAGE>   1
                                                                   EXHIBIT 10.10

                           ACCELERATED NETWORKS, INC.

                            2000 STOCK INCENTIVE PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

        I.     PURPOSE OF THE PLAN

               This 2000 Stock Incentive Plan is intended to promote the
interests of Accelerated Networks, Inc., a Delaware corporation, by providing
eligible persons in the Corporation's service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in such service.

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

        II.    STRUCTURE OF THE PLAN

               A. The Plan shall be divided into four separate equity incentives
programs:

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

                      - the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special option grants,

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

                      - the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive option grants at
designated intervals over their period of continued Board service.

               B. The provisions of Articles One and Six shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.

<PAGE>   2

        III.   ADMINISTRATION OF THE PLAN

               A. The Primary Committee shall have sole and exclusive authority
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option Grant
and Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. However, any
discretionary option grants or stock issuances for members of the Primary
Committee must be authorized by a disinterested majority of the Board.

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

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

               D. The Primary Committee shall have the sole and exclusive
authority to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment Option
Grant Program for one or more calendar years. However, all option grants under
the Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.

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

                                       2
<PAGE>   3

               F. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to any
option grants or stock issuances made under that program.

        IV.    ELIGIBILITY

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

                             (i) Employees,

                             (ii) non-employee members of the Board or the board
        of directors of any Parent or Subsidiary, and

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

               B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.

               C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive such grants, the time or times
when those grants are to be made, the number of shares to be covered by each
such grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive such issuances, the time or times when the issuances are
to be made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration for such
shares.

               D. The Plan Administrator shall have the absolute discretion
either to grant options in accordance with the Discretionary Option Grant
Program or to effect stock issuances in accordance with the Stock Issuance
Program.

               E. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Underwriting Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the
Underwriting Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive an option grant

                                       3
<PAGE>   4

under the Automatic Option Grant Program at the time he or she first becomes a
non-employee Board member, but shall be eligible to receive periodic option
grants under the Automatic Option Grant Program while he or she continues to
serve as a non-employee Board member.

        V.     STOCK SUBJECT TO THE PLAN

               A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed
eleven million fifty thousand (11,050,000) shares. Such reserve shall consist of
the number of shares estimated to remain available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation's
stockholders, including the shares subject to outstanding options under the
Predecessor Plan.

               B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of January
each calendar year during the term of the Plan, beginning with calendar year
2001, by an amount equal to five percent (5%) of the total number of shares of
Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
six million eight hundred seventy-five thousand (6,875,000) shares.

               C. No one person participating in the Plan may receive stock
options, separately exercisable stock appreciation rights and direct stock
issuances for more than one million (1,000,000) shares of Common Stock in the
aggregate per calendar year.

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

                                       4
<PAGE>   5

               E. If any change is made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made by the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year, (iii) the number and/or class of securities for which grants
are subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan, (v) the number and/or class of securities and exercise
price per share in effect under each outstanding option incorporated into this
Plan from the Predecessor Plan and (vi) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar
year pursuant to the provisions of Section V.B of this Article One. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

                                       5
<PAGE>   6

                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

        I.     OPTION TERMS

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

               A.     EXERCISE PRICE.

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

                      2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Six and the documents evidencing the option, be payable in one or more
of the forms specified below:

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

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

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

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

                                       6
<PAGE>   7

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

               C.     EFFECT OF TERMINATION OF SERVICE.

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

                             (i) Any option outstanding at the time of the
        Optionee's cessation of Service for any reason shall remain exercisable
        for such period of time thereafter as shall be determined by the Plan
        Administrator and set forth in the documents evidencing the option, but
        no such option shall be exercisable after the expiration of the option
        term.

                             (ii) Any option held by the Optionee at the time of
        death and exercisable in whole or in part at that time may be
        subsequently exercised by the personal representative of the Optionee's
        estate or by the person or persons to whom the option is transferred
        pursuant to the Optionee's will or the laws of inheritance or by the
        Optionee's designated beneficiary or beneficiaries of that option.

