Document:

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ACQUISITION AGREEMENT made as of December 18, 1999, by and among TELTRAN
INTERNATIONAL GROUP, LTD., a Delaware Corporation ("Teltran") and INTERNET
PROTOCOLS LIMITED (the "Acquired Company") and the Shareholders of the Acquired
Company executing this Agreement (the "Shareholders").

                                  INTRODUCTION

WHEREAS, Teltran is a corporation which is engaged in the telecommunication and
internet business;

WHEREAS, the Acquired Company is engaged in the internet business;

WHEREAS, the Shareholders own all the issued and outstanding ordinary shares one
pence each in the capital of the Acquired Company (the "Acquired Company
Shares");

WHEREAS, Teltran desires to acquire (the "Acquisition") a 100% interest in the
Acquired Company pursuant to which (i) Teltran will acquire all of the
outstanding Acquired Company Shares from the Shareholders in exchange for an
indeterminate number of shares of Teltran's common stock ("Teltran Shares") and
(ii) an additional number of shares ("New Shares") to be issued by the Acquired
Company to Teltran for cash with the result that Teltran will own all of the
Acquired Company Shares;

WHEREAS, the Shareholders desire to effect the aforesaid transaction;

WHEREAS, the parties intend by executing this Agreement, to adopt a tax free
transaction to the extent available under law.

NOW, THEREFORE, in consideration of the premises, the parties hereto do mutually
agree as follows:

                                    ARTICLE I

                        DEFINITIONS, DISCLOSURE SCHEDULE

1.1      Defined Terms. As used in this Agreement, the following terms shall
         have the meanings indicated below:

         "Affiliate Indebtedness" shall refer to indebtedness due to
         Shareholders or entities or persons related or controlled by them as
         set forth in Exhibit C as provided for hereinafter.

         "Balance Sheet" shall refer to the latest balance sheet of the
         Acquired Company delivered to Teltran pursuant to Section 4.12.

         "Balance Sheet Date" with respect to Acquired Company shall refer to
         the date of the latest Balance Sheet.

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         "Consents" shall refer to the consents or approval of any third party
         including any governmental agency or registered securities
         association or stock exchange required in connection with the
         Transactions including, but not limited to, any consent required in
         connection with the transfer of the Acquired Company Shares or
         resulting from a change in beneficial ownership of the Acquired Company
         required by or necessary to prevent any termination of a Material
         Contract referred to in Section 4.8 all of which are listed in the
         Acquired Company Disclosure Schedule.

         "Contract" shall mean any agreement, contract, license, indenture,
         lease, mortgage, plan, arrangement, commitment or instrument including
         any note or other debt instrument (whether written or oral to the
         extent any of the foregoing represent a binding obligation of a party).

         "Enforceability Exceptions" shall mean the extent to which
         enforceability of an obligation may be limited by applicable
         bankruptcy, insolvency, re-organization or other similar laws affecting
         the enforcement of creditors' rights generally and by principles of
         equity regarding the availability of remedies.

         "Escrow Agent" shall refer to a escrow agent designated by
         Shareholders to hold the Teltran Shares (pursuant to the "Escrow
         Agreement").

         "Escrow Agreement" shall refer to escrow agreement in the form of
         Exhibit A between and among Teltran, the Shareholders and Escrow Agent
         to hold a portion of the Teltran Shares from the closing of the
         Acquisition until the later of December 31, 2001 or the resolution of
         all indemnity claims as hereinafter provided.

         "GAAP" shall refer to generally accepted accounting principles as
         applicable in the United States or the United Kingdom as the case may
         be.

         "Investment Banker" shall mean a broker-dealer, bank or other
         financial institution which (i) in the sole judgment of the party
         selecting such firm, has experience in valuing companies substantially
         similar to the Acquired Company and (ii) has no ongoing business
         relationship with a party and is not affiliated or related to any
         party.

         "Investment Banker Valuation" shall refer to the valuation of the
         Acquired Company determined in accordance with procedures set forth in
         paragraph 2.6 hereof

         "Knowledge" shall mean with respect to a party's awareness of the
         presence or absence of a fact, event or condition (a) actual knowledge
         plus, if different, (b) the knowledge that would be obtained if such
         party conducted itself faithfully and exercised a sound discretion in
         the management of his own affairs. Save in respect of representations
         and warranties given individually by a Shareholder, the knowledge of
         any party making a representation for warranties hereunder shall be
         attributable to all other parties making such representations for
         warranties and knowledge of the Acquired Company shall mean the
         knowledge of the Management Shareholders.

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         "Laws" shall mean all laws, common laws, rules, regulations,
         ordinances, codes, judgments, injunctions, orders, decrees, permits,
         published policies and other requirements of the United States or
         United Kingdom and other jurisdictions to which Teltran and an Acquired
         Company, as applicable, are subject, including all foreign and local
         governments and all agencies and instrumentalities thereof, including
         any administrative agencies or administrative body created by any such
         government.

         "Liabilities" shall mean any indebtedness, liability, claim, loss,
         damage, deficiency, obligation or responsibility, fixed or unfixed,
         choate or inchoate, liquidated or unliquidated, secured or unsecured,
         accrued, absolute, contingent or otherwise, whether or not of a kind
         required by generally accepted accounting principles to be set forth on
         a financial statement including the notes thereto.

         "Lien" means any mortgage, pledge, lien, encumbrance, charge, adverse
         claim or restriction of any kind affecting title or resulting in an
         encumbrance against property, real or personal, tangible or intangible,
         or a security interest of any kind (including any conditional sale or
         other title retention agreement, any lease in the nature thereof, any
         third party option or other agreement to sell and any filing of or
         agreement to give, any financing statement under the Uniform Commercial
         Code (or equivalent statute) of any jurisdiction).

         "Management Shareholders" shall refer to Roger Pellew, David Scanlan,
         Sol Alan Saad, Nicholas Le Seelleur and James Muschette.

