Document:

<PAGE>

                                                                   Exhibit 10.10

Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.

                                    SECTION 1
                                    ---------
                         RESPONSE TO COMMERCIAL SECTION
                         ------------------------------

     TENDER FORM

     NOTICES TO PERSONS TENDERING

     CONDITIONS OF CONTRACT

                                       1
<PAGE>

                               Invitation to Tender
                               --------------------

--------------------------------------------------------------------------------
TO:

 .............................................................................

 .............................................................................

 .............................................................................

 .............................................................................

 .............................................................................

 .............................................................................

DATE :  18TH DECEMBER, 1998
--------------------------------------------------------------------------------

-------------------------------------------------
REFERENCE NO  C/369/MULTIPOINT
-------------------------------------------------

You are invited to tender for carrying out, on behalf of Eircom
PlC, (hereinafter referred to as Eircom), the work described in the
Schedule to the subjoined Form of Tender.

Tenders are to be delivered, by return post or otherwise not later than
Wednesday the 20th of January 1999.

--------------------------------------------------------------------------------
Issued on Behalf of Eircom C. MAHER  Executive  Director
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
TENDER OPENED

DATE  ................................     TIME.................................

(1) ....................... (2) ............................  (3)...............
--------------------------------------------------------------------------------

                                       2
<PAGE>

Notice to persons tendering
---------------------------

1.   This Form is to be returned intact. A completed copy will be sent in case
     of acceptance of the Tender.

     NOTED AND COMPLIANT.

2.   A tender shall hold good for ten calendar months from the closing date
     specified for delivery of the

     Tender, and thereafter until withdrawn by formal notice in writing given by
     the person tendering, received before acceptance of the Tender by eircom.
     If the person tendering desires that the Tender shall hold good for a
     shorter time than ten calendar months he must signify, at the foot of the
     Tender, the period for which it will hold good.

     COMPLIANT.

3.   Eircom does not bind itself to accept the lowest or any Tender, and
     reserves the right of accepting any part of the Tender, unless the person
     tendering expressly stipulates to the contrary.

     NOTED.

4.   The rates and prices inserted in this Schedule must be "net" in all cases.

     COMPLIANT.
     NOTE: IT IS ASSUMED THAT "NET" IS INCLUSIVE OF ALL DUTIES BUT EXCLUDES
     SALES TAX OR VAT AS REQUIRED IN PARAGRAPH 31.1.

5.   Where it is specified in the Schedule that any article is to be to pattern
     or sample, such pattern or sample may be seen on request to the Director.
     The official brand and the accompanying initials stamped upon the pattern
     are, however, not to be copied.

     NOTED

6.   Any modification which the person tendering may desire to make in the
     "Conditions of Contract" or in the specification, must be made by means of
     a letter, with drawings if necessary, accompanying and enclosed with the
     Tender.  If a modification in the Specification be suggested which will
     result in any difference in rates and prices, alternative rates and prices
     must be furnished with the Tender.

     NOTED. MODIFICATIONS AND COMMENTS, WHERE SUGGESTED, HAVE BEEN INSERTED
     DIRECTLY BELOW THE PARAGRAPH IN QUESTION.

     IMPORTANT

     (a)  Notwithstanding any modification proposed by the person tendering it
          is essential that a tender fully in accordance with the "Conditions of
          Contract" and Specification be furnished.

          NOTED

     (b)  Where modifications are proposed either in the "Conditions of
          Contract" or in the Specification which will result in any difference
          in rates and prices, an alternative tender with revised prices must be
          furnished, (in addition to the tender in (a)).

          NOTED

7.  For further information or clarification the following people are the
contact points :

     TECHNICAL
     ---------

     NAME:    Richard Poff

                                       3
<PAGE>

     ADDRESS:  Room 1.76C,
               Eircom,
               St Stephen's Green West
               Dublin 2

     TELEPHONE +353-1-701 5557

     FAX :     +353-1-679 5339

     NOTED

     Commercial
     ----------

     NAME:  Joe Ryan

     ADDRESS:  Room 3.69
               Eircom,
               St Stephens Green West
               Dublin 2

     TELEPHONE +353-1-701 5472

     FAX:      +353-1-679 4708

     NOTED

8.   TAX CLEARANCE
     -------------

     The Contractor should note that it will be a condition for the award of a
     contract that the person tendering must also be able to produce promptly a
     current Tax Clearance Certificate (unless he has a current sub-contractor's
     C2 certificate).

     NOTED

9.   PAYMENT OF PRSI
     ---------------

     The Contractor should note that he will be required to make the appropriate
     remittances in respect of PAYE and PRSI to the Revenue Commissioners.
     Evidence of participation in the CIF Pension /Sick Pay Scheme must be
     produced.

     NOTED

10.  LEGALLY BINDING AGREEMENT
     -------------------------

     The Contractor should note that he will be required to comply with legally
     binding  agreements appropriate to the grades of workers employed, such as
     the registered Agreements  for the Construction Industry, and to afford
     Trade Unions reasonable facilities to ensure such compliance.

     NOTED

11.  QUALIFIED PERSONS
     -----------------

     The Contractor should note that he will be required to assign suitably
     qualified persons to perform work which demands a particular skill.

                                       4
<PAGE>

     NOTED.

12.  TENDER DOCUMENTATION
     --------------------

     Tenderers shall submit the Original copy of the Tender, and an additional
     two copies.

     COMPLIANT.

13.  COMPLIANCE
     ----------

     For each Clause in the Conditions of Contract, and the Specification, the
     Tenderer shall state clearly whether or not he is compliant.  In respect of
     Clauses with which he is not fully compliant, the Tenderer shall submit an
     explanatory comment.

     COMPLIANT.

14.  CURRENCY OF TENDER
     ------------------

     Tenderers shall price their bid in fixed Irish Pounds or Euros.
     Exceptionally a contract in the currency of the country of origin of the
     equipment and services will be considered.
     COMPLIANT. PRICES QUOTED IN THIS TENDER ARE IN EUROS.

15.  COPYRIGHT
     ---------

     The copyright of this specification is vested in eircom. No part of the
     specification, or any part therein, may be reproduced or transmitted to any
     third party save with Eircom's prior written permission.

     NOTED

16.  CRITERIA FOR AWARD OF CONTRACT
     ------------------------------

     . Compliance with the Technical Specification
     . Equipment Performance, Features and Reliability
     . Record of field proven equipment similar to that tendered
     . After sales technical support
     . Ease of installation, commissioning and maintenance
     . Delivery/Completion timescales
     . Price and commercial conditions

     NOTED

                                       5
<PAGE>

TENDER
------

"I" or "We"
the undersigned, do hereby offer in accordance with the foregoing invitation and
"Notice to Persons tendering," to carry out on behalf of Eircom the whole or any
part of the work described in the Schedule hereto, at the respective rates
and/or prices and within the times which have been entered in the said Schedule,
and in all respects subject to the several terms and stipulations contained in
the said Schedule , in the "Conditions of Contract" and in the Specification or
Specifications mentioned in the Schedule hereto.  The particulars required under
clause 51 of the "Conditions of Contract" (Country of Manufacture) have been
shown on Page 6 of this Form of Tender.

Dated this.....19TH......................day of...JANUARY......  19.99........

Signature
 ................................................................................

Postal Address    5, New Square,
                  Bedfont Lakes
                  Feltham,
                  Middlesex
                  TW14 8HA

The Schedule  referred to in the above Tender

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Description                                                                         Rates and/or Prices for
                                                                                    the work complete (net)
-----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>
Provision of Fixed Wireless Point to Multipoint Access Radio Systems.          Please refer to Section 3 of this
                                                                               proposal which provides Unit
                                                                               price and configuration
                                                                               information required.

-----------------------------------------------------------------------------------------------------------------
Time required after date of Eircom's acceptance of this Tender                 To be agreed, depending upon
by issue of an Engineering Order                                               scope of work

-----------------------------------------------------------------------------------------------------------------
Days required (including Saturdays, Sundays and Public                         To be agreed, depending upon
Holidays) for completion of the work                                           scope of work

-----------------------------------------------------------------------------------------------------------------
Days required (including Saturdays, Sundays and Public                         To be agreed, depending upon
Holidays) before commencement of  work on site                                 scope of work

-----------------------------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
Accepted on behalf of Eircom

Signature  ..............................    Date  ......... 19.........
--------------------------------------------------------------------------------

COUNTRY OF MANUFACTURE
----------------------

                                       6
<PAGE>

The Tenderer shall state below the country in which the material has been, or
will be, made or produced.  Any class of materials the total value of which is
less than (Pounds)1000 need not be shown.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class of Material                             * Value           Country of Manufacture
-----------------------------------------------------------------------------------------

All equipment included in this
tender has individual is
manufactured in either the UK or
the Republic of Ireland.
The following specific items have
value of greater than (Pounds)1000

<S>                                        <C>                       <C>
Rack Frameworks (various)                   (Pounds)5000               England
Power Amplifiers                            (Pounds)1800               England
Antennas                                    (Pounds)1000               England/ Germany
DA AU Card                                  (Pounds)1000               Ireland
DA TU Card                                  (Pounds)1300               Ireland
DA SC Card                                  (Pounds)1500               Ireland
CU Card                                     (Pounds)3500               Ireland
D128 ST                                     (Pounds)2040               Ireland
ISDN ST                                     (Pounds)1500               Ireland

-----------------------------------------------------------------------------------------
</TABLE>

* the amount shown should be included under "Rates and/or Prices for the work
  complete" in the Schedule to the Form of Tender

--------------------------------------------------------------------------------
The items shown above as being of Irish manufacture have been, or will
be,  made or produced at the following address/addresses  :-

                            Alcatel
                            Donore Industrial Estate
                            Drogheda
                            Ireland
--------------------------------------------------------------------------------

                                       7
<PAGE>

                          Section 1 - Table of Contents
                         -------------------------------
1.   DEFINITIONS ............................................      9
2.   PERFORMANCE OF WORK ....................................      10
4.   SAMPLES ................................................      10
5.   QUALITY AND FITNESS ....................................      10
6.   CARE OF STORES .........................................      10
7.   PATENTED ARTICLES ......................................      11
8.   ASSIGNMENT AND SUB-CONTRACTORS .........................      12
9.   ACCESS TO CONTRACTOR'S WORK ............................      12
10.  LICENCES FOR MANUFACTURING .............................      12
11.  SUPERVISION AND INSPECTION OF WORK .....................      12
12.  PROGRESS REPORT ........................................      12
13.  TIMES OF WORK ..........................................      13
14.  FAIR WAGES .............................................      13
16.  INFRINGEMENT OF CLAUSE 14 ..............................      13
18.  SCHEDULE OF QUANTITIES .................................      14
19.  STORAGE ACCOMMODATION ..................................      14
20.  BUILDINGS AND ACCOMMODATION ............................      15
21.  TOOLS, PLANT, APPLIANCES AND TEST EQUIPMENT ............      15
22.  REQUIREMENTS FOR PROJECT IMPLEMENTATION ................      15
23.  TEST SCHEDULE ..........................................      16
24.  ACCEPTANCE TESTING AND ACCEPTANCE ......................      16
25.  IMPERFECT WORK .........................................      16
26.  RE-EXAMINATION OF CONDEMNED WORK .......................      17
27.  REMOVAL OF WASTE MATERIALS RUBBISH etc .................      18
28.  CARRIAGE, INSURANCE AND FREIGHT ........................      18
29.  CUSTOMS CLEARANCE ......................................      18
30.  PACKING CASES ..........................................      18
31.  PRICE AND PRICE VARIATION ..............................      18
32.  CONTRACTORS STATEMENTS .................................      20
33.  ACCOUNTS ...............................................      21
34.  PAYMENT ................................................      21
35.  EFFECT OF VALUE ADDED TAX, CUSTOMS OR OTHER DUTIES......      21
36.  HINDRANCES .............................................      22
37.  SUSPENSION OF WORK .....................................      22
38.  INDEMNITY AND LIABILITY ................................      22
39.  NON - PERFORMANCE OF CONTRACT ..........................      23
40.  INSURANCE ..............................................      24
41.  TERMINATION ............................................      25
42.  ARBITRATION ............................................      26
43.  EXPENSES RECOVERABLE BY EIRCOM .........................      26
44.  SURETIES ...............................................      26
45.  FORCE MAJEURE ..........................................      27
46.  STATUTORY AND OTHER REGULATIONS ........................      27
48.  LANGUAGE AND LAW .......................................      28
49.  NOTICE TO CONTRACTOR ...................................      28
50.  CORRESPONDENCE .........................................      28
51.  COUNTRY OF MANUFACTURE .................................      28
52.  SAFETY .................................................      28
53.  CONFIDENTIALITY ........................................      28
54.  YEAR 2000 ..............................................      29
55.  SUFFICIENCY OF TENDER ..................................      30
APPENDIX 1  NON-PERFORMANCE OF CONTRACT .....................      32

                                       8
<PAGE>

1.         DEFINITIONS.

In the Tender and Schedule thereto, unless the context otherwise requires: -

(i)    The word "Ireland" does not include any area which is not within the area
       and extent of application of the laws enacted by the Oireachtas.

(ii)   The term "Eircom" means Eircom Plc.