                             (iii) Should the Optionee's Service be terminated
        for Misconduct or should the Optionee otherwise engage in Misconduct
        while holding one or more outstanding options under this Article Two,
        then all those options shall terminate immediately and cease to be
        outstanding.

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

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

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

                                       7
<PAGE>   8

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

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

               E. REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

               F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or the laws of inheritance
following the Optionee's death. Non-Statutory Options shall be subject to the
same restriction, except that a Non-Statutory Option may be assigned in whole or
in part during the Optionee's lifetime to one or more members of the Optionee's
family or to a trust established exclusively for one or more such family members
or to Optionee's former spouse, to the extent such assignment is in connection
with the Optionee's estate plan or pursuant to a domestic relations order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Two, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee's death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee's death.

        II.    INCENTIVE OPTIONS

               The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Six shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

                                       8
<PAGE>   9

               A. ELIGIBILITY. Incentive Options may only be granted to
Employees.

               B. DOLLAR LIMITATION. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

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

        III.   CORPORATE TRANSACTION/CHANGE IN CONTROL

               A. In the event of any Corporate Transaction, each outstanding
option under the Discretionary Option Grant Program shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of the Corporate Transaction, become exercisable for all the shares of
Common Stock at the time subject to such option and may be exercised for any or
all of those shares as fully vested shares of Common Stock. However, an
outstanding option shall NOT become exercisable on such an accelerated basis if
and to the extent: (i) such option is, in connection with the Corporate
Transaction, to be assumed by the successor corporation (or parent thereof) or
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Corporate Transaction on any shares for which the option is not otherwise at
that time exercisable and provides for subsequent payout in accordance with the
same exercise/vesting schedule applicable to those option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.

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

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

                                       9
<PAGE>   10

               D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year and (iv) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar
year. To the extent the actual holders of the Corporation's outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Discretionary Option Grant
Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Corporate Transaction.

               E. The Plan Administrator shall have the discretionary authority
to structure one or more outstanding options under the Discretionary Option
Grant Program so that those options shall, immediately prior to the effective
date of such Corporate Transaction, become exercisable for all the shares of
Common Stock at the time subject to those options and may be exercised for any
or all of those shares as fully vested shares of Common Stock, whether or not
those options are to be assumed in the Corporate Transaction. In addition, the
Plan Administrator shall have the discretionary authority to structure one or
more of the Corporation's repurchase rights under the Discretionary Option Grant
Program so that those rights shall not be assignable in connection with such
Corporate Transaction and shall accordingly terminate upon the consummation of
such Corporate Transaction, and the shares subject to those terminated rights
shall thereupon vest in full.

               F. The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall become exercisable for all the shares of
Common Stock at the time subject to those options in the event the Optionee's
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period (not to exceed twelve (12) months) following the
effective date of any Corporate Transaction in which those options are assumed
and do not otherwise accelerate. In addition, the Plan Administrator may
structure one or more of the Corporation's repurchase rights so that those
rights shall immediately terminate with respect to any shares held by the
Optionee at the time of his or her Involuntary Termination, and the shares
subject to those terminated repurchase rights shall accordingly vest in full at
that time.

                                       10
<PAGE>   11

               G. The Plan Administrator shall have the discretionary authority
to structure one or more outstanding options under the Discretionary Option
Grant Program so that those options shall, immediately prior to the effective
date of a Change in Control, become exercisable for all the shares of Common
Stock at the time subject to those options and may be exercised for any or all
of those shares as fully vested shares of Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Option Grant Program
so that those rights shall terminate automatically upon the consummation of such
Change in Control, and the shares subject to those terminated rights shall
thereupon vest in full. Alternatively, the Plan Administrator may condition the
automatic acceleration of one or more outstanding options under the
Discretionary Option Grant Program and the termination of one or more of the
Corporation's outstanding repurchase rights under such program upon the
subsequent termination of the Optionee's Service by reason of an Involuntary
Termination within a designated period (not to exceed twelve (12) months)
following the effective date of such Change in Control.

