Document:

<PAGE>

                                                                  Exhibit 10.28

***PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE
INDICATED HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***

                                                                  LNM980716RMPT

                               GENERAL AGREEMENT

                                    BETWEEN

                          PAETEC COMMUNICATIONS, INC.
                          ---------------------------

                                      AND

                           LUCENT TECHNOLOGIES INC.

                   *** CONFIDENTIAL TREATMENT REQUESTED ***

<PAGE>

                                                                  LNM980716RMPT

                               TABLE OF CONTENTS
                               GENERAL AGREEMENT
<TABLE>
<CAPTION>
Section                                                                                              Page
-------                                                                                              ----
<S>                                                                                                  <C>
 1.    ARTICLE I GENERAL TERMS AND CONDITIONS......................................................     1
 1.1   DEFINITIONS:................................................................................     1
 1.2   TERM OF AGREEMENT:..........................................................................     3
 1.3   SCOPE:......................................................................................     3
 1.4   CUSTOMER RESPONSIBILITY:....................................................................     4
 1.5   ORDERS:.....................................................................................     4
 1.6   CHANGES IN CUSTOMER'S ORDERS:...............................................................     5
 1.7   CHANGES IN PRODUCTS:........................................................................     5
 1.8   PRICES:.....................................................................................     5
 1.9   INVOICES AND TERMS OF PAYMENT:..............................................................     6
 1.10  PURCHASE MONEY SECURITY INTEREST:...........................................................     7
 1.11  TAXES:......................................................................................     8
 1.12  TRANSPORTATION AND PACKING:.................................................................     8
 1.13  TITLE AND RISK OF LOSS:.....................................................................     8
 1.14  WARRANTY:...................................................................................     8
 1.15  INFRINGEMENT:...............................................................................    10
 1.16  CUSTOMER'S REMEDIES:........................................................................    12
 1.17  USE OF INFORMATION:.........................................................................    12
 1.18  DOCUMENTATION:..............................................................................    13
 1.19  NOTICES:....................................................................................    13
 1.20  FORCE MAJEURE:..............................................................................    14
 1.21  ASSIGNMENT:.................................................................................    14
 1.22  TERMINATION OF AGREEMENT FOR BREACH:........................................................    14
 1.23  ARBITRATION:................................................................................    15
 1.24  NON-SOLICITATION:...........................................................................    15
 1.25  INDEPENDENT CONTRACTOR:.....................................................................    15
 1.26  RELEASES VOID:..............................................................................    15
 1.27  PUBLICITY:..................................................................................    15
 1.28  CONFIDENTIALITY OF AGREEMENT:...............................................................    15
 1.29  AMENDMENTS:.................................................................................    16
 1.30  SEVERABILITY:...............................................................................    16
 1.31  WAIVER:.....................................................................................    16
 1.32  SURVIVAL:...................................................................................    16
 1.33  SECTION HEADINGS:...........................................................................    16
 1.34  CHOICE OF LAW:..............................................................................    16
 1.35  AMBIGUITIES:................................................................................    16
 2.................................................................................................    17
 2.    ARTICLE II PROVISIONS APPLICABLE TO LICENSED MATERIALS......................................    17
 2.1   LICENSE FOR LICENSED MATERIALS:.............................................................    17
 2.2   CHANGES IN LICENSED MATERIALS:..............................................................    17
 2.3   CANCELLATION OF LICENSE:....................................................................    17
 2.4   OPTIONAL SOFTWARE FEATURES:.................................................................    18
 2.5   ADDITIONAL RIGHTS IN LICENSED MATERIALS:....................................................    18
 2.6   INSTALLATION OF SOFTWARE:...................................................................    18
 2.7   SOFTWARE ACCEPTANCE:........................................................................    18
 2.8   MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES:.......................................    19
 2.9   ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS............................    19
 3.................................................................................................    21
 3.    ARTICLE III PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND OTHER SERVICES...........    21
 3.1   SITE REQUIREMENTS:..........................................................................    21
 3.2   ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER:................................................    22
 3.3   ITEMS TO BE FURNISHED BY SELLER.............................................................    25
 3.3.1 ENGINEERING:................................................................................    25
 3.3.2 INSTALLATION:...............................................................................    25
 3.4   ACCEPTANCE..................................................................................    28
</TABLE>
<PAGE>

                                                                   LNM980716RMPT

<TABLE>
<S>                                                                                                    <C>
 3.5   WORK OR SERVICES PERFORMED BY OTHERS:.......................................................    28
 4.................................................................................................    29
 4.    ARTICLE IV ENTIRE AGREEMENT:................................................................    29
 4.1   ENTIRE AGREEMENT............................................................................    29
</TABLE>
<PAGE>

                                                                  LNM980716RMPT

This General Agreement Number LNM980617RMPT (hereinafter "General Agreement" or
"Agreement") is made effective as of the 17/th/ day of June, 1998 ("Effective
Date") by and between PaeTec Communications, Inc., a Delaware  corporation, with
offices located at 290 Woodcliff Drive, Fairport, NY  14450 (hereinafter
"Customer"), and Lucent Technologies Inc., a Delaware corporation, acting
through its Global Service Provider Group, with offices located at 600 Mountain
Avenue, Murray Hill, New Jersey  07974 (hereinafter "Seller").

WHEREAS, Seller desires to supply to Customer and Customer desires to procure
from Seller the products and services described herein, pursuant to the terms
and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties intending to be lawfully bound agree as
follows:

                                 1. ARTICLE I

                         GENERAL TERMS AND CONDITIONS

1.1 DEFINITIONS:
For the purpose of this Agreement, the following definitions will apply:

(a)  "Affiliate" of a corporation means its parent company, its Subsidiaries,
     and any other Subsidiaries of such company or its parent company.

(b)  "Bill and Hold Products" means Products, Licensed Materials, and/or parts
     thereof, which the Customer requests and Seller agrees to inventory or
     warehouse, at a price mutually agreed to by the parties, until final
     delivery to the Customer.

(c)  "Customer Price List" means Seller's published "Ordering and Price Guides"
     or other price notification releases furnished by Seller for the purpose of
     communicating Seller's prices or pricing related information to Customer;
     however, this does not include firm price quotations.

(d)  "Cutover" means the verification by Seller and Customer of actual usage
     over the installed Products.  This function occurs after Turnover and is
     not performed by Seller unless specifically requested by Customer and is
     usually covered under a separate Professional Services Agreement.

(e)  "Delivery Date" means the date required under this Agreement by which all
     deliverables ordered by Customer are to be delivered to the destination
     specified in the order.

(f)  "Designated Processor" means the Product for which licenses to Use Licensed
     Materials are granted.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       1
<PAGE>

                                                                  LNM980716RMPT

(g)  "Firmware" means a combination of (1) hardware and (2) Software represented
     by a pattern of bits contained in such Hardware.

(h)  "Fit" means physical size or mounting arrangement (e.g., electrical or
     mechanical connections).

(i)  "Form means physical shape.

(j)  "Function" means the operation the Product performs.

(k)  "Hazardous Materials" means material designated as a "hazardous chemical
     substance or mixture" pursuant to Section 6 of the Toxic Substance Control
     Act; a "hazardous material" as defined in the Hazardous Materials
     Transportation Act (49 U.S.C.1801,et seq.); "hazardous substance" as
     defined in the Occupational Safety and Health Act Hazard Communication
     Standard (29 CFR 1910.1200) or as defined in the Comprehensive Governmental
     Response, Compensation and Liability Act, 42 U.S.C. 9601 (14), or other
     pollutant or contaminant.

(l)  "Installation Complete Date" means the date on which OS Software or
     transmission systems Software is installed by Seller at the location
     specified in the order and determined by Seller to be ready for Use by
     Customer.

(m)  "Licensed Materials" means the Software and Related Documentation for which
     licenses are granted by Seller under this Agreement; no Source Code
     versions of Software are included in Licensed Materials.

(n)  "OS Software" means the object code Software, for operations systems,
     embodied in any medium, including firmware.

(o)  "Product" means equipment hardware, and parts thereof, but the term does
     not mean Software whether or not such Software is part of Firmware.

(p)  "Related Documentation" means materials useful in connection with Software
     such as, but not limited to, flowcharts, logic diagrams and listings,
     program descriptions and Specifications.

(q)  "Services" means any engineering, installation or repair services to be
     performed by Seller under this Agreement, but the term "Services" does not
     include any services provided by the Professional Services Division of
     Seller's Network Systems Group unless otherwise expressly agreed to in
     writing by the parties.

(r)  "Software" means a computer program consisting of a set of logical
     instructions and tables of information that guide the functioning of a
     processor. Such program may be contained in any medium whatsoever,
     including hardware containing a pattern of bits, representing such program.
     However, the term "Software" does not mean or include such medium.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary
                                       2
<PAGE>

                                                                LNM980716RMPT

(s)  "Source Code" means any version of Software incorporating high-level or
     assembly language that generally is not directly executable by a processor.

(t)  "Specifications" means Seller's or its vendor's technical specifications
     for particular Products or Software furnished hereunder.

(u)  "Statement of Work" (SOW) means the detailed description of the actual
     Services to be performed which includes the expected completion dates of
     such Services as shown in Exhibit 1.

(v)  "Subsidiary" means any corporation in which Customer owns more than fifty
     percent (50%) of the eligible voting stock; such corporation shall be
     deemed to be a Subsidiary of such Customer only as long as such ownership
     or control exists.

(w)  "Turnover" means, with respect to Products and Software to be installed by
     Seller, the point at which Seller has completed the installation and
     notifies Customer that the installation is completed and that Seller has
     confirmed that the installed Product and/or Software comply with Seller's
     Specifications.  This term does not mean Cutover which is separately
     defined herein.

(x)  "Use," with respect to Licensed Materials means loading the Licensed
     Materials, or any portion thereof, into a Designated Processor for
     execution of the instructions and tables contained in such Licensed
     Materials.

1.2 TERM OF AGREEMENT:
     The term of this Agreement shall commence on the Effective Date and shall
continue in effect thereafter for a period of [***] ("Term").

1.3 SCOPE:
(a)  The terms and conditions of this Agreement shall apply to all transactions
occurring during the Term whereby Products, Licensed Materials or Services are
provided by Seller's Global Service Providers Group (formerly Network Systems
Group) to Customer. Except as expressly stated in this Agreement, this Agreement
shall not apply to any products, licensed materials or services offered for
supply by any other group (e.g. Microelectronics, Business Communications
Systems) within Lucent. By placing orders with Seller, including change and/or
addition orders, or using any Products, Licensed Materials, or Services provided
hereunder, Customer agrees to be bound to the terms of this Agreement. Customer
understands and agrees that all Products, Licensed Materials, or Services
furnished by Seller to Customer pursuant to this Agreement shall be for
Customer's own internal use in the United States only. Products, Licensed
Materials or Services furnished under this Agreement are not being supplied for
resale and shall not be resold by Customer.

(b)  All firm price quotes made by Seller to Customer shall incorporate the
terms and conditions of this Agreement. Any conflicting terms and conditions of
a firm price quote, signed

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary
                                       3
<PAGE>

                                                                  LNM980716RMPT

by an authorized representative of Seller and Customer and dated after the
effective date of this Agreement, will supersede the comparable terms of this
Agreement.

1.4 CUSTOMER RESPONSIBILITY:
     Customer shall, at no charge to Seller, provide Seller with such technical
information, data, technical support or assistance as may reasonably be required
by Seller to fulfill its obligations under this Agreement, any subordinate
agreement or order. If Customer fails to provide the technical information,
data, support or assistance, Seller shall be discharged from any such
obligation.

1.5 ORDERS:
(a)  All orders submitted by Customer for Products, Licensed Materials, and
Services shall incorporate and be subject to the terms and conditions of this
Agreement. Any order submitted pursuant to a firm price quotation shall include
such firm price quotation number. All orders, including electronic orders, shall
contain the information as detailed below:

     (i)    Complete and correct ship to and bill to address;
     (ii)   The quantity and type of Products, Licensed Materials, and Services
            being ordered;
     (iii)  The price;
     (iv)   The requested Delivery Date in accordance with Seller's standard
            interval for the Products, Licensed Materials, and Services being
            ordered. In the event a non standard interval has been mutually
            agreed to by the parties, reference to the specific document
            agreeing to the interval needs to be included;
     (v)    The requested completion date in accordance with Seller's standard
            interval for the Products, Licensed Materials, and Services being
            ordered;
     (vi)   Reference to this Agreement;
     (vii)  If an order is for Bill and Hold Products, the phrase "Bill and
            Hold" must be clearly and conspicuously stated in the order.

     The requested Delivery Date of any order must be in accordance with
Seller's published standard order intervals in effect on the date of receipt of
order by Seller. Seller reserves the right to change such standard order
intervals without notification to Customer but only with respect to future
orders. Such change shall not affect orders accepted by Seller prior to the
change to the standard order intervals. Electronic orders with a value of [***]
dollars ($[***]) or less shall be binding on Customer notwithstanding the
absence of a signature. Electronic orders placed by Customer with a value
greater than [***] dollars ($[***]) shall be processed based upon a mutually
agreed upon process prior to the placement of such orders. All orders are
subject to acceptance by Seller. Seller reserves the right to place any order on
hold, delay shipment, and/or reject any order due to, but not limited to the
breach or default by Customer of its obligations under this Agreement or
Customer's insufficient credit limits. Terms and conditions on Customer's
purchase order which are inconsistent with the provisions of this Agreement and
any pre-printed terms and conditions on Customer's purchase order shall be
ineffective, void and of no force and effect. Orders shall be sent to the
following address:

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       4
<PAGE>

                                                                LNM980716RMPT

  Lucent Technologies Inc.
  Customer Service
  6701 Roswell Road
  Building D - 3rd Floor
  Atlanta, GA 30328-2501

(b)  If an order is for Bill and Hold Products, the phrase "Bill and Hold" must
clearly and conspicuously appear on the order. In the event Customer orders Bill
and Hold Products, Seller will defer final shipment of such Product(s) until the
final ship date indicated on the purchase order or such final ship date as is
mutually agreed between the parties provided that in no event shall Seller be
obligated to hold Bill and Hold Products longer than one (1) year from the date
of the applicable purchase order. Customer agrees to pay to Seller a monthly
stocking fee for any Bill and Hold Products held beyond the final ship date
indicated on the purchase order or otherwise mutually agreed to date.

1.6 CHANGES IN CUSTOMER'S ORDERS:
     Changes by Customer to an order which has been previously accepted by
Seller (a "Change Order") are subject to acceptance by Seller. Change Orders
shall be treated as a separate order and shall follow Seller's change order
process. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any price (or
discount, if applicable), shipment date or Services completion date quoted by
Seller with respect to such original order is subject to change. Seller will
provide to Customer written quotations and expected completion dates for any
requested Change Orders.

1.7 CHANGES IN PRODUCTS:
     Prior to shipment, Seller may at any time make changes in Products. Seller
may modify the Product(s) drawings and Specifications or substitute Products of
later design. Seller agrees that such modifications or substitutions will not
impact upon Form, Fit, or Function under normal and proper use of the ordered
Product as provided in Seller's Specifications. With respect to changes,
modifications, and substitutions that do impact the Form, Fit, or Function of
the ordered Product, Seller shall notify Customer in writing thirty (30) days
prior to the date the changes become effective. In the event the Customer
objects to the change, Customer shall notify Seller within thirty (30) days from
the date of notice. Upon receipt of notice, Seller shall not furnish modified
Products to Customer on any orders in process.

1.8 PRICES:
(a)  To the extent Customer's order is subject to a firm price quotation made by
Seller, prices, fees and charges (hereinafter "Prices") shall be as set forth in
Seller's firm price quotation.

(b)  Except as expressly stated in this Agreement, in all other cases Prices
shall be those contained in Seller's Customer Price Lists. The applicable
Customer Price List shall be the issue that is in effect on the date of Seller's
receipt of the order. The requested Delivery Date of such order must be in
accordance with Seller's published shipping or planning interval or thirty (30)
days from the date of order receipt, whichever is longer. Prices for Products
and license fees for

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary
                                       5
<PAGE>

                                                                LNM980716RMPT

Licensed Materials to be shipped, or Services to be performed beyond the
published shipping interval will be based upon the date required for order entry
by Seller in accordance with Customer's requested date and applying the Price
from the Customer Price List as of that date.

(c)  Seller may amend its Prices, other than those subject to firm price
quotations and, except when applicable Prices are adjusted for changes in raw
material prices, Seller agrees to provide thirty (30) days written notice of any
increase in Prices contained in Seller's Customer Price Lists. When Prices
contained in Seller's Customer Price Lists are adjusted for changes in raw
material prices, Seller's new Prices will be revised effective the first day of
any given month. The basis for raw material adjustments will be provided to
Customer upon request.

1.9 INVOICES AND TERMS OF PAYMENT:
(a)  Payment for Products, Licensed Materials and Services (including
transportation charges and taxes, if applicable) will be due in accordance with
the payment schedule described below. Upon acceptance of the purchase order and
initial payment required below, Seller will commence the order fulfillment
process. Seller shall notify Customer when the Products and/or Licensed
Materials are ready for shipment. Upon such notification, Customer shall arrange
the electronic transfer of funds for the second payment in accordance with
subsection (c) below. Upon receipt of the second scheduled payment, Seller will
release the shipment for delivery to Customer. Seller will provide Customer a
"record only" invoice after receipt of the second payment. Such invoice will
reflect the amount due and payments received through the date of the invoice. If
Seller is responsible for installation, the final payment will be invoiced upon
Turnover or as soon thereafter as practical. For furnish only orders the final
payment will be invoiced upon shipment or as soon as practical thereafter. In
either case the payment is due for receipt by Seller within thirty (30) days of
the date of the invoice.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
           Payment Milestone Schedule                     Percent of Total Amount of Purchase
                                                                       Order Due
----------------------------------------------------------------------------------------------
  <S>                                                     <C>
  To Accompany Purchase Order (Initial                                  [***]%
  Payment)
----------------------------------------------------------------------------------------------
  Prior to Shipment of Products (Second                                 [***]%
  Payment)
----------------------------------------------------------------------------------------------
  Due to Seller within thirty (30) days of date of                      [***]%
  invoice (Final Payment)
----------------------------------------------------------------------------------------------
</TABLE>

(b)  For Products, Licensed Materials and Services (including transportation
charges and taxes, if applicable) that are not required to be paid in advance,
Seller will invoice Customer, all amounts due for Products and Licensed
Materials upon shipment and all amounts due for Services, upon completion of
Services or, in either event, as soon as practical thereafter. Customer shall
pay such invoiced amounts for receipt by Lucent within thirty (30) days of the
invoice date. Bill and Hold Products will be invoiced by Seller upon the earlier
of (i) completion of assembly at Seller's facility or (ii) upon stocking at
Customer's designated location. Such invoice will serve as Seller's notification
that Bill and Hold Products are complete and ready to be released by Customer
for final shipment. A sample invoice is provided in Exhibit 2 for informational
purposes only.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       6
<PAGE>

                                                                LNM980716RMPT

(c)  Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT") whether amounts have been invoiced by Seller or are due as
advance payments. EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager Cash Operations at 770-750-4288.

     Chase Manhattan Bank
     New York, New York
     Account Name: Lucent Technologies Inc.
     ACCT. 910144-9099
     ABA 021000021

(d)  If Customer fails to pay any invoiced amount when due, the invoiced amount
will be subject to a late payment charge at the rate of [***] percent ([***])
per month, or portion thereof, of the amount due (but not to exceed the
maximum lawful rate). Customer agrees to pay Seller's reasonable attorneys'
fees and other reasonable and necessary costs incurred by Seller in the
collection of any amounts invoiced hereunder.

(e)  Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and, notify Seller of any billing discrepancies within fifteen (15) days
of receipt of the applicable invoice. Such inquiries can be directed to Seller
in writing or by telephone. Inquiries shall be made to the telephone number or,
if in writing, to the address identified on the invoice.

1.10 PURCHASE MONEY SECURITY INTEREST:
(a)  Seller reserves and Customer agrees that Seller shall have a purchase money
security interest in all Products and Licensed Materials heretofore supplied or
hereafter supplied to Customer by Seller under this Agreement until any and all
payments and charges due Seller under this Agreement including, without
limitation, shipping and installation charges, are paid in full. Seller shall
have the right, at any time during the Term and without notice to Customer, to
file in any state or local jurisdiction such financing statements (e.g., UCC-1
financing statements) as Seller deems necessary to perfect its purchase money
security interest hereunder. Upon request by Seller, Customer hereby agrees to
execute all documents necessary to secure Seller's purchase money security
interest including without limitation, UCC-1 or such other documents Seller
deems reasonably necessary. Notwithstanding the foregoing obligation of Customer
to execute, Customer hereby irrevocably appoints Seller as its attorney-in-fact
solely for purposes of executing and filing such financing statements and such
other documents prepared by Seller or its designated agent for purposes of
perfecting Seller's security interest hereunder. Customer also agrees that this
Agreement may be filed by Seller in any state or local jurisdiction as a
financing statement (or as other evidence of the Seller's purchase money
security interest).

(b)  In addition to any other remedy available to Seller as provided herein, by
common law and by statute, Seller may exercise its right to reclaim all Products
and Licensed Materials sold to Customer pursuant to UCC-702 or such other
applicable provision as it may exist from state to state, upon discovery of
Customer's insolvency, provided Seller demands in writing reclamation of such
goods before ten (10) days after receipt of such goods by Customer, or if such
ten (10)

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       7
<PAGE>

                                                                LNM980716RMPT

day period expires after the commencement of a bankruptcy case, before twenty
(20) days after receipt of such goods by the Customer.

1.11 TAXES:

      Customer shall be liable for all taxes and related charges, however
designated, imposed upon or based upon the provision, sale, license or Use of
Products, Licensed Materials or Services levied upon the sale, excluding taxes
on Seller's net income, unless Customer provides Seller with a valid tax exempt
certificate. Seller's failure to collect taxes in accordance herewith shall not
be deemed to be an authorization to resell Products or Services or sublicense
Licensed Materials.

1.12 TRANSPORTATION AND PACKING:

      Seller, in accordance with its normal practices, shall arrange for prepaid
transportation to destinations in the contiguous United States and shall invoice
transportation charges to Customer. Premium transportation will be used only at
Customer's request. Seller shall pack Products for delivery in the contiguous
United States, in accordance with its standard practices for domestic shipments.
Where, in order to meet Customer's requests, Seller packs Products in other than
its normal manner or for destinations outside the contiguous United States,
Customer shall pay the additional charges for such packing and transportation.