         "Market Price" when referring to the Teltran shares on any particular
         date shall be the average closing price on the electronic bulletin
         board, NASDAQ market or stock exchange constituting the primary United
         States trading market for the Teltran Shares as hereinafter defined
         over the fifteen preceding trading days immediately prior to any such
         date.

         "Material Adverse Effect" or "Material Adverse Change" with respect to
         a party means a change which would in the aggregate have material
         adverse effect on the assets, liabilities (whether absolute, accrued,
         contingent or otherwise), condition (financial or otherwise), results
         of operations, business or future business or financial condition on a
         consolidated or combined basis of such party.

         "Other Shareholders" shall refer to Shareholders other than the
         Management Shareholders.

         "Percentage Ownership" shall refer to the percent of Acquired Company
         Shares owned by a Shareholder as of the date of Closing without giving
         effect to New Shares to be issued at Closing by the Acquired Company to
         Teltran.

         "Person" shall mean any natural person, corporation, division of a
         corporation, partnership, trust, joint venture, association, company,
         estate, unincorporated organization or governmental entity.

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         "Recognized Criteria" shall refer to valuation methods utilized to
         value internet companies including but not limited to the (A)
         "top-down" or Discounted P/E approach; (B) discounted cash flow and
         (C) the Comparable Company Analysis and such other additional methods
         as the parties may agree upon after good faith negotiations.

         "Returns" shall mean all returns (including, without limitation,
         information returns and other material information), reports and forms
         relating to Taxes required by any Law to be filed with any tax
         authority.

         "Subsequent Delivery Date" shall refer the latter of the tenth
         business day after completion of the Investment Banker Valuation or
         December 20, 2001.

         "Subsidiary" shall refer to any corporation or other entities in which
         a Person has a majority interest or which is otherwise controlled by
         such Person.

         "Taxation Authority" shall means any taxing or other authority, whether
         of the United Kingdom of elsewhere, competent to impose any liability
         to Taxation

         "Taxation" shall mean:

         1.       All taxes, duties, charges, levies, deductions or
                  withholdings wherever imposed and whether of the United
                  Kingdom or elsewhere including without limitation income tax,
                  (including income tax required to be deducted or withheld from
                  or accounted for in respect of any payment) capital gains tax,
                  inheritance tax, corporation tax, advance corporation tax,
                  liabilities in respect of the Pay As You Earn system, any
                  charge to tax arising pursuant to section 419 Income and
                  Corporation Taxes Act 1988, stamp duty, stamp duty reserve
                  tax, value added tax, customs duties, excise duties, other
                  import duties, withholding tax, national insurance, social
                  security and other similar contributions;

         2.       Any interest penalty, fine and surcharge related to or arising
                  in connection with any of the matters specified in the
                  preceding sub-paragraph.

         "Teltran Share Value" shall equal the greater of the Market Price on
         the last trading day immediately prior to the date upon which the
         determination is to be made provided that Market Price at closing shall
         not be less than $6.00 per share.

         "Transactions" shall mean, in respect of any party, all transactions
         set forth in or contemplated by this Agreement that involve, relate to
         or affect such party, including, without limitation, the Acquisition.

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                                   ARTICLE II

                             THE INITIAL ACQUISITION

2.1      The Acquisition. On the "Closing Date" as provided in paragraph 2.3:-

         (i)      the Acquired Company shall issue twenty one thousand three
                  hundred forty eight (21,348) Acquired Company Shares ("New
                  Shares") for (pound)1,900,000 to be paid as follows:

                  (A)      by applying the advance previously made by Teltran to
                           the Acquired Company of (pound)108,000 in partial
                           satisfaction of such payment of (pound)1,900,000;
                           and;

                  (B)      (pound)500,000 as the Closing; and

                  (C)      (pound)500,000 on February 15, 2000; and

                  (D)      the balance of (pound)792,000 on August 15, 2000;

         (ii)     the Shareholders shall exchange an aggregate of one hundred
                  thousand (100,000) Acquired Company Shares for 1,481,556
                  Teltran Shares ("Initial Shares") having an aggregate Teltran
                  Share Value of(pound)8,900,000 and additional contingent
                  consideration as set forth in paragraph 2.6 hereof.   Teltran
                  and the Acquired Company shall execute a subscription document
                  as may be customary under the Law of the United Kingdom to
                  evidence the purchase of Acquired Company Shares from the
                  Acquired Company as set forth above. Such subscription shall
                  contain such terms as may be usual in the circumstances
                  provided that the terms shall be consistent with the terms and
                  conditions of this Agreement.

         Each Shareholder shall be entitled to his or its Percentage Ownership
         of such Teltran Shares.  At the Closing, Teltran shall deliver to each
         of the Shareholders 50% of the Teltran Shares each Shareholder is
         entitled to receive with the balance of the Teltran Shares to be
         determined at closing to be held pursuant to the Escrow Agreement.
         Except for (i) the provisions of the Escrow Agreement and this
         Agreement and (ii) restrictions under United States securities law, the
         Shares shall be issued free and clear of all liens encumbrance or
         claims of third parties.

         Each of the Shareholders waives all right of pre-emption or any other
         rights (however obtained) as regards any and all issuance of or
         transfer in respect of the Acquired Company Shares (whether hereby or
         in any prior transaction).

2.2      Delivery of Teltran Shares. In addition to the restrictions herein, all
         of the Teltran Shares to delivered pursuant to the Agreement shall be
         unregistered under United States securities laws and may not be sold
         except in accordance with United States securities laws. Certificates
         for Teltran Shares shall contain a restrictive legend and a stop order
         shall be placed against their transfer, No fractional shares shall be
         issued.

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2.3      Closing. The closing of the Acquisition contemplated hereby (the
         "Closing") shall be held simultaneously upon execution hereby. The date
         upon which such Closing shall Occur shall be referred to as the
         "Closing Date."