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

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

        IV.    CANCELLATION AND REGRANT OF OPTIONS

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

        V.     STOCK APPRECIATION RIGHTS

               A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.

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

                             (i) One or more Optionees may be granted the right,
        exercisable upon such terms as the Plan Administrator may establish, to
        elect between the exercise of the underlying option for shares of Common
        Stock and

                                       11
<PAGE>   12

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

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

                             (iii) If the surrender of an option is not approved
        by the Plan Administrator, then the Optionee shall retain whatever
        rights the Optionee had under the surrendered option (or surrendered
        portion thereof) on the option surrender date and may exercise such
        rights at any time prior to the later of (a) five (5) business days
        after the receipt of the rejection notice or (b) the last day on which
        the option is otherwise exercisable in accordance with the terms of the
        documents evidencing such option, but in no event may such rights be
        exercised more than ten (10) years after the option grant date.

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

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

                             (ii) Upon the occurrence of a Hostile Take-Over,
        each individual holding one or more options with such a limited stock
        appreciation right shall have the unconditional right (exercisable for a
        thirty (30)-day period following such Hostile Take-Over) to surrender
        each such option to the Corporation. In return for the surrendered
        option, the Optionee shall receive a cash distribution from the
        Corporation in an amount equal to the excess of (A) the Take-Over Price
        of the shares of Common Stock at the time subject to such option
        (whether or not the option is otherwise at that time exercisable for
        those shares) over (B) the aggregate exercise price payable for those
        shares. Such cash distribution shall be paid within five (5) days
        following the option surrender date.

                             (iii) At the time such limited stock appreciation
        right is granted, the Plan Administrator shall pre-approve any
        subsequent exercise of that right in accordance with the terms of this
        Paragraph C. Accordingly, no further approval of the Plan Administrator
        or the Board shall be required at the time of the actual option
        surrender and cash distribution.

                                       12
<PAGE>   13

                                  ARTICLE THREE

                     SALARY INVESTMENT OPTION GRANT PROGRAM

        I.     OPTION GRANTS

               The Primary Committee shall have the sole and exclusive authority
to determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Grant Program on the first trading day in January of the calendar
year for which the salary reduction is to be in effect.

        II.    OPTION TERMS

               Each option shall be a Non-Statutory Option evidenced by one or
more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below.

               A.     EXERCISE PRICE.

                      1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.

                      2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

               B. NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):

                      X = A / (B x 66-2/3%), where

                      X is the number of option shares,

                                       13
<PAGE>   14

                      A is the dollar amount by which the Optionee's base salary
               is to be reduced for the calendar year pursuant to his or her
               election under the Salary Investment Option Grant Program, and

                      B is the Fair Market Value per share of Common Stock on
               the option grant date.

               C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.

               D. EFFECT OF TERMINATION OF SERVICE. Should the Optionee cease
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or the laws of inheritance or by the designated beneficiary
or beneficiaries of the option. Such right of exercise shall lapse, and the
option shall terminate, upon the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the three (3)-year period measured from the date
of the Optionee's cessation of Service. However, the option shall, immediately
upon the Optionee's cessation of Service for any reason, terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.

        III.   CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

               A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed shall remain exercisable for the fully vested
shares until the earlier of (i) the expiration of the ten (10)-year option term
or (ii) the expiration of the three (3)-year period measured from the date of
the Optionee's cessation of Service.

                                       14
<PAGE>   15

               B. In the event of a Change in Control while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully vested
shares of Common Stock. The option shall remain so exercisable until the
earliest to occur of (i) the expiration of the ten (10)-year option term, (ii)
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

               C. Upon the occurrence of a Hostile Take-Over while the Optionee
remains in Service, such Optionee shall have a thirty (30)-day period in which
to surrender to the Corporation each outstanding option held by him or her under
the Salary Investment Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at the
time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. The Primary
Committee shall, at the time the option with such limited stock appreciation
right is granted under the Salary Investment Option Grant Program, pre-approve
any subsequent exercise of that right in accordance with the terms of this
Paragraph C. Accordingly, no further approval of the Primary Committee or the
Board shall be required at the time of the actual option surrender and cash
distribution.