1.13 TITLE AND RISK OF LOSS:

      Title to Products only and risk of loss to Products and Licensed Materials
shall pass to Customer upon delivery to the Customer. Title to all Licensed
Materials (whether or not part of Firmware) furnished by Seller, and all copies
thereof made by Customer, including translations, compilations and partial
copies are, and shall remain, the property of Seller. Title to Products only and
risk of loss for Products and Licensed Material for Bill and Hold Products shall
pass to Customer upon stocking at Seller's facility or Customer's designated
location, whichever occurs earlier. Customer shall notify Seller promptly of any
claim with respect to loss which occurs while Seller has the risk of loss and
shall cooperate in every reasonable way to facilitate the settlement of any
claim. For purposes of this section, "delivery" shall mean the point at which
Seller or Seller's supplier or agent turns over possession of the Product or
Licensed Materials to Customer, Customer's employee, Customer's designated
carrier, Customer's warehouse, or other Customer's agent and not necessarily the
final destination shown on the order.

1.14 WARRANTY:

(a)   Seller warrants to Customer only, that during the applicable Warranty
Periods set forth below (i) Seller's manufactured Products (exclusive of
Software) will be free from defects in material and workmanship and will conform
to Seller's Specifications for such Products; (ii) Software developed by Seller
will be free from those defects which materially affect performance in
accordance with Seller's Specifications; and (iii) Services will be performed in
a workmanlike manner and in accordance with good usage and accepted practices in
the community in which Services are provided. With respect to Products or
Software or partial assembly of Products furnished by Seller but neither
manufactured by Seller nor purchased by Seller pursuant to its procurement
Specifications ("Vendor Items"), Seller, to the extent permitted, does hereby
assign to Customer the warranties given to Seller by its vendor(s) of such
Vendor Items.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       8
<PAGE>

                                                                  LNM980716RMPT

(b)  For purposes of this Agreement the term "Warranty Period" means the period
of time listed below which, unless otherwise stated, commences on date of
shipment or, if installed by Seller the earliest of either: (i) acceptance by
Customer; or (ii) thirty (30) days from the date Seller submits its notice of
completion of its installation; or (iii) the date Customer first puts Products
and/or Licensed Materials into service. For Bill and Hold Products the warranty
will commence upon the date of stocking at Seller's facility or Customer's
designated location. The Warranty Period for any Product or Software (or part
thereof) repaired or replaced under this Section 1.14 is the period listed in
the right column below or the unexpired portion of the new Product Warranty
Period, whichever is longer.

<TABLE>
<CAPTION>
                               SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
                                             WARRANTY PERIOD
---------------------------------------------------------------------------------------------------------
                                                            Base                         Repaired
                                                            ----                         --------
                                                            Period                       Product or
                                                            ------                       ----------
                                                            New                          Part
                                                            ---                          ----
                                                            Product
                                                            -------
---------------------------------------------------------------------------------------------------------
<S>                                                         <C>                          <C>
Switching Systems Products                                  [***]                        [***]
---------------------------------------------------------------------------------------------------------
Central Office Power Equipment:
---------------------------------------------------------------------------------------------------------
Associated with Switching Systems                           [***]                        [***]
---------------------------------------------------------------------------------------------------------
Not Associated with Switching Systems                       [***]                        [***]
---------------------------------------------------------------------------------------------------------
Transmission Systems Products:
---------------------------------------------------------------------------------------------------------
DACS-IV 2000,                                               [***]                        [***]
---------------------------------------------------------------------------------------------------------
FT-2000 OC-48                                               [***]                        [***]
---------------------------------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12                                         [***]                        [***]
---------------------------------------------------------------------------------------------------------
DDM-2000 FIBER REACH                                        [***]                        [***]
---------------------------------------------------------------------------------------------------------
SLC 2000 Access System                                      [***]                        [***]
---------------------------------------------------------------------------------------------------------
SLC 2000 MSDT                                               [***]                        [***]
---------------------------------------------------------------------------------------------------------
SLC Series 5 (System and Plug In)                           [***]                        [***]
---------------------------------------------------------------------------------------------------------
Other Transmission Products (i.e., DDM Plus                 [***]                        [***]
Repeater Cases)
---------------------------------------------------------------------------------------------------------
Network Cable Systems Products                              [***]                        [***]
---------------------------------------------------------------------------------------------------------

All Other Products                                          [***]                        [***]
---------------------------------------------------------------------------------------------------------
Software:
---------------------------------------------------------------------------------------------------------
Switching System Software                                   [***]                        [***]
---------------------------------------------------------------------------------------------------------
Transmission Systems Software                               [***]                        [***]
---------------------------------------------------------------------------------------------------------
Operations Systems Software                                 [***]                        [***]
---------------------------------------------------------------------------------------------------------
All Other Software                                          [***]                        [***]
---------------------------------------------------------------------------------------------------------
</TABLE>

(c)  If, under normal and proper use, a defect or non-conformity appears in
Seller's manufactured Products or Software during the applicable Warranty
Period and Customer promptly notifies Seller in writing of such defect or non-
conformance and follows Seller's instructions regarding return of defective or
non-conforming Product or Software, Seller, at its option, will either repair,
replace or correct the same without charge at its manufacturing or repair
facility or provide a refund or credit based on the original

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       9
<PAGE>

                                                                LNM980716RMPT

purchase price or license fee. If engineering or installation Services prove not
to be performed as warranted within a [***] ([**]) [******] period commencing on
the date of completion of the Services, Seller, at its option, either will
correct the defect or non-conforming Services or render a full or pro-rated
refund or credit based on the original charges for the Services. No Product or
Software will be accepted for repair or replacement without the written
authorization of and in accordance with instructions of Seller. Removal and
reinstallation expenses as well as transportation expenses associated with
returning such Product or Software to Seller shall be borne by Customer. Seller
shall pay the costs of transportation of the repaired or replacing Product or
Software to any United States destination designated by Customer. If Seller
determines that returned Product or Software is not defective, Customer shall
pay Seller's costs of handling, inspecting, testing and transportation and, if
applicable, travel and related expenses. In repairing or replacing any Product,
part of Product, or Software medium under this warranty, Seller may use either
new, remanufactured, reconditioned, refurbished or functionally equivalent
Products or parts. Replaced Products or parts shall become Seller's property.

(d)       With respect to Seller's manufactured Products which Seller has
ascertained are not readily returnable for repair, Seller, at its option, may
elect to repair or replace the Products at Customer's site. In such instances,
travel and living expenses for Seller's personnel to and from Customer's site
shall be borne by Seller. Customer, at its expense, shall make the Products
accessible for repair or replacement and shall restore the site after Seller has
completed its repairs or replacement.

(e)       Seller makes no warranty with respect to defective conditions or non-
conformities resulting from any of the following: Customer's modifications,
misuse, neglect, accident or abuse; improper wiring, repairing, splicing,
alteration, installation, storage or maintenance; use in a manner not in
accordance with Seller's or its vendor's Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with respect
to Products which have had their serial numbers or month and year of manufacture
removed, altered and with respect to expendable items, including, without
limitation, fuses, light bulbs, motor brushes and the like. No warranty is made
that Software will run uninterrupted or error free, and in addition Seller makes
no warranty with respect to defects related to Customer's data base errors.

(f)       THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO REPAIR, REPLACE, CREDIT, OR
REFUND AS SET FORTH ABOVE IN THIS WARRANTY.

1.15 INFRINGEMENT:

(a)       In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with Seller's Specifications, of any Product or Licensed Materials

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      10
<PAGE>

                                                                LNM980716RMPT

furnished by Seller to Customer under this Agreement, Seller, at its expense,
will defend Customer, subject to the conditions and exceptions stated below.
Seller will reimburse Customer for any cost, expense or attorneys' fees,
incurred (i) at Seller's written request or authorization and (ii) by Customer
where Customer has provided Seller with advance written notice describing
Customer's need to incur such expenses and Seller has not, within three (3)
business days of such notice, taken appropriate action to obviate Customer's
need to incur such expenses, in which case such inaction shall be deemed
authorization for Customer to proceed, and such costs shall continue to be
reimbursed by Seller, until such time as Seller demonstrates, to Customer's
reasonable satisfaction, that such costs no longer need to be incurred. Further,
Seller will indemnify Customer against any liability assessed against Customer
by final judgment on account of such infringement or violation arising out of
such use.

(b)       If Customer's use shall be enjoined or in Seller's opinion is likely
to be enjoined, Seller will, at its expense and at its option, either (1)
replace the enjoined Product or Licensed Materials furnished pursuant to this
Agreement with a suitable substitute free of any infringement; (2) modify it so
that it will be free of the infringement; or (3) procure for Customer a license
or other right to use it. If none of the foregoing options are practical, Seller
will remove the enjoined Product or Licensed Materials and refund to Customer
any amounts paid to Seller therefor less a reasonable charge for any actual
period of use by Customer.

(c)       Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same. Customer shall, upon Seller's request and
at Seller's expense, furnish all information and assistance available to
Customer and cooperate in every reasonable way to facilitate the defense and/or
settlement of any such claim, action, proceeding or suit.

(d)       No undertaking of Seller under this section shall extend to any such
alleged infringement or violation to the extent that it: (1) arises from
adherence to design modifications, specifications, drawings, or written
instructions which Seller is directed by Customer to follow, but only if such
alleged infringement or violation does not reside in corresponding commercial
Product or Licensed Materials of Seller's design or selection; or (2) arises
from adherence to instructions to apply Customer's trademark, trade name or
other company identification; or (3) resides in a product or licensed materials
which are not of Seller's origin and which are furnished by Customer to Seller
for use under this Agreement; or (4) relates to uses of Product or Licensed
Materials provided by Seller in combinations with other Product or Licensed
Materials, furnished either by Seller or others, which combination was not
installed, recommended or otherwise approved by Seller. In the foregoing cases
numbered (1) through (4), Customer will defend and save Seller harmless, subject
to the same terms and conditions and exceptions stated above, with respect to
the Seller's rights and obligations under this section.

(e)       The liability of Seller and Customer with respect to any and all
claims, actions, proceedings or suits by third parties alleging infringement of
patents, trademarks or copyrights or violation of trade secrets or proprietary
rights because of, or in connection with, any Products or Licensed Materials
furnished pursuant to this Agreement shall be limited to the specific
undertakings contained in this section.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      11
<PAGE>

                                                                LNM980716RMPT

1.16  CUSTOMER'S REMEDIES:

(a)       CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE LIABILITY OF SELLER, ITS
AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS FOR ANY CLAIM,
LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY ARISING OUT OF THIS
AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR
SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY, SHALL BE AS FOLLOWS:

      1) FOR INFRINGEMENT --THE REMEDY SET FORTH IN THE "INFRINGEMENT" SECTION;

      2) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
      WARRANTY PERIOD --THE REMEDY SET FORTH IN THE APPLICABLE "WARRANTY"
      SECTION;

      3) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
      NEGLIGENCE --THE AMOUNT OF THE PROVEN DIRECT DAMAGES;

      4) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE --THE AMOUNT OF THE PROVEN
      DIRECT DAMAGES NOT TO EXCEED $[***] PER OCCURRENCE INCLUDING AWARDED
      COUNSEL FEES AND COSTS.

(b)       NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, SELLER, ITS
AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS SHALL NOT BE
LIABLE FOR ANY INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS,
REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF
ANY PRODUCT, LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR
ARISING OUT OF BREACH OF CONTRACT, TORT, INCLUDING NEGLIGENCE, OR STRICT
LIABILITY. THIS SECTION, 1.16(B), SHALL SURVIVE FAILURE OF AN EXCLUSIVE OR
LIMITED REMEDY.

(c)       CUSTOMER SHALL GIVE SELLER PROMPT WRITTEN NOTICE OF ANY CLAIM. ANY
ACTION OR PROCEEDING AGAINST SELLER MUST BE BROUGHT WITHIN THE GREATER OF
[***] ([***])[***] OR THE TIME PERIOD SPECIFIED WITHIN THE APPLICABLE STATUTE OF
LIMITATION AFTER THE CAUSE OF ACTION ACCRUES.

1.17  USE OF INFORMATION:

          All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party.  The furnishing party grants the receiving
party the right to use such Information only for purposes expressly permitted in
this section.  Such Information (1) shall not be reproduced or copied, in whole
or part, except for use as authorized in this Agreement; and (2)

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      12
<PAGE>

                                                                LNM980716RMPT

shall, together with any full or partial copies thereof, be returned or
destroyed when no longer needed. Moreover, when Seller is the receiving party,
Seller shall use such Information only for the purpose of performing under this
Agreement, and when Customer is the receiving party, Customer shall use such
Information only (1) to order; (2) to evaluate Seller's Products, Licensed
Materials and Services; or (3) to install, operate and maintain the particular
Products and Licensed Materials for which it was originally furnished. Unless
the furnishing party consents in writing, such Information, except for that
part, if any, which is known to the receiving party free of any confidential
obligation, or which becomes generally known to the public through acts not
attributable to the receiving party, shall be held in confidence by the
receiving party. The receiving party may disclose such Information to other
persons, upon the furnishing party's prior written authorization, but solely to
perform acts which this section expressly authorizes the receiving party to
perform itself and further provided such other person agrees in writing (a copy
of which writing will be provided to the furnishing party at its request) to the
same conditions respecting use of Information contained in this section and to
any other reasonable conditions requested by the furnishing party.

1.18 DOCUMENTATION:

          Seller shall furnish to Customer, at no additional charge, one (1)
copy of the documentation for Products and/or one (1) copy of the Related
Documentation for Software licensed to Customer. Such documentation shall be
that which is customarily provided by Seller to its Customers at no additional
charge. Such documentation shall be sufficient to enable Customer to operate and
maintain such Products and Software in accordance with Seller's Specifications.
Such documentation shall be provided either prior to, included with, or shortly
after shipment of Products and/or Software from Seller to Customer. Additional
copies of such documentation are available at prices set forth in Seller's
Customer Price Lists.

1.19 NOTICES:

(a)       Any notice, demand or other communication (other than an order)
required, or which may be given, under this Agreement shall, unless specifically
otherwise provided in this Agreement, be in writing and shall be given or made
by nationally recognized overnight courier service, confirmed facsimile, or
certified mail, return receipt requested and shall be addressed to the
respective parties as follows:

If to Seller:
     Lucent Technologies Inc.
     Global Commercial Markets
     5440 Millstream Road, E2N32
     I-85 & Mt. Hope Church Road
     McLeansville, North Carolina 27301
     Attn:  Contract Manager  (Fax # 336-279-6544)

<TABLE>
<S>                                                            <C>
If to Customer:
     PaeTec Communications, Inc.                               With a copy to:
     Attn:  President                                          PaeTec Communications, Inc.
     290 Woodcliff Drive                                       Attn:  General Counsel
     Fairport, NY  14450                                       290 Woodcliff Drive
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      13
<PAGE>

                                                                LNM980716RMPT

     Fax# 716-385-8994                                     Fairport, NY  14450
                                                           Fax#716-385-5634

(b)  Any such notice shall be effective upon receipt.  Each party may change its
     designated representative who is to receive communications and notices
     and/or the applicable address for such communications and notices by giving
     notice thereof to the other party as provided herein.

1.20 FORCE MAJEURE:

          Except for payment obligations, neither party shall be held
responsible for any delay or failure in performance to the extent that such
delay or failure is caused by fires, strikes, embargoes, explosions,
earthquakes, floods, wars, water, the elements, labor disputes, government
requirements, civil or military authorities, acts of God or by the public enemy,
inability to secure raw materials or transportation facilities, acts or
omissions of carriers or suppliers, or other causes beyond its reasonable
control whether or not similar to the foregoing.

1.21 ASSIGNMENT:

          Except as provided in this section, neither party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any work
or obligation to be performed under this Agreement, (an "assignment") without
the other party's prior written consent. Such consent shall not be unreasonably
withheld. Any attempted assignment in contravention of this shall be void and
ineffective. Nothing shall preclude a party from employing a subcontractor in
carrying out its obligations under this Agreement. A party's use of such
subcontractor shall not release the party from its obligations under this
Agreement. Notwithstanding the foregoing, Seller has the right to assign this
Agreement and to assign its rights and delegate its duties under this Agreement,
in whole or in part, at any time and without Customer's consent, to any present
or future subsidiary or "Affiliate" of Seller or to any combination of the
foregoing. Such assignment or delegation shall release Seller from any further
obligation or liability thereon. Seller shall give Customer prompt written
notice of the assignment. For the purposes of this section, the term "Agreement"
includes this Agreement, any subordinate agreement placed under this Agreement
and any order placed under this Agreement or subordinate agreement.

1.22 TERMINATION OF AGREEMENT FOR BREACH:

          In the event either party is in material breach or default of the
terms of this Agreement and such breach or default continues for a period of ten
(10) days with respect to payment obligations or thirty (30) days with respect
to any other obligations after the receipt of written notice from the other
party, then the party not in breach or default shall have the right to terminate
this Agreement without any charge, obligation or liability except for Products
or Licensed Materials already delivered and Services already performed. The
party not in breach or default shall provide full cooperation to the other party
in every reasonable way to facilitate the remedy of the breach or default
hereunder within the applicable cure period. Notwithstanding the foregoing, if
the nature of the material breach or default is such that it is not a payment
obligation and it is incapable of cure within the foregoing thirty (30) day
period, then the thirty (30) day cure period may be extended for a reasonable
period of time (in no event to exceed an additional thirty (30) days), provided
that the party in breach or default is proceeding diligently and in good faith
to effectuate a cure.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      14
<PAGE>

                                                                LNM980716RMPT

1.23 ARBITRATION:

          If a dispute arises out of or relates to this Agreement, or its
breach, the parties agree to escalate such dispute to their respective senior
executives for good faith negotiations seeking a mutually agreeable resolution.
This demand for escalation shall be in writing and notice shall be served in
accordance with the notice provision of this Agreement. If the dispute is not
resolved through such escalation within fifteen (15) days after the date of
escalation, either party shall have the right to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by the American Arbitration Association ("AAA"). If not thus resolved,
it shall be referred to a sole arbitrator selected by the parties within thirty
(30) days of the mediation or, in the absence of such selection, to AAA
arbitration which shall be governed by the United States Arbitration Act, and
judgment on the award may be entered in any court having jurisdiction. The
arbitrator may determine issues of arbitrability, but may not award punitive
damages or limit, expand or otherwise modify the terms of this Agreement. The
parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence, except as such disclosure may be necessary for the
purpose of recording or otherwise acting upon the arbitrator's award.

1.24 NON-SOLICITATION:

     During the term of this Agreement and for a period of [***] ([***])
[***] from  the termination of this Agreement or a Statement of Work, the
parties agree not to employ, make an offer of employment to, or enter into a
consulting relationship with any employee, subcontractors or consultant of the
other party who is directly involved with the delivery of Services under this
Agreement, except upon the prior written consent of the affected party.

1.25 INDEPENDENT CONTRACTOR:

          All work performed by either party under this Agreement shall be
performed as an independent contractor and not as an agent of the other, and no
persons furnished by the performing party shall be considered the employees or
agents of the other.

1.26 RELEASES VOID:

          Neither party shall require releases or waivers of any personal rights
from representatives or employees of the other in connection with visits to its
premises, nor shall such parties plead such releases or waivers in any action or
proceeding .

1.27 PUBLICITY:

          Neither party shall issue or release for publication any articles,
advertising, or publicity material relating to Products, Licensed Materials, or
Services under this Agreement or mentioning or implying the name, trademarks,
logos, trade name, service mark or other company identification of the other
party or any of its Affiliates or any of its personnel without the prior written
consent of the other party.

1.28 CONFIDENTIALITY OF AGREEMENT:

          Notwithstanding the obligations contained in Section 1.17 (Use of
Information) of this Agreement the parties shall keep all provisions of this
Agreement and any order submitted hereunder (including, without limitation,
prices and pricing related information) confidential

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      15
<PAGE>

                                                                LNM980716RMPT

except as reasonably necessary for performance by the parties hereunder and
except to the extent disclosure may be required by applicable laws or
regulations, in which latter case, the party required to make such disclosure
shall promptly inform the other prior to such disclosure in sufficient time to
enable such other party to make known any objections it may have to such
disclosure. The disclosing party shall take all reasonable steps and exercise
all reasonable efforts directed by Seller to secure a protective order, seek
confidential treatment, or otherwise assure that this Agreement and/or any order
will be withheld from the public record.

1.29 AMENDMENTS:

          Any supplement, modification or waiver of any provision of this
Agreement must be in writing and signed by authorized representatives of both
parties.

1.30 SEVERABILITY:

          If any portion of this Agreement is found to be invalid or
unenforceable, the parties agree that the remaining portions shall remain in
effect. The parties further agree that in the event such invalid or
unenforceable portion is an essential part of this Agreement, they will
immediately begin negotiations for a replacement.

1.31 WAIVER:

      If either party fails to enforce any right or remedy available under this
Agreement, that failure shall not be construed as a waiver of any right or
remedy with respect to any other breach or failure by the other party.

1.32 SURVIVAL:

          The rights and obligations of the parties which by their nature would
continue beyond the termination, cancellation, or expiration of this Agreement,
shall survive such termination, cancellation or expiration.

1.33 SECTION HEADINGS:

          The section headings in this Agreement are inserted for convenience
only and are not intended to affect the meaning or interpretation of this
Agreement.

1.34 CHOICE OF LAW:

          The construction and interpretation of, and the rights and obligations
of the parties pursuant to this Agreement, shall be governed by the laws of the
State of New York without regard to its conflict of laws provision.

1.35 AMBIGUITIES:

          The parties represent that they are sophisticated businesses with
access to their own legal, financial and business advisors and that each party
has had the opportunity to consult with advisors of their own choosing before
entering into this Agreement. The parties therefore acknowledge and agree that
the rule of law that ambiguities are construed against the drafter shall not
apply to the interpretation of this Agreement.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      16
<PAGE>

                                                                LNM980716RMPT

                                2.  ARTICLE II

                  PROVISIONS APPLICABLE TO LICENSED MATERIALS

2.1  LICENSE FOR LICENSED MATERIALS:

(a)       Upon delivery of Licensed Materials pursuant to this Agreement, Seller
grants to Customer a personal, nontransferable, and nonexclusive license to Use
Licensed Materials on a Designated Processor in the United States for its own
business operations. No license is granted to Customer to Use the Licensed
Materials outside the United States or to sublicense such Licensed Materials
furnished by Seller. Customer shall not reverse engineer, decompile or
disassemble Software furnished as object code to generate corresponding Source
Code. Unless otherwise agreed in writing by Seller, Customer shall not modify
Software furnished by Seller under this Agreement. If the Designated Processor
becomes temporarily inoperative, Customer shall have the right to Use the
Licensed Materials temporarily on a backup processor until operable status is
restored and processing on the backup processor is completed.