(iii)  The term "Tender" means the form of Tender as signed by the person
       tendering, together with the Notice to Persons Tendering, the Conditions
       of Contract, Specification, Schedule (duly filled in) and drawings,
       including any letter submitted with the Tender and any relevant
       correspondence subsequent to the date of tender and prior to the issue of
       an order on foot of the Tender.

(iv)   The term "Contract" means the Contract created by the Tender and the
       acceptance thereof by Eircom.

(v)    The term Contractor means the Tenderer whose Tender has been accepted by
       Eircom. All references to the "Contractor" shall be deemed:

       (a)  In the case of a single Contractor to include his executors,
            administrators and permitted assigns;

       (b)  In the case of several Contractors to include jointly and severally
            the partnership firm (if any) and each of the Contractors and their
            respective executors, administrators and permitted assigns; or

       (c)  In the case of a Company to include its successors and permitted
            assigns;

(vi)   The term "Sub Contractor" means any person to whom any part of the
       contract has been sublet with the permission in writing of the Director.

(vii)  The term "The Work" means all work to be carried out in pursuance of the
       Contract.

(viii) The term "Director" means Executive Director or any of the authorised
       officers of Eircom acting on his behalf.

(ix)   The term "Supervising Officer" means the Officer for the time being
       appointed by the Director for the purpose of superintending the work, or
       where the context permits, the representative of such officer.

(x)    The term "the site" means the actual place to which plant is to be
       delivered or where "The Work" is to be carried out by the Contractor.

(xi)   the term "Validity Period" means the period of six months from the latest
       date for return of tenders as specified in the Invitation to Tender
       herein.

(xii)  the term "Commencement Date" means the date specified for the
       commencement of work in the Schedule to the Tender herein.

(xiii) the term "Completion Date" means the date specified for the completion of
       work in the Schedule to the Tender herein.

(xiv)  the term "Equipment" means any equipment to be delivered and installed by
       the Contractor as part of the work.

(xv)   The term "Overtime" means Saturday work, that is work performed between
       the hours of 12 midnight Friday and 12 midnight on the following
       Saturday. Sunday work is work performed
                                       9
<PAGE>

        between the hours of 12 midnight Saturday and 12 midnight on the
        following Sunday; Night work, that is work performed between the hours
        of 20.00 and 08.00 hours excluding Saturday and Sunday work and all work
        performed on a Public Holiday.

(xvi)   Words importing persons shall include firms and corporations. Words
        importing the masculine gender shall include the feminine gender and
        vice versa. Words importing singular only shall also include the plural
        and vice versa.

        NOTED

(xvii)  The term "Performance Bond" means the single bond that the Contractor
        will raise to cover contract performance under the contract, having a
        total value of EURO 4Million.

2.   PERFORMANCE OF WORK.

The Work to be performed under the Contract shall, unless the Supervising
Officer orders otherwise in writing, be commenced on the Commencement Date.
NOTED.

3.  STANDARD OF WORK.

All Work performed under the Contract shall be of the highest professional
standards and to the satisfaction of Eircom.   All materials or articles
supplied by the Contractor, in connection therewith shall be equal in every
respect to the standard patterns or samples exhibited or described in connection
with the Tender, and in accordance with any Specification and Drawings
prescribed or approved by the Supervising Officer. The Contractor shall ensure
that the Site is maintained in a clean and tidy manner throughout the duration
of the Contract.

COMPLIANT

4.   SAMPLES

Where it is specified in the Schedule that samples are to be submitted with the
Tender, such samples shall, in the event of the Tender being accepted, and
unless otherwise agreed in writing, be taken as the standard by which the supply
in bulk shall be governed.

COMPLIANT

5.   QUALITY AND FITNESS

For the avoidance of doubt it is hereby declared that Section 14 of the Sale of
Goods Act 1893 and Section 39 of the Sale of Goods and Supply of Services Act
1980 shall apply to the Goods and Services supplied under this Specification.
NOTED

6.   CARE OF STORES

     6.1  All the materials and tools supplied by Eircom to the Contractor shall
          remain the property of Eircom.  The Contractor shall return them to
          Eircom upon completion or termination of the Contract or earlier on
          reasonable request by Eircom.

          COMPLIANT

     6.2  The Contractor shall be responsible for the safety of all materials
          and tools deposited with him by eircom in connection with the
          Contract, and shall be liable for any loss of, or damage to, such
          materials and tools whilst they are in his custody. Also, the
          Contractor shall keep such records of the materials and tools so
          deposited as will enable the Supervising Officer from time to time to
          check the quantities used and in hand against those delivered to the
          Contractor's charge.

          COMPLIANT

                                       10
<PAGE>

     6.3  The Contractor shall not, without the prior written consent of eircom,
          use the Eircom supplied materials and tools for any purpose other than
          is necessary for the performance of the Contract, or allow any other
          party to use, take possession of, or have any other rights or lien
          over Eircom supplied materials and tools or other property of Eircom.

          COMPLIANT

     6.3  In the event of any threatened seizures of any of the Eircom supplied
          materials and tools or other property of eircom in the event of the
          Contractor going into receivership, liquidation or examinership or
          equivalent, the Contractor shall :

                    (i)   notify Eircom immediately
                    (ii)  draw the attention of the receiver, liquidator or
                          examiner or any other appointed official to the fact
                          that eircom supplied materials and tools do not form
                          part of the Contractor 's assets;
                    (iii) allow Eircom to enter into any premises where the
                          materials and tools are being kept for the purpose of
                          taking possession of such materials and tools that are
                          at that time the property of Eircom;
          COMPLIANT

     6.4  The provisions of this condition shall survive the expiry or
          termination of the Contract.

          COMPLIANT

7.   PATENTED ARTICLES

     7.1  Patented articles to include without limitation letters patent,
          registered designs, copyright, trademark or trades name supplied under
          the Contract shall be marked in accordance with the provisions of the
          relevant legislation in force for the time being.  The Contractor
          shall indemnify eircom against any action, claim or demand for
          infringement of any patent rights in respect of any articles or
          combination of articles under the Contract, or for royalty or damage
          in respect thereof.

          COMPLIANT

     ACL AGREES TO INDEMNIFY AND HOLD EIRCOM HARMLESS WITH RESPECT TO ANY SUIT,
     CLAIM, OR PROCEEDING BROUGHT AGAINST EIRCOM BY A THIRD PARTY ALLEGING THAT
     EIRCOM'S USE OF THE EQUIPMENT OR THE SOFTWARE, SEPARATELY OR IN
     COMBINATION, AS A WHOLE OR IN PART, CONSTITUTES AN INFRINGEMENT OF ANY
     PATENT OR COPYRIGHT OR MISUSE OF PROPRIETARY OR TRADE SECRET INFORMATION.
     ACL AGREES TO DEFEND EIRCOM AGAINST ANY SUCH CLAIMS AND TO PAY ALL
     LITIGATION COSTS, REASONABLE ATTORNEY'S FEES, SETTLEMENT PAYMENTS, AND ANY
     DAMAGES AWARDED OR RESULTING FROM ANY SUCH CLAIM.

     EIRCOM SHALL PROMPTLY ADVISE ACL OF ANY SUCH SUIT, CLAIM, OR PROCEEDING AND
     SHALL CO-OPERATE WITH ACL IN THE DEFENCE OR SETTLEMENT THEREOF.  ACL SHALL
     HAVE SOLE CONTROL OF THE DEFENCE OF ANY ACTION INVOLVING SUCH A CLAIM AND
     OF ALL NEGOTIATIONS FOR ITS SETTLEMENT OR COMPROMISE.

     THIS INDEMNITY SHALL NOT APPLY TO CLAIMS ARISING IN RESPECT TO THE USE OF
     THE EQUIPMENT OR SOFTWARE SUPPLIED BY ACL OR MANUFACTURED BY ITS SUPPLIERS
     IF USED BY EIRCOM IN A MANNER OR FOR A PURPOSE NOT CONTEMPLATED BY THIS
     AGREEMENT.

                                       11
<PAGE>

     7.2  In the event of any article mentioned in the Schedule being, to the
          knowledge of the person tendering, covered by an existing patent or
          the subject of an application for a patent, a declaration to that
          effect (stating where possible the number and date of the patent or
          application) must accompany the tender.

          COMPLIANT.

8.   ASSIGNMENT AND SUB-CONTRACTORS

The Contractor shall not without the permission in writing of eircom assign or
sub-contract the whole or any part of the Contract to any third party.  Any such
permission, if given, shall not relieve the Contractor of any obligation or
liability under the Contract.  The Contractor shall be responsible for the acts,
defaults and neglects of any sub-contractor, his servants or agents as fully as
if they were acts, defaults or neglects of the Contractor .

COMPLIANT.

9.   ACCESS TO CONTRACTOR'S WORK

The Supervising Officer shall be entitled at all reasonable times during
manufacture to inspect, examine and test on the Contractor's premises the and
materials and workmanship performance of all plant to be supplied under Contract
and if part of the said plant is being manufactured on other premises the
Contractor shall obtain for the Supervising Officer permission to inspect,
examine and test as if the said plant was being manufacturing on the
Contractor's premises.

COMPLIANT.

10.  LICENCES FOR MANUFACTURING

It is the responsibility of the Contractor to ensure that appropriate licences
have been granted to him for the manufacturing of all Equipment offered in
response to this specification.

COMPLIANT.

11.  SUPERVISION AND INSPECTION OF WORK

The Supervising Officer may, during the progress of the work, inspect the
operations of the Contractor to satisfy himself that The Work is being carried
out in accordance with the Contract, provided always that the provisions of this
clause 11 or the preceding clause 10  shall not release the Contractor from any
obligation under the Contract.

COMPLIANT.

12.  PROGRESS REPORT

The Contractor shall render such reports to eircom on the performance of the
Contract and attend such meetings as may be reasonably required.

                                       12
<PAGE>

COMPLIANT.

13.  TIMES OF WORK

(a)  Weekdays  -  Tenderers shall state the times of Work envisaged in their
     Tender. In general, overtime work shall not be permitted at eircom
     premises. Where such overtime work is deemed necessary by the Director,
     for example to minimise down-time of working systems, the Contractor shall
     endeavour to give as much notice as possible to the Supervising Officer of
     any overtime proposed and in the case of Weekend or Public Holiday Work at
     least two working days notice shall be given. All overtime shall be subject
     to the prior approval of the Director.

     The Director shall be notified in writing of any proposed extended
     stoppages in the Contract resulting from Annual Holidays, Public Holidays,
     etc.

     NOTED. DETAILS OF STANDARD WORKING TIMES ARE PROVIDED IN THE CUSTOMER
     SERVICE SUPPORT PRINCIPLES OF AGREEMENT DOCUMENT INCLUDED WITH THIS
     PROPOSAL

(b)  Weekend or Night Work
     When the Director instructs the Contractor to carry out overtime work, the
     Contractor may charge in respect of such work the amount of the net actual
     increase in wages paid to his staff employed on the work, over that paid
     for Work performed Monday through to Friday. Tenderers shall state (in
     their Tender) the increase in wages above the Basic Hourly Wage Rate for
     the various grades of staff involved.

     NOTED. DETAILS OF STANDARD WORKING TIMES ARE PROVIDED IN THE CUSTOMER
     SERVICE SUPPORT PRINCIPLES OF AGREEMENT DOCUMENT INCLUDED WITH THIS
     PROPOSAL

14.  FAIR WAGES

The Contractor shall pay rates of wages and observe hours of labour not less
favourable than those commonly recognised by employers and trade societies (or
in the absence of such recognised wages and hours, those which in practice
prevail amongst good employers) in the trade in the district where the Work is
carried out.  Where there are no such wages and hours recognised or prevailing
in the district, those recognised or prevailing in the nearest district in which
the general industrial circumstances are similar shall be adopted.  Further, the
conditions of employment generally accepted in the district in the trade
concerned shall be taken into account in considering how far the terms of this
Clause are being observed, and for this purpose also regard shall be had to the
conditions of employment generally in the contracting firm.  The Contractor
shall be responsible for the observance of this Clause by a Sub-Contractor to
whom the Work or any portion thereof has been assigned.

COMPLIANT.

15.  EXHIBITION OF NOTICE.

The Contractor shall cause the preceding Clause to be prominently exhibited for
the information of his work-people, at every place, where any work is being
executed under the Contract.  Cards for this purpose can be obtained on
application to the Director.  In trade where it is the practice, the Contractor
shall also cause to be exhibited, or have available for inspection, a copy of
any signed agreement, determining the rates of wages and hours of labour
commonly recognised by employers and trade societies in the district.

COMPLIANT.

16.  INFRINGEMENT OF CLAUSE 14.

                                       13
<PAGE>

Any infringement of the Conditions specified in Clause 14, if proved to the
satisfaction of Eircom (whereof a certificate under the hand of a duly
authorised officer of Eircom shall be sufficient evidence), shall render the
Contractor liable to pay to Eircom by way of liquidated damages, and not as a
penalty, the sum of (Pounds)250, which may at any time be deducted from any sum
or sums which are then due or which at any time thereafter may become due to the
Contractor under any Contract between the Contractor and eircom or may be
demanded of him to be paid, and shall thereupon be paid within fourteen days.
In addition thereto, eircom may, upon any such infringement, whether of Clause
14 or of any corresponding Clause in any other Contract between the Contractor
and Eircom, forthwith terminate this Contract, and any other existing Contract
between Eircom and the Contractor, and may recover from the Contractor any loss
resulting from such termination.