               D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Salary Investment Option Grant Program, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.

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

                                       15
<PAGE>   16

        IV.    REMAINING TERMS

               The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.

                                       16
<PAGE>   17

                                  ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM

        I.     STOCK ISSUANCE TERMS

               Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below. Shares of Common Stock
may also be issued under the Stock Issuance Program pursuant to share right
awards which entitle the recipients to receive those shares upon the attainment
of designated performance goals.

               A.     PURCHASE PRICE.

                      1. The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.

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

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

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

               B.     VESTING PROVISIONS.

                      1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals.

                      2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or

                                       17
<PAGE>   18

other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.

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

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

                      5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant's Service or the
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

                      6. Outstanding share right awards under the Stock Issuance
Program shall automatically terminate, and no shares of Common Stock shall
actually be issued in satisfaction of those awards, if the performance goals
established for such awards are not attained. The Plan Administrator, however,
shall have the discretionary authority to issue shares of Common Stock under one
or more outstanding share right awards as to which the designated performance
goals have not been attained.

        II.    CORPORATE TRANSACTION/CHANGE IN CONTROL

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

                                       18
<PAGE>   19

               B. The Plan Administrator shall have the discretionary authority
to structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights shall
immediately vest, in the event the Participant's Service should subsequently
terminate by reason of an Involuntary Termination within a designated period
(not to exceed twelve (twelve) months) following the effective date of any
Corporate Transaction in which those repurchase rights are assigned to the
successor corporation (or parent thereof).

               C. The Plan Administrator shall also have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, either upon the occurrence of a Change in Control
or upon the subsequent termination of the Participant's Service by reason of an
Involuntary Termination within a designated period (not to exceed twelve (12)
months) following the effective date of that Change in Control.

        III.   SHARE ESCROW/LEGENDS

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

                                       19
<PAGE>   20

                                  ARTICLE FIVE

                         AUTOMATIC OPTION GRANT PROGRAM

        I.     OPTION TERMS

               A. GRANT DATES. Option grants shall be made on the dates
specified below:

                      1. Each individual who is first elected or appointed as a
non-employee Board member at any time on or after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase thirty thousand (30,000) shares of Common
Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

                      2. On the date of each Annual Stockholders Meeting held
after the Underwriting Date, each individual who is to continue to serve as a
non-employee Board member, whether or not that individual is standing for
re-election to the Board at that particular Annual Meeting, shall automatically
be granted a Non-Statutory Option to purchase ten thousand (10,000) shares of
Common Stock, provided such individual has served as a non-employee Board member
for at least six (6) months. There shall be no limit on the number of such
10,000-share option grants any one non-employee Board member may receive over
his or her period of Board service, and non-employee Board members who have
previously been in the employ of the Corporation (or any Parent or Subsidiary)
or who have otherwise received one or more stock option grants from the
Corporation prior to the Underwriting Date shall be eligible to receive one or
more such annual option grants over their period of continued Board service.

               B.     EXERCISE PRICE.

                      1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

                      2. The exercise price shall be payable in one or more of
the alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

               C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.

               D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any
unvested shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. The shares subject to each
initial 30,000-share grant shall vest, and the Corporation's repurchase right
shall

                                       20
<PAGE>   21

lapse, in a series of eight (8) successive equal quarterly installments upon the
Optionee's completion of each three (3)-month period of service as a Board
member over the twenty-four (24)-month period measured from the option grant
date. The shares subject to each annual 10,000-share option grant shall vest in
two (2) successive semi-annual installments upon the Optionee's completion of
each six (6)-month period of service over the twelve (12)-month period measured
from the grant date.