2.4      Disclosure Schedules. The parties have delivered a disclosure
         schedules to each other. The "Acquired Company Disclosure Schedule"
         relates to the Shareholders and the Acquired Company while the "Teltran
         Disclosure Schedule" relates to Teltran. The Teltran Disclosure
         Schedule and the Acquired Company Disclosure Schedule shall be referred
         to as the "Disclosure Schedules". The Disclosure Schedules shall set
         forth the matters required or permitted to be set forth therein as
         described elsewhere in this Agreement and shall be deemed to be part of
         this Agreement. The Acquired Company and the Shareholders jointly and
         severally represent and warrant the truth and accuracy in all material
         respects of the Acquired Company Disclosure Schedule and Teltran
         represents the truth and accuracy of the Teltran Disclosure Schedule in
         all material respects.

2.5      Teltran Subsidiary. At any time, Teltran may designate a wholly owned
         subsidiary (the "Subsidiary") to acquire or own the Acquired Company
         Shares. Unless otherwise indicated by the context, references herein to
         Teltran shall include the Subsidiary. Teltran shall remain primarily
         liable, however, for all obligations herein.

2.6      Contingent Purchase Price-Subsequent Deliveries.

         (a)      As of November 1, 2000 the parties shall cause the value of
                  the Acquired Company to be determined by independent
                  Investment Bankers utilizing recognized Criteria of Value.

         (b)      The Shareholders, acting through their Shareholder
                  Representative, and Teltran shall each on or prior to October
                  20, 2000 appoint an Investment Banker to value the Acquired
                  Company as of November 1, 2000 ("Valuation Date"). Each
                  Investment Banker shall submit to Teltran and Shareholders on
                  or prior to November 20, 2000 a written determination of the
                  value of the Acquired Company on such date setting forth
                  therein the basis of such determination. If the difference
                  between the two valuations is less than 20% of the lower
                  valuation then an average of such valuations shall control and
                  shall be deemed the value. If the difference between the two
                  valuation is greater than 20% of lower Valuation and the
                  Investment Bankers appointed by the parties are unable to
                  reconcile their differences by November 30, 2000 then both
                  parties (or such appointed Investment Bankers, subject to the
                  consent of the parties which will not be unreasonably
                  withheld) shall appoint a mutually agreeable third party
                  Investment Banker by December 7, 2000. Such third party
                  Investment Banker shall determine the value of the Acquired
                  Company and shall submit a written determination to Teltran
                  and Shareholders setting forth the basis of its determination.

                  If the determination of such third Investment Banker is either
                  more than 20% greater than the higher of the two valuations or
                  more than 20% lower than the lower of the two valuations, then
                  three Investment Bankers shall be required to

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                  confer and determine an agreed upon valuation (and if they do
                  so within 14 days of the commencement of such conferring such
                  agreed valuation shall be final and conclusive). In all other
                  instances, the valuation shall be the average of the three
                  valuations.

                  Teltran shall reimburse the costs of the Shareholders in
                  connection with the valuations hereunder up to a maximum of
                  $15,000.

                  The failure of any party to appoint an investment banker shall
                  operate as a forfeiture of such party's right with respect
                  thereto and the determination of the other Investment Banker
                  shall control and be conclusive.

         (c)      Teltran, after execution of a confidentiality agreement, shall
                  cause the Acquired Company to give any Investment Banker
                  appointed pursuant to this Section 2.6 such written available
                  information as such Investment Banker may request which
                  information shall be true and correct. Teltran will give such
                  Investment Bankers and their representatives reasonable access
                  during business hours to the Acquired Company's book and
                  records. In determining value of the Acquired Company the
                  Investment Banker shall not increase or decrease the Value of
                  the Acquired Company for force major and extraordinary
                  circumstances or for any event for which is the subject of a
                  payment claim for indemnity.

         (d)      (i)      Each of the Shareholders shall receive additional
                           consideration ("Contingent Consideration") for the
                           Acquisition equal to their Percentage Ownership of
                           the excess of the value of the Acquired Company as
                           determined pursuant to paragraph 2.6(b) ("the Final
                           Value") over (pound)10,800,000 payable either in cash
                           or in Teltran Shares valued at the Teltran Share
                           Value as at November 1, 2000 or a combination thereof
                           at the option of Teltran.

                  (ii)     If the Final Value is less than (pound)10,800,000
                           then, the Shareholders shall be obliged to pay to
                           Teltran in cash their Percentage Ownership of the
                           amount of the shortfall calculated as follows ("the
                           Adjusted Shortfall"):

                 Adjusted Shortfall=     [Final Value]       x(pound)8.9 million
                                      --------------------
                                      (pound) 10.8 million

                           Provided always that the amount of the Adjusted
                           Shortfall shall in no circumstances exceed
                           (pound)2,225,000. Any such payment shall first be
                           satisfied by the sale of Teltran Shares held under
                           the Escrow Agreement and the payment of the proceeds
                           of such sale to Teltran but in the event that the
                           Teltran Share Value at the date of determination of
                           the Final Value is less that $9.683, then the
                           Adjusted Shortfall shall be satisfied by delivery to
                           Teltran of such number of Teltran Shares as shall
                           have an aggregate Teltran Share Value at Closing
                           equal to the Adjusted Shortfall.

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         (e)      Oil the Subsequent Delivery Date Teltran shall deliver to each
                  Shareholder such Shareholder's Percentage Ownership of such
                  Contingent Consideration and Teltran Shares held in escrow
                  less shares to be retained as follows:

                  (i)      The balance of the Initial Shares and Contingent
                           Consideration held by the Escrow Agent shall be
                           delivered to the Shareholders according to their
                           respective entitlements less cash or such number of
                           Teltran Shares having Teltran Share Value at the
                           Closing Date or Valuation Dates as the case may be
                           equal to the sum of (A) a reasonable estimate of the
                           maximum likely amount of any pending claim made by
                           Teltran for indemnity under Article X hereof plus (B)
                           (pound)450,000 all of which shall continue to be held
                           by the Escrow Agent.