COMPLIANT.

17.  INSPECTION OF WAGES BOOKS etc

The Contractor shall keep proper wages books and time sheets, showing the wages
paid to and the time worked by the work- people in his employment and about the
execution of the Contract, and such wages books and time sheets shall be
produced whenever required for the inspection of any officer authorised by  the
Director.

COMPLIANT.

18.  SCHEDULE OF QUANTITIES

     18.1 Prior to the commencement of the work, the Contractor shall supply to
          the Director six copies of a Schedule in which shall be listed all
          Materials and Equipment including test equipment, installation
          materials, tools and spare items to be supplied on the work.  This
          schedule shall show the  if any variation in quantity or disposition
          becomes necessary, the Contractor shall furnish an amended Schedule.

          COMPLIANT.

     18.2 The Contractor shall not carry out any variations to the Contract
          unless agreed in writing with Eircom.

          COMPLIANT.

     18.3 Eircom may, from time to time by notice in writing, amend the
          specification, and from the date specified in the notice the relevant
          part of the work shall be in accordance with the specification as
          amended.

          COMPLIANT.

     18.4 Eircom may instruct the Contractor to carry out additional work or
          omit any part of the work. Details of any additional work or any work
          not required will be provided to the Contractor in writing.

          COMPLIANT.

     18.5 The Contractor shall act immediately upon Eircom's requests for
          amendments under this condition. Any increases or decreases in price
          and time-scale as a result of such changes shall be subject to pro-
          rata amendment to be mutually agreed between the parties.

          COMPLIANT.

19.  STORAGE ACCOMMODATION

     19.1 The Contractor shall be responsible for the delivery to the Site of
          all equipment

                                       14
<PAGE>

          and materials in connection with the work. However, where it is not
          possible to deliver Equipment directly to the Site the Contractor
          shall provide suitable storage accommodation, at his own expense at a
          convenient distance from the site.

     COMPLIANT.

     19.2 The Director shall at all reasonable times have free access to this
          accommodation for the purpose of inspecting the storage of Equipment
          and Materials.

     COMPLIANT.

20.  BUILDINGS AND ACCOMMODATION

     20.1 Where it is envisaged that the Equipment to be provided under this
          Contract shall be installed at existing Eircom premises, floor plans
          indicating the proposed location for the Equipment to be installed and
          identifying the location of existing Equipment may be arranged, by
          visits to site prior appointment with the Director.

          COMPLIANT.

     20.2 The Contractor shall be deemed to have allowed in his Tender and
          Tender Rates for the carrying out of Installation Works without
          interference to the normal working of Eircom Equipment and for
          protecting the Equipment and existing Equipment from interference or
          damage arising from the Work including the provision of dust proof
          screens and draught lobbies.

          COMPLIANT.

21.  TOOLS, PLANT, APPLIANCES AND TEST EQUIPMENT

The Contractor shall provide all tools, test equipment, appliances and
scaffolding required for the conveyance of the equipment on to the site and for
the performance of the whole of the work and shall remove the same on the
completion of the work.  He shall take adequate precautions to prevent damage to
or staining of the floors, walls and ceilings during the progress of
installation.

Compliant.

22.  REQUIREMENTS FOR PROJECT IMPLEMENTATION

     22.1 Appointment of Project Manager
          ------------------------------
          The Contractor, as part of the Contract Award, may be required to
          nominate a Project Manager, who shall be responsible for the overall
          Direction, Management and Supervision of the Contractor's Activities
          on The Site. The Contractor shall provide full details on the
          qualifications and experience of the nominated Project Manager for the
          approval of Eircom.  Field experience on similar Projects shall be a
          primary requirement.

          COMPLIANT.

     22.2 Project Execution and Review
          ----------------------------
          Within thirty days of Acceptance of his Tender, the Contractor shall
          develop overall Project Execution and  Review (PERT) type charts.
          The Review will be in graphical form, and shall highlight all events
          relating to the Project with an indication of time scale for each
          event. "Critical Paths" shall be identified. The basic design to be
          adopted in the layout of the presentation of the information shall be
          subject to the approval of Eircom.

          Within thirty days of Acceptance of his Tender, the Contractor shall
          enter into Design Review discussions to finalise with eircom all
          aspects of the Project.
          COMPLIANT.

                                       15
<PAGE>

23.  TEST SCHEDULE

The Contractor shall, within 60 calendar days of acceptance of Tender, provide
the Director with a Schedule of the Tests he proposes to perform upon the
System, to demonstrate that it conforms to the Specification in all respects.
The Contractor shall be required to obtain the approval of eircom in respect of
the Test Schedule, before equipment installation shall commence.  Eircom
reserves the right to require that further tests (additional to those listed in
the Test Schedule) be performed.

COMPLIANT.

24.  ACCEPTANCE TESTING AND ACCEPTANCE

Acceptance Testing shall consist of the following elements:

     (i)   Factory Tests

     (ii)  Acceptance Testing

     COMPLIANT.

    24.1  Factory Tests
          -------------
          The various System Elements shall be tested by the Contractor at his
          premises, before delivery to site. Test Reports incorporating the
          results obtained shall be furnished by the Contractor. The Contractor
          shall provide at least one months Advance Notice (of these tests), to
          permit Eircom to exercise its right to be represented at these tests.

          COMPLIANT.

    24.2  Acceptance Testing
          ------------------
          Upon completion of equipment commissioning, the Contractor and eircom
          shall participate in joint acceptance testing. The test figures
          obtained shall be equal to or better than the Guaranteed Test Figures
          supplied by the Contractor. The contractor shall supply, at his own
          expense, the necessary staff and any proprietary test equipment, to
          enable the acceptance tests to be made.

          COMPLIANT.

    24.3  Acceptance
          ----------
          If as a result of these tests the system is found to be in total
          accordance with the specification, it shall be accepted. Such
          acceptance shall be without prejudice to:
          (i)  any  claim of Eircom in respect of any defects which may
               subsequently develop in the installation or performance of the
               system during the guarantee period of Maintenance as provided for
               in clauses 25.2 and 25.4 hereof; or
          (ii) any other claims which may arise under clause 25 hereof.

     COMPLIANT

25.  IMPERFECT WORK

     25.1  The Director shall condemn any work which, in his opinion, has not
          been performed in accordance with the terms of the Contract and the
          Contractor shall, at his own cost and charge, rectify the same. The
          Contractor shall take back any equipment, materials or articles that
          shall be considered by the Supervising Officer to be unsound or
          otherwise not

                                       16
<PAGE>

          conforming with the Specifications and he shall not again attempt to
          use such equipment, materials or articles on any work for eircom. Any
          Equipment, Materials or Articles which are condemned, shall be removed
          from the site within 14 days. If the Contractor shall neglect to
          rectify, reform or reconstruct any Work as aforesaid, within a Period
          to be specified by the Director or shall omit to take back any
          Equipment, Materials or Articles which shall be considered by the
          Director to beunsound or otherwise not in conformity with the
          Specification or shall fail to provide immediately suitable Equipment,
          Materials or Articles in lieu of those condemned, then the Contractor
          shall at once cause the Work to be stopped, if so instructed by the
          Director, and the Director shall be at liberty forthwith to employ
          another Contractor to perform the work and to supply the required
          equipment and materials at the expense of the Contractor

          COMPLIANT WITHIN THE AGREED WARRANTY PERIOD.

     25.2 The Contractor shall at his own Cost, notwithstanding Payment by
          Eircom replace or repair any Equipment, Materials or Articles which,
          before completion and final acceptance of the whole work are found to
          be defective from any cause whatsoever, (including the act, whether
          wrongful or otherwise, of a Third Party) or, which within 24 Calendar
          Months after shipment of the of the equipment are found to be
          defective by reason of faulty design, workmanship or Materials or of
          any act, neglect, omission or failure on the part of the Contractor,
          his servants or agents.

          COMPLIANT

     25.3 The Director may, by notice in writing to the Contractor, require the
          Contractor to repay any sum paid in respect of any defective
          equipment, materials or articles, instead of replacing any effective
          item and upon such repayment such defective equipment, materials or
          articles shall become the property of the Contractor. The Contractor
          shall in either case pay to eircom a sum equal to all expenses (if
          any) incurred by Eircom in testing and examining for the propose of
          making good, replacing or repairing any defective equipment, materials
          or articles.

          Compliant. Please refer to attached document Customer Services
          Principles of Agreement and Repair and Return Procedure  for details
          of replacement of Defective Units within the warranty period.

     25.4 If any part of the work is found to be defective by reason of faulty
          design, workmanship or materials or any act, neglect, omission or
          failure on the part of the Contractor, his servants or agents within
          the period of six years after Completion and Final Acceptance the same
          shall be made good by the Contractor at this own cost provided such
          defect would not have been disclosed by a reasonable examination prior
          to the expiry of the 12 month period in clause 25.2.

          Compliant.

26  RE-EXAMINATION OF CONDEMNED WORK

If any work performed or article or material provided by the Contractor is
condemned by Eircom pursuant to clause 25 hereof during the progress of the work
and the Contractor considers himself aggrieved, a re-examination of such work or
article of material by an independent person, to be mutually agreed upon by the
Director and the Contractor, shall take place if the Contractor shall, by notice
in writing, addressed to the Director within three days from such condemnation,
so require.  The decision of such person shall be final, and the party against
whom the decision is given shall pay the entire expense of the re-examination.

COMPLIANT

                                       17
<PAGE>

27.  REMOVAL OF WASTE MATERIALS RUBBISH etc

The Contractor shall remove from the site all Packing Crates, Surplus Cable, and
other Waste Materials, resulting from the work.

COMPLIANT

28.  CARRIAGE, INSURANCE AND FREIGHT

All Materials, Articles and Equipment supplied by the Contractor as part of or
under the contract or under any agreed addition, alteration or modification
thereto shall be delivered to the site, by the Contractor at his own expense.
The Contractor shall bear all associated Carriage, Insurance and Freight Charges
and the rates quoted in the tender shall be inclusive of all such charges.

COMPLIANT. ALL PRICES ARE QUOTED AS DELIVERY, DUTY PAID TO EIRCOM SITE.

29.  CUSTOMS CLEARANCE

The Contractor shall be responsible for customs clearance and charges, if any,
and all other such matters relating to the  transport of the equipment  to the
site.

COMPLIANT

30.  PACKING CASES

Packing Cases containing Equipment shall be clearly marked on the outside to
indicate the type of equipment contained therein, and

          (ii)  the name of the site to which the equipment has been assigned

          (iii) the relevant Eircom Engineering Order Number.

COMPLIANT

31.  PRICE AND PRICE VARIATION

     31.1 Tenders for this Project shall be fixed price, preferably in Irish
          Pounds or ECUs or alternatively in the currency of the country of
          origin of the equipment, for orders placed within 12 months of the
          date of tender and shall be DDP but exclusive of V.A.T.

          COMPLIANT. PRICES ARE QUOTED IN EUROS AND ARE INCLUSIVE OF DDP
          (INCOTERMS.) AND ARE EXCLUSIVE OF VAT.

     31.2 Any future variation in prices for orders placed more than 12 months
          following the expiration of the Validity Period, shall be determined
          with reference to a mutually agreed price-variation formula. Details
          of such a formula or formulae to govern price adjustments in labour
          and materials shall be submitted as part of the tender. The submission
          of a price variation formula shall indicate the precise origin of the
          relevant price indices and shall be governed by the conditions
          hereunder. The adjusted price shall be valid from a date ten days
          prior to the latest date set for the receipt of tenders and shall have
          retrospective effect. The adjusted price for orders placed following
          the expiration of the Validity Period shall be calculated in
          accordance with the following criteria:

                                       18
<PAGE>

               (a) If the market price of any materials embodied in the works
               shall be increased over the price current during the validity
               period the Contractor shall be entitled to be paid such sum as
               Eircom shall certify to be the amount of such increase;

               COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
               INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
               PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
               MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.

               (b) If the market price embodied in the work shall fall below the
               price current during the Validity Period, the total amount to be
               paid on foot of the Contract shall be reduced by such sum as the
               Eircom shall certify to be the amount of such decrease.

               COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
               INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
               PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
               MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.

               (c)  (i) Consequent on action initiated by workmen or workmen's
                    organisations an increase occurs in the rate of wages
                    current in the district over the rate current during the
                    Validity Period or if there were no such current rate
                    recognised or prevailing in that district, over the rate
                    current at such date in the nearest district in which the
                    general industrial conditions are similar, the Contractor
                    has to increase the rate of wages of any workman employed on
                    the works he shall, subject to the provisions hereunder, be
                    entitled to be paid such sum as the Director shall certify
                    to be the amount of such increase.