(b)       Customer shall not copy Software embodied in Firmware. Customer shall
not make any copies of any other Licensed Materials except as necessary in
connection with the rights granted hereunder. Customer shall reproduce and
include any Seller copyright and proprietary notice on all such necessary copies
of the Licensed Materials. Customer shall also mark all media containing such
copies with a warning that the Licensed Materials are subject to restrictions
contained in an agreement between Seller and Customer and that such Licensed
Materials are the property of Seller. Customer shall maintain records of the
number and location of all copies of the Licensed Materials. Customer shall take
appropriate action, by instruction, agreement, or otherwise, with the persons
permitted access to the Licensed Materials so as to enable Customer to satisfy
its obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.

2.2  CHANGES IN LICENSED MATERIALS:

          Prior to shipment, Seller at its option may at any time modify the
Specifications relating to its Licensed Materials, provided the modifications,
under normal and proper Use, do not materially adversely affect the Use,
function, or performance of the ordered Licensed Materials. Unless otherwise
agreed in writing, such substitution shall not result in any additional charges
to Customer with respect to licenses for which Seller has quoted fees to
Customer.

2.3  CANCELLATION OF LICENSE:

          Notwithstanding any other section in this Agreement to the contrary,
if Customer fails to comply with any of the material terms and conditions of
this Agreement with respect to the Use of Licensed Materials, and such failure
is not corrected within ten (10) days of receipt of written notice thereof by
Customer, Seller, upon written notice to Customer, may cancel any affected
license for Licensed Materials without further notification.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      17
<PAGE>

                                                                LNM980716RMPT

2.4  OPTIONAL SOFTWARE FEATURES:

          Software provided to Customer under this Agreement may contain
optional features which are separately licensed and priced. Customer understands
and agrees that such optional features will not be activated without written
authorization from Seller and Customer and Customer's payment of the appropriate
license fees. If, in spite of Customer's best efforts to comply with this
restriction, such features are activated, Customer agrees to so notify Seller
within five (5) business days from the date of Customer's knowledge that such
features were activated and to pay Seller the current license fees charged by
Seller for the activated features, as well as the reasonable cost of money for
the period in which such features were activated.

2.5  ADDITIONAL RIGHTS IN LICENSED MATERIALS:

(a)       Upon thirty (30) days advance written notice, Customer may relocate
the Software permanently to a new processor of Customer. This new processor
shall then become the Designated Processor in lieu of the former Designated
Processor.

(b)       Customer may retain an archival copy of the Software for as long as
such Software is relevant to Customer's operations.

INSTALLATION OF SOFTWARE:

(a)       Where Customer is responsible for Software installation, Seller's sole
responsibility is to deliver the Software to Customer on or before the scheduled
Delivery Date agreed to by Seller. However, if the order specifies that Seller
is responsible for such installation, Seller shall deliver the Software to
Customer in sufficient time for it to be installed on or before the scheduled
Installation Complete Date agreed to by Seller, and Seller shall complete its
installation and associated testing on or before such date.

(b)       Where Customer has assumed responsibility for the installation of
newly licensed Software and in the event that Customer encounters installation
difficulties, at Customer's request, Seller will, at the standard rate in effect
at the time of the request, provide technical assistance.

2.7   SOFTWARE ACCEPTANCE:

(a)       Prior to Software acceptance by Customer, Customer has the right to
operate the Software furnished by Seller on the Designated Processor solely for
the purpose of conducting an Acceptance Test (means the test which may be
performed by Customer during the Acceptance Test Period to determine whether
Software will be free from defects which materially affect performance in
accordance with the Seller's Specifications). Unless otherwise agreed by the
parties, the Acceptance Test Period (means the period of time in days agreed to
by the parties and specified in this section) for Software shall be eighteen
(18) consecutive calendar days from the ship date if Customer performs
installation or from the Installation Complete Date if Seller performs
installation. The Software shall be deemed accepted by Customer unless Customer
notifies Seller in writing to the contrary within the applicable Acceptance Test
Period described above. If Seller receives written notice from Customer during
the Acceptance Test Period that the Software failed the Acceptance Test, the
Acceptance Date (the date on which the Software successfully completes the
Acceptance Test) shall be extended on a day-to-day basis until such time as the
Software passes the Acceptance Test.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      18
<PAGE>

                                                                LNM980716RMPT

(b)  If Customer elects in the order not to perform Acceptance Tests for any
Software, the Acceptance Date for such Software shall be the Delivery Date if
not installed by Seller or the Installation Complete Date if installed by
Seller, as applicable.

(c)  For any Acceptance Test conducted by Customer on newly licensed Software,
and in the event that Customer encounters difficulties, Seller will, at
Customer's request and for the standard rate in effect at the time of the
request, provide technical assistance to Customer.

(d)  If Customer performs installation and elects to perform applicable tests
for any Software, the warranty for such Software shall commence on the Delivery
Date.

2.8   MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES:

     Customer may add to, delete from, or modify user controlled Software
modules or menus as contemplated in the Seller's Related Documentation.  Such
changes or modifications, however extensive, shall not affect Seller's title to
the licensed Software.  Seller shall have no liability for Customer's errors in
making such changes or modifications.

2.9   ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS

     The following provisions also apply to the granting of licenses by Seller
to Customer for 5ESS(R) Switch Licensed Materials.

(a)  Customer may transfer its right-to-use 5ESS(R) Switch Software furnished
under this Agreement without the payment of an additional right-to-use fee by
transferee, except where size sensitive units are a factor. Such transfer can be
made to an end user for their own internal use and only under the following
conditions:

     (i)   Such software shall be used only within the United States; however,
           Seller will not unreasonably withhold its consent to Use outside the
           United States provided that, in the sole opinion of the Seller, the
           proprietary information associated with the Use can be adequately
           protected and any other reasonable concerns of Seller are adequately
           addressed;

     (ii)  Except as otherwise provided in the Agreement, the right to use such
           Software may be transferred only together with the 5ESS(R) Switch
           Product with which customer has a right to use such Software, and
           such right to use the Software shall continue to be limited to Use
           with such Product;

     (iii) Before any such Software shall be transferred, Customer shall notify
           Seller of such transfer and the transferee shall have agreed in
           writing (a copy of which will be provided to Seller at its request)
           to keep such Software in confidence and to comply with corresponding
           conditions respecting Use of Licensed Materials as those imposed on
           customer; and

     (iv)  Within the United States, the transferee shall have the same right to
           Software warranty or Software maintenance for such Software as the
           transferor, provided the

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      19
<PAGE>

                                                                LNM980716RMPT

           transferee continues to pay the fees, if any, associated with such
           Software or Software maintenance.

     (v)   In no event shall such transfer be made to any competitor of Seller
           who is in the business of manufacturing comparable systems or to any
           other party who presents a competitive or strategic conflict to
           Seller.

(b)  Upon advance written notice to Seller, Customer may remove 5ESS(R) Switch
Software or optional feature packages, which Customer has the right to Use under
this Agreement from one Customer-owned 5ESS(R) Switch Product and relocate them
to another Customer-owned 5ESS(R) Switch Product within the same company as
Customer. Customer shall not be required to pay additional right-to-use fees as
a result of such relocation, except where size sensitive units are a factor.
Seller may charge Customer for services requested by Customer in support of such
relocation. Such Software shall not be used or transferred to Customer's
affiliate that is a manufacturer of telecommunication products in direct
competition with Seller.

(c)  If Seller ceases to maintain a standard, supported version of Software for
the 5ESS(R) Switch Product furnished pursuant to this Agreement, and these
support services are not available from another entity (either working with or
independently from Seller), then Seller shall furnish Customer, under a
confidentiality agreement acceptable to Seller, Seller's then existing Software
Source Code, Software development programs, and associated documentation for
such standard version to the extent necessary for Customer to maintain and
enhance for its own use the standard version of that Software which it has the
right to use under this Agreement.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      20
<PAGE>

                                                                LNM980716RMPT

                               3.   ARTICLE III

     PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND OTHER SERVICES

     GENERAL:  The provisions of this Article III shall apply to the Services
ordered by Customer and furnished by Seller under this Agreement.

3.1   SITE REQUIREMENTS:

(a)  Customer is solely responsible for ensuring that the installation site is
compliant with any site requirements identified by Seller for the installation
and/or operation of any Products, Licensed Materials, or Services furnished by
Seller under this Agreement. Such site requirements shall include, without
limitation, those site requirements set forth in this Section 3.1 below. Seller
agrees to cooperate with Customer to ensure compliance with all site
requirements, provided that such cooperation shall not require Seller to incur
any out-of-pocket costs unless the parties expressly agree otherwise in writing.

(b)  Customer shall be solely responsible for ensuring that the installation
site complies with all applicable laws, orders, and regulations of federal,
state and local governmental entities including, without limitation, those
relating to environmental conditions.

(c)  Notwithstanding anything contained in this Agreement to the contrary,
Seller shall have no liability to Customer, its employees, agents, and customers
for any delay by Seller in completion of any installation or other Service to be
provided by Seller under this Agreement if such delay is attributable to the
failure by Customer to comply with any site requirements or to provide any other
items which are the responsibility of Customer under this Article III.

(d)  The site requirements which are solely the Customer's responsibility shall
include but are not limited to the following:

     (i)    Participate in a joint site survey with Seller
     (ii)   Interior Space -Clears ten feet (10') from floor to bottom of lowest
            obstruction
     (iii)  Floor Loading(minimum requirements) Structural Analysis always
            required
     (iv)   Power Room 150 lb. per sq. ft
     (v)    Switch Room 100 lb. per sq. ft.
     (vi)   Floor Thickness: In accordance with local seismic requirements for
            the equipment
     (vii)  Conduit access to all floors in building
     (viii) Local exchange carrier cable available
     (ix)   Commercial electrical current
     (x)    Existing building grounding is 5 ohm or less metered
     (xi)   Battery room ventilation in accordance with local requirements
     (xii)  Fire suppression system
     (xiii) Freight access for a 48' trailer off loading equipment.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      21
<PAGE>

                                                                LNM980716RMPT

3.2   ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER:

(a)  Customer will also be responsible for furnishing the items described in
this Section 3.2 as required by the conditions of the particular installation or
other on-site Service at no cost to Seller and such items are not included in
Seller's price for the Services. Seller shall have the right to invoice Customer
for any costs or expenses incurred by Seller as a result of Customer's failure
to provide any of these items described in this Section 3.2 and all such
invoices shall be paid by Customer in accordance with this Agreement.

     (i)    Access to Building and Work Site   Customer shall provide employees
            --------------------------------
            of Seller and its subcontractors free access to premises and
            facilities at all hours during the scheduled Service or at such
            other times as are reasonably requested by Seller. Customer shall
            obtain for Seller's employees and its subcontractors' employees any
            identification and clearance credentials which are necessary to
            enable Seller and its subcontractors to have access to the work
            site.

     (ii)   Site Coordination   At Seller's request Customer shall coordinate
            -----------------
            with Customer's sub contractors, property managers, Regional Bell
            Operating Company, Local Exchange Carrier and any other parties and
            tenants having rights to the work site or whose participation is
            necessary in order for Seller to perform the applicable Services.

     (iii)  Environmental Conditions  Prior to the Services start date,
            ------------------------
            Customer shall insure that the premises will be dry and free from
            dust and Hazardous Materials, including but not limited to asbestos,
            and that the premises are in such condition as not to be injurious
            to Seller's or its subcontractors' employees or to the Products and
            Licensed Materials to be installed. Prior to Services start date and
            during the performance of the Services, Customer shall, if requested
            by Seller, provide Seller with sufficient data to assist Seller and
            its subcontractors in evaluating the environmental conditions at the
            work site (including without limitation, the presence of Hazardous
            Materials). The price quoted by Seller for Services does not include
            the cost of removal or disposal of the Hazardous Materials from the
            work site. Customer is responsible for the removal and disposal in
            accordance with applicable laws, rules and regulation of the
            Hazardous Materials, including but not limited to asbestos, prior to
            commencement of Services.

     (iv)   Sensitive Equipment  Prior to the Services start date, Customer
            -------------------
            shall inform Seller of the presence of any sensitive equipment at
            the work site (e.g., equipment sensitive to static electricity or
            light).

     (v)    Repairs to Buildings   Prior to the Services start date, Customer
            --------------------
            shall make such alterations and repairs to the work site as are
            necessary for proper installation of Products and Licensed
            Materials.

     (vi)   Building Readiness   Prior to the Services start date, Customer
            ------------------
            shall provide extraordinary hauling and hoisting services such as,
            rigging or crane services, if applicable, and shall arrange for
            traffic control, if necessary for the delivery of Products.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      22
<PAGE>

                                                                LNM980716RMPT

     (vii)  Openings in Buildings - Customer shall furnish suitable openings in
            ---------------------
            buildings, including, without limitation, elevators and windows as
            needed to allow Products to be placed in position, and shall provide
            necessary openings and ducts for cable and conductors in floors and
            walls as designated on engineering drawings furnished by Seller.
            Customer shall fireproof (with steel covers and as otherwise
            required by applicable laws, rules, regulations, and codes) all
            unopened paths throughout such buildings.

     (viii) Surveys   Prior to the Services start date, Customer shall provide
            -------
            to Seller (and, if requested by Seller, to Seller's subcontractors)
            surveys (describing the physical characteristics, legal limitations,
            and utility locations for the work site) and a legal description of
            the site.

     (ix)    Electrical Current, Heat, Light, and Water   Customer shall, in
             ------------------------------------------
             amounts no less than that ordinarily furnished for similar purposes
             in a working office, provide electric power, run all leads to
             Seller's power board; provide temperature control and general
             illumination (regular and emergency) in rooms in which services are
             to be performed or Products stored, provide exit lights; and
             provide water and other necessary utilities for the proper
             execution of Services.

     (x)     Building Evacuation   Prior to the Services start date, Customer
             -------------------
             shall provide building evacuation plans in case of a fire or other
             emergency.

     (xi)    Ceiling Inserts   Provide ceiling inserts as required using\
             ---------------
             Seller's standard spacing arrangement for ceiling support
             equipment.

     (xii)   Material Furnished by Customer   Unless expressly stated to the
             ------------------------------
             contrary, Seller's prices do not include costs for any Customer
             furnished material nor do they include any Seller charges for
             engineering, installation, modification, or repair Services to
             Customer furnished material. New or used material furnished by
             Customer shall be in such condition that it requires no repair and
             no adjustment or test effort in excess of that normal for new
             equipment. Customer assumes all responsibility for the proper
             functioning of such material. Customer shall also provide the
             necessary technical assistance and information for Seller to
             properly install such material.

     (xiii)  Floor Space and Storage Facilities   Customer shall provide, for
             ----------------------------------
             the duration of Services, suitable and easily accessible floor
             space and storage facilities to permit storing of Products and
             other material, tools and other property of Seller and its
             subcontractors in close proximity to where they will be used. Where
             the Services are to be performed outside of a building or in a
             building under construction, Customer shall, in addition to the
             above requirements, permit or secure any necessary permission for
             Seller and its subcontractors to maintain at the work site, storage
             facilities for Products, material, tools, and equipment needed to
             complete the Services. As appropriate Customer shall provide
             Seller's and its subcontractors' personnel access to toilet
             facilities.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      23
<PAGE>

                                                                LNM980716RMPT

     (xiv)   Easements, Permits, and Rights of Way   Customer shall secure prior
             -------------------------------------
             to the Services start date and shall maintain for the duration of
             the Services all rights-of-way, easements, licenses, and permits
             and such other rights and approvals as are necessary to enable
             Seller to perform the Services including, without limitation, all
             construction and building permits for work to be performed at the
             work site and other areas ancillary to the work site such as
             sidewalks, streets, alleys, and highways.

     (xv)    Security Service   Customer shall provide such levels of security
             ----------------
             as are necessary to prevent admission of unauthorized persons to
             building and other areas where installation Services are performed
             and to prevent unauthorized removal of the Products and other
             materials. Seller will inform Customer as to which storage
             facilities at the work site Seller will keep locked. Such storage
             facilities will remain closed to Customer's building surveillance.

     (xvi)   Access to Existing Equipment   Customer shall permit Seller
             ----------------------------
             reasonable use of such portions of the existing equipment as are
             necessary for the proper completion of such tests as require
             coordination with existing equipment. Such use shall not interfere
             with the Customer's normal maintenance of equipment.

     (xvii)  Grounds   Customer shall provide access to suitable and isolated
             -------
             building ground as required for Seller's standard grounding of
             equipment. Where installation is performed outside or in a building
             under construction, Customer shall also furnish lightning
             protection ground.

     (xviii) Requirements for Customer Designed Circuits   Customer shall
             -------------------------------------------
             furnish information covering the proper test and readjust
             requirements for apparatus and shall furnish requirements for
             circuit performance associated with circuits designed by Customer
             or standard circuits modified by Customer's drawings such as alarm
             and environmental circuits.

     (xix)   Cross-Connecting Main Distributing Frames and Installing Heat Coils
             -------------------------------------------------------------------
             Customer shall install such cross-connections and heat coils as are
             necessary in connection with the Services.

     (xx)    Clearing Equipment for Modifications   Customer shall remove cross-
             ------------------------------------
             connections, transfer service on trunks and sundry working
             equipment, and make other arrangements required to permit Seller to
             modify existing equipment.

(b)  In the event the joint site survey conducted by the parties pursuant to
Section 3.3.2(a) determines that the necessary requirements are not met at the
commencement of the installation of the Products and the Customer needs to
arrange for alterations and/or repairs, the order will be placed on hold until
such time as requirements are met. During such interval, Seller reserves the
right to determine any schedule and price impacts, to treat such product as Bill
and Hold, or to cancel such order. Customer shall be responsible for and agrees
to pay the applicable cancellation fee if such order is canceled by Seller.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      24
<PAGE>

                                                                LNM980716RMPT

3.3  ITEMS TO BE FURNISHED BY SELLER

3.3.1  ENGINEERING:

(a)      General Review  Seller will review the following items as Seller deems
         --------------
appropriate; switching Products (Products and Software); transmission Products
(Products and Software); power/energy equipment hardware; engineering drawings;
site survey; grounding of the switch; appliance outlets; front and rear aisle
lighting as required; timing cables; distributing frame engineering and
equipment; cable rack and hardware; stanchions; end guards auxiliary framing;
existing cable holes; fiber cable protection systems.

(b)      Needs Analysis  Seller will perform a needs analysis of the Telephone
         --------------
Equipment Order (TEO) and the Customer's specified requirements to determine the
equipment solution that meets those requirements.

(c)      Records  Upon Installation Complete, Seller will turn over to Customer
         -------
a complete set of records. Such records include but are not limited to wiring
lists, front equipment drawings, assignment drawings, and interface schematics.

3.3.2  INSTALLATION:

(a)      Site Survey   Prior to the commencement of installation Services,
         -----------
Seller and Customer will perform a joint site survey to determine whether the
installation site meets the site requirements referenced in Section 3.1 and
whether Customer has provided the items in Section 3.2. Should Seller determine
that the site does not comply with such site requirements or that Customer has
not provided any item required under Section 3.2, Seller shall specify such
deficiencies to Customer in writing. Seller and Customer shall jointly agree on
a course of action to correct such deficiencies prior to the start of
installation Services. During the joint site survey, Seller and Customer shall
also jointly agree upon the layouts and arrangements for the Products and
Licensed Materials to be installed. Upon the start of installation all changes
shall be subject to additional charges.

(b)      Method of Procedure   Seller shall prepare a detailed Method of
         -------------------
Procedure ("MOP") and review with Customer before starting work. Customer shall
review the MOP prepared by Seller and shall give Seller written acceptance of
the MOP by signing a copy thereof prior to the Services start date. Any changes
to the MOP requested by Customer shall be agreed upon subject to the Change
Order process.

The MOP shall contain the following details:

         (i)   A concise statement that covers the installation Services to be
               performed including the equipment that will be affected and the

         (ii)  Specific responsibilities of Seller and Customer;
         (iii) Service protection procedures that include, general service
               protection rules and special service precautions for the specific
               project;
         (iv)  A time and release schedule of the work operations involving
               working equipment and/or circuits in service and;
         (v)   A method of identifying equipment and cabling to ensure that the
               circuits are "cleared" before start of work

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      25
<PAGE>

                                                                LNM980716RMPT

         (vi)    A detailed account of the work operations that the installer
                 will follow
         (vii)   The methodology to be used to halt installation Services if
                 trouble occurs and a general procedure to correct/resume work
                 operations;
         (viii)  Provide environmental safety concerns, if applicable;
         (ix)    Obtain Customer signature.

(c)       Warehousing, Delivery, Receipt & On-site Storage of Equipment, and
          ------------------------------------------------------------------
General Cleaning   Seller will stage the delivery of Products. Seller's
----------------
personnel will be on-site at the time the Products are delivered. Such personnel
will accept the Products, unpack for inventory purposes and inspect such
Products for damage. Seller will resolve all shipping errors inventory
discrepancies and damage issues. This function shall be performed in an area
previously designated for the storage and unpacking of equipment and Product(s).
Such area will be selected based on a location that minimizes movement of
material and personnel through the work site. In the event storage is limited or
inadequate, as determined by Seller, temporary storage facilities such as
trailers or containers may be required. Any fees associated with the procurement
of temporary storage facilities are not included in Seller's quoted prices and
shall be solely the responsibility of the Customer. Materials such as plywood or
masonite will be utilized as necessary, to prevent cable reels, iron work and
other heavy objects from damaging floors, walls and doors. Seller shall perform
general cleaning of the equipment and storage areas (e.g. clearing floors of
debris, packing material, etc.) on a regular basis throughout the installation
period. Rubbish shall be disposed of at Seller's expense and in compliance with
local requirements.