               E. LIMITED TRANSFERABILITY OF OPTIONS. Each option under this
Article Five may be assigned in whole or in part during the Optionee's lifetime
to one or more members of the Optionee's family or to a trust established
exclusively for one or more such family members or to Optionee's former spouse,
to the extent such assignment is in connection with the Optionee's estate plan
or pursuant to a domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Five, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.

               F. TERMINATION OF BOARD SERVICE. The following provisions shall
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:

                             (i) The Optionee (or, in the event of Optionee's
        death, the personal representative of the Optionee's estate or the
        person or persons to whom the option is transferred pursuant to the
        Optionee's will or the laws of inheritance or the designated beneficiary
        or beneficiaries of such option) shall have a twelve (12)-month period
        following the date of such cessation of Board service in which to
        exercise each such option.

                             (ii) During the twelve (12)-month exercise period,
        the option may not be exercised in the aggregate for more than the
        number of vested shares of Common Stock for which the option is
        exercisable at the time of the Optionee's cessation of Board service.

                                       21
<PAGE>   22

                             (iii) Should the Optionee cease to serve as a Board
        member by reason of death or Permanent Disability, then all shares at
        the time subject to the option shall immediately vest so that such
        option may, during the twelve (12)-month exercise period following such
        cessation of Board service, be exercised for all or any portion of those
        shares as fully vested shares of Common Stock.

                             (iv) In no event shall the option remain
        exercisable after the expiration of the option term. Upon the expiration
        of the twelve (12)-month exercise period or (if earlier) upon the
        expiration of the option term, the option shall terminate and cease to
        be outstanding for any vested shares for which the option has not been
        exercised. However, the option shall, immediately upon the Optionee's
        cessation of Board service for any reason other than death or Permanent
        Disability, terminate and cease to be outstanding to the extent the
        option is not otherwise at that time exercisable for vested shares.

        II.    CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

               A. In the event of any Corporate Transaction while the Optionee
remains a Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the option shares as fully vested shares
of Common Stock and may be exercised for any or all of those vested shares.
Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

               B. In the event of any Change in Control while the Optionee
remains a Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the option shares as fully vested shares of
Common Stock and may be exercised for any or all of those vested shares. Each
such option shall remain exercisable for such fully vested option shares until
the expiration or sooner termination of the option term or the surrender of the
option in connection with a Hostile Take-Over.

               C. All outstanding repurchase rights under this under this
Automatic Option Grant Program shall automatically terminate, and the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction or Change in Control.

                                       22
<PAGE>   23

               D. Upon the occurrence of a Hostile Take-Over while the Optionee
remains a Board member, such Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each of his or her outstanding options
under this Automatic Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. No approval or consent
of the Board or any Plan Administrator shall be required at the time of the
actual option surrender and cash distribution.

               E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Automatic Option Grant Program, substitute one or more shares
of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.

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

        III.   REMAINING TERMS

               The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.

                                       23
<PAGE>   24

                                   ARTICLE SIX

                                  MISCELLANEOUS

        I.     FINANCING

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

        II.    TAX WITHHOLDING

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

               B. The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan (other than the options granted or the shares issued under the
Automatic Option Grant Program) with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such holders may
become subject in connection with the exercise of their options or the vesting
of their shares. Such right may be provided to any such holder in either or both
of the following formats:

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

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

                                       24
<PAGE>   25

        III.   EFFECTIVE DATE AND TERM OF THE PLAN

               A. The Plan shall become effective immediately on the Plan
Effective Date. However, the Salary Investment Option Grant Program shall not be
implemented until such time as the Primary Committee may deem appropriate.
Options may be granted under the Discretionary Option Grant at any time on or
after the Plan Effective Date, and the initial option grants under the Automatic
Option Grant Program shall also be made on the Plan Effective Date to any
non-employee Board members eligible for such grants at that time. However, no
options granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
Plan Effective Date, then all options previously granted under this Plan shall
terminate and cease to be outstanding, and no further options shall be granted
and no shares shall be issued under the Plan.