                    (ii) In the event that an increase claimed under this
                    section is in whole or in part not in accordance with the
                    terms of the relevant National Wage Agreement the amount of
                    such an increase shall, to the extent that is not in
                    accordance with the National Wage Agreement, not be
                    allowable to the Contractor. (In the absence of National
                    Wage Agreements, wage increases claimed under this Section
                    will not be allowable if they do not conform with Government
                    guidelines on wages). Any question as to whether or not a
                    particular increase is in accordance with the terms of the
                    relevant National Wage Agreement shall be resolved on the
                    basis of procedures provided for in that Agreement. Pending
                    the outcome of these procedures the increase sought,
                    provided it has been approved by the Joint Industrial
                    Council for the Construction Industry, shall be paid to the
                    contractor without prejudice to the right of eircom to
                    deduct the amount of the increase subsequently from monies
                    due to the contractor under this or any other Clause in the
                    event that the procedures referred to result in the increase
                    sought being judged not to be in accordance with the terms
                    of the relevant National Wage Agreement or to the extent
                    that it is so declared not to be in accordance with the
                    Agreement.

                    COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
                    INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
                    PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
                    MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.

               (d)  Consequent on a decrease in the rate of wages current in the
                    district below the ratecurrent during the Validity Period or
                    if there were no such current rate recognised or prevailing
                    in that district, below the rate current at such time in
                    the nearest district in which the general industrial

                                       19
<PAGE>

                    conditions are similar, the rate of wages of any workman
                    employed on the works falls below the rate current during
                    the Validity Period, the total amount to be paid on foot of
                    the contract shall be reduced by such sum as the Director
                    shall certify to be the amount of such decrease.

                    COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
                    INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
                    PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
                    MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.

               (e)  Consequent on an increase in wages under (c) above, if the
                    Contractor shall pay an increased premium for insurance for
                    Employers' Liability cover, he shall be entitled to be  paid
                    such sums as the Director shall certify to be the amount of
                    such increase in premium.

                    COMPLIANT.

               (f)  Consequent on a decrease in wages under (d) above, if the
                    Contractor pays a decreased amount for insurance premium for
                    Employer's Liability cover, the total amount to be paid on
                    foot of the Contract shall be reduced by such sum as the
                    Director shall certify to be the amount of such decrease in
                    premium. Provided always that, notwithstanding the
                    provisions of the foregoing Clause, the Contractor shall not
                    be entitled to payment for any increase or additions
                    provided for in (a) (c) and (e) thereof which may occur
                    after the completion date as defined in the conditions of
                    contract or such extended date as may be granted by the
                    Director in accordance with the conditions of the Contract.

                    COMPLIANT.

32.  CONTRACTORS STATEMENTS

     The Contractor shall on a monthly basis, supply the Director with the
     statement of the value of the work carried out by him, during the preceding
     month. This document shall also state;

 .    the amount invoiced by the Contractor up to the date of the Statement, and

 .    the value of the work still outstanding on the Contract and the period(s)
     (monthly) in which it will be accrued.

COMPLIANT

33.  ACCOUNTS.

The Contractor, on completion of the work or on completion of any portion of the
work for which payment is due, shall send a priced invoice for the same in
duplicate addressed to Eircom, Accounts Payable Section, PO Box 1507, South King
Street, Dublin 2, Ireland.

Each invoice shall specify the number of the order, the description and position
of the work executed to the date of the claim, the amount of the work completed,
the amount for retention, if any, and the amount claimed as due.  All work for
which payment in excess of the contract price is claimed by the Contractor shall
be invoiced; and in respect of such claims the date and reference of the order
authorising the extra work shall be quoted.

                                       20
<PAGE>

It is the preference of Eircom to trade electronically with its suppliers using
EDI.  The format of any trading document shall be mutually agreed between the
parties in advance.

COMPLIANT

34.  PAYMENT

Eircom shall pay to the Contractor in the following manner the Contract price
adjusted to give effect to such additions thereto and such deductions therefrom,
as are provided for in these conditions.

The Contractor shall be paid (as the work proceeds) in the following manner:

     34.1 Within 45 days of receipt of invoice for equipment delivered in good
          order to the site a sum equal to the total sum certified therein.

          COMPLIANT

     34.2 Within 45 days of receipt of an invoice for installation and
          commissioning, following successful completion of acceptance testing a
          sum equal to the total sum certified therein for such installation and
          commissioning.

          COMPLIANT. SEE 34.4.

     34.3 Within 45 days of receipt of an invoice and successful completion of
          Training Courses, a sum equal to the total sum certified on the said
          invoice.

          COMPLIANT. SEE 34.4.

     34.4 A performance bond of Euro's 4 million shall be required for a 12
          month period from receipt of invoice in lieu of retention

          COMPLIANT. ACL PREFERS THE BOND OF EURO'S 4 MILLION.

     34.5 No part of the money shall be payable at the time at which payment
          ought otherwise to be made under the Contract, unless in the opinion
          of the Director, all the supplied Equipment is in good repair and
          condition, fair wear and tear, accidental injury or damage by persons
          other than the Contractor's Staff (and not due to faulty workmanship
          or materials) excepted.

          COMPLIANT.

     34.6 Should the completion of any portion of the work be deferred on the
          instructions of the Director, the date for the payment of the monies
          on the portion not so deferred shall be calculated from the date of
          successful completion of Acceptance Testing of the portion not so
          deferred.

          COMPLIANT.

     34.7 Payment for any item shall be due only when delivery acceptance
          thereof has been certified by the Director.

          COMPLIANT. SEE 34.4 ABOVE.

     34.8 In all cases, payment as certified shall be made within 45 days from
          the date of the invoice.

          COMPLIANT.

     34.9 Without prejudice to any other remedy which eircom may have, it shall
          be entitled to deduct from any monies due or becoming due to the
          Contractor under the Contract, all costs, damages or expenses for
          which under the Contract the Contractor is liable to Eircom.

          COMPLIANT.

                                       21
<PAGE>

35.  EFFECT OF VALUE ADDED TAX, CUSTOMS OR OTHER DUTIES

If subsequent to the expiration of the Validity Period any Customs or Excise
duty affecting the equipment or material or any part of the equipment or
material is increased, decreased, imposed or abolished, or any alteration is
made by the Government of Ireland in the practice of assessing the value of
goods for the purposes of Customs duty, and the amount of duty payable on the
equipment or material or any part of the material is thereby increased or
decreased, the amount to which the Contractor shall be entitled under the
Contract shall be increased or decreased, as the case may require, by a sum
equal to the difference between the amount of duty which would have been payable
on the expiration of the Validity Period of  the Tender and the amount actually
paid by the Contractor on the equipment or material delivered by him under the
Contract.

If on the expiration of the Validity Period, the rate of Value Added Tax payable
by the Contractor on the monies received from the Director under the Contract is
increased or decreased, the amount to which the Contractor shall be entitled
under the Contract shall be increased or decreased, as the case may require, so
that the amount less value added tax at the revised rate equals the amount less
value added tax at the rate obtaining on the expiration of the Validity Period.

The Contractor shall, whenever so required by the Director, produce for
inspection all documents in his possession or under his control, which may, in
the opinion of the Director, be necessary to enable the precise extent of the
increase or decrease in the Contract price under this clause to be determined.

COMPLIANT.

36.       HINDRANCES.

The Contractor shall have no claim for damage arising out of delay on the part
of the Director, either prior to commencement or during the progress of work, in
furnishing any article or in obtaining any consent for the work from any local
authority, or other body or person, or in giving or securing access to the site,
or owing to the necessity for removing, avoiding or changing the position of any
obstruction, or on account of the work being suspended by any local authority,
body or person, or by  the Director, unless such suspension shall involve the
whole or the major portion of the work and shall be operative  for a period
exceeding two days.

COMPLIANT.

37.       SUSPENSION OF WORK

If the whole or the major portion of the work shall be suspended for a period
exceeding two days by order of  the Director, or by order of any local
authority, body or person in whose order the Director is constrained to
acquiesce, provided that such suspension is not due to any default of the
Contractor and provided also that such suspension shall necessitate the
cessation of work of all or the greater part of the Contractor's workmen engaged
upon the work, then the Director shall pay to the Contractor such reasonable
expenses incident to the suspension of work as the Director in his sole
discretion may determine as proper to be allowed.  Such allowance of expenses
shall be made only in respect of suspension authorised in writing by the
Director or the Supervising Officer (such authority not being unreasonably
withheld in cases not provided for in Clause 36) and the Contractor shall on his
part afford the Director all necessary facilities to enable him to determine the
amount of the expenses that should properly be granted under the terms of this
Clause.  The provisions of this clause shall apply to any suspension of work due
to a public festival or other function which could not be foreseen prior to the
commencement of the work in any thoroughfare affected, the Contractor in such
case being allowed to charge for any resulting temporary work even if the
remainder of the work be not stopped.

COMPLIANT.

38.  INDEMNITY AND LIABILITY

     38.1 The Contractor shall indemnify and keep indemnified eircom in respect
          of any and all damages, costs, proceedings, demands or other expense
          or claim arising out of:

                                       22
<PAGE>

          (i) injury to (including death) or sickness of any employee of the
          Contractor, its servants, subcontractors or agents, in connection with
          his/her employment or contract of service;

          (ii) injury to (including death) or sickness of any other person
          (including any employee of Eircom) arising out or in connection with
          any act or omission of the Contractor, its subcontractors, employees,
          servants and agents;

          (iii) loss or damage to the property of Eircom or any third party
          arising out of or in connection with any act or omission of the
          Contractor, its subcontractors, employees, servants and agents;

          (iv) such other loss as may be caused by breach of Contract by, or the
          wilful or negligent act of the Contractor, its subcontractors,
          employees, servants and agents;

     COMPLIANT.

     38.2 The Contractor shall be liable to and shall compensate Eircom for the
          loss, damage or destruction of the whole or any part of eircom
          property. Such compensation shall be payable at the value of the goods
          lost, damaged or destroyed at the time of such loss, damage or
          destruction. In the event that any item is so damaged that though not
          destroyed it is incapable of serving its intended function, the
          Contractor shall pay compensation equivalent to the full replacement
          cost of the item concerned, excepting only where Eircom agrees and
          accepts that satisfactory repair of the item can be achieved at lesser
          cost in which case compensation shall be equivalent to the cost of
          repairs plus any ancillary cost incurred.

          Eircom reserves the right to withhold payment of such a sum as in the
          opinion of Eircom is sufficient to cover any payments or liabilities
          that may become due as a result of the execution of the Contract. Any
          payment so withheld may be used by Eircom to discharge any such
          liability to any third party without the prior agreement of the
          Contractor.

          COMPLIANT.  ACL'S MAXIMUM LIABILITY UNDER THIS AGREEMENT SHALL BE
          LIMITED TO THE SUM OF EURO'S 4 MILLION IN RESPECT OF PHYSICAL DAMAGE
          TO OR LOSS OF TANGIBLE PROPERTY, AND EURO'S 4 MILLION IN RESPECT OF
          ALL OTHER EVENTS OR ANY ONE EVENT OR SERIES OF CONNECTED EVENTS, WHERE
          ACL IS LEGALLY LIABLE.

     38.4 Any instruction or information which may be given or provided by
          Eircom shall in no way release the Contractor from his responsibility
          under Clause 37.

          COMPLIANT.

39.  NON - PERFORMANCE OF CONTRACT

If the Contractor shall fail to commence "The Work" on or prior to the
commencement date, the Contractor shall (subject to sub-clause(3) of this
Clause) be liable in respect of the delay in commencement to pay to eircom a
sum calculated at the rate of one per cent of the total value of The Work for
each week or portion thereof which shall elapse from the commencement date until
the actual commencement of The Work.

COMPLIANT.

     39.1 If the Contractor shall fail to complete The Work on or by the
          completion date, the Contractor shall (subject to sub-clause (3) of
          this clause) be liable in respect of the delay in completion to pay to
          Eircom the sum of one - quarter of one percent of the value of the
          uncompleted portion of the work for every day which shall elapse after
          the completion date until the actual completion of the Work.

          COMPLIANT.

                                       23
<PAGE>

     39.2 In the event of the Contractor failing to complete the Work on or by
          the completion date and the said failure results in Eircom being
          liable to pay a penalty or penalties to the Office of the Director of
          Telecommunications Regulation (ODTR) in respect of such failure or
          delay, the Contractor shall indemnify and keep Eircom effectively
          indemnified against the payment of such penalty, in so far as the
          imposition of the penalty arises directly from such failure or delay
          of the Contractor. For the avoidance of doubt such liability shall be
          in addition to the liability of the contractor specified in Clause
          39.1 hereof Provided Always that the Contractors total liability
          hereunder shall not exceed Euro's 4 million. Further failure to
          complete the work in respect of new AS4000 features and products shall
          mean failure to deliver the products and services set out in Appendix
          I by the dates specified in Appendix I.

     39.3 Eircom shall not be bound to prove that it has in fact sustained
          damage by reason of any failure or delay in commencement or completion
          as aforesaid, and the Contractor shall not be at liberty to adduce
          evidence to prove that eircom has sustained no such damage, the
          intention of the parties hereby declared being that the sum payable
          under sub-clause (1) or sub-clause (2) of this Clause shall be paid as
          liquidated damages, and not as a penalty.

          COMPLIANT.

     39.4 In case of failure or delay in commencement or completion as
          aforesaid, Eircom shall be at liberty to execute or cause to be
          executed by other persons the whole or the remaining portion of the
          work (as the case may be), and the Contractor shall thereupon be
          liable to pay to eircom in addition to any sum payable under sub-
          clause (1) or  sub-clause (2) of this Clause a sum equal to the excess
          (if any) of the expenses incurred by eircom in or about such execution
          over and above the expense that would have been incurred by the due
          completion of the work by the Contractor.