(d)       Hardware Assembly   Hardware assemblies and overhead cable rack, iron
          -----------------
work and conduit (collectively "Components") will be delivered for specific bays
and cabinets as identified in the firm price quote provided or in the Statement
of Work, attached hereto. Unless included in the SOW, additions of these
components to provide access to other locations (i.e. power rooms, computer
rooms, distributing frames not located with Products, or Products located on
separate floors) will be specifically excluded from the installation Services.
Such additions will only be included in the installation Services for an
additional charge. Seller will place and secure all ordered Products in the
location specified in the engineering specifications. Such activity includes but
is not limited to:

         (i)     Mark and drill floors
         (ii)    Assemble and place floor mounted Products
         (iii)   Assemble distribution frames
         (iv)    Erect frames
         (v)     Align and junction frames
         (vi)    Install end guards and covers
         (vii)   Assemble and install fiber protection ductwork
         (viii)  Mount units and apparatus
         (ix)    Place batteries

          Seller will also erect supporting hardware compatible with purchased
Products. Such activity includes but is not limited to:

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      26
<PAGE>

                                                                LNM980716RMPT

         (i)   Fabricate and install cable racks, bars, rod or stations as
               identified in Statement of Work attached hereto
         (ii)  Erect ladder rack and ladders
         (iii) Open and close existing cable holes and slots.  Any new cable to
                              --------
               facilitate Products designs the responsibility of the Customer
         (iv)  Fabricate and install framing aisle lighting conduit and fittings

          In addition, Seller will place and designate connecting appliances
(MDF terminal blocks, DSX panels, etc.) provided with order. Such as but not
limited to:

         (i)   Stamp and/or affix aisle, shelf and unit designations
         (ii)  Mount and stencil terminal strips

          Seller will also extend lighting, AC circuits and grounding to include
added Products if Products are ordered in Statement of Work.  Such activities
include but are not limited to:

         (i)   Assemble and install lighting fixtures
         (ii)  Install switches and receptacles

(e)       Cable and Wire   For cable and wire to be installed by Seller, Seller
          --------------
will run, tag, and secure metallic and fiber optic cables in an unobstructed
environment a maximum of one hundred (100) feet and power cables a maximum of
fifty (50) feet for the Products and apparatus (this specifically excludes
primary power cables, except on power equipment orders) identified in the
Product order or Statement of Work attached hereto. Seller will wire, attach,
terminate and affix all cable and wire including fiber optic cables supplied
with purchased Products. This may include but is not limited to mechanical wire
wrapping, soldering, crimping, plugging in of pre-terminated cables or polishing
of fiber optics for purchased Product. Seller will run alarm cabling, terminate
and test for the identified equipment including Customer provided environmental
scan points of fire detection and door entry which are less than fifty (50) feet
away and pre-terminated. Seller will verify all copper wiring placed by the
Seller for continuity to detect and analyze opens, shorts, reversals, and
incorrect wiring. Where pairs, quads or groupings are indicated, the grouping
will be verified. Seller will ensure the functionality and integrity of all
fiber directly associated with the installed Products and the fiber optic cables
installed by Seller within the building structure. Seller will "Dress" all
cabling and wiring and provide physical protection. Seller will properly protect
cables at all "break-off" locations, such as the vertical turns from the
overhead cable rack to bay frame work.

(f)       Testing   Specific test procedures are dependent upon the type of
          -------
Product installed and are identified in the installation guide for the
particular Product. To ensure that technical design and performance criteria are
being met, testing shall be performed by Seller to obtain an evaluation of the
functional, operational, electrical and mechanical integrity of all Products
installed by Seller. In general the following tests are required for all Product
types furnished and installed by Seller: Seller's activities associated with
testing will include, but not be limited to the following:

         (i)   Turn on and verify power to installed Products

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      27
<PAGE>

                                                                LNM980716RMPT

         (ii)    Load product software and default parameters required to
                 conduct local unit loop-back testing to demarcation points.
         (iii)   Run and connect test specific cross-connects. Remove upon
                 completion of test(s).
         (iv)    Perform all unit and system-level tests to ensure Products pass
                 system and technician evoked diagnostics
         (v)     Test functionality of circuit packs required by job, at time of
                 original installation, within the installed unit. Testing of
                 spares is specifically excluded and will be included only for
                 an additional charge.
         (vi)    Test functionality and integrity of Seller installed local
                 alarms.
        (vii)    Resolve troubles encountered with Products purchased on order.
                 Refer to Customer any trouble found in Customer provided
                 equipment.
         (viii)  Maintain test logs and trouble reports and turn over to
                 Customer.

(g)       Seller will perform the following Turnover procedures for all
installation Services provided by Seller:

         (i)     Inform Customer of completion of installation cycle.
         (ii)    Provide Customer with all drawings, invoices, logs and test
                 results per the contract.
         (iii)   Remove from Customer premises tools and scrap generated from
                 installation effort.
         (iv)    Issue job completion notice to Customer.

3.4  ACCEPTANCE

(a)       All installation Services shall be considered complete and ready for
acceptance by Customer on Turnover. Upon completion of the installation, Seller
will submit to Customer a notice of completion or, if Customer has elected
advance-turnover of subsystems, a notice of completion of advance-turnover.

(b)       Customer shall promptly make its final inspection of substantial
conformance with the Specifications and do everything necessary to expedite
acceptance of the job. Seller will promptly correct any defects for which it is
responsible. All work will be considered as fully accepted unless Seller
receives notification to the contrary within thirty (30) days after submitting
its notice of completion. Notwithstanding the foregoing, Customer shall be
deemed to have accepted any Products and Licensed Materials upon the placement
of the same into service.

3.5  WORK OR SERVICES PERFORMED BY OTHERS:

          Work or services performed at the site by Customer or its other
vendors or contractors shall not interfere with Seller's performance of
Services. Seller shall have no responsibility or liability with respect to such
work or services performed by others. If Customer or its other vendors or
contractors fail to timely complete the site readiness or if Customer's or its
other vendors' or contractors' work interferes with Seller's performance, the
scheduled completion date of Seller's Services under this Agreement shall be
extended as necessary to compensate for such delay or interference.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      28
<PAGE>

                                                                  LNM980716RMPT

                                4.  ARTICLE IV

                               ENTIRE AGREEMENT:
4.1  ENTIRE AGREEMENT

          The terms and conditions contained in this General Agreement supersede
all prior oral or written understandings between the parties with respect to the
subject matter hereof and constitute the entire agreement between the parties
with respect to such subject matter. The preprinted terms and conditions on
Customer's purchase orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an order which are consistent with the terms of this
General Agreement along with the terms of this General Agreement shall
constitute the entire Agreement between the parties relating to said order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date(s) indicated.

PaeTec Communications, Inc.             Lucent Technologies Inc.

By: /s/ Richard E. Ottalagana            By: /s/ Gerard T. Cafaro
    --------------------------------         ---------------------------------

Name: Richard Ottalagana                 Name:   Gerard T. Cafaro
     _______________________________           _______________________________

Title: Exec. Vice President              Title:  AVP
      ______________________________            ______________________________

Date:      8-11-98                       Date:      8/17/98
     _______________________________           _______________________________

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      29
<PAGE>

                                                                   LNM980716RMPT

                                                                       EXHIBIT 1
                               STATEMENT OF WORK

                            IMPLEMENTATION SCHEDULE

          The parties recognize that the following milestones must be met in
order to keep the project on schedule.  Each party agrees to adhere to this
schedule and in the event a circumstance arises that will cause a delay the
party knowledgeable of the delay will notify the other party and the schedule
will be adjusted accordingly.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
          Milestone                   Stakeholder             Expected Completion Date
------------------------------------------------------------------------------------------
<S>                                   <C>                     <C>
Develop Implementation Plan
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Identify Project Site
------------------------------------------------------------------------------------------
Receive Customer Purchase
 Order
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Site Ready
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Switch Software Questionnaire
 Complete
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Installation and Testing
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Turnover/Acceptance
------------------------------------------------------------------------------------------
</TABLE>

If separately ordered by Customer the following will be included in the
implementation.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
          Milestone                   Stakeholder             Expected Completion Date
------------------------------------------------------------------------------------------
<S>                                   <C>                     <C>
------------------------------------------------------------------------------------------
Network Planning
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Cutover
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Monitor
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Maintenance
------------------------------------------------------------------------------------------
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      30
<PAGE>

                                                                   LNM980716RMPT

                                                                       EXHIBIT 2

                                               INVOICE NUMBER___________________
                                               INVOICE DATE_____________________
[LOGO OF LUCENT TECHNOLOGIES]                  ACCOUNT NUMBER___________________
                                               PAGE NUMBER______________________

SHIP TO:                                BILL TO:

<TABLE>
<CAPTION>
       ---------------------------------------------------------------------------------------------------------
        CUSTOMER P.O. #        LUC REFERENCE #   CUSTOMER CODE      TERMS            CONTRACT #         FOB
       ---------------------------------------------------------------------------------------------------------
ITEM   LUCENT                           BILL OF                                 QUANTITY    QUANTITY
 NO.    ORDER    SHIP DATE   SHIP METH  LADING #     PART NUMBER/DESCRIPTION     ORDERED     SHIPPED  UNIT PRICE  PM   TOTAL PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>    <C>       <C>         <C>        <C>          <C>                        <C>         <C>       <C>         <C>  <C>
  1    J7888KK     2/2/00                                  5ESS Material                        1      $[_______]   E    $[_______]

  2    J7888KK     2/2/00                                      Spares                           1      $[_______]   E    $[_______]

  3    J7888KK     2/2/00                                   Engineering                                $[_______]        $[_______]

  4    J7888KK     2/2/00                                   Installation                               $[_______]        $[_______]

  5    J7888KK     2/2/00                                  Transportation                              $[_______]        $[_______]

------------------------------------------------------------------------------------------------------------------------------------

                                                                                                               SUBTOTAL  $[_______]
                                     -----------------------------                                                      ____________
QUESTIONS ABOUT YOUR ACCOUNT?        MAKE CHECK PAYABLE TO:        INVOICES ARE PAYABLE            LESS ADVANCE PAYMENT  $[_______]
                                                                                                                        ____________
CALL:                                Lucent Technologies Inc.      IN U.S. CURRENCY AND                  TRANSPORTATION  $[_______]
                                                                                                                        ____________
                                     P.O. Box 100317               OVERDUE AMOUNT SHALL                             TAX
                                                                                                                        ____________
REMARKS                              Atlanta, GA 30384-0317        BEAR INTEREST AT A REASONABLE              TOTAL DUE  $[_______]

                                     Attn: Accounts Receivable     RATE OR IS SUBJECT TO LATE
                                     -----------------------------
                                                                   PAYMENT CHARGES PER AGREEMENT
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      31
<PAGE>
                                                       EXHIBIT 10.28 (Continued)

                                                       LNM980824RMPT

                              ADDENDUM NUMBER ONE

                 5ESS(R)-2000 SWITCH AND TRANSMISSION SYSTEMS

                              PURCHASE AGREEMENT

                     BETWEEN PAETEC COMMUNICATIONS, INC.,

                         AND LUCENT TECHNOLOGIES INC.

This 5ESS(R)-2000 Switch and Transmission Systems Product Purchase Agreement
(hereinafter "Addendum") is made effective as of the Sept. 16 1998 ("Effective
Date"), by and between PaeTec Communications, Inc., a Delaware corporation with
offices located at 290 Woodcliff Drive, Fairport, NY 14450 (hereinafter
"Customer"), and Lucent Technologies Inc., a Delaware corporation, acting
through its Global Service Provider Group (formerly Network Systems Group), with
offices located at 600 Mountain Avenue, Murray Hill, New Jersey 07974,
(hereinafter "Seller").

WHEREAS, PaeTec Communications, Inc. and Seller have entered into a certain
General Agreement, Agreement #LNM980716RMPT, (the "General Agreement") effective
June 17, 1998, setting forth the terms and conditions pursuant to which Seller
agreed to supply and Customer agreed to procure certain Lucent Products,
Licensed Materials or Services (as such terms are defined therein); and

WHEREAS, Customer and Seller desire to establish in this Addendum discounts, and
additional terms and conditions applicable to Customer's purchase and/or license
for use, as appropriate, of certain of Seller's 5ESS(R)-2000 Switching Systems,
Transmission Systems and related Licensed Materials and Services and
Communications Software Products during the term of this Addendum, as set forth
below,

NOW THEREFORE, in consideration of the mutual promises hereinafter set forth and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

A-1.1  SCOPE OF ADDENDUM

Notwithstanding anything to the contrary contained within the General Agreement,
this Addendum shall govern any purchase order placed by Customer during the Term
for Seller's 5ESS-2000 Switching Systems, Transmission Systems, Power Systems,
Communications Software Product, and Network Product Group Products and related
Licensed Materials and Services.  This Addendum is issued pursuant to and
incorporates the non-conflicting terms and conditions of the General Agreement.
In the event of any conflict or inconsistency between the terms of this Addendum
and the terms of the General Agreement, the terms of this Addendum shall
prevail.

The terms and conditions of this Addendum shall apply to all transactions in
which Seller furnishes Products, Licensed Materials or Services provided by its
Global Service Provider Group to Customer, or to any Affiliate or authorized
Associated Entity (as hereinafter defined) of Customer, it being the intent and
understanding between the parties that said Affiliates or authorized Associated
Entity shall be authorized to procure Products, Licensed Materials and Services
from Seller under and pursuant to the terms and conditions of the Addendum,
provided, however that the Affiliates or authorized

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       1
<PAGE>

                                                                   LNM980824RMPT

Associated Entity shall each additionally be subject to meeting Seller's credit
requirements prior to the placement of any orders. In addition, said Affiliates
or authorized Associated Entities shall not include competitors of Seller
engaged in the business of manufacturing systems comparable to those offered to
Customer hereunder.

By virtue of placing orders with Seller or using any Products, Licensed
Materials or Services provided hereunder, Customer, or any of the Affiliates or
authorized Associated Entities agrees to be bound to the obligations and
limitations set forth in this General Agreement respecting such Products,
Licensed Materials or Services.

All Products, Licensed Materials, or Services furnished by Seller to Customer
pursuant to this General Agreement shall be for Customer, Customer's Affiliates,
or authorized Associated Entity's own internal use only and not for resale,
unless Customer (1) resells or transfers internally to its Affiliated Companies
or authorized Associated Entity for their own use, or (2) unless authorized
representatives of both parties expressly agree in writing that the terms and
conditions of the General Agreement, modified where applicable, shall apply to
resale transactions.

A-1.2  DEFINITIONS

For the purpose of this Addendum, the following definitions will apply:

a)   "5ESS-2000 Switching Systems Products" means the 5ESS-2000 Switch, Growth
     and related Licensed Materials including, without limitation, Base
     Software.

b)   "5ESS-2000 Switch" means any 5ESS-2000 Host Switch system (including the
     5ESS-2000 Compact Digital Exchange ("CDX") and 5ESS-2000 Very Compact
     Digital Exchange ("VCDX")). With the exception of the VCDX, a 5ESS-2000
     Switch contains at a minimum, an Administrative Module (AM), Communications
     Module (CM), and at least one (1) switch module. Any such Switch can act as
     a host for Optically Remote Modules ("ORMs"), Remote Switch Modules
     ("RSMs") and/or Extended Switch Modules ("EXMs"). The VCDX contains a Sun
     Workstation and one (1) Switch Module.

c)   "Base Software" means the operating system and related Software, and
     operations, administration and maintenance features and functions, for all
     Seller's switch-based platforms.

d)   "Growth" means any 5ESS-2000 hardware or software not purchased with the
     associated 5ESS-2000 Switch required to support the expansion of such 5ESS-
     2000 Switch, which may include without limitation any ORMs, RSMs, or EXMs.

e)   "List Price" means Seller's list price in effect at the time of order
     placement.

f)   "Switch Module/Switch Module 2000 (SM2000)" means a Module Control/Time
     Slot Interchange Unit along with a number of Peripheral units and related
     Software added to an embedded 5ESS-2000 Switch or to an existing RSM site.

g)   "Peripherals" means hardware and/or Software extensions added subsequent to
     the installation of the initial 5ESS-2000 Switch, or Switch Module/Switch
     Module 2000.

h)   "Transmission Systems Products" means a DDM-2000 OC-1 Fiber Reach
     Multiplexer, DDM-2000 OC-3 Multiplexer, DDM-2000 OC-12 Multiplexer, SLC(R)-
     2000 Access System, SLC(R)-2000 MSDT, SLC(R)-Series 5 Carrier System, FT-
     2000 OC-48 Lightwave, Echo Canceller, DACS IV -2000,

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       2
<PAGE>

                                                                   LNM980824RMPT

     DACS II, Millennia ADM 155C, AnyMedia Fast, SLC Connect Reach, and SLC Line
     Reach and any related Licensed Materials and any other Transmission Systems
     Products as may be added based upon the mutual written agreement of both
     parties prior to order placement.

i)   "Communications Software Products" for the purpose of this Addendum means
     Seller's NOC1, BILLDATS and ConnectVu products and any other Communications
     Software Products as may be added based upon the mutual written agreement
     of both parties.

j)   "Network Product Group Products" means Seller's optical
     products/connectivity solutions and network power products furnished by
     Seller's Network Products Group.

k)   "Private Branch Exchange (PBX) Systems Products" means Seller's PBX Systems
     Products (e.g. DEFINITY(R)) and voice mail products furnished by Seller's
     Business Communications Systems Group.

A-1.3     TERM OF ADDENDUM

This Addendum shall be coterminous with the General Agreement, unless earlier
terminated as provided by this Addendum or the General Agreement, and shall
remain in effect for so long as the General Agreement remains in effect.

A-1.4     STATEMENTS OF WORK

At Customer's request, Seller will provide pricing on a firm price quote basis
for Seller's Communications Software Products.  Such pricing shall be pursuant
to separate Statements of Work to be developed and mutually agreed upon by both
parties.  All deliverables and their due dates related to such Communications
Software Products shall be set forth, along with all fees, costs and related
expenses in the Statements of Work.  Executed Statements of Work and any changes
thereto shall be in writing and made part of this Addendum.

A-1.5     ASSOCIATED ENTITY ORDERS

Subject to Seller's prior written approval, Customer's Associated Entities may
place orders pursuant to the terms and conditions of the General Agreement.
Associated Entity as used herein shall mean any corporation, partnership or
venture in which Customer has a minority ownership interest, or any other entity
as may be added based upon the mutual written agreement of both parties.  Star
Telecommunications Inc. maybe added based upon the mutual written agreement of
both parties.  Such corporation shall be deemed to be an Associated Entity of
such Customer only as long as such ownership interest exists.

Seller will review Customer's prospective Associated Entities submitted by
Customer in accordance with, but not limited to, Seller's then-current credit
approval process. Seller agrees not to unreasonably withhold approval of such
Associated Entities. Seller also agrees that the 5ESS-2000 Switch paid purchases
of an Affiliate or Associated Entity received by Seller during the Term shall
count towards the satisfaction of the Purchase Commitment, set forth in the
Section entitled "Customer's Purchase Commitment."

A-1.6     TERMS OF DISCOUNT

Any purchase orders placed pursuant to this Addendum shall reference Contract
Number  LNM980824RMPT to qualify for the discounts incorporated herein.  During
the Term, all discounts shown in this Addendum are applicable to all Seller's
Products, and related Licensed Materials listed herein only and are not
applicable to related Services such as engineering and installation.  Such
discounts shall be

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       3
<PAGE>

                                                                   LNM980824RMPT

applied to Seller's List Price. Discounts set forth in this Addendum will apply
to all purchase orders requiring Seller's then-current standard delivery
interval.

A-1.7     CUSTOMER'S PURCHASE COMMITMENT

(a)  In consideration for the discounts, allowances, and incentives set forth in
this Addendum, Customer agrees to directly procure from Seller a minimum of
[***] US dollars ($[***]) of Contributing Purchases (as defined below) during
the Term (the "Purchase Commitment"). In satisfaction of the Purchase
Commitment, Customer shall procure at least [***] ([***]) 5ESS-2000 Switches
during the Term.

(b)  For purposes of this Section, Contributing Purchases shall include, to the
extent not more specifically stated in subsection (a) above, all of the dollar
amounts actually received by Seller from Customer for (a) Seller's 5ESS-2000
Switching System Products, Transmission Systems Products, Network Product Group
Products, Communications Software Products, Power Systems Products and related
Licensed Materials and Services and (b) payments received by Seller's Business
Communications Systems (BCS) Group from Customer for Seller's PBX purchases and
Seller's voice mail purchases which may be procured by Customer under a separate
agreement to be negotiated by Seller's BCS Group and Customer.

(c)  If the Customer fails to meet the Purchase Commitment set forth above, then
in addition to any other rights and remedies available to Seller under this
Agreement, at law, in equity, or otherwise, then Seller may invoice and Customer
shall pay, pursuant to the terms of this Agreement, an additional price premium
to be calculated as follows:

If Customer procures at least [***] ([***]) 5ESS-2000 Switches but less than
[***] ([***]) 5ESS-2000 Switches during the Term and Customer's Contributing
Purchases total between [***] ([***]) and [***] ([***]) US dollars then,
Customer shall pay an additional price premium equal to [***] ([***]) percent of
the value of Contributing Purchases; or

If Customer procures at least [***] ([***]) but less than [***] ([***]) 5ESS-
2000 Switches during the Term and Customer's Contributing Purchases total
between [***] ([***]) and [***] ([***]) US dollars then, Customer shall pay an
additional price premium equal to [***] ([***]) percent of the value of the
Contributing Purchases; or

If Customer procures at least [***] ([***]) but less than [***] ([***]) 5ESS-
2000 Switches during the Term and Customer's Contributing Purchases total
between [***] ([***]) and [***] ([***]) US dollars then, Customer shall pay an
additional price premium equal to [***] ([***]) percent of the value of the
Contributing Purchases; or

If Customer procures at least [***] ([***]) but less than [***] ([***]) 5ESS-
2000 Switches during the Term and Customer's Contributing Purchases total
between [***] ([***]) and [***] ([***]) US dollars then, Customer shall pay an
additional price premium equal to [***] ([***]) percent of the of the value of
the Contributing Purchases; or

If Customer procures up to [***] ([***]) 5ESS-2000 Switches during the Term and
Customer's Contributing Purchases total less than [***] ([***]) US dollars then,
Customer shall pay an additional price premium equal to [***] ([***]) percent of
the of the of the value of the Contributing Purchases.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                  4
<PAGE>

                                                                   LNM980824RMPT

The provisions of this Section entitled, "Customer's Purchase Commitment," shall
survive the expiration or earlier termination of this Agreement.

A-1.8    SERVICE CONTROL POINT (SCP) MODEL PRICING

In consideration for Customer's Purchase Commitment as set forth in the Section
entitled "Customer's Purchase Commitment", Seller will provide Customer with
the following pricing for Seller's Service Control Point (SCP) Model purchased
directly from Seller during the Term.  Such pricing shall be based upon the SCP
Model configuration set forth in Appendix C attached hereto and made a part of
this Addendum.

                     SERVICE CONTROL POINT MODEL PRICING**

<TABLE>
<CAPTION>
-------------------------------------------------------------------
DESCRIPTION                                           Total Price
-------------------------------------------------------------------
<S>                                                     <C>
SCP Hardware and Software                               $[***]
-------------------------------------------------------------------
Service Management System (SMS) RTU & Hardware           [***]
-------------------------------------------------------------------
Flexible Network Routing 1 & 2 service                   [***]
-------------------------------------------------------------------
Engineering                                              [***]
-------------------------------------------------------------------
Installation                                             [***]
-------------------------------------------------------------------
Advance Toll Free RTU Fee                                [***]
-------------------------------------------------------------------
Total Gross Price                                        [***]
-------------------------------------------------------------------
Less: Discount                                           [***]*
-------------------------------------------------------------------
Net Total Price                                         $[***]
-------------------------------------------------------------------
</TABLE>
*[***].

**Pricing is valid only for [***] ([***]) days from [***].

Additional SCP purchases during the Term shall be based on a discount of [***]
per cent ([***]%) off the then current List Price. Any deviations from such
configuration and the pricing related to such deviation shall be mutually agreed
to in writing between the parties prior to order placement and shall be priced
on a firm price quote basis.