                  (ii)     Where the assets held by the Escrow Agent under the
                           Escrow Agreement ("the Escrow Fund") comprise cash
                           and Teltran Shares, then all cash shall first be
                           released from the Escrow Fund. Where any Teltran
                           Shares are retained in the Escrow Fund pursuant to
                           Section 6(e)(B), then such retention shall first be
                           satisfied to the extent possible by any Teltran
                           Shares issued as Contingent Consideration.

(iii)    Where any assets are retained in the Escrow Fund pursuant to Section
         6(e)(A) and any claim for which a retention has been so made is finally
         agreed or determined with any Shareholder or withdrawn by Teltran, the
         amount (or value of shares) so retained, to the extent it exceeds the
         amount payable (if any) to Teltran in respect of that claim shall be
         released to that Shareholder.

(iv)     If for any reason any claim for indemnity made against a Shareholder
         for a breach of an individual representation or warranty is satisfied
         from the Escrow Fund, that Shareholder shall be liable to replace the
         assets so removed from the Escrow Fund to satisfy such claim.

(v)      If for any reason, any Teltran Shares may not be sold to satisfy an
         indemnity claim or payment of an Adjusted Shortfall against or by any
         Shareholder within 3 months after the later of the Subsequent Delivery
         Date and the date of final determination of such claim, then Teltran
         Shares having a Teltran Share Value at the Closing equal to the amount
         of such claim (or the amount of the Adjusted Shortfall) due but not
         paid shall be returned to Teltran from the assets of that Shareholder
         in the Escrow Fund (or otherwise from that Shareholder).

(vi)     Notwithstanding the foregoing provisions of this Section 2.6, if
         Teltran sells all or a majority of the shares in, or substantially all
         the assets of, the Acquired Company prior to November 2000 (other than
         to an affiliated party), then the Final Value shall not in any event be
         less than the value of the Acquired Company at the date of such sale by
         reference to that sale price (as determined by the relevant Investment
         Bankers appointed under section 2.6, in case of dispute between the
         parties).

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         (vii)    If the Shareholder Representative objects to any claim for or
                  the amount thereof in respect of which Teltran intends or may
                  make any retention under Section 2.6 (c), Teltran shall
                  produce to the Shareholder Representative an opinion by a UK
                  barrister (acting as expert) selected and instructed by
                  Teltran in good faith (who shall be not less than 8 years'
                  call) to the effect that the amount of Teltran's claim is a
                  reasonable estimate of the maximum likely amount of that
                  claim. Once requested, such opinion shall be delivered to the
                  Shareholder Representative prior to the date on which the sums
                  are due to be released, unless the release of any sums held in
                  Escrow is due to occur less than 21 days after the date of
                  notice of the claim, in which case Teltran shall be entitled
                  retain in Escrow a sum equal to their bona fide estimate of
                  the value of the claim until it has obtained such an opinion
                  within 21 days of the request therefor. Failure to obtain and
                  deliver such opinion shall mean that Teltran shall not be
                  entitled to make any such retention or shall release any
                  amount already retained. The reasonable costs of obtaining
                  such an opinion shall be added to the amount of the claim and,
                  if Teltran recovers in respect of such cl aim in whole or in
                  part, shall be satisfied by the Shareholders in accordance
                  with the Agreement. Such opinion shall not be dispositive of
                  any claim.

         (f)      The amount of consideration retained pursuant to Section
                  2.6(e) shall be delivered to the Shareholders upon the
                  resolution of all indemnity claims under Article X provided
                  the adequacy of retention shall be reviewed every quarter
                  commencing December 1, 2001 and to the extent the value
                  retained exceeds the value of claims, such excess shall be
                  delivered to the Shareholder.

2.7      Payment of Affiliate Indebtedness. At the Closing Teltran shall issue
         in the name of each person owed Affiliate Indebtedness additional
         Teltran Shares ("Debt Shares") as may have a Teltran Share Value at
         Closing equal to 150% of the Affiliate Indebtedness owed to such person
         (excluding any such debt to be repaid in cash at Closing as specified
         in Exhibit C). The Debt Shares shall be included in a registration
         statement filed with The Securities & Exchange Commission within one
         hundred twenty days (120) of the Closing and Teltran shall use all
         reasonable best efforts to have the registration statement declared
         effective. At the Closing each such creditor shall deliver a general
         release of the Affiliated Indebtedness as well as stock powers and
         transfer documents to the Acquired Company. The Debt Shares, stock
         powers and release shall be held pursuant to a separate escrow
         agreement ("Debt Shares Escrow Agreement"). Upon effectiveness of the
         Registration Statement, Debt Shares having a Teltran Share Value at
         that date equal to the Affiliate Indebtedness shall be delivered to the
         creditor, the balance of Debt Shares returned to Teltran and the
         release delivered to Teltran. If the Teltran Shares Value at that date
         is less than the aggregate Affiliate Indebtedness, then the entire
         amount of Debt Shares shall be delivered to the creditor and a release
         delivered for the amount of Affiliated Indebtedness equal to the
         Aggregate Teltran Share Value at that date. Unless the aggregate
         Teltran Share Value at that date of Debt Shares delivered increases to
         an amount equal to the Aggregate Affiliate Indebtedness prior thereto,
         the balance of Affiliated Indebtedness shall be paid out of cash flow
         of the Acquired Company. If the registration statement covering the
         Debt Shares is not declared effective by June 30, 2000 the Affiliated
         Indebtedness shall (if the creditor so elects) be paid out of cash flow
         of the Acquired Company and Debt

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         Shares allocated to him shall be returned to Teltran and cancelled.
         Teltran shall procure that (pound) 59,000 owed to the Management
         Shareholders (other than James Muschette) shall be repaid forthwith
         after the Closing by the Acquired Company.