               B. The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants or direct stock issuances shall be made under the
Predecessor Plan after the Plan Effective Date. All options outstanding under
the Predecessor Plan on the Plan Effective Date shall be incorporated into the
Plan at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.

               C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Corporate Transactions and Changes in Control, may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise contain such provisions.

               D. The Plan shall terminate upon the earliest to occur of (i)
March 31, 2010 (ii) the date on which all shares available for issuance under
the Plan shall have been issued as fully vested shares or (iii) the termination
of all outstanding options in connection with a Corporate Transaction. Should
the Plan terminate on March 31, 2010 then all option grants and unvested stock
issuances outstanding at that time shall continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.

        IV.    AMENDMENT OF THE PLAN

               A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options or unvested stock issuances at the time outstanding
under the Plan unless the Optionee or the Participant consents to such amendment
or modification. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.

                                       25
<PAGE>   26

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

        V.     USE OF PROCEEDS

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

        VI.    REGULATORY APPROVALS

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

               B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

        VII.   NO EMPLOYMENT/SERVICE RIGHTS

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

                                       26
<PAGE>   27

                                    APPENDIX

               The following definitions shall be in effect under the Plan:

               A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under Article Five of the Plan.

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

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

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

                             (ii) a change in the composition of the Board over
        a period of thirty-six (36) consecutive months or less such that a
        majority of the Board members ceases, by reason of one or more contested
        elections for Board membership, to be comprised of individuals who
        either (A) have been Board members continuously since the beginning of
        such period or (B) have been elected or nominated for election as Board
        members during such period by at least a majority of the Board members
        described in clause (A) who were still in office at the time the Board
        approved such election or nomination.

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

               E. COMMON STOCK shall mean the Corporation's common stock.

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

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

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

                                      A-1.
<PAGE>   28

               G. CORPORATION shall mean Accelerated Networks, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Accelerated Networks, Inc. which shall by appropriate
action adopt the Plan.

               H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under Article Two of the Plan.

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

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

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

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

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

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

               L. HOSTILE TAKE-OVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of

                                      A-2.
<PAGE>   29

beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept.

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

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

                             (i) such individual's involuntary dismissal or
        discharge by the Corporation for reasons other than Misconduct, or

                             (ii) such individual's voluntary resignation
        following (A) a change in his or her position with the Corporation which
        materially reduces his or her duties and responsibilities or the level
        of management to which he or she reports, (B) a reduction in his or her
        level of compensation (including base salary, fringe benefits and target
        bonus under any corporate-performance based bonus or incentive programs)
        by more than fifteen percent (15%) or (C) a relocation of such
        individual's place of employment by more than fifty (50) miles, provided
        and only if such change, reduction or relocation is effected by the
        Corporation without the individual's consent.

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

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

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

               R. OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant, Salary Investment Option Grant or
Automatic Option Grant Program.

                                      A-3.
<PAGE>   30

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

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

               U. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.

               V. PLAN shall mean the Corporation's 2000 Stock Incentive Plan,
as set forth in this document.

               W. PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

               X. PLAN EFFECTIVE DATE shall mean the date the Plan shall become
effective and shall be coincident with the Underwriting Date.

               Y. PREDECESSOR PLAN shall mean the Corporation's 1997 Stock
Option/Stock Issuance Plan in effect immediately prior to the Plan Effective
Date hereunder.

               Z. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate in
such program.

               AA. SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment option grant program in effect under Article Three of the Plan.

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

                                      A-4.
<PAGE>   31

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

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

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

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

               GG. STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under Article Four of the Plan.

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

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

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

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

               LL. UNDERWRITING DATE shall mean the date on which the
Underwriting Agreement is executed and priced in connection with an initial
public offering of the Common Stock.

               MM. WITHHOLDING TAXES shall mean the Federal, state and local
income and employment withholding taxes to which the holder of Non-Statutory
Options or unvested shares of Common Stock may become subject in connection with
the exercise of those options or the vesting of those shares.

                                      A-5.

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