          COMPLIANT.

     39.5 Eircom shall be at liberty to set off any sum or sums payable by the
          Contractor underthis Clause against any sum or sums which may be or
          may become payable to the Contractor under this or any other Contract
          with Eircom.

          COMPLIANT.

40.  INSURANCE

The Contractor shall without limiting his responsibilities and obligations under
this contract insure the works for their replacement value against all loss or
damage for whatever cause arising.   The Contractor shall also be responsible
for having adequate insurance cover in respect of his employer's liability
obligation, public liability obligation, product liability obligation and
insurance under the Road Traffic Acts in respect of machinery used in connection
with the work. The Contractor shall produce to eircom satisfactory evidence of
the existence of the above mentioned insurance cover against any risk with
respect to which such failure occurs.  Any sums paid by eircom to effect such
insurance shall be recoverable from the Contractor as a simple debt.

COMPLIANT.

     40.1 The contractor shall furnish satisfactory evidence that the
          requirements of this clause has been compiled with prior to the
          commencement of the work and shall notify the director no less that 30
          days in advance of any material changes, cancellation or non-renewal
          of the above coverage.

          COMPLIANT.

     40.2 The contractor shall ensure that all sub-contractors effect similar
          insurances.

          COMPLIANT.

     40.3 Eircom reserves the right to affect any additional insurances which it
          deems necessary in the event of the contractor's insurance cover being
          inadequate. All sums paid by Eircom to effect such insurance shall be
          recoverable from the contractor as a simple debt.

     COMPLIANT.

                                       24
<PAGE>

41.  TERMINATION

     41.1 If the Contractor commits a breach of this Contract (or any other
          contract with Eircom related to the contract or the work) and in the
          case of a breach which is capable of remedy, fails to remedy the
          breach within seven days (or such longer period as eircom at its
          option may agree in writing) of written notice from Eircom to do so,
          then, without prejudice to any other rights or remedies eircom may
          have, Eircom shall have the right:

          (a)  at any time to terminate the Contract forthwith as a whole or (at
               Eircom's option) in respect of any part of the Work, performed or
               to be performed under the Contract; and

          (b)  to recover from the Contractor all resulting losses and expenses
               (including, without limitation, the cost of completion the work,
               or having the Work completed by another contractor, to a similar
               standard).

          COMPLIANT.

     41.2 Without prejudice to any other rights or remedies it may have, Eircom
          shall have the right at any time to terminate the Contract forthwith
          and to recovery from the Contractor of all resulting losses and
          expenses (including, without limitation, the cost of completing the
          work, or having the work completed by another contractor, to a similar
          standard) if;

          (a)  the Contractor shall become insolvent or cease to trade or
               compound with its creditors; or

          (b)  a bankruptcy petition or order is presented or made against the
               Contractor; or where the Contractor is a partnership, against one
               partner, or

          (c)  a receiver or examiner is appointed in respect of any of the
               Contractor's assets; or

          (d)  a petition for the appointment of a receiver or an examiner is
               presented or such an order is made in relation to the Contractor;
               or

          (e)  where the contractor is a company, a resolution or petition or
               order to wind-up the Contractor is passed or presented or made or
               a liquidator is appointed in respect of the Contractor (otherwise
               than for reconstruction or amalgamation); or

          (f)  without prejudice to any other rights or remedies it may have,
               Eircom shall have the right at any time to terminate the Contract
               forthwith if the management, ownership or control of the
               Contractor is materially changed, and thereby causing conflict of
               interest.

               COMPLIANT.

     41.3 Eircom may, at any time on written notice, without prejudice to any
          other rights or remedies it may have, terminate the Contract
          forthwith. Where Eircom terminates the Contract under paragraph 41.3
          and does not have any other right to terminate that Contract, the
          following shall apply:

          (a)  Eircom shall, subject to sub-clause 41.3 (b) below, pay the
               Contractor such amounts as may be necessary to cover its
               reasonable costs and outstanding and unavoidable commitments
               necessarily and solely incurred in properly performing the
               Contract in relation to the applicable work (as defined below)
               prior to the termination

               COMPLIANT.

                                       25
<PAGE>

          (b)  Eircom shall not pay for any such costs or commitments that the
               Contractor  is able to mitigate and shall only pay costs and
               commitments that Eircom has validated to its satisfaction. Eircom
               shall not be liable to make any payment to the Contractor in
               respect of any of the applicable work that at the date of
               termination, eircom is entitled to reject or has already
               rejected.  Eircom's total liability under sub-clause (a) above
               shall not in any circumstances exceed the price that would have
               been payable by eircom for the applicable work if the contract
               had not been terminated. In respect of this clause, the term
               applicable work shall mean the Work in respect of which the
               Contract has been terminated under this paragraph, which was
               ordered by eircom under the Contract before the date of
               termination and for which payment has not at that date become due
               from Eircom.

               COMPLIANT.

          (c)  Sub-clauses (a) and (b)  above encompass the total liability of
               Eircom for termination pursuant to this clause 41 and Eircom
               shall be liable for no other costs, claims, damages or expenses
               consequent upon such termination.

               COMPLIANT.

     41.4 Where notice of termination is given due to insufficient progress, the
          Contractor may issue a counter notice in writing within 3 working days
          giving its proposals for completion of the work within the time
          allowed in the Contract. Eircom shall, within 5 working days, either
          accept the Contractor's proposals or confirm that the termination
          notice is to stand.

          COMPLIANT.

42.  ARBITRATION.

     42.1 If at any time any question, dispute or difference shall arise between
          the Contractor and Eircom in relation to the Contract or in any way
          connected with the Work which cannot be settled amicably either party
          shall as soon as reasonably practical give to the other notice of the
          existence of such question, dispute or difference specifying its
          nature and the point at issue and the same shall be referred to the
          arbitration of a person to be mutually agreed upon. Failing agreement
          upon such person within 30 days after the date of such notice, the
          arbitration shall be conducted by some person appointed on the
          application of either party by the President of the Institution of
          Engineers in Ireland. Any reference to arbitration shall be conducted
          in accordance with the Institution of Engineers in Ireland arbitration
          procedures or any amendment or modification thereof being in force at
          the time of appointment of an arbitrator and shall be deemed to be a
          submission to arbitration within the meaning of the Arbitration Act,
          1954 to 1980 as amended or re-enacted. The award of the arbitrator
          shall be final and binding on the parties.

          COMPLIANT.

     42.2 The performance of the Contract shall continue with due diligence
          during the arbitration proceedings unless Eircom shall order the
          suspension thereof or the Contract has been abandoned or terminated.
          No payment due or payable by Eircom or the Contractor shall be
          withheld on account of a pending reference to arbitration.

          COMPLIANT.

43.  EXPENSES RECOVERABLE BY EIRCOM

All expenses that may be incurred by eircom, or that the Director admits as
proper to be paid on account of damage to property, or accident, or of any act,
neglect, omission, or failure on the part of the Contractor or his workmen,
shall be deemed to be a debt due from the Contractor to eircom, and may be
deducted to from any sums due or that may become due to the Contractor under any
Contract between the Contractor and eircom, and may be recovered by eircom from
the Contractor by action or otherwise.

COMPLIANT SUBJECT TO THE LIMITATIONS SPECIFIED FOR CLAUSE 38.2.

                                       26
<PAGE>

44.  SURETIES

The Contractor shall (if required) produce two sufficient sureties or a
guarantor of an insurance or guarantee policy, the acceptance of whose security
has been authorised by eircom to enter into a bond for the due performance of
the Contract in amount not exceeding one-half of the total value of the work to
be performed.

COMPLIANT - ACL AGREES TO PROVIDE A BOND OF EURO'S 4 MILLION.

45.  FORCE MAJEURE

Such extension of time as may appear to eircom to be reasonable shall be allowed
to the Contractor if the work is delayed owing to force majeure.  For the
purpose of this agreement the terms "force majeure" shall mean but shall not
be limited to war, hostilities (whether war being declared or not) invasion, act
of foreign enemies, ionising radiation or contamination by radio activity from
any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel,
radioactive,  toxic explosive of other hazardous properties of any explosives,
nuclear assembly or nuclear component thereof, pressure wave caused by aircraft
or other aerial device travelling at sonic supersonic speeds, rebellion,
revolution, insurrection, military or usurped power or civil riot, civil
commotion or disorder, strike, lock-out or labour unrest (including where solely
restricted to employees of the Contractor), weather conditions or any
circumstances beyond the reasonable control of either party.

If either party is prevented or delayed from or in performing any of their
obligations under the Contract by force majeure in spite of all reasonable
endeavours to continue to perform  their obligations under the Contract then it
must notify the other party of the circumstances constituting the force majeure
and of the obligations, the performance of which, are thereby delayed or
prevented.  The party giving notice shall thereupon be excused its performance
or punctual performance as the case may be of such obligation for so long as the
circumstances of prevention or delay may continue. Should force majeure
thereafter circumstances continue for a continuous period of 120 days then
either party may at any time and provided such performance or punctual
performance is still excused by 21 days notice in writing to the other terminate
the Contract.  In the event of such termination then the provisions of Clause 41
hereof shall be invoked.

COMPLIANT.

46.  STATUTORY AND OTHER REGULATIONS

     46.1 The Contractor shall at its own expense, comply with all legislation
          and Eircom's site regulations applicable to the performance of the
          Contract and take and comply with such other measures as may be
          reasonably necessary in respect of precautions for safeguarding all
          persons and property as may be affected by the performance of the
          Contract.

          COMPLIANT.

     46.2 Eircom will obtain all necessary consents for the work to be carried
          out and will inform the Contractor of any conditions attaching to the
          consent if it affects the execution of the work and the Contractor
          shall comply with such conditions. The provision of clause 46.2 shall
          survive the expiry or termination of the contract.

          COMPLIANT.

47.  CORRUPT GIFTS.

The Contractor shall not offer or give or agree to give to any person in the
Service of the Government of Ireland or, eircom any gift or consideration of any
kind as an inducement or reward in relation to obtaining or execution of this or
any other Contract for or with Eircom.

Any breach of this Clause by the Contractor or by anyone employed by him or
acting on his behalf (whether with or without the knowledge of the Contractor)
or the commission of any offences by the Contractor or by

                                       27
<PAGE>

anyone employed by him or acting on his behalf under the Prevention of
Corruption Acts, 1889 to 1916, in relation to this or any other Contract for or
with Eircom shall render the Contractor liable to the cancellation of this
Contract and any other existing Contracts with Eircom and shall entitle eircom
to recover from the Contractor the amount of any loss resulting from such
cancellation.

COMPLIANT.

48.  LANGUAGE AND LAW

     (a) The language of the Contract is English.

         COMPLIANT.

     (b) The Contract is subject to the Laws of Ireland.

         COMPLIANT.

49.  NOTICE TO CONTRACTOR

Notices required under this Contract to be given in writing shall be delivered
by hand, post, e-mail, telex or facsimile transmission to the Contractor, at the
address specified in the tender.  Notices shall be deemed to be given upon
receipt except notices sent by first class registered post in the correctly
addressed envelope shall be deemed to have been given within 48 hours (excluding
Sunday and Public Holidays) of posting and notices sent by telex (where a
correct answer back code is obtained by the sender upon transmission) shall be
deemed to be given upon transmission.

COMPLIANT.

50.  CORRESPONDENCE

All Correspondence, Quotations, Packing Lists, Equipment Schedules, Test
Certificates, Schedules, etc., shall quote the relevant Eircom Contract
(Engineer's Order) Number.

COMPLIANT.

51.  COUNTRY OF MANUFACTURE

The Tenderer shall state on the page following the Form of Tender the country of
manufacture or production of material offered.

COMPLIANT.

52.  SAFETY

The Contractor shall be responsible for the safety of his operations on site and
shall ensure that his employees and agents are aware of and shall comply with
the safety rules which must be observed when engaged in Contract work for
eircom. The Contractor shall comply with all statutory requirements with regard
to safety.

COMPLIANT.

53.  CONFIDENTIALITY

     53.1 The Contractor shall keep confidential all information belonging to,
          or held by, Eircom which may come into the Contractor's possession
          during the Tender process or during the period of the Contract and
          shall not without the prior written agreement of Telecom confidential
          information for any purpose, other than is necessary for the
          performance of his obligations under the Contract.

                                       28
<PAGE>

          The provision of clause 53.1 shall not apply to the extent that the
          information is:

               (i)   published or comes into the public domain otherwise than
               by a breach of this Contract; or

               (ii)  lawfully known before commencement of the tender process
               of this Contract and is not subject to a previous obligation of
               confidentiality or

               (iii) lawfully obtained from a third party which is free to
               divulge it.

     COMPLIANT.