2.8      Transfer of Entities. At the Closing all the shares of Common Stock in
         consideration Intothenet Organization Limited shall be transferred to
         [the Acquired Company] which has no assets or liabilities.

2.9      Shareholder Representative. The Shareholders have appointed Nicholas Le
         Seelleur to act as their representative ("Shareholder Representative").
         Such appointment shall be deemed an irrevocable appointment of the
         Shareholders Representative to make all decisions and execute all
         documents on behalf of the Shareholders relating to the Transaction
         including the Acquisition and to initiate, waive or compromise any
         rights of Shareholders respecting the Transactions. Except as set forth
         in Schedule 2.7, the Shareholder Representative shall receive all
         notices on behalf of the Shareholders. Nothing herein shall prevent the
         Shareholders from nominating a substitute Shareholder Representative.

2.10     Exchange Rate. When a determination is to be made with respect to
         exchange rate of U.S. Dollars to Pound Sterling and visa versa such
         rate shall be based upon the fifteen(15) business day average of the
         London Spot Closing prices as quoted by Chase Bank prior to such date.

2.11     Release of Guarantees. Teltran shall use its best efforts to procure,
         as soon as practicable after Closing, the guarantees included in the
         Acquired Company Disclosure Schedule given by Ken Drury and the Number
         Portability Company Ltd. ("the Guarantors"), and pending such release,
         Teltran shall indemnify the Guarantors against all liabilities in
         connection therewith.

2.12     Satisfaction of Teltran Advances. Upon the Closing, the advances
         previously made by Teltran to the Acquired Company of (pound)108,000
         shall be deemed satisfied and the guarantees and security arrangements
         between any (A) Shareholders and (B) Teltran shall be deemed
         terminated. Teltran shall receive in credit (pound)108,000 in respect
         of the payment of the purchase price of the New Shares.

                                  ARTICLE III

                               CLOSING DELIVERIES

3.1      Acquired Company and Shareholder's Closing Deliveries. At the Closing,
         in addition to documents referred to elsewhere herein, the Shareholders
         shall execute and deliver, or cause to be delivered from the Acquired
         Company or other third parties to Teltran:

         (1)      Stock Certificates owned by the Shareholders representing all
                  of Acquired Company Shares duly transferred to Teltran in
                  accordance with applicable Law;

         (2)      Minute books and corporate records of the Acquired Company and
                  Intothenet.

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         (3)      Copies of all Consents;

         (4)      Opinion of Shareholder's Counsel referred to in paragraph 8;

         (5)      Certified copy of Resolutions of Corporate Company
                  Shareholders authorizing this transaction;

         (6)      Resignations of all officers and directors of the Acquired
                  Company;

         (7)      Certified resolutions of the board of directors of the
                  Acquired Company authorizing the transaction appointing
                  nominees of Teltran as directors as well as the managing
                  director and other officers of Acquired Company;

         (8)      Delivery of certificates for Teltran Shares to be delivered at
                  Closing with transfer documents to the Escrow Agreement to be
                  held pursuant to the terms herein and the Escrow Agreement;

         (9)      The Escrow Agreement executed by the Escrow Agent and each
                  Shareholder.

         (10)     Debt Shares Escrow Agreement executed by the Shareholders and
                  the deposit of the shares and documents Release referred to in
                  paragraph 2.7.

         (11)     A Release to the Acquired Company of all debts, obligations
                  and claims of Shareholders other than the Affiliated Debt.

         (12)     Such other documents as Teltran or its counsel may reasonably
                  request.

                  All such documents shall be reasonably satisfactory to Teltran
                  and its counsel.

3.2      Closing Deliveries to the Acquired Company and Shareholders. At the
         Closing, in addition to documents referred to elsewhere, Teltran shall
         deliver to the Shareholders:

         (1)      A certified check or wire transfer to the Acquired Company
                  representing that portion of the purchase price to be paid at
                  Closing for the new shares to be purchased directly from the
                  Acquired Company. The balance less the amount of any advance
                  made by Teltran to Acquired Company shall be paid in
                  accordance with paragraph 2.1;

         (2)      Certificates registered in the names of the Shareholders
                  representing the Teltran Shares to be delivered at Closing in
                  accordance with their Percentage Interest to be delivered in
                  accordance with Paragraph 2.1 and 3.1(8).

         (3)      Resolutions of the Board of Directors of Teltran approving the
                  Acquisition;

         (4)      Subscription Documentation as may be required to evidence
                  Teltran's purchase of the new shares from the Acquired
                  Company.

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         (5)      The Escrow Agreements referred to in paragraph 3.1(9) and 3.1
                  (10) executed by Teltran and the escrow agent thereto;

         (6)      Such Other documents as the Acquired Company or Shareholders
                  or their counsel may reasonably request, All such documents
                  shall be satisfactory to Acquired Company and the Shareholders
                  and their counsel.

                                   ARTICLE IV

               REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

4        Except as set forth in the Acquired Company Disclosure Schedule in
         addition to any other representations or warranties, the Acquired
         Company and Shareholders jointly and severally make the following
         representations and warranties to Teltran on the date hereof and on the
         Closing Date with the knowledge and understanding that Teltran is
         relying materially upon such representations and warranties.
         Notwithstanding the foregoing, the representations made in paragraphs
         4.3, 4.5, 4.6(a), 4.15 (in relation to Taxes for which a Shareholder is
         primarily liable), 4.18 and 4.24 shall be made individually to the
         extent such representation relates to such Shareholder's own personal
         position and circumstances.