A-1.8.1   SERVICE CONTROL POINT (SCP) GROWTH PRICING

In consideration for Customer's Purchase Commitment as set forth in the Section
entitled "Customer's Purchase Commitment," Seller will further provide Customer
with the following growth pricing to [***] the SS7 linkage of the SCP from [***]
([***]) to [***] ([***]) SS7 links for [***] ([***]) US dollars. This pricing is
based on a [***] per cent ([***]%) discount off the then current List Price.
Engineering and Installation costs are not included in this price.

Following are the components of the $[***] quote for each SCP:

([***])[***]
([***])[***]
([***])[***]
([***])[***]
[***]

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       5
<PAGE>

                                                                   LNM980824RMPT

A-1.9    PRICING PLAN FOR POWER PRODUCTS

In consideration for Customer's Purchase Commitment as set forth in the Section
entitled "Customer's Purchase Commitment," Seller will provide the following
discounts off the List Price for all purchases of Seller's Power products made
by Customer directly from Seller during the Term.

     Manufactured Products          [***]%

     Purchased Products ([***])     [***]%

A-1.10   ANNUAL FORECAST

Within thirty (30) days of the execution date of this Addendum, Customer will
submit in writing a quarterly forecast of its planned purchases of Seller's
5ESS-2000 Switching and Transmission Systems Products and/or related Licensed
Materials and Services.  Such forecasts shall include type(s), quantities,
locations and other information as mutually agreed to by the parties.  The
forecasts will be updated quarterly, and shall provide a twelve (12) month
rolling view of all prospective purchases by month.  Customer will submit such
forecasts to Seller's Account Manager at the following address:

               Greg Spanellis, Account Manager
               Lucent Technologies Inc.
               Room 4K508
               101 Crawfords Corner Road
               Holmdel, NJ 07733 U S

Customer will designate upon execution of this Addendum an authorized
representative to coordinate the ordering and distribution of Products and
related Licensed Materials and to interface with Seller's Account Manager as
needed.

A-1.11   PRICING PLAN FOR 5ESS(R)-2000 PRODUCTS

In consideration for Customer's Purchase Commitment as set forth in the Section
"Customer's Purchase Commitment" Seller will provide the following discounts as
described herein off the List Price for all purchases of the following products
made by Customer directly from Seller during the Term:

     A-1.11.1    DISCOUNT SCHEDULE FOR 5ESS(R)-2000 SWITCH PRODUCTS

<TABLE>
<CAPTION>
 -------------------------------------------------------------------------------------------------------
      PRODUCT TYPE             INITIAL SWITCH          DISCOUNTS FOR GROWTH          DISCOUNTS FOR
                                  DISCOUNTS           SM-2000 SWITCH MODULES       PERIPHERAL GROWTH
-------------------------------------------------------------------------------------------------------
<S>                            <C>                    <C>                          <C>
5ESS(R)-2000 Switch                 [***]%                     [***]%*                    [***]
-------------------------------------------------------------------------------------------------------
RSM/ORM/EXM                         [***]%                     [***]                      [***]
-------------------------------------------------------------------------------------------------------
</TABLE>

*[***].

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       6
<PAGE>

                                                                   LNM980824RMPT

     A-1.11.2    GROWTH DISCOUNTS FOR CUSTOMER DESIGNATED PERIODS

In addition to the above discounts, for each 5ESS(R)-2000 Switch purchased
hereunder, a growth discount of [***] percent ([***]%) shall apply to orders for
subsequent Growth and Peripheral Growth of said Switch received during any [***]
([***]) Customer designated [***] ([***]) [***] periods during the Term. Orders
received for Growth and Peripheral Growth outside of such designated periods
shall be priced in accordance with the discounts contained within the Section
entitled, "Discount Schedule for 5ESS(R)-Switch Products."

For each RSM/ORM/EXM purchased hereunder, a growth Discount of [***] percent
([***]%) shall apply to orders for subsequent Growth and Peripheral Growth of
said RSM/ORM/EXM Switch received during any [***] ([***]) Customer designated
[***] ([***])[***] periods during the Term. Orders for Growth and Peripheral
Growth received outside of such designated periods shall be priced in accordance
with the discounts contained within the Section entitled, "Discount Schedule for
5ESS(R)-Switch Products."

The [***] ([***]) [***] ([***]) [***] periods referenced herein must be
designated in writing by the Customer at the time of order placement and the
commencement of such periods can only begin after Turnover of the applicable
5ESS-2000 Switch.

     A-1.11.3    PRICING PLAN FOR 5ESS-2000 SWITCH SOFTWARE RELEASES

For purposes of this section, the fees for Base Software releases shall mean the
Software RTU and Office Data Assembler ("ODA") fees.  The purchase by Customer
of a 5ESS-2000 Switch during the Term includes, a license (subject to the
licensing provisions of the General Agreement) to use the then-current Base
Software release. In addition, if Customer licenses each consecutive annual
generic Base Software release (after the generic release in effect at the time
of each 5ESS-2000 Switch installation), then the RTU fees for each subsequent
generic Base Software release will be fixed at [***] dollars ($[***]) per
release for the first [***] ([***]) [***] following the in-service date
(Cutover) of each 5ESS-2000 Switch. This [***] dollars ($[***]) RTU fee for the
5ESS-2000 Switch includes the generic RTU fee and Office Data Assembler
Processing but does not include any additional hardware, engineering,
installation or optional RTU feature fees. Customer will be responsible for all
engineering charges associated with each Base Software release furnished by
Seller under this Addendum.

Base Software releases shall be available to Customer in accordance with
Seller's published announcement stating when customers can order Base Software
subject, however, to Seller's then-current availability process and Seller's
standard order intervals.

     A-1.11.4    5ESS-2000 SWITCH TRAINING INCENTIVE

In consideration of Customer's Purchase Commitment and upon Seller's receipt of
a purchase order from Customer for the first 5ESS-2000 Switch, Seller will make
available to Customer up to [***] ([***]) tuition-free training days upon
execution and placement for the first switch purchase orders. The use of
training day as used herein shall mean one student day per training class.
Seller will also award to Customer [***] ([***]) additional tuition free
training days for each subsequent 5ESS-2000 Switch beyond the first switch
procured from Seller. Seller will make available to Customer [***] ([***])
additional training days for

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       7
<PAGE>

                                                                   LNM980824RMPT

RSMs, ORMs, and EXMs. Training days earned by Customer for each 5ESS-2000 Switch
shall be used within [***] ([***]) [***] prior to Turnover date or within [***]
([***]) [***] after the Turnover date of such 5ESS-2000 Switch. Customer is
responsible for all associated travel and living expenses for Customer
personnel. Seller, at its option, shall offer training regionally at Seller's
Training Centers. While Seller recommends core courses from its Customer
Training Catalog, Customer may choose from any of Seller's 5ESS-2000 Switch
related courses.

     A-1.11.5  INVENTORY CONTROL PROVISIONS FOR 5ESS-2000 SWITCHES

Seller will offer the Spares Exchange Service for 5ESS Switching Equipment (SES-
5) to address Customer's 5ESS-2000 System inventory control requirements.  SES-5
will enhance equipment maintenance by facilitating the exchange of defective
circuit packs for new or remanufactured devices in a timely manner.  This
service operates on a twenty-four-hour, seven-day-week basis, under the
following delivery services options:

<TABLE>
<S>                                                    <C>
1.  Normal Delivery Interval (2 to 7 days)             $[***] per plug-in
2.  Emergency Delivery Interval (24 hours)             $[***] per plug-in
3.  Critical Delivery Interval (less than 24 hours)    $[***] per plug-in (minimum $[***] per order)
</TABLE>

SES-5 will exchange Seller-manufactured material required to support a 5ESS-2000
Switch and the embedded 3B21 Computer for "readily returnable" material (e.g.,
circuit packs and plug-ins, but not disk or tape drives).  Customer shall not be
charged for the "readily returnable" material provided by Seller through SES-5
if the material for which it is exchanged is determined by Seller to be under
warranty.  If Seller determines such exchanged material to be out of warranty,
Customer will be billed and shall pay for the material furnished by Seller
through SES-5 based on the current SES-5 catalog price.

     A-1.11.6    TECHNICAL SUPPORT OF SELLER'S SWITCH AND TRANSMISSION SYSTEMS
                 PRODUCTS AND LICENSED MATERIALS

Seller will, in addition to its repair obligations under the "Warranty" clause
of the General Agreement, make available for purchase by Customer technical
support for Seller's Switch and Transmission Systems Products and related
Licensed Materials.  Such technical support shall be provided under mutually
agreed upon, separate technical support agreements entered into by the parties
or on a per-problem basis at Seller's prevailing rates.

Seller will, in addition to the technical support specified above, make
available for purchase by Customer post-warranty technical support. Such post-
warranty technical support shall be provided under mutually agreed upon,
separate post-warranty service contracts entered into by the parties or on a
per-problem basis at Seller's prevailing rates. Separately from such warranty or
post-warranty technical support services, Seller may offer Services designed to
enhance the operating capabilities of Customer's network or system on a billable
basis.

     A-1.11.7    FIVE FACILITY ACCESS INCENTIVE

In consideration of the Purchase Commitment set forth in the Section entitled,
"Customer's Purchase Commitment," Seller will provide Customer access to
Seller's Feature Interactive Verification Environment (FIVE) facility in Lisle,
Illinois to enable Customer to test the following to the extent relating to the
5ESS-2000 Switching Systems Products purchased under this Addendum: new features
of Seller's 5ESS-2000 Switching Systems Products, verification of new
applications and simulation of call scenarios. To the extent relating to
Seller's Switching and Transmission Systems Products

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       8
<PAGE>

                                                                   LNM980824RMPT

purchased under this Addendum, Seller may use the FIVE facility on a billable
basis to integrate other vendor's equipment for Customer-specific applications.
Such access shall be provided on a reservation basis only. Customer agrees to be
reasonable in its requests for reservations and will provide reasonable notice
of any cancellation.

A-1.12    5ESS-2000 SWITCH DOCUMENTATION

In consideration of the Purchase Commitment set forth in the Section entitled
"Customer's Purchase Commitment," and upon the receipt of a purchase order for
Customer's 5ESS-2000 Switch, Seller will make available to Customer at no charge
[***] [(***)] [***] of CD ROM documentation. In addition, Seller will provide
to Customer at no charge [***] [(***)] [***] each of the most recent text and
drawing CD-ROM or [***] [(***)] [***] to the 5ESS(R) Switch Documentation World
Wide Web Internet site for each new host/standalone Switch site. No
documentation will be provided to RSMs (Remote Site Modules) or ORMs (Optical
Remote Modules)

[***].

A-1.13    PRICING PLAN FOR TRANSMISSION SYSTEMS PRODUCTS

Seller will provide the following discounts off the List Price for all purchases
of the following products made by Customer directly from Seller during the Term.

     TRANSMISSION SYSTEMS PRODUCTS DISCOUNT SCHEDULE
     ------------------------------------------------------------------------
     TRANSMISSION SYSTEMS PRODUCTS*                              DISCOUNT
     ------------------------------------------------------------------------
     DDM-2000
     ------------------------------------------------------------------------
     DDM-2000  OC-3 BAYS/SHELVES                                  [***]%
     ------------------------------------------------------------------------
     DDM-2000  OC-3 PLUGS-INS                                     [***]%
     ------------------------------------------------------------------------
     DDM-2000  OC-3 SOFTWARE                                      [***]%
     ------------------------------------------------------------------------
     DDM-2000  OC-12 BAYS/SHELVES                                 [***]%
     ------------------------------------------------------------------------
     DDM-2000  OC-12 PLUG-INS                                     [***]%
     ------------------------------------------------------------------------
     DDM-2000  OC-12 SOFTWARE                                     [***]%
     ------------------------------------------------------------------------
     DDM-2000 FIBEREACH WIDEBAND SHELF                            [***]%
     ------------------------------------------------------------------------
     DDM-2000 FIBEREACH OC-1 PLUGS-INS                            [***]%
     ------------------------------------------------------------------------
     DDM- 2000 OC-3 & OC-12 CABLES
     ------------------------------------------------------------------------
     FT-2000                                                      [***]%
     ------------------------------------------------------------------------
     FT-2000 OC-48 BAYS/SHELVES/COMMON PLUG-INS                   [***]%
     ------------------------------------------------------------------------
     FT-2000 OC-48 HIGH SPEED OPTICS & LOW SPEED PLUG-INS         [***]%
     ------------------------------------------------------------------------
     FT-2000 OC-48 SOFTWARE                                       [***]%
     ------------------------------------------------------------------------
     FT-2000 CABLES                                               [***]%
     ------------------------------------------------------------------------
     SLC-2000 CARRIER SYSTEM:
     ------------------------------------------------------------------------
     SLC-2000 BAYS/SHELVES                                        [***]%
     ------------------------------------------------------------------------
     SLC-2000 COMMONS                                             [***]%
     ------------------------------------------------------------------------
     SLC-2000 (POTS/SPOTS)                                        [***]%
     ------------------------------------------------------------------------
     SLC-2000 (SPECIAL CHANNEL UNITS)                             [***]%
     ------------------------------------------------------------------------

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                       9
<PAGE>

                                                                   LNM980824RMPT

     ------------------------------------------------------------------------
     TRANSMISSION SYSTEMS PRODUCTS*                              DISCOUNT
     ------------------------------------------------------------------------
     SLC-2000 SOFTWARE                                            [***]%
     ------------------------------------------------------------------------
     ISDN CHANNEL UNITS                                           [***]%
     ------------------------------------------------------------------------
     SLC(R) SERIES 5 CARRIER SYSTEM:
     ------------------------------------------------------------------------
     SLC SERIES 5 BAYS/SHELVES                                    [***]%
     ------------------------------------------------------------------------
     SLC SERIES 5 COMMONS                                         [***]%
     ------------------------------------------------------------------------
     SLC SERIES 5 (POTS/SPOTS)                                    [***]%
     ------------------------------------------------------------------------
     SLC SERIES 5 (SPECIAL CHANNEL UNITS)                         [***]%
     ------------------------------------------------------------------------
     ISDN CHANNEL UNITS                                           [***]%
     ------------------------------------------------------------------------
     FIBEREACH NARROW BAND SYSTEM
     ------------------------------------------------------------------------
     NARROW BAND SHELF                                            [***]%
     ------------------------------------------------------------------------
     NARROW BAND COMMONS                                          [***]%
     ------------------------------------------------------------------------
     NARROW BAND (POTS/SPOTS)                                     [***]%
     ------------------------------------------------------------------------
     NARROW BAND (SPECIAL CHANNEL UNITS)                          [***]%
     ------------------------------------------------------------------------
     FIBERREACH CABLES                                            [***]%
     ------------------------------------------------------------------------
     MULTI-SERVICES DISTANT TERMINAL (MSDT)
     ------------------------------------------------------------------------
     MSDT TERMINAL                                                [***]%
     ------------------------------------------------------------------------
     MSDT PLUG-INS                                                [***]%
     ------------------------------------------------------------------------
     DACS IV-2000                                                 [***]%
     ------------------------------------------------------------------------
     DACS III-2000                                                [***]%
     ------------------------------------------------------------------------
     DSX-1                                                        [***]%
     ------------------------------------------------------------------------
     DSX-3                                                        [***]%
     ------------------------------------------------------------------------
     ANYMEDIA FAST 303/08
     ------------------------------------------------------------------------
     ANYMEDIA SHELF/COMMONS                                       [***]%
     ------------------------------------------------------------------------
     POTS ONLY APPLICATION PACK                                   [***]%
     ------------------------------------------------------------------------
     PROGRAMMABLE APPLICATION PACK                                [***]%
     ------------------------------------------------------------------------
     ISDN APPLICATION PACK                                        [***]%
     ------------------------------------------------------------------------
     ADSL APPLICATION PACK                                        [***]%
     ------------------------------------------------------------------------
     SLC CONNECT REACH
     ------------------------------------------------------------------------
     HARDWARE                                                     [***]%
     ------------------------------------------------------------------------
     POTS CHANNEL UNITS                                           [***]%
     ------------------------------------------------------------------------
     DATA CHANNEL UNITS                                           [***]%
     ------------------------------------------------------------------------
     SERVER CARD                                                  [***]%
     ------------------------------------------------------------------------
     SLC LINE REACH
     ------------------------------------------------------------------------
     SHELF                                                        [***]%
     ------------------------------------------------------------------------
     COMMONS                                                      [***]%
     ------------------------------------------------------------------------

*   This does not include [***]
The applicable merchandise class for Seller's Transmission Systems Products and
related Licensed Materials shall determine the applicable discount level.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      10
<PAGE>

                                                                   LNM980824RMPT

A-1.14    TRANSMISSION SYSTEMS PRODUCTS TRAINING

For each [***] dollars ($[***]) in total paid purchases of Seller's Transmission
Systems Products, Seller will provide one (1) tuition-free training day. The use
of training day as used herein shall mean one student day per training class.
Training days earned by Customer for Transmission Systems Products shall be used
within [***] ([***]) [***] after the Turnover date for such Transmission Systems
Products. Customer is responsible for all associated travel and living expenses
for Customer personnel. Seller, at its option, shall offer training regionally
at Seller's Training Centers. While Seller recommends core courses from its
Customer Training Catalog, Customer may choose from any of Seller's Transmission
Systems Product related courses.

A-1.15    COMMUNICATIONS SOFTWARE PRODUCTS CREDIT

In consideration for the Purchase Commitment set forth in the Section entitled,
"Customer's  Purchase Commitment," Seller will provide Customer with a credit
equal to [***] dollars ($[***]) to be applied towards Customer's first purchase
order for Seller's Communications Software Products (CSP) where such order shall
be for at least [***] ([***]) of the following CSP Products: BILLDATS, NOC-1,
ConnectVu. As noted within the Section, entitled "Statements of Work," the
Statements of Work related to these Communication Software Products shall be
developed within [***] ([***])[***] of the execution of this Agreement or as
mutually agreed to between the parties .

     A-1.15.1  TERMS OF PAYMENT INCENTIVE FOR COMMUNICATIONS SOFTWARE
               PRODUCTS

If Customer's first purchase order for Seller's Communications Software Products
(CSP) is for at least [***] ([***]) of the [***] ([***]) or for all [***]
([***]) of the CSP Products described in the above Section entitled
Communications Software Products Credit and such order is received within [***]
([***])[***] of the execution of this Agreement then, Seller shall provide the
following payment and invoicing terms for such order as follows:

Customer shall in addition to receiving the [***] ([***]) dollar credit pay
[***] of the remaining amount for the CSP Software at the time of order
placement and the balance of the order no later than [***] from the initial
invoice date.

A-1.16    CHECKMATE MARKETING & BUSINESS SOLUTIONS MARKETING
               DEVELOPMENT FUND ALLOWANCE

In consideration for the Purchase Commitment set forth in the Section entitled,
"Customer's Purchase Commitment", Seller agrees to provide Customer with
following incentives related to the Checkmate Marketing and Business Solutions
Market Development Fund (hereinafter "MDF") described in Appendix A, entitled
"Checkmate and Marketing & Business Solutions Marketing Development Guidelines"
attached hereto and made part of this Agreement:

(a)  Upon the execution of this Agreement, Seller agrees to provide [***] to
     Customer the

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      11
<PAGE>

                                                                   LNM980824RMPT

     Checkmate element services listed in Appendix B. The total value of these
     Checkmate Services equals [***] dollars ($[***]).
(b)  Seller also agrees to create a MDF as described in Appendix A into which
     Seller will allocate up to [***]% of Customer's paid purchases of Seller's
     5ESS-2000 Products and related Licensed Materials (excludes engineering,
     installation, and related Services) and Transmission Systems Products
     during the Term of this Addendum.
(c)  Upon the Effective Date, Seller shall provide Customer with a credit
     allocation into the MDF equal to [***] ($[***]) as an advance against the
     credits to be earned by Customer under the Section A 1.13 (b). Upon such
     advance, no further credit allocations shall be earned or accrued by
     Customer until its paid purchases to Seller exceeds [***] dollars ($[***])
     at which time the advance shall be satisfied.

Any amounts allocated to the MDF hereunder shall be subject in all respects to
and may be utilized by Customer only in accordance with the MDF Guidelines
attached hereto and must be used prior to the Term expiration or be forfeited.

A-1.17    [***]

[***].

[***].

[***].

[***].

[***].

A-1.18    INVOICES AND TERMS OF PAYMENT

For Customer's first order for the first switch site only and until an adequate
credit line has been established, all Customer's purchase orders will be subject
to the invoices and payment terms shown below.  If a sufficient line of credit
has not been established prior to the shipment of the second order, shipment of
such order and all subsequent orders will be pursuant to the invoice and payment
terms Section 1.9 of the General Agreement.  Further, if at any time Customer
does not meet the Net 30 payment requirements specified below, the invoices and
terms of payment clause specified in Section 1.9 in the General Agreement, will
apply for subsequent orders.

(a)  Except as otherwise specified above, for orders in which an adequate line
of credit has been established, Products and Licensed Materials (including
transportation charges and taxes, if applicable) will be billed by Seller when
shipped, or as soon thereafter as practicable. A sample invoice is provided in
Exhibit 2 of the General Agreement for informational purposes only. Engineering
will be billed with the initial shipment of Product(s). Installation will be
billed as performed or as soon thereafter as practical. Payment in full for all
invoiced or billed amounts is due for receipt by Seller within thirty (30) days
of the invoice or bill date. All payments other than EFT payments described in
subsection (c) below shall be forwarded to Seller at the following address:

If by regular mail:    Lucent Technologies Inc.
                       P.O. Box 100317
                       Atlanta, GA 30384-0317
                       Attn: Accounts Receivable

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      12
<PAGE>

                                                                   LNM980824RMPT

If by overnight courier:  NationsBank
                          Account Number 143049062
                          6000 Feldwood Road
                          P.O. Box 100317
                          College Park, GA 30349

(b)  Bill and Hold Products will be invoiced by Seller upon the earlier of (i)
completion of assembly at Seller's facility or (ii) upon stocking at Customer's
designated location. Such invoice will serve as Seller's notification that Bill
and Hold Products are complete and ready to be released by Customer for final
shipment. The date of the invoice, which shall be the stocking date, shall be
deemed the warranty start date.

(c)  Customer shall have the right to pay any amounts due Seller hereunder using
Electronic Funds Transfer ("EFT"). Seller reserves the right to cancel the
Customer's right to pay using EFT with thirty (30) days notice to the Customer.

(d)  EFT payments by Customer shall be made to the following account of Seller
or such other account as is subsequently designated by Seller in writing and,
concurrent with the EFT payment, Customer shall fax a copy of the [federal wire
instructions/remittal] to Seller's Manager Cash Operations at 770-750-4288.