54.  YEAR 2000

     54.1 Definition of "Year 2000 Compliance"

          "AD2000 Compliance" or "Year 2000 Compliance" or "Y2K Compliance" or
          any other similar expression shall mean the ability to perform and
          function in a manner unaffected by dates prior to, during and after
          the year 2000 and, in particular, the ability to:

          handle date information before, during and after 1st January 2000,
          including, but not limited to, accepting date input, providing date
          output, and performing calculations on dates or portions of dates;

          function accurately and without interruption before, during and after
          1st January 2000 without any changes in operation associated with the
          advent of the new century;

          respond to two digit year date input in a way that resolves the
          ambiguity as to century in a defined and pre-determined manner;

          store and provide output of date information in ways that are
          unambiguous as to century; and

          recognise leap years including that the year 2000 is a leap year and
          that 29 February 2000 is a valid date.

          And expressions such as "AD2000 Compliant" or "Year 2000 Compliant" or
          "Y2K Compliant" or any other similar expression shall be interpreted
          accordingly.
          COMPLIANT. THE AS4000 PRODUCT DOES NOT CONTAIN ANY REAL TIME CLOCK AND
          THEREFORE COMPLIANCE TO YEAR 2000 IS NOT APPLICABLE.

          SITESPAN - THE AS8100 (PREVIOUSLY KNOWN AS SITESPAN) OPERATES USING
          THE SYSTEM CLOCKS, WHICH ARE PROVIDED, VIA MICROSOFT(R) WINDOW NT(C).
          IT IS A CONDITION THAT THE PC USED SHALL BE LOADED WITH EITHER WINDOW
          NT(C) VERSION 4.0 WITH THE YEAR 2000 FIXES AS SUPPLIED BY MICROSOFT,
          OR VERSION 5.0.

          THUS AIRSPAN CAN CONFIRM THAT:

               .    There will be no interruption in operation prior to, during
                    or after the year 2000 due to the change in century.
               .    Date based functionality will behave consistently when
                    provided with an acceptable clock from the operating system
                    as detailed above.
               .    The date data is displayed explicitly as a four-digit year.
               .    As confirmed by Microsoft Windows NT, versions as detailed
                    above; recognise Year 2000 as a leap year.

                                       29
<PAGE>

     54.2 Warranty in relation to "Year 2000 Compliance"

          [1.1] The [Contractor] warrants that both the [Equipment/Licensed
          Programs] and any third party [equipment/licensed programs] supplied
          by the Contractor hereunder are Year 2000 Compliant.

          COMPLIANT. SEE COMMENT ABOVE

          [1.2] If the Contractor receives written notice from Eircom of any
          breach of the warranty set out in clause [1.1] above, it shall at its
          own expense remedy the breach in question by repairing or replacing
          the [Equipment/Licensed Programs] within either:-

          .    days after receiving such notice (in the case of
               [Equipment/Licensed Programs] which are not regarded by Eircom as
               critical to its business); or
          .    days after receiving such notice (in the case of
               [Equipment/Licensed Programs] which are regarded by Eircom as
               critical to its business).

          COMPLIANT. SEE COMMENT ABOVE

          [1.3] Eircom shall, when notifying the Contractor of said breach
          specify whether the [Equipment/Licensed Programs] are critical to its
          business.  If the Contractor fails to remedy such breach within the
          period specified under clause [1.2] then, without prejudice to any
          other right or remedy which eircom may have, it shall be entitled to a
          refund of the aggregate payment paid for the defective
          [Equipment/Licensed Programs].  Such refund shall be payable on
          demand.

          COMPLIANT. SEE COMMENT ABOVE

          [1.4] The Contractor shall indemnify Eircom against any loss, damage
          or expense suffered by Eircom as a result of a breach of the warranty
          set out in clause [1.1] and shall take out and maintain adequate
          insurance cover in respect of its liability hereunder.  The Contractor
          shall produce to Eircom, if requested, satisfactory evidence of the
          existence of such insurance cover.

          COMPLIANT. SEE COMMENT ABOVE

55.  SUFFICIENCY OF TENDER

The Contractor shall be deemed to have satisfied himself before tendering as to
the correctness and sufficiency of his Tender for the Work and of the Costs and
Rates stated in the Tender, which Tender Costs and Rates shall, except insofar
as it is otherwise provided in the Contract, cover all his obligations under the
Contract and all matters and things necessary for the proper execution and
maintenance of the Work.

COMPLIANT.

                                       30
<PAGE>

          Appendix I:
          -----------

          Non-performance of Contract:

          In the case of failure or delay in commencement or completion of
          planned products or services listed below, the Contractor shall be
          liable to pay 25% of the Surety detailed under Clause 44;

          (i)   Native V 5.2 I/F will be available to Eircom in June 2000.
          (ii)  Airspan's PacketDrive product will be available in August 2000.
          (iii) DA ISDN will be available in December 2000, provided the
          Contractor receives an order to product with this feature no later
          than March 2000, for commercial quantities (no less than 25,000
          lines).

          In the event of non-performance by the contractor under the Clause 44,
          the Contractor will be permitted a remedy period of 3 months from the
          date of notification of non-performance by Eircom, before the penalty
          as provided by Clause 44 becomes effective.

                                       31
<PAGE>

                            [EIRCOM PLC LETTERHEAD]

                                                                23 December 1999

          EXTRA No. 2 on EO 7856: NARROW BAND FIXED WIRELESS ACCESS;
              PROVISION OF ADDITIONAL EQUIPMENT AND INSTALLATION.

Dear Sir,

We wish to place an order with you for the supply and installation of 60 central
terminals and associated exchange equipment, plus the delivery of 1,050
subscriber terminals, as detailed in the attached Ordering Schedule (annex 1),
in accordance with your tender ref: 98052 dated 19th January 1999, as amplified
and revised by the attached Schedule of Correspondence (annex 2).

This transaction, for an additional sum of * , exclusive of VAT, is being
regarded as Extra No. 2 on Engineering Order No. EO 7856, and is subject to the
terms and conditions of that order.

Yours Faithfully,

/s/ A. Kane
----------------------------
A. Kane
Chief Executive,
Eircom Plc.

[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

                        EIRCOM DETAILED ORDER SCHEDULE

------------------------------------
 Supplier        AIRSPAN
 Quote ref       98052
 Date            10 Dec. 99
                 Page 2/2
------------------------------------
 Freq selected   3.4-3.6 GHz Plan 1
------------------------------------

------------------------------------------------------------------------------
Item                                  Qty     Price()         Extended Price()
------------------------------------------------------------------------------
ST
  R1 1-line 64k & 32k POTS
   internal plastic Subs
   Terminal, Ext Antenna,
   PSU, batteries and cable            *         *                   *
  B1 ISDN 2B+D internal Subs
   Terminal, Ext Antenna,
   PSU, batteries and cable            *         *                   *
    Total ST                                                         *
------------------------------------------------------------------------------
CT & AC Racks
  CT Rack with combiner &
   2 DA shelves                        *         *                   *
  Basic RF plug in set for
   CT (PA+MON+2PSU+DIPLNA)             *         *                   *
  Full redundant DA Card
   set for 1 rf channel
   (rf+AU+TU+SC+2PSU+6Modem)           *         *                   *
  AC Rack with alarm &
   1 AC shelf                          *         *                   *
  Basic AC Card Set
   (64kbit/s)(2PSU+SC+CTU+XTU)         *         *                   *
  AC XTU card                          *         *                   *
  AC CTU card                          *         *                   *
    Total CT & AC Racks                                              *
------------------------------------------------------------------------------
Test Equipment
  Level control unit, cables
   and splitters-Commissioning
   Equipment                           *         *                   *
    Total test equipment                                             *
------------------------------------------------------------------------------
Antenna Modules
  Omni Antenna System, including
   feeder and install kit              *         *                   *
  Directional Antenna System,
   including feeder and install kit    *         *                   *
    Total Antenna Modules                                            *
------------------------------------------------------------------------------
Software
  Sitespan hardware                    *         *                   *
  Sitespan main Licence                *         *                   *
  Sitespan Shelf Licence               *         *                   *
  Sitespan Starter Licence
   (s/w licence for up to
   qty 4 CT shelves)                   *         *                   *
  V5.1 licence per 1000 subs           *         *                   *
    Total Software                                                   *
------------------------------------------------------------------------------
Installation, Commissioning &
 Documentation                         *         *                   *
  Documentation set (Paper)            *         *                   *
  Documentation set (CD ROM)           *         *                   *
  CT Rack Installation &
   Commissioning (Includes
   Site Survey and Drawings)-
   1 Shelf                             *         *                   *
  CT Rack Installation &
   Commissioning (Includes
   Site Survey and Drawings)-
   2 Shelves                           *         *                   *
  AC Rack Installation (Includes
   Site Survey and Drawings)-
   1 Shelf                             *         *                   *
  CT Antenna Installation &
   Commissioning-Omni Site             *         *                   *
  CT Antenna Installation &
   Commissioning-Directional,
   2 or 3 Sectors                      *         *                   *
    Total-Installation,
     Commissioning &
     Documentation                                                   *
------------------------------------------------------------------------------

------------------------------------------------------------------------------
        Total                                                        *
------------------------------------------------------------------------------

Notes

  Please note that prices are DDP (Delivery, Duty Paid) to site.

References                                      Ref
  Airspan Proposal                                      98052
  Order Number                                          nnnn
  Commercial Terms & Conditions-
    See document Ref:                                   xxxxxx
  Airspan Contact:
    Simon J Crouch, Phone +44 1895 467156

[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.

                            [EIRCOM PLC LETTERHEAD]

                                                        Date: 23 December 1999

ENGINEERING ORDER NO  EO 8022
(To be quoted on each Invoice)

TO:     Airspan Communications Ltd.,
        Cambridge House, Oxford Road,
        Uxbridge, Middlesex UB8 1UN, U.K.

I hereby accept, on behalf of Eircom plc, your Tender
Dated the 19th day of January 1999
For the work hereunder mention, to be proceeded with  AS AGREED
                                       And completed  WITH ENGINEER

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

On the completion of any portion of the work, or on payment becoming due under
the terms of the tender or specification, a PRICED INVOICE (in the name of
Eircom plc) shall be sent IN DUPLICATE to Eircom plc at the following address
Eircom plc,
Engineering Contracts Section,
Room 3.69, Block C,
St. Stephen's Green West, Dublin 2.

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

Description of work

                       NARROW BAND FIXED WIRELESS ACCESS.

Supply, install and commission FWA equipment for 39 base stations, as detailed
in the attached Ordering Schedule, in accordance with your Tender dated 19th
January 1999, for a total amount of EURO * , fixed price, delivered DDP to site,
exclusive of duties and VAT, and subject to the general terms and conditions of
Engineering Order No EO 7856.

/s/ A. Kane
----------------------------
A. Kane
Chief Executive,
Eircom Plc.

[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>

                        EIRCOM DETAILED ORDER SCHEDULE

------------------------------------
 Supplier        AIRSPAN
 Quote ref       98052
 Date            10 Dec. 99
                 Page 2/2
------------------------------------
 Freq selected   3.4-3.6 GHz Plan 1
------------------------------------

------------------------------------------------------------------------------
Item                                  Qty     Price()         Extended Price()
------------------------------------------------------------------------------
ST
  R1 1-line 64k & 32k POTS
   internal plastic Subs
   Terminal, Ext Antenna,
   PSU, batteries and cable            *         *                   *
  B1 ISDN 2B+D internal Subs
   Terminal, Ext Antenna,
   PSU, batteries and cable            *         *                   *
    Total ST                                                         *
------------------------------------------------------------------------------
CT & AC Racks
  CT Rack with combiner &
   2 DA shelves                        *         *                   *
  Basic RF plug in set for
   CT (PA+MON+2PSU+DIPLNA)             *         *                   *
  Full redundant DA Card
   set for 1 rf channel
   (rf+AU+TU+SC+2PSU+6Modem)           *         *                   *
  AC Rack with alarm &
   1 AC shelf                          *         *                   *
  Basic AC Card Set
   (64kbit/s)(2PSU+SC+CTU+XTU)         *         *                   *
  AC XTU card                          *         *                   *
  AC CTU card                          *         *                   *
    Total CT & AC Racks                                              *
------------------------------------------------------------------------------
Test Equipment
  Level control unit, cables
   and splitters-Commissioning
   Equipment                           *         *                   *
    Total test equipment                                             *
------------------------------------------------------------------------------
Antenna Modules
  Omni Antenna System, including
   feeder and install kit              *         *                   *
  Directional Antenna System,
   including feeder and install kit    *         *                   *
    Total Antenna Modules                                            *
------------------------------------------------------------------------------
Software
  Sitespan hardware                    *         *                   *
  Sitespan main Licence                *         *                   *
  Sitespan Shelf Licence               *         *                   *
  Sitespan Starter Licence
   (s/w licence for up to
   qty 4 CT shelves)                   *         *                   *
  V5.1 licence per 1000 subs           *         *                   *
    Total Software                                                   *
------------------------------------------------------------------------------
Installation, Commissioning &
 Documentation                         *         *                   *
  Documentation set (Paper)            *         *                   *
  Documentation set (CD ROM)           *         *                   *
  CT Rack Installation &
   Commissioning (Includes
   Site Survey and Drawings)-
   1 Shelf                             *         *                   *
  CT Rack Installation &
   Commissioning (Includes
   Site Survey and Drawings)-
   2 Shelves                           *         *                   *
  AC Rack Installation (Includes
   Site Survey and Drawings)-
   1 Shelf                             *         *                   *
  CT Antenna Installation &
   Commissioning-Omni Site             *         *                   *
  CT Antenna Installation &
   Commissioning-Directional,
   2 or 3 Sectors                      *         *                   *
    Total-Installation,
     Commissioning &
     Documentation                                                   *
------------------------------------------------------------------------------

------------------------------------------------------------------------------
        Total                                                        *
------------------------------------------------------------------------------

Notes

  Please note that prices are DDP (Delivery, Duty Paid) to site.