4.1      Organization and Standing of Acquired Company. The Acquired Company
         is a corporation duly organized, validly existing and in good standing
         under the corporate laws of England and Wales. The Acquired Company has
         the corporate power to carry on its business as now conducted and to
         own its assets and is duly qualified to transact business as a foreign
         corporation in each jurisdiction where such qualification is necessary
         except where the failure to qualify will not have a Material Adverse
         Effect. The copies of the Certification of Incorporation, Memorandum of
         Association and Articles of Association of Acquired Company as amended
         to date, and made available to Teltran, are true and complete copies of
         those documents as now in effect.

4.2      Capitalization. The authorized capital stock of the Acquired Company,
         is set forth in Schedule 4.2. The Acquired Company Shares to be
         exchanged hereunder constitutes all the issued and outstanding Shares
         of the Acquired Company except as Schedule 4.2, the shares of common
         stock of the Acquired Company that are issued and outstanding are duly
         authorized, validly issued and outstanding, fully paid and
         nonassessable (not subject to further charge), and were not issued in
         violation of the preemptive rights of any person. The Acquired Company
         Shares to be issued to Teltran have been duly authorized, validly
         issued fully paid, nonassessable not subject to any liens, claims,
         restrictions or third party, including any pre-emption rights. There
         are no outstanding (a) options, warrants or rights to purchase or
         subscribe for any equity securities, or other ownership interests of
         the Acquired Company, (b) obligations of the Acquired Company, whether
         absolute or contingent, to issue any shares of equity securities or
         other ownership interests, (c) debt or equity securities directly or
         indirectly convertible into any equity securities of the Acquired
         Company or (d) any shareholder agreements, options, rights of first
         refusal or

                                       12

<PAGE>

         other similar rights with respect to the capital stock of the Acquired
         Company to which the Acquired Company is a party.

4.3      Share Ownership. Each Shareholder represents that the Shareholder is
         the record and beneficial owner of the number of Acquired Company
         Shares listed in Schedule 4.3 free and clear of all liens and
         encumbrances and claims of any kind. Upon execution of this Agreement
         and deliveries at closing of the certificates for Acquired Company
         Shares and transfer of the Teltran Shares pursuant to the Acquisition,
         Teltran shall receive marketable title to such Acquired Company Shares
         free and clear of all Liens and encumbrances and claims of third
         parties. Moreover, no prior holder of Acquired Company Shares may
         assert any claim against the Acquired Company with respect to Acquired
         Company Shares transferred hereby or with respect to or arising out of
         any transaction under which any Shareholder acquired shares from any
         former shareholder.

4.4      Subsidiaries. The Acquired Company' does not own any Subsidiary nor
         does any Acquired Company have an interest in any other corporation,
         partnership, joint venture or other entity.

4.5      Investment Intent. Each of the Shareholders hereby represents, warrants
         and agrees that such Shareholder will be acquiring any Teltran Shares
         to be issued in connection with Initial Acquisition and Affiliated
         Indebtedness for investment, for its own account, and not with a view
         to the distribution of the Teltran Shares. In such connection, each
         Shareholder further represents and warrants that they understand that
         Teltran is issuing the Teltran Shares to such Shareholder in reliance
         upon an exemption from the registration requirements pursuant to
         Section 5 of the Securities Act of 1933, as amended (the "Act") and the
         rules and regulations thereunder. Each Shareholder agrees that the
         Teltran Shares may not be sold, transferred, pledged, hypothecated,
         assigned or otherwise disposed of by such Shareholder unless Teltran
         shall have been supplied with evidence satisfactory to it and its
         counsel that such transfer is not in violation of the Act. Furthermore,
         each Shareholder understands that the certificates for the Teltran
         Shares shall bear an appropriate restrictive legend to reflect the
         foregoing restrictions and that stop transfer instructions will be
         placed against the Teltran Shares with respect thereto. Each
         Shareholders consents to the placing of such legend on the certificates
         for the Teltran Shares.

4.6      Authority. (a) This Agreement constitutes, when executed and delivered
         by the Shareholders in accordance herewith, the valid and binding
         obligations of each of the Shareholders, enforceable in accordance with
         its respective terms, subject to the Enforceability Exceptions. (b) the
         Acquired Company has all the requisite corporate power and authority to
         execute and delivery and perform its obligations under this Agreement
         and all related transactions as provided hereunder and upon execution
         and delivery, the Agreement is a valid and binding agreement,
         enforceable in accordance with its respective terms subject to the
         Enforceability Exception.

4.7      Assets. The Acquired Company has good and marketable title to or lease
         or licenses to all of the assets and properties which it purports to
         own as reflected on the Acquired Company Balance Sheet or thereafter
         acquired or on Schedule 4.7 hereto. No material

                                       13

<PAGE>

         portion of the assets of the Acquired Company is subject to any lien
         or any governmental decree or other to be sold or is being condemned,
         expropriated or otherwise taken by any public authority with or without
         payment of compensation therefore, nor, to the Acquired Company
         Shareholders' Knowledge, has any such condemnation, expropriation or
         taking been proposed. None of the material assets of the Acquired
         Company is subject to any restriction which would prevent continuation
         of the use currently made thereof or materially adversely affect the
         value thereof

4.8      Contracts. Schedule 4.8 consists of a true and complete list of all

         Contracts, to which the Acquired Company ("Material Contracts") is a
         party which requires payments or receipts in excess of (pound)10,000
         per year or is not terminable by the Acquired Company on notice of
         thirty (30) days or less without penalty or the Acquired Company being
         liable for damages.