Customer will EFT funds to the following location:

     Chase Manhattan Bank
     New York, New York
     Lucent Technologies Inc.
     ACCT. 910144-9099
     ABA 021000021

(e)  If Customer fails to pay any invoiced amount when due, the invoiced amount
will be subject to a late payment charge at the rate of [***] percent
([***]%) per month, or portion thereof, of the amount due (but not to exceed the
maximum lawful rate). Customer agrees to pay Seller's attorneys' fees and other
costs incurred by Seller in the collection of any amounts invoiced hereunder.

(f)  Customer agrees to review invoice upon receipt and if necessary, initiate
billing inquires within ten (10) days of receipt of invoice. Inquiries can be
initiated in writing or by telephone and shall be directed to the address or
telephone number identified on the invoice.

ENTIRE AGREEMENT

Except as specifically modified, amended or supplemented herein, all terms and
conditions of the General Agreement shall remain in full force and effect.  The
terms and conditions contained in this Addendum and those nonconflicting terms
and conditions of the General Agreement supersede all prior oral and written
understandings between the parties and shall constitute the entire agreement
between the parties with respect to the subject matter herein.

IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by
their duly authorized representatives on the date(s) indicated.

PaeTec Communications, Inc.             Lucent Technologies Inc.

By: /s/ Arunas A. Chesonis              By: /s/ Gerard T. Cafaro
   -----------------------------------     -----------------------------------
Name: Arunas A. Chesonis                Name: Gerard T. Cafaro
     ---------------------------------       ---------------------------------
Title: Chairman and CEO                 Title: Assistant Vice President
      --------------------------------        --------------------------------
Date: September 16, 1998                Date: 9/16/98
     ---------------------------------       ---------------------------------

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      13
<PAGE>

                                                                   LNM980824RMPT

                                  APPENDIX A

                                   CHECKMATE
                        MARKETING & BUSINESS SOLUTIONS
                          MARKETING DEVELOPMENT FUND

                                  GUIDELINES

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      14
<PAGE>

                                                                   LNM980824RMPT

                   CHECKMATE MARKETING & BUSINESS SOLUTIONS
                     MARKETING DEVELOPMENT FUND GUIDELINES                11/96

The Checkmate Marketing & Business Solutions Marketing Development Fund
(hereinafter "MDF") is a cooperative approach to marketing and promotion.  The
program provides assistance for pre-approved market development and promotional
activities executed by authorized Lucent Technologies Global Commercial Markets
(GCM) Customers to stimulate switched services sales activity.

MDF Funding
 .  Funding is based on the year's purchases of Lucent Technologies Network
   Systems 5ESS(R) Switching and, Transmission and OS products only. Network
   Systems products are used to calculate the amount of MDF funds. Note: Network
   Cable Systems products are not eligible for rebate reimbursement calculations
   under this plan.
 .  For customers to be eligible for MDF, a written marketing plan must be
   jointly approved by the Lucent Technologies GCM Marketing Administrator and
   sales organization and the customer's marketing and sales organization prior
   to submission of any MDF reimbursement claims.
 .  Proper MDF forms are submitted by the customer along with supporting
   documentation for pre-approval. After approval, copies of original paid
   invoices are submitted. MDF reimbursements are issued as credits to be
   applied to current or future Lucent Technologies invoices.
 .  Funding is based on a percentage of the year's total paid direct
   purchases only.

It's a Five Step Process
1. Jointly prepare a Marketing Development Business Plan.  This plan must at a
   minimum include:
     .  Marketing opportunities or projects designed to stimulate switched
        services sales activities
     .  Forecasts of new revenues produced with corresponding cost summaries,
        and
     .  Specific "measurements of success."
2. Submit a completed MDF Submittal Form for pre-approval.
3. When the project is completed, the approved MDF Submittal Form will be
   returned to Lucent Technologies along with paid invoices and substantiating
   documents.
4. The MDF program administrator will process the reimbursement claim, verify
   that funding is available, and, if so, forward the approval documentation to
   the customer with a reimbursement certificate.
5. When submitted by the customer, the amount of the reimbursement certificate
   will be credited to the customer's account.

Answers to your Questions . . .
Your primary MDF contact with Lucent Technologies is your Account
Representative.  Your Representative can provide whatever assistance you may
need in providing direction and planning marketing strategies. Lucent
Technologies has appointed a Marketing Development Fund Administrator who
handles day-to-day details of tracking and coordinating reimbursement claims
within Lucent Technologies. You may contact the Administrator at the following
address: 5 Wood Hollow Rd., Room 1I82, Parsippany, NJ 07054-2821.

                                      15
<PAGE>

                                                                   LNM980824RMPT

                   CHECKMATE MARKETING & BUSINESS SOLUTIONS
                     MARKETING DEVELOPMENT FUND GUIDELINES

Activities Eligible for MDF Reimbursement

Direct marketing
Direct marketing may include advertising, e.g. print ads and radio spots,
collateral salesware, catalogs, trade show fees, Lucent Technologies product
displays, direct mail and telemarketing programs and other pre-approved
activities.  MDF funds may be utilized to assist with individual company
customization of direct marketing materials, including development, printing,
and one-time production costs on authorized mailings.

Events
MDF allowances may be used to off-set Lucent Technologies sponsorship of events
such as technology forums, conferences, seminars, trade shows or other business
related activities. Pre-approval requests must clearly demonstrate goals and
objectives of the event. Reimbursement claims must include a list of any other
co-sponsors, a copy of guest invitations to the event, detailed event cost
estimates, and a full description of the participation, involvement, and
activity by the Lucent Technologies Representative who would attend or support
the event.

Database Acquisition
MDF can be utilized to fund a variety of pre-approved database tools such as
market-based automated pricing tools (which could include basic Centrex rates,
standard features, and ISDN rates and features), and Marketing Information
Databases (such as MKIS) for client prospecting, lead generation and
infrastructure modeling.

Sales Incentive Programs
Incentive programs to stimulate switched services sales are designed and
administered by the customer.  A jointly established target for service activity
penetration must be in effect and tracked for the duration of the program.
Proposed incentive programs must conform to the following guidelines:

 .  An outline of procedures to administer, track and audit the program is
   provided.
 .  Estimated program costs, award descriptions and values are identified.
 .  A complete program activity description with specific time-frames is
   established.
 .  A list of participating Account Executives and Sales Managers and their
   incentive program objectives is submitted to Lucent Technologies.

Training
Lucent Technologies offers a wide range of educational opportunities, and
encourages Lucent Technologies sponsored customers to increase product knowledge
and marketing and sales skills.  Lucent Technologies training courses are
delivered at Lucent Technologies training locations or suitcased to remote
locations.

MDF Personnel
 .  Under the MDF program, the Lucent Technologies customer may fund technical
   consultants and/or marketing sales consultant personnel to implement
   marketing and sales programs to stimulate switched services sales activity.
   All pre-approved personnel funded by MDF must be dedicated 100% to
   stimulating Lucent Technologies switched services sales. All expenses must
   conform to standard Lucent Technologies voucher guidelines. All expenses
   require pre-approval and must include: overall project concept, opportunity
   identification, program cost, and a detailed action plan with measurable
   milestones and start-stop dates. MDF payments for personnel are made
   quarterly.

                                  Appendix B

                     CHECKMATE ELEMENT SERVICES INCENTIVE

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      16
<PAGE>

                                                                   LNM980824RMPT

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
ITEM NO.   CHECKMATE SERVICE DESRIPTION                                                  PRICE
--------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>
204        RBOC PRICING (10 Tariffs and 2 cities under one tariff)                       $[***]
--------------------------------------------------------------------------------------------------------
205        RBOC MTCE (Qtrly mtce for 10 tariffs)                                         $[***]
--------------------------------------------------------------------------------------------------------
301        Multimedia Presentation package: 70 copies Multimedia Presentation, Sales
           Toolkit, IAP services guide and forms                                         $[***]
--------------------------------------------------------------------------------------------------------
401        Introduction to Telecom Training (70 copies of CBT training)                  $[***]
--------------------------------------------------------------------------------------------------------
403        Introduction to Centrex (70 copies of self paced training)                    $[***]
--------------------------------------------------------------------------------------------------------
404        Centrex Applications (Instructor led training for 12 cities & 70 users)       $[***]
--------------------------------------------------------------------------------------------------------
405        IAP CBT  (70 copies of CBT Training )                                         $[***]
--------------------------------------------------------------------------------------------------------
406        Marketplace  (70 copies of CBT Training)                                      $[***]
--------------------------------------------------------------------------------------------------------
501        IAP Training (Instructor led training for 12 cities and 70 users)             $[***]
--------------------------------------------------------------------------------------------------------
502        New City Rollout (Instructor led training for 12 cities and 70 users)         $[***]
--------------------------------------------------------------------------------------------------------
503        ISDN Configurator (70 Copies)                                                 $[***]
--------------------------------------------------------------------------------------------------------
600        Checkmate Consulting (10 days of Marketing and Sales Support in addition to
           Checkmate integration)                                                        $[***]
--------------------------------------------------------------------------------------------------------
601        Checkmate other miscellaneous services                                        $[***]
--------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------
Total      Total Checkmate Services Incentive                                            $[***]
--------------------------------------------------------------------------------------------------------
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      17
<PAGE>

                                                                   LNM980824RMPT

                                  APPENDIX C

                SERVICE CONTROL POINT (SCP) MODEL CONFIGURATION

SCP System Configuration -  4 SS7 Links/SCP (165 tps) in a mated environment.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Item                                                                                         Quantity
----------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>
R8 SCP Hardware
----------------------------------------------------------------------------------------------------------
Control Server Hardware  The Model 2 Control Server Cabinet is equipped                        [***]
with active/standby 4-way SMP P6 200 MHz Processors with 512 MB RAM, 6
pair of 4GB disks (3-pair system, 3-pair user), Ethernet interface, 16-port
asynch interface and system sanity monitoring equipment, 4 x.25 ports.
Also provides Control Server cabinet peripherals kit which includes 2
windowing terminals, Alarm Relay Unit, splitters and cables.
----------------------------------------------------------------------------------------------------------
Additional Hardware                                                                            [***]
----------------------------------------------------------------------------------------------------------
Miscellaneous Cabinet with Power Distribution Unit                                             [***]
----------------------------------------------------------------------------------------------------------
Modem Rack                                                                                     [***]
----------------------------------------------------------------------------------------------------------
Synchronous Modems                                                                             [***]
----------------------------------------------------------------------------------------------------------
Asynchronous Modems                                                                            [***]
----------------------------------------------------------------------------------------------------------
Printer                                                                                        [***]
----------------------------------------------------------------------------------------------------------
Telecom Server Hardware (The Telecom Server cabinet is equipped with 2 Telecom                 [***]
Servers each with 2 SS7 ports for a total of 4 SS7 links (ports) per SCP.
----------------------------------------------------------------------------------------------------------
Spares                                                                                         [***]
----------------------------------------------------------------------------------------------------------
SCP Model 2 System Spares Kit                                                                  [***]
----------------------------------------------------------------------------------------------------------
Synchronous Modem Card                                                                         [***]
----------------------------------------------------------------------------------------------------------
Asynchronous Modem Card                                                                        [***]
----------------------------------------------------------------------------------------------------------
Filter Kit                                                                                     [***]
----------------------------------------------------------------------------------------------------------
Blank Tape Kit                                                                                 [***]
----------------------------------------------------------------------------------------------------------
Simm Mod 64MB                                                                                  [***]
----------------------------------------------------------------------------------------------------------
Documentation                                                                                  [***]
----------------------------------------------------------------------------------------------------------
Single User License and CD-ROM Media                                                           [***]
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
SMS (K-460 Duplex) Hewlett Packard System:
-------------------------------------------------------------------------------------------------------
Item                                            Configuration
-------------------------------------------------------------------------------------------------------
<S>                                             <C>
Hewlett Packard System                          (duplex HP-K460 e/w 4 CPUs, 1.28GB RAM, 120GB
                                                disk storage, support for up to 8 network
                                                element interfaces)

                                                Single User license and CD-ROM Media documentation
                                                one copy
-------------------------------------------------------------------------------------------------------
Additional Equipage                             SMS peripherals kit for duplex systems (2 ethernet
                                                switches, 2 terminal servers, 1 Alarm Relay Unit,
                                                1 modem, 2 system console PCs w EXCEED software,
                                                2 modem racks e/w 32 synchronous
                                                1 standalone maintenance modem)
-------------------------------------------------------------------------------------------------------
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      18
<PAGE>

                                                                   LNM980824RMPT

Assumptions:

1. Quote assumes [***] of Gold Support Maintenance for the SCP pair and the SMS.
   The Lucent Customer Technical Support organization is accessible via pager 24
   hours per day in the event of a service disruption. Otherwise, the
   maintenance period is 8 a.m. - 5 p.m. CST/CSD, Monday-Friday, except
   holidays.
2. The current standard engineering, manufacturing, and installation interval
   for this equipment is 16 weeks and is subject to change.
3. Since Lucent does not currently have access to forecasts of PaeTec's expected
   SS7 traffic that will require SCP transactions, Lucent has quoted its
   smallest SCP system which will handle 165 Transactions per Second of Flexible
   Network Routing service traffic, assuming one half of the calls are for an
   FNR function that requires one SCP query and one half of the calls are for an
   FNR function that requires two SCP queries. Since a Lucent SCP can be
   configured in the following increments: 4 links, 8 links, 16 links, 32 links
   (the maximum), an increase in TPS rates needed or the addition of other
   services to the SCP will require subsequent engineering analysis to determine
   the needed link or CPU growth. Each SCP of the mated pair is quoted at 40%
   link occupancy so each of the SCPs can handle all of the SS7 queries from the
   Signal Transfer Point in the event it is necessary for one SCP of the mated
   pair to carry the entire traffic load.
4. Quote for the 4 SS7 link SCP pair DOES NOT include engineering and
   installation services charges.
5. Seller will provide [***] ([***]) days of SCP related training to Customer.
   Such training days must be used with [***] of the Turnover Date of the SCP
   Product or be forfeited. Additional SCP, SMS, and service courses can be
   scheduled at a Lucent facility for a fee of $[***] per student per day.
   Courses can also delivered to the customer site for the fee as stated above
   plus travel and living expenses.
6. Pricing includes [***] ([***]) [***] of product integration and
   [***] ([***]) [***] of acceptance testing services.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                        Lucent Technologies Proprietary

                                      19
<PAGE>

                                                       Exhibit 10.28 (Continued)

                                                                   LNM981204KBPT

                              ADDENDUM NUMBER TWO

               5ESS(R)-2000 SWITCH LONG DISTANCE FEATURE PACKAGE

                              PURCHASE AGREEMENT

                     BETWEEN PAETEC COMMUNICATIONS, INC.,

                         AND LUCENT TECHNOLOGIES INC.

This Addendum Two, LNM981204KBPT (hereinafter "Addendum"), is made effective as
of the 17th day of December 1998 ("Effective Date"), by and between PaeTec
Communications, Inc., a Delaware corporation with offices located at 290
Woodcliff Drive, Fairport, NY  14450 (hereinafter "Customer"), and Lucent
Technologies Inc., a Delaware corporation, acting through its Global Service
Provider Group (formerly Network Systems Group), with offices located at 600
Mountain Avenue, Murray Hill, New Jersey 07974, (hereinafter "Seller").

WHEREAS, PaeTec Communications, Inc. and Seller have entered into a certain
General Agreement, Contract #LNM980716RMPT effective June 17, 1998, and entered
into Addendum Number One to the General Agreement Contract #LNM980824RMPT
effective September 16, 1998 (hereinafter collectively referred to as the
"General Agreement") as amended from time to time by Seller and Customer,
setting forth the terms and conditions pursuant to which Seller agreed to supply
and Customer agreed to procure certain Lucent Products, Licensed Materials or
Services (as such terms are defined therein); and

WHEREAS, Customer and Seller desire to establish in this Addendum additional
terms and conditions applicable to Customer's purchase and/or license for use,
as appropriate, of certain Products and related Licensed Materials and Services,

NOW THEREFORE, in consideration of the mutual promises hereinafter set forth and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

A-1.1    SCOPE OF ADDENDUM

Notwithstanding anything to the contrary contained within the General Agreement,
this Addendum shall apply to: (1) Customer's purchase orders for Seller's Long
Distance Feature Packages which will provide the long distance related features
as listed in Exhibit 1 attached hereto and made part of this Addendum
(hereinafter "Long Distance Feature Packages" and; (2) Customer's purchase
orders for Real Time Call Detail (RTCD) Product and related Licensed Materials
as listed within Exhibit 2 attached hereto and made a part of this Agreement.
This Addendum is issued pursuant to and incorporates the non-conflicting terms
and conditions of the General Agreement.  In the event of any conflict or
inconsistency between the terms of this Addendum and the terms of the General
Agreement, the terms of this Addendum shall prevail.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       1
<PAGE>

                                                                   LNM981204KBPT

A-1.2  PRICING PLAN FOR LONG DISTANCE FEATURE PACKAGES.

At Customer's request, Seller will provide firm price quotations for the Long
Distance Feature Packages and Real Time Call Detail (RTCD) Product and Licensed
Material contained within Exhibits 1 & 2, respectively.

A-1.3  [***]

[***].

     [***].

[***].

[***].

[***].

A-1.4  ADDITIONAL SUPPORT INCENTIVES RELATED TO DELIVERY OF  LONG DISTANCE
       FEATURE PACKAGES.

In consideration for Customer's Purchase Commitment as set forth in the Section
entitled "Customer's Purchase Commitment" of the Agreement, Seller will provide,
at no additional charge, the following incentives for Customer's first order for
Long Distance Feature Packages:

i.   [***] ([***]) [***] to assist Customer's engineering in completing the
     necessary information required for ODA with respect to the Long Distance
     features only.
ii.  [***] ([***]) [***]. dedicated to the installation activities of the long
     distance features included within Attachment 1.

A-1.5  TERMS OF PAYMENT [***] FOR LONG DISTANCE
       FEATURE PACKAGES AND REAL TIME CALL DETAIL ORDERS.

In consideration for Customer's Purchase Commitment as set forth in the Section
entitled "Customer's Purchase Commitment" of the Agreement, Seller will provide
the following extended payment terms incentive for Customer's first order only
for: (1) the Long Distance Feature Packages and (2) the Real Time Call Detail
Frame.  For Customer's initial order only of these items Seller agrees to: (1)
issue invoices for these items upon Seller's notice of installation completion
(i.e. Turnover date) and (2) provide extended payment terms for these items only
of Net [***] from the date Seller provides its notice of installation complete.

A-1.6  5ESS-2000 TRAINING INCENTIVE

Refer to Section A-1.11.4 of Addendum Number One and delete the fourth sentence
in its entirety and replace it with the following provision:

     Seller will make available to Customer [***] ([***]) additional training
     days for RSMs, ORMs, and EXMs.

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       2
<PAGE>

                                                                   LNM981204KBPT

All other provisions of such Section remain unchanged.

ENTIRE AGREEMENT

Except as specifically modified, amended or supplemented herein, all terms and
conditions of the General Agreement shall remain in full force and effect.  The
terms and conditions contained in this Addendum and those nonconflicting terms
and conditions of the General Agreement supersede all prior oral and written
understandings between the parties and shall constitute the entire agreement
between the parties with respect to the subject matter herein.

IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by
their duly authorized representatives on the date(s) indicated.

PaeTec Communications, Inc.           Lucent Technologies Inc.

By: /s/ Richard Ottalagana            By:    /s/ Gerard T. Cafaro
    _____________________________            ________________________________

Name: Richard Ottalagana              Name:  Gerard T. Cafaro
      ___________________________            ________________________________

Title: Ex. V.P.                       Title: Sales V.P.
       __________________________            ________________________________

Date: 12/22/98                        Date:  12/18/98
      ___________________________            _______________________________

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       3
<PAGE>

                                                                   LNM981204KBPT

                                   EXHIBIT 1
              PaeTec Long Distance Features and Feature Packages

[***]      [***]        [***]     [***]       [***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]
3. [***]   [***]        [***]     [***]       [***]
4. [***]   [***]        [***]     [***]       [***]
5. [***]   [***]        [***]     [***]       [***]
6. [***]   [***]        [***]     [***]       [***]
7. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]
*[***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]
3. [***]   [***]        [***]     [***]       [***]
4. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]
3. [***]   [***]        [***]     [***]       [***]
4. [***]   [***]        [***]     [***]       [***]
5. [***]   [***]        [***]     [***]       [***]
6. [***]   [***]        [***]     [***]       [***]
*[***]

[***]
1. [***]   [***]        [***]     [***]       [***]
           [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]
3. [***]   [***]        [***]     [***]       [***]
4. [***]   [***]        [***]     [***]       [***]
5. [***]   [***]        [***]     [***]       [***]
6. [***]   [***]        [***]     [***]       [***]

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       4
<PAGE>

                                                                   LNM981204KBPT

[***]
1. [***]   [***]        [***]     [***]       [***]
2. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]

[***]
1. [***]   [***]        [***]     [***]       [***]

[***]
[***]   [***]        [***]     [***]       [***]
[***]   [***]        [***]     [***]       [***]
[***]   [***]        [***]     [***]       [***]
[***]   [***]        [***]     [***]       [***]
[***]   [***]        [***]     [***]       [***]
[***]   [***]        [***]     [***]       [***]

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       5
<PAGE>

                                                                   LNM981204KBPT

                                   EXHIBIT 2

                      REAL TIME CALL DETAIL (RTCD) FRAME

                    REAL TIME CALL DETAIL FRAME COMPONENTS:

<TABLE>
<CAPTION>
Quantity                                 Description
--------------------------------------------------------------------------------
<S>          <C>
[***]        Cabinet Assembly incl. Intra bay cables, EMC and safety kits
--------------------------------------------------------------------------------
[***]        VT 100 Terminal and Cables
--------------------------------------------------------------------------------
[***]        28.8 Modem
--------------------------------------------------------------------------------
[***]        A/B Box
--------------------------------------------------------------------------------
[***]        Duplex system operation/application software bundle RTU
--------------------------------------------------------------------------------
[***]        DAT tapes
--------------------------------------------------------------------------------
</TABLE>

* System Price does not include the following:
  Engineering
  Installation
  Inter Bay Cabling
  Cable Rack
  Spares Equipment

Recommended Spares Equipment include the Basic Spares Kit, ED5D838-30-G-40
equipped as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
 Quantity                                Description
--------------------------------------------------------------------------------
<S>                      <C>
   [***]                 Integrated Server with pre-loaded software
--------------------------------------------------------------------------------
   [***]                 Hot swap components for Data Storage
--------------------------------------------------------------------------------
   [***]                 Ethernet Hub Module
--------------------------------------------------------------------------------
</TABLE>