References                                      Ref
  Airspan Proposal                                      98052
  Order Number                                          nnnn
  Commercial Terms & Conditions-
    See document Ref:                                   xxxxxx
  Airspan Contact:
    Simon J Crouch, Phone +44 1895 467156

[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.<PAGE>

                                                                   EXHIBIT 10.11

                       AIRSPAN COMMUNICATIONS CORPORATION
                  1998 STOCK OPTION AND RESTRICTED STOCK PLAN

            (as amended by the board and shareholders May 24, 2000)

     Section 1.  Purpose.  The purpose of the Airspan Communications Corporation
                 -------
1998 Stock Option and Restricted Stock Plan (the "Plan") is to promote the
interests of Airspan Communications Corporation, a Delaware corporation (the
"Company"), and any Subsidiary thereof and the interests of the Company's
stockholders by providing an opportunity to selected employees, officers and
directors of the Company or any Subsidiary thereof as of the date of the
adoption of the Plan or at any time thereafter to purchase Common Stock of the
Company.  By encouraging such stock ownership, the Company seeks to attract,
retain and motivate such employees and persons and to encourage such employees
and persons to devote their best efforts to the business and financial success
of the Company. It is intended that this purpose will be effected by the
granting of "non-qualified stock options" and/or "incentive stock options" to
acquire the Common Stock of the Company and/or by the granting of Common Stock
or rights to purchase the Common Stock of the Company on a "restricted stock"
basis. Under the Plan, the Committee shall have the authority (in its sole
discretion) to grant "incentive stock options" within the meaning of Section
422(b) of the Code, "non-qualified stock options" as described in Treasury
Regulation Section 1.83--7 or any successor regulation thereto, or "restricted
stock" awards.

     Section 2.  Definitions.  For purposes of the Plan, the following terms
                 -----------
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.

     2.1.  "Award" shall mean an award of Common Stock or the right to purchase
            -----
Common Stock granted under the provisions of Section 7 of the Plan.

     2.2.  "Board of Directors" shall mean the Board of Directors of the
            ------------------
Company.

     2.3.  "Code" shall mean the Internal Revenue Code of 1986, as amended.
            ----

     2.4.  "Committee" shall mean the committee of the Board of Directors
            ---------
referred to in Section 5 hereof.

     2.5.  "Common Stock" shall mean the Common Stock, $.01 par value, of the
            ------------
Company.

     2.6.  "Employee" shall mean (i) with respect to an ISO, any person,
            --------
including an officer or director of the Company, who, at the time an ISO is
granted to such person hereunder, is employed on a full-time basis by the
Company or any Subsidiary of the Company, and (ii) with respect to a Non-
Qualified Option and/or an Award, any person employed by, or performing services
for, the Company or any Subsidiary of the Company, including, without
limitation, directors and officers.
<PAGE>

     2.7.  "ISO" shall mean an Option granted to a Participant pursuant to the
            ---
Plan that constitutes and shall be treated as an "incentive stock option" as
defined in Section 422(b) of the Code.

     2.8.  "Non-Qualified Option" shall mean an Option granted to a Participant
            --------------------
pursuant to the Plan that is intended to be, and qualifies as, a "non--qualified
stock option" as described in Treasury Regulation Section 1.83--7 or any
successor regulation thereto and that shall not constitute nor be treated as an
ISO.

     2.9.  "Option" shall mean any ISO or Non--Qualified Option granted to an
            ------
Employee pursuant to the Plan.

     2.10.  "Participant" shall mean any Employee to whom an Award and/or an
             -----------
Option is granted under the Plan.

     2.11.  "Parent of the Company" shall have the meaning set forth in Section
             ---------------------
424(e) of the Code.

     2.12.  "Subsidiary of the Company" shall have the meaning set forth in
             -------------------------
Section 424(f) of the Code.

     Section 3.  Eligibility.  Awards and/or Options may be granted to any
                 -----------
Employee. The Committee shall have the sole authority to select the persons to
whom Awards and/or Options are to be granted hereunder, and to determine whether
a person is to be granted a Non-Qualified Option, an ISO or an Award or any
combination thereof. No person shall have any right to participate in the Plan.
Any person selected by the Committee for participation during any one period
will not by virtue of such participation have the right to be selected as a
Participant for any other period.  On and after the time that the Company
becomes subject to Code Section 162(m), no Participant shall be granted Options
and/or Awards under the Plan with respect to more than 1,000,000 shares of
Common Stock in any calendar year (subject to adjustment as provided in Section
8 hereof).

     Section 4.  Common Stock Subject to the Plan.
                 --------------------------------

     4.1.   Number of Shares.  The total number of shares of Common Stock for
            ----------------
which Options and/or Awards may be granted under the Plan (as well as the total
number of ISOs that may be granted hereunder) shall not exceed in the aggregate
four million five hundred ninety-one thousand six hundred sixty-six (4,591,666)
shares of Common Stock (subject to adjustment as provided in Section 8 hereof).

     4.2.   Reissuance.  The shares of Common Stock that may be subject to
            ----------
Options and/or Awards granted under the Plan may be either authorized and
unissued shares or shares reacquired at any time and now or hereafter held as
treasury stock as the Board of Directors may determine. In the event that any
outstanding Option expires or is terminated for any reason, the shares allocable
to the unexercised portion of such Option may again be subject to an Option
and/or Award granted under the Plan. If any shares of Common Stock acquired
pursuant to an Award or the exercise of an Option shall be forfeited or
repurchased by the Company, then such shares shall again become available for
issuance pursuant to the Plan.

                                       2
<PAGE>

     4.3. Special ISO Limitations.
          -----------------------

     (a)  To the extent that the aggregate fair market value (determined as of
the date an ISO is granted) of the shares of Common Stock with respect to which
ISOs are exercisable for the first time by an Employee during any calendar year
(under all Incentive Stock Option Plans of the Company or any Parent or
Subsidiary of the Company) exceeds $100,000, then the excess thereof shall be
treated as a Non-Qualified Option and not as an ISO.  This rule shall be applied
by taking Options into account in the order in which they are granted.

     (b)  No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, unless the option price is at least 110% of the fair market value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and the ISO by its terms is not exercisable more than five
years from the date it is granted.

     4.4. Limitations Not Applicable to Non-Qualified Options or Awards.
          -------------------------------------------------------------
Notwithstanding any other provision of the Plan, the provisions of Sections
4.3(a) and (b) shall not apply, nor shall be construed to apply, to any Non-
Qualified Option or Award granted under the Plan.

     Section 5.  Administration of the Plan.
                 --------------------------

     5.1. Administration.  The Plan shall be administered by a committee of the
          --------------
Board of Directors (the "Committee") established by the Board of Directors and
consisting of no less than two persons.  From and after the time that any equity
securities of the Company become registered or required to be registered under
Section 12 of the Securities Exchange Act of 1934 ("Exchange Act"), all members
of the Committee shall be both "non-employee directors" within the meaning of
Rule 16b-3 promulgated under the Exchange Act and "outside directors" within the
meaning of Code Section 162(m).  The Committee shall be appointed from time to
time by, and shall serve at the pleasure of, the Board of Directors.

     5.2. Grant of Options/Awards.
          -----------------------

     (a)  Options.  The Committee shall have the sole authority and discretion
          -------
under the Plan (i) to select the Employees who are to be granted Options
hereunder; (ii) to designate whether any Option to be granted hereunder is to be
an ISO or a Non-Qualified Option; (iii) to establish the number of shares of
Common Stock that may be issued under each Option; (iv) to determine the time
and the conditions subject to which Options may be exercised in whole or in
part; (v) to determine the form of the consideration that may be used to
purchase shares of Common Stock upon exercise of any Option (including the
circumstances under which the Employee may pay all or part of the exercise price
by entering into a promissory note with the Company, or circumstances under
which the Company's issued and outstanding shares of Common Stock may be used by
a Participant to exercise an Option); (vi) to impose restrictions and/or
conditions with respect to shares of Common Stock acquired upon exercise of an
Option; (vii) to determine the circumstances under which shares of Common Stock
acquired upon exercise of any Option may be subject to repurchase by the
Company; (viii) to determine the circumstances and conditions subject to which
shares acquired upon exercise of an Option may be sold or otherwise transferred,
including, without limitation, the

                                       3
<PAGE>

circumstances and conditions subject to which a proposed sale of shares of
Common Stock acquired upon exercise of an Option may be subject to the Company's
right of first refusal (as well as the terms and conditions of any such right of
first refusal); (ix) to establish a vesting provision for any Option relating to
the time when (or the circumstances under which) the Option may be exercised by
a Participant, including, without limitation, vesting provisions that may be
contingent upon (A) the Company meeting specified financial goals, (B) a change
of control of the Company or (C) the occurrence of other specified events; (x)
to accelerate the time when outstanding Options may be exercised; and (xi) to
establish any other terms, restrictions and/or conditions applicable to any
Option not inconsistent with the provisions of the Plan.

     (b)   Awards. The Committee shall have the sole authority and discretion
           ------
under the Plan (i) to select the Employees who are to be granted Awards
hereunder; (ii) to determine the amount, if any, to be paid by a Participant to
acquire shares of Common Stock pursuant to an Award; (iii) to determine the time
or times and the conditions subject to which Awards may be made; (iv) to
determine the time or times and the conditions subject to which the shares of
Common Stock subject to an Award are to become vested and no longer subject to
forfeiture to and/or repurchase by the Company; (v) to establish transfer
restrictions and the terms and conditions on which any such transfer
restrictions with respect to shares of Common Stock acquired pursuant to an
Award shall lapse; (vi) to establish vesting provisions with respect to any
shares of Common Stock subject to an Award, including, without limitation,
vesting provisions which may be contingent upon (A) the Company meeting
specified financial goals, (B) a change of control of the Company or (C) the
occurrence of other specified events; (vii) to determine the circumstances under
which shares of Common Stock acquired pursuant to an Award may be subject to
repurchase by the Company; (viii) to determine the circumstances and conditions
subject to which any shares of Common Stock acquired pursuant to an Award may be
sold or otherwise transferred, including, without limitation, the circumstances
and conditions subject to which a proposed sale of shares of Common Stock
acquired pursuant to an Award may be subject to the Company's right of first
refusal (as well as the terms and conditions of any such right of first
refusal); (ix) to determine the form of consideration that may be used to
purchase shares of Common Stock pursuant to an Award (including the
circumstances under which the Company's issued and outstanding shares of Common
Stock may be used by a Participant to purchase the Common Stock subject to an
Award); (x) to accelerate time at which any or all restrictions imposed with
respect to any shares of Common Stock subject to an Award will lapse; and (xi)
to establish any other terms, restrictions and/or conditions applicable to any
Award not inconsistent with the provisions of the Plan.

     5.3.  Interpretation.  The Committee shall be authorized to interpret the
           --------------
Plan and may, from time to time, adopt such rules and regulations, not
inconsistent with the provisions of the Plan, as it may deem advisable to carry
out the purposes of the Plan.

     5.4.  Finality.  The interpretation and construction by the Committee of
           --------
any provision of the Plan, any Option and/or Award granted hereunder or any
agreement evidencing any such Option and/or Award shall be final and conclusive
upon all parties.

     5.5.  Voting.  Members of the Committee may vote on any matter affecting
           ------
the administration of the Plan or the granting of Options and/or Awards under
the Plan.

     5.6.  Expenses, Etc.  All expenses and liabilities incurred by the
           -------------
Committee in the administration of the Plan shall be borne by the Company. The
Committee may employ

                                       4
<PAGE>

attorneys, consultants, accountants or other persons in connection with the
administration of the Plan. The Company, and its officers and directors, shall
be entitled to rely upon the advice, opinions or valuations of any such persons.

     5.7.  Indemnification.  Neither the members of the Board of Directors nor
           ---------------
any member of the Committee shall be liable for any act, omission, or
determination taken or made in good faith with respect to the Plan or any
Options or Awards granted under it, and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys'
fees, the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising therefrom to the full extent permitted by law.

    Section 6.  Terms and Conditions of Options.
                 ------------------------------

     6.1.  ISOs.  The terms and conditions of each ISO granted under the Plan
           ----
shall be specified by the Committee and shall be set forth in an ISO agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each ISO shall be such that each ISO issued
hereunder shall constitute and shall be treated as an "incentive stock option"
as defined in Section 422(b) of the Code. The terms and conditions of any ISO
granted hereunder need not be identical to those of any other ISO granted
hereunder.