         Except as set forth on Schedule 4.8 (i) each Material Contract is in
         full force and effect and there is no default under any Material
         Contract either by the Acquired Company or, to the knowledge of the
         Shareholders and the Acquired Company, by any other party thereto, and
         no event has occurred that with the lapse of time or the giving of
         notice or both would constitute a default thereunder by the Acquired
         Company or to the knowledge of the Acquired Company and Shareholders,
         any other party of which could result in termination of a Material
         Agreement or which alone or in the aggregate, would provide the basis
         for a claim against the Acquired Company in excess of (pound) 10,000;
         (ii) no party to any such Material Contract has given notice to the
         Acquired Company of or made a claim against the Acquired Company with
         respect to any breach or default thereunder; and (iii) neither the
         Acquired Company, nor any Shareholder has received any payment from any
         contracting party in connection with, or as an inducement for, entering
         into any contract, agreement, commitment or instrument with the
         Acquired Company except for payment for actual services rendered or to
         be rendered by the Acquired Company, consistent with amounts
         historically charged for such service.

         Such schedule also lists all pending executed heads of agreements or
         letters of intent. To the Knowledge of the Shareholders none of the
         heads of agreement have been canceled or terminated.

4.9      Litigation There is no claim, action, proceeding, or investigation
         pending or, to the Knowledge of the Shareholders or the Acquired
         Company, threatened against or affecting the Acquired Company before or
         by any court, arbitrator or governmental agency or authority which, in
         their reasonable judgment, could have a Material Adverse Effect on the
         Acquired Company. There are no decrees, injunctions or orders of any
         court, governmental department, agency or arbitration outstanding
         against the Acquired Company and with respect to any action or claim
         covered by insurance, the Acquired Company has complied with all
         requirements of any such policy which are conditions to the defense and
         continued defense of such claim or action. Neither the Acquired Company
         nor any person for whose acts or defaults in the matter it may be
         contractually or vicariously liable is involved in any civil criminal
         or arbitration proceedings or reference of any dispute to any expert
         and to the knowledge, information or belief of the Shareholders no such
         proceeding is pending or threatened against the Acquired Company

                                       14

<PAGE>

         or any such person and there are no facts likely to give rise to such
         proceedings or reference.

4.10     Insurance. The Acquired Company has in force insurance policies, or
         renewals thereof, as identified and described in the Disclosure
         Schedule, reasonably adequate to cover the Assets and the business
         against loss, damage and liability and will maintain such insurance up
         to and including the Closing Date.

4.11     No Conflict. The execution and delivery of this Agreement by the
         Acquired Company and the Shareholders does not, and the consummation by
         the Acquired Company and the Shareholders of the transactions
         contemplated hereby will not, violate, conflict with or result in a
         breach of any provision of, or constitute a default (or in an event
         which, with notice or lapse of time or both, would constitute a
         default) under, or result in the termination of, or accelerate the
         performance required by, or result in a right of termination or
         acceleration under, or result in the creation of any lien, security
         interest, charge or encumbrance upon any of the properties or assets of
         the Acquired Company under any of the terms, conditions or provisions
         of (i) the Certificate of Incorporation or By-laws of the Acquired
         Company, (ii) any statute, law, ordinance, rule, regulation, judgment,
         decree, order, injunction, writ, permit or license of any court or
         governmental authority applicable to the Acquired Company or any of its
         properties or assets, or (iii) except as set forth in Schedule 4.11,
         any note, bond, mortgage, indenture, deed of trust, license, franchise,
         permit, concession, contract, lease or other instrument, obligation or
         agreement of any kind to which the Acquired Company is now a party or
         by which the Acquired Company or any of its or their properties or
         assets may be bound or affected, excluding from the foregoing clauses
         (ii) and (iii), such violations, conflicts, breaches, defaults,
         terminations, accelerations or creations of liens, security interests,
         charges or encumbrances that would not, in the aggregate, have a
         Material Adverse Effect.

4.12     Financial Statements. The Acquired Company and the Shareholders have
         delivered to Teltran true and complete copies of the Acquired Company's
         financial statements listed in Schedule 4.12. These financial
         statements (i) have been prepared from the books and records of the
         Acquired Company in accordance with UK GAAP consistently applied with
         prior periods, and (ii) are complete and correct and fairly reflect, in
         each case in all material respects, the financial condition and results
         of operations of the Acquired Company as of the dates and for the
         periods indicated thereon, and (iii) reflect all assets at the lower of
         their cost or net realizable value. The books and accounts of the
         Acquired Company have been maintained in all material respects in
         accordance with sound business practices, and to the Acquired Company
         Shareholders' Knowledge there have been no transactions involving the
         Acquired Company that properly should have been set forth therein in
         accordance with U.K. GAAP that have not been accurately so set forth.
         Since the Balance Sheet Date there has been no Material Adverse Change
         with respect to the Acquired Company.

 4.13     Compliance With Law.

         (a)      The Acquired Company has complied and is presently complying,
                  in all material respects, with all U.K. Laws, including,
                  without limitation, all applicable laws

                                       15

<PAGE>

                  regulating the business of providing products and services to
                  internet service users and the Shareholders know of no pending
                  or anticipated changes to such Laws that could cause The
                  Acquired Company's current business practices to fall out of
                  compliance with such Laws. The Shareholders do not know of
                  any claim by any party that the Acquired Company is in
                  violation in any material respect of any such Laws with
                  respect to its operations or that the actions of any third
                  party has caused the Company to be in such violation and no
                  notice in that regard has been received by the Acquired
                  Company.

         (b)      The Acquired Company has all material UK governmental
                  licenses, permits, consents, authorizations and approvals
                  necessary for the conduct of its business as currently
                  conducted ("Government Licenses and Permits"). Schedule 4.13
                  includes a list of all Government Licenses and Permits and
                  such Government Licenses and Permits are attached thereto. All
                  Government Licenses and Permits are in full force and effect,
                  and no proceedings for the suspension or cancellation of any
                  thereof is pending or, to their knowledge, threatened.
                  Herewith the Shareholders in the Acquired Company still know
                  of no action, omission or policy which could form a reasonable
                  basis for the loss of any such Government License or Permit.
                  The Acquired Company is not in breach of the terms or
                  conditions of such licenses and there are no pending or
                  threatened proceedings which might in any way affect such
                  licenses and consents.