                    ***CONFIDENTIAL TREATMENT REQUESTED***

                     Lucent Technologies Inc. Proprietary

                                       6<PAGE>

                                                                   Exhibit 10.29

                                    FORM OF
                                 PAETEC CORP.
                     2000 STOCK OPTION AND INCENTIVE PLAN
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
                                                                                                          Page
                                                                                                          ----
<S>  <C>                                                                                                   <C>
1.   PURPOSE..............................................................................................  1
2.   DEFINITIONS..........................................................................................  1
3.   ADMINISTRATION OF THE PLAN...........................................................................  4
     3.1.  Board..........................................................................................  4
     3.2.  Committee......................................................................................  4
     3.3.  Grants.........................................................................................  5
     3.4.  No Liability...................................................................................  6
     3.5.  Applicability of Rule 16b-3....................................................................  6
4.   STOCK SUBJECT TO THE PLAN............................................................................  6
     4.1.  Aggregate Limitation...........................................................................  6
     4.2.  Other Plan Limits..............................................................................  7
     4.3.  Payment Shares.................................................................................  7
     4.4.  Application of Aggregate Limitation............................................................  7
     4.5.  Per-Grantee Limitation.........................................................................  7
5.   EFFECTIVE DATE AND TERM OF THE PLAN..................................................................  8
     5.1.  Effective Date.................................................................................  8
     5.2.  Term...........................................................................................  8
6.   PERMISSIBLE GRANTEES.................................................................................  9
     6.1.  Employees and Service Providers................................................................  9
     6.2.  Multiple Grants................................................................................  9
7.   LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS.....................................................  9
8.   AWARD AGREEMENT......................................................................................  9
9.   OPTION PRICE.........................................................................................  9
10.  VESTING, TERM AND EXERCISE OF OPTIONS................................................................ 10
     10.1.  Vesting and Option Period..................................................................... 10
     10.2.  Term.......................................................................................... 10
     10.3.  Acceleration.................................................................................. 10
     10.4.  Termination of Employment or Other Relationship for a Reason Other than Death or Disability... 11
     10.5.  Rights in the Event of Death.................................................................. 11
     10.6.  Rights in the Event of Disability............................................................. 11
     10.7.  Rights in the Event of Retirement............................................................. 12
     10.8.  Limitations on Exercise of Option............................................................. 12
     10.9.  Method of Exercise............................................................................ 12
     10.10. Rights as a Stockholder; Dividend Equivalents................................................. 13
     10.11. Delivery of Stock Certificates................................................................ 13
11.  TRANSFERABILITY OF OPTIONS........................................................................... 14
     11.1.  General Rule.................................................................................. 14
     11.2.  Family Transfers.............................................................................. 14
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>  <C>                                                                                                   <C>
12.  RESTRICTED STOCK..................................................................................... 14
     12.1.  Grant of Restricted Stock or Restricted Stock Units........................................... 14
     12.2.  Restrictions.................................................................................. 14
     12.3.  Restricted Stock Certificates................................................................. 15
     12.4.  Rights of Holders of Restricted Stock......................................................... 15
     12.5.  Rights of Holders of Restricted Stock Units................................................... 16
     12.6.  Termination of Employment or Other Relationship for a Reason Other than Death or Disability... 16
     12.7.  Rights in the Event of Death.................................................................. 17
     12.8.  Rights in the Event of Disability............................................................. 17
     12.9.  Delivery of Shares and Payment Therefor....................................................... 17
13.  STOCK APPRECIATION RIGHTS............................................................................ 17
     13.1.  Grant of Stock Appreciation Rights............................................................ 17
     13.2.  Nature of a Stock Appreciation Right.......................................................... 18
     13.3.  Terms and Conditions Governing SARs........................................................... 18
14.  UNRESTRICTED STOCK................................................................................... 18
15.  PARACHUTE LIMITATIONS................................................................................ 18
16.  REQUIREMENTS OF LAW.................................................................................. 19
     16.1.  General....................................................................................... 19
     16.2.  Rule 16b-3.................................................................................... 20
17.  AMENDMENT AND TERMINATION OF THE PLAN................................................................ 20
18.  EFFECT OF CHANGES IN CAPITALIZATION.................................................................. 20
     18.1.  Changes in Stock.............................................................................. 20
     18.2.  Reorganization, Sale of Assets or Sale of Stock............................................... 21
     18.3.  Adjustments................................................................................... 22
     18.4.  No Limitations on Company..................................................................... 22
19.  DISCLAIMER OF RIGHTS................................................................................. 22
20.  NONEXCLUSIVITY OF THE PLAN........................................................................... 23
21.  WITHHOLDING TAXES.................................................................................... 23
22.  CAPTIONS............................................................................................. 24
23.  OTHER PROVISIONS..................................................................................... 24
24.  NUMBER AND GENDER.................................................................................... 24
25.  SEVERABILITY......................................................................................... 24
26.  POOLING.............................................................................................. 24
27.  GOVERNING LAW........................................................................................ 24
</TABLE>

                                      -ii-
<PAGE>

                                 PAETEC CORP.
                     2000 STOCK OPTION AND INCENTIVE PLAN

  PaeTec Corp., a Delaware corporation (the "Company"), sets forth herein the
terms of its 2000 Stock Option and Incentive Plan (the "Plan") as follows:

1.  PURPOSE

  The Plan is intended to enhance the Company's ability to attract and retain
highly qualified officers, key employees, outside directors and other persons,
and to motivate such officers, key employees, outside directors and other
persons to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such officers, key employees, outside directors and
other persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company.  To this end, the
Plan provides for the grant of stock options, restricted stock, restricted stock
units, unrestricted stock and stock appreciation rights in accordance with the
terms hereof.  Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein, except that stock
options granted to outside directors and all Service Providers shall in all
cases be non-qualified stock options.

2.  DEFINITIONS

  For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:

2.1.  "Affiliate" of, or person "affiliated" with, a person means any
       ---------                 ----------
      company or other trade or business that controls, is controlled by or is
      under common control with such person within the meaning of Rule 405 of
      Regulation C under the Securities Act.

2.2.  "Award Agreement" means the stock option agreement, restricted stock
       ---------------
      agreement, restricted stock unit agreement, stock appreciation right
      agreement or other written agreement between the Company and a Grantee
      that evidences and sets out the terms and conditions of a Grant.

2.3.  "Board" means the Board of Directors of the Company.
       -----

2.4.  "Code" means the Internal Revenue Code of 1986, as now in effect or as
       ----
      hereafter amended.

2.5.  "Committee" means a committee of, and designated from time to time by
       ---------
      resolution of, the Board, which shall consist of no fewer than two members
      of

                                       1
<PAGE>

      the Board, none of whom shall be an officer or other salaried employee of
      the Company or any affiliate of the Company.

2.6.  "Company" means PaeTec Corp., a Delaware corporation.
       -------

2.7.  "Effective Date" means the date designated by the Board in its
       --------------
      resolution adopting the Plan.

2.8.  "Exchange Act" means the Securities Exchange Act of 1934, as now in
       ------------
      effect or as hereafter amended.

2.9.  "Fair Market Value" means the closing price of a share of Stock reported
       -----------------
      on The Nasdaq National Market ("Nasdaq") on the date Fair Market Value is
      being determined, provided that if there should be no closing price
      reported on such date, the Fair Market Value of a share of Stock on such
      date shall be deemed equal to the closing price as reported by the Nasdaq
      for the last preceding date on which sales of shares were reported.
      Notwithstanding the foregoing, in the event that the shares of Stock are
      listed upon one or more established stock exchanges, Fair Market Value
      means the closing price of a share of Stock reported on the exchange that
      trades the largest volume of shares on such date. If the Stock is not at
      the time listed or admitted to trading on the Nasdaq or on an established
      stock exchange, Fair Market Value means the mean between the lowest
      reported bid price and highest reported asked price of the Stock on the
      date in question in the over-the-counter market, as such prices are
      reported in a publication of general circulation selected by the Board and
      regularly reporting the market price of Stock in such market. If the Stock
      is not listed or admitted to trading on the Nasdaq or on any established
      stock exchange or traded in the over-the-counter market, Fair Market Value
      shall be as determined in good faith by the Board.

2.10. "Grant" means an award of an Option, Restricted Stock, Restricted
       -----
      Stock Unit, Unrestricted Stock, or Stock Appreciation Right under the
      Plan.

2.11. "Grant Date" means, as determined by the Board or authorized
       ----------
      Committee, (i) the date as of which the Board or such Committee approves a
      Grant or (ii) such other date as may be specified by the Board or such
      Committee.

2.12. "Grantee" means a person who receives or holds an Option, Restricted
       -------
      Stock, Restricted Stock Unit, Stock Appreciation Right or Unrestricted
      Stock under the Plan.

2.13. "Immediate Family Members" means the spouse, children, grandchildren,
       ------------------------
      parents and siblings of the Grantee.

                                       2
<PAGE>

2.14. "Incentive Stock Option" means an "incentive stock option" within the
       ----------------------
      meaning of Section 422 of the Code.

2.15. "IPO Closing Date" means the closing date of the Company's initial public
       ----------------
      offering of Stock.

2.16. "Option" means an option to purchase one or more shares of Stock pursuant
       ------
       to the Plan.

2.17.  "Option Period" means the period during which Options may be exercised as
        -------------
       set forth in Section 10 hereof.

2.18.  "Option Price" means the purchase price for each share of Stock subject
        ------------
       to an Option.

2.19.  "Outside Director" means a member of the Board who is not an officer
        ----------------
       or employee of the Company or any Subsidiary.

2.20.  "Plan" means this 2000 Stock Option and Incentive Plan of PaeTec Corp.,
        ----
       as amended from time to time.

2.21.  "Reporting Person" means a person who is required to file reports under
        ----------------
       Section 16(a) of the Exchange Act.

2.22.  "Restricted Period" means the period during which Restricted Stock or
        -----------------
       Restricted Stock Units are subject to restrictions or conditions
       pursuant to Section 12.2 hereof.

2.23.  "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant
        ----------------
       to Section 12 hereof, that are subject to restrictions and to a risk of
       forfeiture.

2.24.  "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to
        ---------------------
       Section 12 hereof, which represents a conditional right to receive a
       share of Stock in the future, and which is subject to restrictions and to
       a risk of forfeiture.

2.25.  "Securities Act" means the Securities Act of 1933, as now in effect or as
        --------------
       hereafter amended.

2.26.  "Service Provider" means a consultant or adviser to the Company, a
        ----------------
       manager of the Company's properties or affairs, or other similar service
       provider or affiliate of the Company, and employees of any of the
       foregoing, as such persons may be designated from time to time by the
       Board pursuant to Section 6 hereof.

                                       3
<PAGE>

2.27.  "Stock" means the Class A common stock, par value $0.01 per share, of the
        -----
       Company.

2.28.  "Stock Appreciation Right" or "SAR" means a right granted to a Grantee
        ------------------------      ---
       pursuant to Section 13 hereof.

2.29.  "Subsidiary" means any "subsidiary corporation" of the Company within
        ----------
       the meaning of Section 424(f) of the Code.

2.30.  "Termination Date" means the date upon which an Option shall terminate
        ----------------
       or expire, as set forth in Section 10.2 hereof.

2.31.  "Unrestricted Stock" means an award of Stock granted to a Grantee
        ------------------
       pursuant to Section 14 hereof.

3.  ADMINISTRATION OF THE PLAN

    3.1.  Board

  The Board shall have such powers and authorities related to the administration
of the Plan as are consistent with the Company's certificate of incorporation,
bylaws and applicable law. The Board shall have full power and authority to take
all actions and to make all determinations required or provided for under the
Plan, any Grant or any Award Agreement, and shall have full power and authority
to take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board
deems to be necessary or appropriate to the administration of the Plan, any
Grant or any Award Agreement.  All such actions and determinations shall be by
the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company's certificate of incorporation, bylaws and applicable law.  The
interpretation and construction by the Board of any provision of the Plan, any
Grant or any Award Agreement shall be final and conclusive.  As permitted by
law, the Board may delegate its authority under the Plan to a member of the
Board or an executive officer of the Company; provided, however, that, unless
otherwise provided by resolution of the Board, only the Board or the Committee
may make a Grant to a Reporting Person of the Company and establish the number
of shares of Stock that may be subject to Grants with respect to any fiscal
period.

    3.2.  Committee.

  The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set

                                       4
<PAGE>

forth in Section 3.1 hereof and in other applicable provisions of the Plan, as
the Board shall determine, consistent with the Company's certificate of
incorporation, bylaws and applicable law.  In the event that the Plan, any Grant
or any Award Agreement provides for any action to be taken or determination to
be made by the Board, such action may be taken by or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section 3.2.  Unless
otherwise expressly determined by the Board, any such action or determination by
the Committee shall be final, binding and conclusive.  As permitted by law, the
Committee may delegate the authority delegated to it under the Plan to a member
of the Board of Directors or an executive officer of the Company; provided,
however, that, unless otherwise provided by the Board, only the Board or the
Committee may make a Grant to a Reporting Person of the Company and establish
the number of shares of Stock that may be subject to Grants during any fiscal
period.

    3.3.  Grants.

  Subject to the other terms and conditions of the Plan, the Board shall have
full and final authority (i) to designate Grantees, (ii) to determine the types
of Grants to be made to a Grantee, (iii) to determine the number of shares of
Stock to be subject to a Grant, (iv) to establish the terms and conditions of
each Grant, including, but not limited to, the Option Price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof, including lapse relating to a change in control of the Company)
relating to the vesting, exercise, transfer or forfeiture of a Grant or the
shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options, (v) to prescribe the
form of each Award Agreement evidencing a Grant, (vi) to make Grants alone, in
addition to, in tandem with, or in substitution or exchange for any other Grant
or any other award granted under another plan of the Company or a Subsidiary,
and (vii) to amend, modify or supplement the terms of any outstanding Grant.
Such authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy or
custom.  As a condition to any subsequent Grant, the Board shall have the right,
at its discretion, to require Grantees to return to the Company any Grants
previously awarded under the Plan.  Subject to the terms and conditions of the
Plan, any such subsequent Grant shall be upon such terms and conditions as are
specified by the Board at the time the subsequent Grant is made.

  The Company may retain the right in an Award Agreement to cause a forfeiture
of the gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or any

                                       5
<PAGE>

affiliate thereof or any confidentiality obligation with respect to the Company
or any affiliate thereof or otherwise in competition with the Company, to the
extent specified in such Award Agreement applicable to the Grantee.
Furthermore, the Company may annul a Grant if the Grantee is an employee of the
Company or an affiliate thereof and is terminated "for cause" as defined in
the applicable Award Agreement.  The Board may permit or require the deferral of
any award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest or
dividend equivalents, including converting such credits into deferred Stock
equivalents.

    3.4.  No Liability.

  No member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant or Award
Agreement.

    3.5.  Applicability of Rule 16b-3.

  Those provisions of the Plan that make express reference to Rule 16b-3 under
the Exchange Act shall apply only to Reporting Persons.

4.  STOCK SUBJECT TO THE PLAN

    4.1.  Aggregate Limitation.

  Subject to adjustment as provided in Section 18 hereof, the aggregate number
of shares of Stock available for issuance under the Plan pursuant to Options or
other Grants shall be equal to the sum of (i) two million (2,000,000) shares,
(ii) the number of shares of Stock available for future awards under the
Company's 1998 Incentive Compensation Plan as of the IPO Closing Date and (iii)
any shares of Stock that are represented by awards granted under the Company's
1998 Incentive Compensation Plan or which have been assumed by the Company,
which are forfeited, expire or are canceled without the delivery of shares of
Stock or which result in the forfeiture of shares of Stock to the Company after
the IPO Closing Date.  Shares of Stock available for issuance under the Plan may
be authorized but unissued shares, treasury shares or issued and outstanding
shares that are purchased in the open market.  Any shares of Stock granted under
the Plan which are forfeited to the Company because of the failure to meet an
award contingency or condition shall again be available for issuance pursuant to
new awards granted under the Plan.  Any shares of Stock covered by an award (or
portion of an award) granted under the Plan which is forfeited or canceled,
expires or is settled in cash shall be deemed not to have been issued for
purposes of determining the maximum number of shares of Stock available for
issuance under the Plan.  If any stock option is exercised by tendering shares
of Stock, either actually or by attestation, to the

                                       6
<PAGE>

Company as full or partial payment in connection with the exercise of a stock
option under the Plan or any prior plan of the Company as hereinabove described,
only the number of shares of Stock issued net of the shares of Stock tendered
shall be deemed issued for purposes of determining the maximum number of shares
of Stock available for issuance under the Plan. Shares of Stock issued under the
Plan through the settlement, assumption or substitution of outstanding awards or
obligations to grant future awards resulting from the acquisition of another
entity shall not reduce the maximum number of shares available for issuance
under the Plan.

    4.2.  Other Plan Limits.

  Subject to adjustment as provided in Section 18 hereof, the following
additional limitations are imposed under the Plan.  The maximum number of shares
of Stock that may be delivered through stock options intended to be Incentive
Stock Options shall be the aggregate number of shares of Stock available for
issuance under the Plan pursuant to Section 4.1.  Subject to adjustment as
provided in Section 18 hereof, the maximum number of shares of Stock that may be
issued in conjunction with awards granted pursuant to Section 12 and 14 hereof
shall be four hundred thousand (400,000); provided, however, that shares issued
in satisfaction of other compensation obligations of the Company shall not count
against this maximum number.

    4.3.  Payment Shares.

  Subject to the overall limitation on the number of shares of Stock that may be
delivered under the Plan, the Board may use available shares of Stock as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company, including the plan of any
entity acquired by the Company, and such payment shares shall not count against
the limitation on the maximum number of shares specified in Section 4.2 hereof.

    4.4.  Application of Aggregate Limitation.

  The Board may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of shares of Stock previously counted
in connection with a Grant.

    4.5.  Per-Grantee Limitation.

  During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act:

                                       7
<PAGE>

     (i)   no person eligible for a Grant under Section 6 hereof may be awarded
     Options for purposes of the Plan exercisable for greater than eight hundred
     thousand (800,000) shares of Stock (subject to adjustment as provided in
     Section 18 hereof);

     (ii)   the maximum number of shares of Unrestricted Stock and Restricted
     Stock that may be awarded under the Plan (including for this purpose any
     shares of Stock represented by Restricted Stock Units) to any person
     eligible for a Grant under Sections 12 and 14 hereof if such Grant is
     intended to qualify as performance-based under Code Section 162(m) is two
     hundred thousand (200,000) for purposes of the Plan (subject to adjustment
     as provided in Section 18 hereof);

     (iii)   the maximum number of shares of Stock that may be the subject of
     SARs awarded to any Grantee under Section 13 hereof is two hundred thousand
     (200,000) for purposes of the Plan (subject to adjustment as provided in
     Section 18 hereof).

5.  EFFECTIVE DATE AND TERM OF THE PLAN

    5.1.  Effective Date.

  The Plan shall be effective as of the Effective Date, subject to approval of
the Plan by the stockholders of the Company within one year before or after the
date upon which the Plan was adopted by the Board.  Such approval shall be by a
majority of the votes cast on the proposal at a meeting of stockholders,
provided that a quorum is present, or by a written consent of stockholders in
lieu of a meeting in accordance with Delaware corporate law.  Upon approval of
the Plan by the stockholders of the Company as set forth above, all Grants made
under the Plan on or after the Effective Date shall be fully effective as if the
stockholders of the Company had approved the Plan on the Effective Date.  If the
stockholders fail to approve the Plan within the time period set forth above,
any Grants made hereunder shall be null and void and of no effect.

    5.2.  Term.

  The Plan has no termination date; however, no Incentive Stock Option may be
granted under the Plan on or after July 25, 2010.

                                       8
<PAGE>

6.  PERMISSIBLE GRANTEES

    6.1.  Employees and Service Providers.

  Subject to the provisions of Section 7 hereof, Grants may be made under the
Plan to any employee of the Company or any Subsidiary, including any such
employee who is an officer or director of the Company, to an Outside Director,
to a Service Provider or employee of a Service Provider providing, or who has
provided, services to the Company or any Subsidiary, and to any other individual
whose participation in the Plan is determined by the Board to be in the best
interests of the Company, as the Board shall determine and designate from time
to time.

    6.2.  Multiple Grants.

  An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.

7.  LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS

  An Option shall constitute an Incentive Stock Option only (i) if the Grantee
of such Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value (determined at the time
the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee's employer and its affiliates) does not exceed $100,000.  This
limitation shall be applied by taking Options into account in the order in which
they were granted.

8.  AWARD AGREEMENT

  Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine.  Award
Agreements issued from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan.  Each Award
Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed non-qualified
stock options.

9.  OPTION PRICE

  The Option Price of each Option shall be no less than the Fair Market Value of
a share of Stock on the date of grant and stated in the Award Agreement
evidencing such Option; provided, however, that in the event that a Grantee
would otherwise

                                       9
<PAGE>

be ineligible to receive an Incentive Stock Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent (10%) of the Company's outstanding shares of Stock), the Option
Price of an Option granted to such Grantee that is intended to be an Incentive
Stock Option shall be not less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the Grant Date. In no case shall the Option
Price of any Option be less than the par value of a share of Stock.

10.  VESTING, TERM AND EXERCISE OF OPTIONS

    10.1.  Vesting and Option Period.

  Subject to Sections 10.2 and 18 hereof, each Option granted under the Plan
shall become exercisable at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement.  For purposes of this
Section 10.1, fractional numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest whole number.  The period during which any
Option shall be exercisable shall constitute the "Option Period" with respect
to such Option.

    10.2.  Term.

  Each Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and
thereafter stated in the Award Agreement relating to such Option; provided,
however, that in the event that the Grantee would otherwise be ineligible to
receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent
(10%) of the outstanding shares of Stock), an Option granted to such Grantee
that is intended to be an Incentive Stock Option shall not be exercisable after
the expiration of five years from its date of grant.

    10.3.  Acceleration.

  Any limitation on the exercise of an Option contained in any Award Agreement
may be rescinded, modified or waived by the Board, in its sole discretion, at
any time and from time to time after the Grant Date of such Option, so as to
accelerate the time at which the Option may be exercised.

                                       10
<PAGE>

    10.4.  Termination of Employment or Other Relationship for a Reason Other
           than Death or Disability.

  Unless otherwise provided by the Board, upon the termination of a Grantee's
employment or other relationship with the Company and its Subsidiaries other
than by reason of death, "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) or retirement, any Option or portion thereof
held by such Grantee that has not vested in accordance with the provisions of
Section 10.1 hereof shall terminate immediately, and any Option or portion
thereof that has vested in accordance with the provisions of Section 10.1 hereof
but has not been exercised shall terminate at the close of business on the 90th
day following the Grantee's termination of employment or other relationship (or,
if such 90th day is a Saturday, Sunday or holiday, at the close of business on
the next preceding day that is not a Saturday, Sunday or holiday).  Upon
termination of an Option or portion thereof, the Grantee shall have no further
right to purchase shares of Stock pursuant to such Option or portion thereof.
Whether a leave of absence or leave on military or government service shall
constitute a termination of employment or other relationship for purposes of the
Plan shall be determined by the Board, whose determination shall be final and
conclusive.  For purposes of the Plan, a termination of employment, service or
other relationship shall not be deemed to occur if the Grantee is immediately
thereafter employed with the Company, a Subsidiary or a Service Provider, or is
engaged as a Service Provider or an Outside Director.  Whether a termination of
a Grantee's employment or other relationship with the Company and its
Subsidiaries shall have occurred shall be determined by the Board, whose
determination shall be final and conclusive.