     The terms and conditions of each ISO shall include the following:

     (a)   The option price shall be fixed by the Committee but shall in no
event be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the fair market value of the shares of Common Stock
subject to the ISO on the date the ISO is granted. For purposes of the Plan, the
fair market value per share of Common Stock as of any day shall mean the average
of the closing prices of sales of shares of Common Stock on all national
securities exchanges on which the Common Stock may at the time be listed or, if
there shall have been no sales on any such day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock shall not be so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of 3:30 p.m.,
New York time, on such day, or, if on any day the Common Stock shall not be
quoted in the NASDAQ system, the average of the high and low bid and asked
prices on such day in the over-the-counter market as reported by National
Quotation Bureau Incorporated, or any similar successor organization. If at any
time the Common Stock is not listed on any national securities exchange or
quoted in the NASDAQ system or the over-the-counter market, the fair market
value of the shares of Common Stock subject to an Option on the date the ISO is
granted shall be the fair market value thereof determined in good faith by the
Board of Directors. The fair market value of Common Stock subject to an ISO
shall be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.

     (b)   ISOs, by their terms, shall not be transferable otherwise than by
will or the laws of descent and distribution, and, during an Optionee's
lifetime, an ISO shall be exercisable only by the Optionee.

                                       5
<PAGE>

     (c)   All ISOs must be granted within 10 years of the earlier of the date
the Plan is adopted or the date the Plan is approved by the shareholders of the
Company. The Committee shall fix the term of all ISOs granted pursuant to the
Plan (including the date on which such ISO shall expire and terminate),
provided, however, that such term shall in no event exceed ten years from the
--------  -------
date on which such ISO is granted (or, in the case of an ISO granted to an
Employee referred to in Section 4.3(b) hereof, such term shall in no event
exceed five years from the date on which such ISO is granted). Each ISO shall be
exercisable in such amount or amounts, under such conditions and at such times
or intervals or in such installments as shall be determined by the Committee in
its sole discretion.

     (d)   To the extent that the Company or any Parent or Subsidiary of the
Company is required to withhold any Federal, state or local taxes in respect of
any compensation income realized by any Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Board of
Directors in its sole discretion.

     (e)   In the sole discretion of the Committee the terms and conditions of
any ISO may (but need not) include any of the following provisions:

           (i)   In the event a Participant shall cease to be employed by the
     Company or any Parent or Subsidiary of the Company on a full-time basis for
     any reason other than as a result of his death or "disability" (within the
     meaning of Section 22(e)(3) of the Code), the unexercised portion of any
     ISO held by such Participant at that time may only be exercised within
     three (3) months after the date on which the Participant ceased to be so
     employed, and only to the extent that the Participant could have otherwise
     exercised such ISO as of the date on which he ceased to be so employed.

           (ii)  In the event a Participant shall cease to be employed by the
     Company or any Parent or Subsidiary of the Company on a full--time basis by
     reason of his "disability" (within the meaning of Section 22(e)(3) of the
     Code), the unexercised portion of any ISO held by such Participant at that
     time may only be exercised within one year after the date on which the
     Participant ceased to be so employed, and only to the extent that the
     Participant could have otherwise exercised such ISO as of the date on which
     he ceased to be so employed.

           (iii) In the event a Participant shall die while in the full-time
     employ of the Company or a Parent or Subsidiary of the Company (or within a
     period of three (3) months after ceasing to be an Employee for any reason
     other than his "disability" or within a period of one year after ceasing to
     be an Employee by reason of such "disability"), the unexercised portion of
     any ISO held by such Participant at the time of his death may only be
     exercised within one year after the date of such Participant's death, and
     only to the extent that the Participant could have otherwise exercised such
     ISO at the time of his death. In such event, such ISO may be exercised by
     the executor

                                       6
<PAGE>

     or administrator of the Participant's estate or by any person amish persons
who shall have acquired the ISO directly from the Participant by bequest or
inheritance.

     (f)   No Option granted hereunder shall qualify as an ISO unless the Plan
is approved by the shareholders of the Company within 12 months before or after
the date the Plan is adopted by the Board of Directors.

     6.2.  Non-Qualified Options.  The terms and conditions of each Non-
           ---------------------
Qualified Option granted under the Plan shall be specified by the Committee, in
its sole discretion, and shall be set forth in a written option agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each Non-Qualified Option will be such (and
each Non-Qualified Option Agreement shall expressly so state) that each Non-
Qualified Option issued hereunder shall not constitute nor be treated as an
"incentive stock option" as defined in Section 422(b) of the Code but will be a
"non-qualified stock option" for Federal, state and local income tax purposes.
The terms and conditions of any Non-Qualified Option granted hereunder need not
be identical to those of any other Non-Qualified Option granted hereunder.

     The terms and conditions of each Non-Qualified Option Agreement shall
include the following:

     (a)   The option (exercise) price shall be fixed by the Committee and may
be equal to, more than or less than 100% of the fair market value of the shares
of Common Stock subject to the Non-Qualified Option on the date such Non-
Qualified Option is granted, provided, however, that the option (exercise) price
                             --------  -------
shall not be less than the par value of such shares of Common Stock.

     (b)   The Committee shall fix the term of all Non-Qualified Options granted
pursuant to the Plan (including the date on which such Non--Qualified Option
shall expire and terminate).  Each Non-Qualified Option shall be exercisable in
such amount or amounts, under such conditions (including provisions governing
the rights to exercise such Non--Qualified Option), and at such times or
intervals or in such installments as shall be determined by the Committee in its
sole discretion.

     (c)   Except as otherwise provided in an individual Option Agreement, Non-
Qualified Options shall not be transferable otherwise than by will or the laws
of descent and distribution, or a domestic relations order, and during a
Participant's lifetime a Non-Qualified Option shall be exercisable only by the
Participant or an alternate payee under a domestic relations order.

     (d)   To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by any
Participant in respect of a Non-Qualified Option granted hereunder or in respect
of any shares of Common Stock acquired upon exercise of a Non-Qualified Option,
the Company shall deduct from any payments of any kind otherwise due to such
Participant the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such Federal,
state or local taxes, or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to the Company, or
make other arrangements satisfactory to the Company (including, with prior
Committee approval, use of a promissory note in favor of the Company) regarding
payment to the Company of, the

                                       7
<PAGE>

aggregate amount of any such taxes. All matters with respect to the total amount
of taxes to be withheld in respect of any such compensation income shall be
determined by the Board of Directors in its sole discretion.

     Section 7.  Terms and Conditions of Awards.  The terms and conditions of
                 ------------------------------
each Award granted under the Plan shall be specified by the Committee, in its
sole discretion, and shall be set forth in a written agreement between the
Participant and the Company, in such form as the Committee shall approve. The
terms and provisions of any Award granted hereunder need not be identical to
those of any other Award granted hereunder.

     The terms and conditions of each Award shall include the following:

     (a)   The amount, if any, to be paid by a Participant to acquire the shares
of Common Stock pursuant to an Award shall be fixed by the Board of Directors
(or the Committee).

     (b)   Each Award shall contain such vesting provisions, such transfer
restrictions and such other restrictions and conditions as the Committee, in its
sole discretion, may determine, including, without limitation, the circumstances
under which the Company shall have the right and option to repurchase shares of
Common Stock acquired pursuant to an Award.

     (c)   Stock certificates representing Common Stock acquired pursuant to an
Award shall bear a legend referring to the restrictions imposed on such Stock
and such other matters as the Committee may determine.

     (d)   To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of an Award granted hereunder, or in respect of any
shares acquired pursuant to an Award, or in respect of the vesting of any such
shares of Common Stock, then the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, or if no such
payments are due or to become due to such Participant, then, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Committee
in its sole discretion.

     Section 8.  Adjustments.  In the event that, after the adoption of the Plan
                 -----------
by the Board of Directors, the outstanding shares of the Company's Common Stock
shall be increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation through reorganization, merger or consolidation,
recapitalization, reclassification, stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock, the
Board of Directors shall appropriately adjust (i) the number of shares of Common
Stock (and the option price per share) subject to the unexercised portion of any
outstanding Option (to the nearest possible full share), provided, however, that
                                                         --------  -------
the limitations of Section 424 of the Code shall apply with respect to
adjustments made to ISOs; (ii) the number of shares of Common Stock to be
acquired pursuant to an Award which have not become vested, and (iii) the number
of shares

                                       8
<PAGE>

of Common Stock for which Options and/or Awards may be granted under
the Plan, as set forth in Section 4.1 hereof, and such adjustments shall be
effective and binding for all purposes of the Plan.  The number of shares
authorized in Section 4.1 reflects the three-for-one reverse split of the common
stock effected in May 2000.

     Section 9.  Effect of the Plan on Employment Relationship.  Neither the
                 ---------------------------------------------
Plan nor any Option and/or Award granted hereunder to a Participant shall be
construed as conferring upon such Participant any right to continue in the
employ of (or otherwise provide services to) the Company or any Subsidiary or
Parent thereof, or limit in any respect the right of the Company or any
Subsidiary or Parent thereof to terminate such Participant's employment or other
relationship with the Company or any Subsidiary or Parent, as the case may be,
at any time.

     Section 10. Amendment of the Plan.  The Committee or Board of Directors
                 ---------------------
may amend or suspend the Plan or any portion thereof at any time, provided such
amendment is made with stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval which is a requirement for ISO treatment or, if applicable once any
equity securities of the Company become registered under Section 12 of the
Exchange Act, for exemptive relief under Section 16(b) of the Exchange Act or
which is a requirement for the performance-based compensation exception under
Code Section 162(m). The Committee in its sole discretion may amend the Plan so
as to conform with local rules and regulations subject to any provisions to the
contrary specified herein.

     Section 11. Amendment of an Option or Award Agreement.  In its sole and
                 -----------------------------------------
complete discretion, the Committee may at any time amend any Option or Award
Agreement for the following reasons: (i) additions and/or changes to the Code,
any federal or state securities law, or other law or regulations applicable to
the Option or Award, are made, and such additions and/or changes have some
effect on the Option or Award; or (ii) any other event not described in clause
(i) occurs and the Participant gives his or her consent to such amendment,
provided however, except for capital adjustments described in Section 8, the
Committee may not reduce the exercise price of an Option or Award.

     Section 12. Exemption from Computation of Compensation for Other Purposes.
                 -------------------------------------------------------------
By acceptance of an applicable Option or Award, subject to the conditions of
such Option or Award, each Participant shall be considered in agreement that all
shares sold or awarded and all Options granted under this Plan shall be
considered special incentive compensation and will be exempt from inclusion as
"wages" or "salary" in pension, retirement, life insurance, and other employee
benefits arrangements of the Company, except as determined otherwise by the
Company. In addition, each beneficiary of a deceased Participant shall be in
agreement that all such Options and Awards will be exempt from inclusion in
"wages" or "salary" for purposes of calculating benefits of any life insurance
coverage sponsored by the Company.

     Section 13. Listing, Registration and Other Legal Compliance.  No Options,
                 ------------------------------------------------
Awards or shares of the Common Stock shall be required to be issued or granted
under the Plan unless legal counsel to the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance, that
certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Any

                                       9
<PAGE>

certificates for shares of Common Stock delivered under the Plan may be subject
to such stock-transfer orders and such other restrictions as the Committee may
deem advisable under the rules, regulations, or other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed, and any applicable federal or state securities law. In
addition, if, at any time specified herein (or in any Agreement or otherwise)
for (a) the making of any Option or Award, or the making of any determination,
(b) the issuance or other distribution of Common Stock, or (c) the payment of
amounts to or through a Participant with respect to any Option or Award, any
law, rule, regulation, or other requirement of any governmental authority or
agency shall require the Company, any affiliate, or any Participant (or any
estate, designated beneficiary, or other legal representative thereof) to take
any action in connection with any such determination, any such shares to be
issued or distributed, any such payment, or the making of any such
determination, as the case may be, shall be deferred until such required action
is taken.

     Section 14.  Rights as Stockholder.  Subject to the Award provisions, no
                  ---------------------
Participant or beneficiary shall be deemed a stockholder of the Company nor have
any rights as such with respect to any shares to be provided under the Plan
until he or she has become the holder of such shares. Notwithstanding the
aforementioned, with respect to restricted stock Awards under this Plan, the
Participant or beneficiary of such Award shall be deemed the owner of such
shares provided herein. As such, unless contrary to the provisions herein or in
any such related Agreement, such stockholder shall be entitled to full voting,
dividend and distribution rights as provided any other Company stockholder for
as long as the Participant continues to be deemed the owner of such stock.

     Section 15.  Construction of the Plan.  The Plan, and its rules, rights,
                  ------------------------
agreements and regulations, shall be governed, construed, interpreted and
administered solely in accordance with the laws of the state of Delaware. In the
event any provision of the Plan shall be held invalid, illegal or unenforceable,
in whole or in part, for any reason, such determination shall not affect the
validity, legality or enforceability of any remaining provision, portion of
provision or the Plan overall, which shall remain in full force and effect as if
the Plan had been absent the invalid, illegal or unenforceable provision or
portion thereof

     Section 16.  Termination of the Plan.  The Board of Directors may terminate
                  -----------------------
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
initial adoption by the Board of Directors. No Option and/or Award may be
granted hereunder after termination of the Plan. The termination or amendment of
the Plan shall not alter or impair any rights or obligations under any Option
and/or Award theretofore granted under the Plan.

     Section 17.  Effective Date of the Plan.  The Plan shall be effective as of
                  --------------------------
1st  February, 1998, the date on which the Plan was adopted by the Board of
Directors of the Company.

                                    * * * *

                                      10

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