    10.5.  Rights in the Event of Death.

  Unless otherwise provided by the Board, if a Grantee dies while employed by or
providing services to the Company, all Options granted to such Grantee that have
not previously terminated shall fully vest on the date of death, and the
executors or administrators or legatees or distributees of such Grantee's estate
shall have the right, at any time within one year after the date of such
Grantee's death and prior to termination of the Option pursuant to Section 10.2
hereof, to exercise any Option held by such Grantee at the date of such
Grantee's death.

    10.6.  Rights in the Event of Disability.

  Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company is terminated by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Grantee, such Grantee's Options that have not previously terminated shall fully
vest, and shall be exercisable for a period of one year after such termination
of employment or other relationship, subject to earlier termination of the
Option as provided in

                                       11
<PAGE>

Section 10.2 hereof. Whether a termination of employment or other relationship
is considered to be by reason of "permanent and total disability" for purposes
of the Plan shall be determined by the Board, whose determination shall be final
and conclusive.

    10.7.  Rights in the Event of Retirement.

  Unless otherwise provided by the Board, if a Grantee retires under the terms
of any Company retirement plan applicable to the Grantee or as determined by the
Board, the Grantee shall be considered retired and all Options granted to such
Grantee that have not previously terminated shall fully vest on the date of
retirement, and the Grantee shall have the right, at any time within three years
after the date of such Grantee's retirement and prior to termination of the
Option pursuant to Section 10.2 hereof, to exercise any Option held by such
Grantee at the date of such Grantee's retirement.

    10.8.  Limitations on Exercise of Option.

  Notwithstanding any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, prior to the date the Plan is approved by the
stockholders of the Company as provided herein, or after ten years following the
date upon which the Option is granted, or after the occurrence of an event
referred to in Section 18 hereof which results in termination of the Option.

    10.9.  Method of Exercise.

  An Option that is exercisable may be exercised by the Grantee's delivery to
the Company of written notice of exercise on any business day, at the Company's
principal office, addressed to the attention of the Board.  Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of the
shares of Stock for which the Option is being exercised.  The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares of Stock available for purchase under the Option at the time of exercise.
Payment of the Option Price for the shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents
acceptable to the Company; (ii) to the extent permitted by law and at the
Board's discretion, through the actual or constructive tender to the Company of
shares of Stock, which shares of Stock, if acquired from the Company, shall have
been held for at least six months prior to such tender and which shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or (iii)
to the extent permitted by law and at the Board's discretion,

                                       12
<PAGE>

by a combination of the methods described in clauses (i) and (ii). The Board may
provide, by inclusion of appropriate language in an Award Agreement, that
payment in full of the Option Price need not accompany the written notice of
exercise, provided that the notice is accompanied by delivery of an
unconditional and irrevocable undertaking by a licensed broker acceptable to the
Company as the agent for the individual exercising the Option to deliver
promptly to the Company sufficient funds to pay the Option Price and directs
that the certificate or certificates for the shares of Stock for which the
Option is exercised be delivered to a licensed broker acceptable to the Company
as the agent for the individual exercising the Option and, at the time such
certificate or certificates are delivered, the broker tenders to the Company
cash (or cash equivalents acceptable to the Company) equal to the Option Price
for the shares of Stock purchased pursuant to the exercise of the Option plus
the amount (if any) of federal or other taxes which the Company may in its
judgment be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted hereunder other than as set forth above
shall be invalid and of no force and effect.

    10.10.  Rights as a Stockholder; Dividend Equivalents.

  Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to such individual.  Except as provided in Section 18 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance.  However, the Board may,
on such conditions as it deems appropriate, provide that a Grantee will receive
a benefit in lieu of cash dividends that would have been payable on any or all
shares of Stock subject to the Grant if such shares of Stock had been
outstanding.  Without limitation, the Board may provide for payment to the
Grantee of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Grantee.

    10.11.  Delivery of Stock Certificates.

  Promptly after the exercise of an Option by a Grantee and the payment in full
of the Option Price, such Grantee shall be entitled to the issuance of a Stock
certificate or certificates evidencing such Grantee's ownership of the shares of
Stock subject to the Option.

                                       13
<PAGE>

11.  TRANSFERABILITY OF OPTIONS

    11.1.  General Rule

  Except as provided in Section 11.2 hereof, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option.  Except as
provided in Section 11.2 hereof, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.

    11.2.  Family Transfers.

  To the extent permitted by the Board and under such rules and conditions as
imposed by the Board, a Grantee may transfer all or part of an Option that is
not an Incentive Stock Option to (i) any Immediate Family Member, (ii) a trust
or trusts for the exclusive benefit of any Immediate Family Member or (iii) a
partnership or limited liability company in which Immediate Family Members are
the only partners or members, provided that (x) there may be no consideration
for any such transfer, and (y) subsequent transfers of transferred Options or
transfers of an interest in a trust, partnership, or limited liability company
to which an Option has been transferred are prohibited except those in
accordance with this Section 11.2 or by will or the laws of descent and
distribution.  Following such transfer, any such Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
the transfer, provided that, for purposes of this Section 11.2, the term
"Grantee" shall be deemed to refer to the transferee.  The events of
termination of employment or other relationship referred to in Section 10.4
hereof shall continue to be applied with respect to the original Grantee,
following which the Option shall be exercisable by the transferee only to the
extent and for the periods specified in Section 10.4, 10.5, 10.6 or 10.7 hereof.

12.  RESTRICTED STOCK

    12.1.  Grant of Restricted Stock or Restricted Stock Units.

  The Board from time to time may grant Restricted Stock or Restricted Stock
Units to persons eligible to receive Grants under Section 6 hereof, subject to
such restrictions, conditions and other terms as the Board may determine.

    12.2.  Restrictions.

  At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Board shall establish a period of time (the "Restricted Period") applicable to
such Restricted Stock or Restricted Stock Units.  Unless otherwise determined by
the Board, unless the Grant is being made in consideration of compensation due
under

                                       14
<PAGE>

another plan, or unless vesting is subject to performance, the Restricted Period
will be a minimum of three years. Each Grant of Restricted Stock or Restricted
Stock Units may be subject to a different Restricted Period. At the time a Grant
of Restricted Stock or Restricted Stock Units is made, the Board may, in its
sole discretion, prescribe restrictions in addition to or other than the
expiration of the Restricted Period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to all or any portion
of the Restricted Stock or Restricted Stock Units. Such performance objectives
shall be established in writing by the Board by not later than the 90th day of
the period of service to which such performance objectives relate and while the
outcome is substantially uncertain. Performance objectives may be stated either
on an absolute or relative basis and may be based on any of the following
criteria: earnings per share, total stockholder return, operating earnings,
growth in assets, return on equity, return on capital, market share, stock
price, net income, cash flow, sales growth (in general, by type of product or
service and by type of customer), retained earnings, completion of acquisitions,
completion of divestitures and asset sales, cost or expense reductions,
introduction or conversion of product brands and achievement of specified
management information systems objectives. Performance objectives may include
positive results, maintaining the status quo or limiting economic losses.
Subject to the fifth sentence of this Section 12.2, the Board also may, in its
sole discretion, shorten or terminate the Restricted Period or waive any other
restrictions applicable to all or a portion of the Restricted Stock or
Restricted Stock Units. Neither Restricted Stock nor Restricted Stock Units may
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the Restricted Period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Stock or
Restricted Stock Units.

    12.3.  Restricted Stock Certificates.

  The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, Stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date.  The Board may provide in an Award Agreement
that either (i)  the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii)  such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends complying with the applicable securities laws and regulations
and making appropriate reference to the restrictions imposed under the Plan and
the Award Agreement.

    12.4.  Rights of Holders of Restricted Stock.

  Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such shares of Stock and the right
to

                                       15
<PAGE>

receive any dividends declared or paid with respect to such shares of Stock. The
Board may provide that any dividends paid on Restricted Stock must be reinvested
in shares of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock. All
distributions, if any, received by a Grantee with respect to Restricted Stock as
a result of any stock split, stock dividend, combination of shares or other
similar transaction shall be subject to the restrictions applicable to the
original Grant.

    12.5.  Rights of Holders of Restricted Stock Units.

  Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company.  The
Board may provide in an Award Agreement evidencing a Grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding shares
of Stock, a cash payment for each Restricted Stock Unit held equal to the per-
share dividend paid on the shares of Stock.  Such Award Agreement may also
provide that such cash payment will be deemed reinvested in additional
Restricted Stock Units at a price per unit equal to the Fair Market Value of a
share on the date that such dividend is paid.

    12.6.  Termination of Employment or Other Relationship for a Reason Other
           than Death or Disability.

  Unless otherwise provided by the Board, upon the termination of a Grantee's
employment or other relationship with the Company and its Subsidiaries, in
either case other than, in the case of individuals, by reason of death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of
the Code), any Restricted Stock or Restricted Stock Units held by such Grantee
that have not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited.  Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have
no further rights with respect to such Grant, including, but not limited to, any
right to vote Restricted Stock or any right to receive dividends with respect to
Restricted Stock or Restricted Stock Units.  Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Plan shall be determined by the Board,
whose determination shall be final and conclusive.  For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter employed with the Company or any
other Service Provider, or is engaged as a Service Provider or an Outside
Director.  Whether a termination of a Grantee's employment or other relationship
with the Company and its Subsidiaries shall have occurred shall be determined by
the Board, whose determination shall be final and conclusive.

                                       16
<PAGE>

    12.7.  Rights in the Event of Death.

  Unless otherwise provided by the Board, if a Grantee dies while employed by
the Company or a Service Provider, or while serving as a Service Provider, all
Restricted Stock or Restricted Stock Units granted to such Grantee shall fully
vest on the date of death unless the Board provided otherwise in the Award
Agreement relating to such Restricted Stock or Restricted Stock Units.  Upon
such vesting, the shares of Stock represented thereby shall be deliverable in
accordance with the terms of the Plan to the executors, administrators, legatees
or distributees of the Grantee's estate.

    12.8.  Rights in the Event of Disability.

  Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company or a Service Provider, or service as a Service
Provider, is terminated by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Grantee, such
Grantee's then unvested Restricted Stock or Restricted Stock Units shall be
fully vested.  Whether a termination of employment, service or other
relationship is to be considered by reason of "permanent and total disability"
for purposes of the Plan shall be determined by the Board, whose determination
shall be final and conclusive.

    12.9.  Delivery of Shares and Payment Therefor.

  Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to Restricted Stock or Restricted Stock Units shall lapse, and,
unless otherwise provided in the Award Agreement, upon payment by the Grantee to
the Company, in cash or by check, of the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or Restricted Stock
Units or (ii) the purchase price, if any, specified in the Award Agreement
relating to such Restricted Stock or Restricted Stock Units, a certificate for
such shares shall be delivered, free of all such restrictions, to the Grantee or
the Grantee's beneficiary or estate, as the case may be.

13.  STOCK APPRECIATION RIGHTS

    13.1.  Grant of Stock Appreciation Rights.

  The Board may from time to time grant SARs to persons eligible to receive
grants under Section 6 hereof, subject to the provisions of this Section 13 and
to such restrictions, conditions and other terms as the Board may determine.

                                       17
<PAGE>

    13.2.  Nature of a Stock Appreciation Right.

  An SAR shall confer on the Grantee a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the grant price of the SAR, as determined by the Board.
Unless the Board provides otherwise in the Award Agreement, the grant price of
an SAR shall not be less than the Fair Market Value of a share of Stock on the
Grant Date.

    13.3.  Terms and Conditions Governing SARs.

  The Board shall determine at the Grant Date or thereafter the time or times at
which and the circumstances under which an SAR may be exercised in whole or in
part (including exercise based on achievement of performance objectives or
future service requirements), the time or times at which and the circumstances
under which an SAR shall cease to be exercisable, the method of exercise, the
method of settlement, form of consideration payable in settlement, whether or
not an SAR shall be in tandem or in combination with any other Grant, and any
other terms and conditions of any SAR.

14.  UNRESTRICTED STOCK

  The Board may, in its sole discretion, grant Stock (or sell Stock at par value
or such other higher purchase price determined by the Board) free of
restrictions other than those required under federal or state securities laws
("Unrestricted Stock") to persons eligible to receive grants under Section 6
hereof.  Unrestricted Stock may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such Grantee.

15.  PARACHUTE LIMITATIONS

  If the Grantee is a "disqualified individual" (as defined in Section 280G(c)
of the Code), any Option, Restricted Stock, Restricted Stock Unit or SAR and any
other right to receive any payment or benefit under the Plan shall not vest or
become exercisable (i) to the extent that the right to vest or any other right
to any payment or benefit, taking into account all other rights, payments or
benefits to or for the Grantee, would cause any payment or benefit to the
Grantee under the Plan to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute
Payment") and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Grantee from the Company under any
Award Agreements, the Plan, and all other rights, payments or benefits to or for
the Grantee would be less than the maximum after-tax amount that could be
received by the Grantee without causing the payment or benefit to be considered
a Parachute Payment.  In the event that, but for the

                                       18
<PAGE>

provisions of this Section 15, the Grantee would be considered to have received
a Parachute Payment under any Award Agreements that would have the effect of
decreasing the after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall have the right, in the
Grantee's sole discretion, to designate any rights, payments or benefits under
any Award Agreements, the Plan, any other agreements and any benefit
arrangements to be reduced or eliminated so as to avoid having the payment or
benefit to the Grantee under any Award Agreements be deemed to be a Parachute
Payment.

16.  REQUIREMENTS OF LAW

    16.1.  General.

  The Company shall not be required to sell or issue any shares of Stock under
any Grant if the sale or issuance of such shares of Stock would constitute a
violation by the Grantee, any other person exercising a right emanating from
such Grant, or the Company of any provision of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations.  If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares of
Stock subject to a Grant upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares of Stock hereunder, no shares of Stock
may be issued or sold to the Grantee or any other person exercising a right
emanating from such Grant unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way
affect the date of termination of the Grant.  Without limiting the generality of
the foregoing, upon the exercise of any Option or any SAR that may be settled in
shares of Stock or the delivery of any Restricted Stock or shares of Stock
underlying Restricted Stock Units, unless a registration statement under the
Securities Act is in effect with respect to the shares of Stock covered by such
Grant, the Company shall not be required to sell or issue such shares of Stock
unless the Board has received evidence satisfactory to it that the Grantee or
any other person exercising a right emanating from such Grant may acquire such
shares of Stock pursuant to an exemption from registration under the Securities
Act.  Any such determination by the Board shall be final, binding and
conclusive.  The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act.  The Company shall
not be obligated to take any affirmative action in order to cause the exercise
of an Option or an SAR or the issuance of shares of Stock pursuant to the Plan
to comply with any law or regulation of any governmental authority.  As to any
jurisdiction that expressly imposes the requirement that an Option (or SAR that
may be settled in shares of Stock) shall not be exercisable until the shares of
Stock covered by such Option (or SAR) are registered or are exempt from
registration, the exercise of such Option (or SAR) under circumstances in which
the laws of such jurisdiction apply shall be

                                       19
<PAGE>

deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.

    16.2.  Rule 16b-3.

  During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Grants pursuant to the Plan and the exercise of Options and SARs granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act.  To the extent that any provision of the Plan or action by the
Board does not comply with the requirements of Rule 16b-3, such provision or
action shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan.  In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify the Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.

17.  AMENDMENT AND TERMINATION OF THE PLAN

  The Board may, at any time and from time to time, amend, suspend or terminate
the Plan as to any shares of Stock as to which Grants have not been made.
Except as permitted under this Section 17 or Section 18 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the Grantee,
alter or impair rights or obligations under any Grant theretofore awarded under
the Plan.

18.  EFFECT OF CHANGES IN CAPITALIZATION

    18.1.  Changes in Stock.

  Subject to Section 18.2 hereof, in the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend, spin-
off, split-up, share combination or other change in the corporate structure of
the Company affecting the shares of Stock, (a) such adjustment may be made in
the number and class of shares which may be delivered under Section 4 hereof and
the Grant limits under Section 4 hereof, and in the number and class of or price
of shares subject to outstanding Grants as may be determined to be appropriate
and equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of existing rights; and (b) the Board or, if another legal entity
assumes the obligations of the Company hereunder, the board of directors,
compensation committee or similar body of such other legal entity shall either
(i) make appropriate provision for the protection of outstanding Grants by the
substitution on an equitable basis of appropriate equity interests or awards
similar to the Grants, provided that the substitution neither enlarges nor
diminishes the value and rights under the Grants, or (ii) upon written notice to
the Grantees, provide that Grants shall be exercised

                                       20
<PAGE>

distributed, canceled or exchanged for value pursuant to such terms and
conditions (including the waiver of any existing terms or conditions) as shall
be specified in the notice. Any adjustment of an Incentive Stock Option under
this Section 18.1 shall be made in such a manner so as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. The
conversion of any convertible securities of the Company shall not be treated as
a change in the corporate structure of the Company affecting the shares of
Stock. Subject to any contrary language in an Award Agreement evidencing a Grant
of Restricted Stock, any restrictions applicable to such Restricted Stock shall
apply as well to any replacement shares received by the Grantee as a result of
the merger, reorganization or other transaction referred to in this Section
18.1.

    18.2.  Reorganization, Sale of Assets or Sale of Stock.

  Upon the dissolution or liquidation of the Company or upon a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board that results in any
person or entity (or person or entities acting as a group or otherwise in
concert) owning eighty percent (80%) or more of the combined voting power of all
classes of securities of the Company, (i) all outstanding Restricted Stock and
Restricted Stock Units shall be deemed to have vested, and all restrictions and
conditions applicable to such Restricted Stock and Restricted Stock Units shall
be deemed to have lapsed, immediately prior to the occurrence of such
transaction, and (ii) all Options and SARs outstanding hereunder shall become
immediately exercisable for a period of fifteen days immediately prior to the
scheduled consummation of such transaction.  Any exercise of an Option or SAR
during such fifteen-day period shall be conditioned upon the consummation of the
transaction and shall be effective only immediately before the consummation of
the transaction.

  This Section 18.2 shall not apply to any transaction to the extent that (A)
provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of the Options, SARs, Restricted
Stock and Restricted Stock Units theretofore granted, or for the substitution
for such Options, SARs, Restricted Stock and Restricted Stock Units of new
options, stock appreciation rights, restricted stock and restricted stock units
covering the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, in which event the Plan and Options, SARs, Restricted Stock and
Restricted Stock Units theretofore granted shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that
such transaction shall not trigger application of the provisions of this Section
18.2 subject to Section 26 hereof

                                       21
<PAGE>

and limited by any "change in control" provision in any employment agreement or
Award Agreement applicable to the Grantee. Upon consummation of any such
transaction, the Plan and all outstanding but unexercised Options and SARs shall
terminate, except to the extent provision is made in writing in connection with
such transaction for the continuation of the Plan or the assumption of such
Options and SARs theretofore granted, or for the substitution for such Options
and SARs of new options and stock appreciation rights covering the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Options and SARs theretofore granted shall continue
in the manner and under the terms so provided. The Board shall send written
notice of an event that will result in such a termination to all individuals who
hold Options and SARs not later than the time at which the Company gives notice
thereof to its stockholders.

    18.3.  Adjustments.

  Adjustments under this Section 18 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive.  No fractional shares or other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.

    18.4.  No Limitations on Company.

  The making of Grants pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.

19.  DISCLAIMER OF RIGHTS

  No provision in the Plan or in any Grant or Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or service of
the Company or any affiliate thereof, or to interfere in any way with any
contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any affiliate thereof.  In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement or employment agreement, no Grant
awarded under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company.

                                       22
<PAGE>

The obligation of the Company to pay any benefits pursuant to the Plan shall be
interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan shall
in no way be interpreted to require the Company to transfer any amounts to a
third party trustee or otherwise hold any amounts in trust or escrow for payment
to any participant or beneficiary under the terms of the Plan. No Grantee shall
have any of the rights of a stockholder with respect to the shares of Stock
subject to an Option or SAR except to the extent such shares of Stock shall have
been issued upon the exercise of the Option or SAR.

20.  NONEXCLUSIVITY OF THE PLAN

  Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of Stock options
otherwise than under the Plan.

21.  WITHHOLDING TAXES

  The Company or a Subsidiary, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the exercise of an Option or SAR or the grant of
Unrestricted Stock.  At the time of such vesting, lapse or exercise, the Grantee
shall pay to the Company or the Subsidiary, as the case may be, any amount that
the Company or the Subsidiary may reasonably determine to be necessary to
satisfy such withholding obligation.  Subject to the prior approval of the
Company or the Subsidiary, which may be withheld by the Company or the
Subsidiary, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the
Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii)
by delivering to the Company or the Subsidiary shares of Stock already owned by
the Grantee.  The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations.  The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Subsidiary as of the date that the
amount of tax to be withheld is to be determined.  A Grantee who has made an
election pursuant to this Section 21 may satisfy such Grantee's withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirement.

                                       23
<PAGE>

22.  CAPTIONS

  The use of captions in the Plan or any Award Agreement is for convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.

23.  OTHER PROVISIONS

  Each Grant awarded under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

24.  NUMBER AND GENDER

  With respect to words used in this Plan, the singular form shall include the
plural form and, the masculine gender shall include the feminine gender, as the
context requires.

25.  SEVERABILITY

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

26.  POOLING

  Notwithstanding anything in the Plan to the contrary, if any action described
in the Plan would cause a transaction to be ineligible for pooling of interests
accounting that would, but for the action under the Plan, be eligible for such
accounting treatment, the Board shall modify or adjust such action so that the
transaction will be eligible for pooling of interests accounting, if the Company
intends to use such accounting in the transaction.  Such modification or
adjustment may include payment of cash or issuance to a Grantee of shares of
Stock of equivalent Fair Market Value.

27.  GOVERNING LAW

  The validity and construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the State of Delaware
(without giving effect to the choice of law provisions thereof).

                                    * * * *

                                       24
<PAGE>

  The Plan was duly adopted and approved by the Board of Directors of the
Company as of the 25th day of July, 2000.

                                      ---------------------------------------
                                      Secretary of the Company

  The Plan was duly approved by the stockholders of the Company as of the ____
day of ______, 2000.

                                      ---------------------------------------
                                      Secretary of the Company

                                       25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}]]