         (c)      The Acquired Company is not and will not be liable for any
                  damages, awards, penalties, costs, expenses or losses for
                  failure to register under the Data Protection Act.

4.14     Employee. There is no and there has never been any employee of the
         Acquired Company and there is no and there has never been any claim or
         demand by any employee and the Acquired Company is not and will not be
         liable for any Taxation in respect of any employee for any period prior
         to Closing whether such Taxation is due and/or payable on the date
         hereof or becomes due and/or payable in the future.

4.15     Taxes. Except as set forth on Schedule 4.15 the representations and
         warranties set forth in Exhibit B are true and correct.

4.16     Non Governmental Consents. Except with respect to the Consents listed
         in Schedule 4.16 no consent of any third party is required by the
         Acquired Company pursuant to any Material Contract or by any non
         governmental third party to preserve any material right of the Acquired
         Company upon the Acquisition.

4.17     Liabilities. The Acquired Company does not have any material
         Liabilities other than (i) Liabilities fully and adequately reflected
         or reserved against on the Balance Sheet, (ii) Liabilities incurred
         since the Balance Sheet Date in the ordinary course of the business of
         the Acquired Company or to be incurred in connection with this
         Transaction or (iii) Liabilities otherwise disclosed in this Agreement,
         including the Acquired Company Disclosure Schedule.

                                       16

<PAGE>

4.18     Governmental Approvals for Transactions. Except with respect to any
         Consents listed in Schedule 4.18 no authorization, license, permit,
         franchise, approval, order or consent of, and no registration,
         declaration or filing by the Acquired Company or Shareholders in the
         United Kingdom with any governmental authority, domestic or foreign,
         federal, state or local, is required in connection with the Acquired
         Company's execution, delivery and performance of this Agreement and
         consummation of the Transaction.

4.19     Intellectual Property. Schedule 4.19 sets forth a complete and correct
         list and summary description of all trademarks, trade names, service
         marks, service names, brand names, know-how, copyrights, design, design
         rights and patents, and all other intellectual property rights
         whatsoever ("Intellectual Property") registrations thereof and
         applications therefore, applicable to or used in the business of the
         Acquired Company. To the best of the knowledge and belief of the
         Shareholders and the Acquired Company, the Company owns or has the
         right or licence to Intellectual Property necessary for the conduct of
         its business as set forth in the Material Contracts and Heads of
         Agreement under Schedule 4.8. A complete list of all licenses granted
         by or to such entities with respect to any of the foregoing is set
         forth as a Material Contract as Schedule 4.8. Except as otherwise set
         forth in Schedule 4.19 all Intellectual Property is owned by the
         Acquired Company as applicable, free and clear of all liens, claims,
         security interests and encumbrances of any nature whatsoever. The
         Acquired Company is currently not in receipt of any notice of any
         violation or infringements of, and is not knowingly violating or
         infringing, the rights of others with respect to Intellectual Property.

4.20     Accounts Receivable. Except as set forth in Schedule 4.20, all of the
         accounts receivable of the Acquired Company included in the Balance
         Sheet or otherwise reflect actual transactions, have arisen in the
         ordinary course of business, to the knowledge of the Acquired Company
         and Shareholders, (i) be subject to offset or deduction or other
         defense and, (ii) except as reserved in the Balance Sheet or set forth
         in 4.20 will be paid at the aggregate recorded amounts thereof net of
         any reserves established in a manner consistent with past practices or
         as reflected in the Balance Sheets. None of the accounts receivable of
         the Acquired Company have been the subject of any factoring by the
         Acquired Company and the Acquired Company is not entitled to the
         benefit of any accounts receivable otherwise than as the original
         creditor.

4.21     Real Property-Leases. Schedule 4.21 contains a list of all real
         property leases, licenses and personal property leases under which the
         Acquired Company is the lessee or licensee ("Leased Property") together
         with (i) the location and nature of each of the Leased Properties
         (including a legal description of all leased real property); (ii) the
         termination date of each such lease or license; (iii) the name of the
         lessor or licensor; and (iv) all rental and other payments made or
         required to be made. All such leases and licenses are valid subsisting
         and in full force and effect in accordance with their respective terms,
         and there is not under any Leased Property lease or license, any
         existing default or event of default (or event that, with notice or
         passage of time, or both, would constitute a default). True and
         complete copies of all Leased Property and licenses listed in Schedule
         4.21 have been delivered to Teltran heretofore as well as any copies of
         title reports, surveys or environmental reports or audits relating to
         any leased property. Except as set forth in Schedule 4.21 no such lease
         or license will require the consent of the lessor or licensor to

                                       17

<PAGE>

         or as a result of the consummation of the Transactions. Any such lease
         or license shall be deemed a Material Contract and the representations
         set forth in paragraph 4.8 shall apply. Except for the aforesaid
         leases and licenses the Acquired Company has no interest in real
         property.

4.22     Condition of Assets. All personal property used by the Acquired Company
         (whether owned or held pursuant to leases) is to the knowledge of the
         Shareholders and Acquired Company in good operating condition and
         repair, subject only to ordinary wear and tear, has been operated,
         serviced and maintained properly within the recommendation and
         requirements of the manufacturer thereof (if any) or in accordance with
         UK industry practice as necessary to maintain it in operation and is
         suitable and appropriate for the use thereof made and proposed to be
         made by the Acquired Company in its business operations. The personal
         property pursuant to Schedule 4.22 comprises all of the personal
         property used or capable of being used in, or necessary for the conduct
         of the Acquired Company's business as presently conducted by it and as
         contemplated pursuant to the Material Contract and the Heads of
         Agreement with customers and prospective customers.

         The Acquired Company has obtained manufacturer's warranties with
         respect to such property and the Acquired Company has complied with all
         material respects thereof and the manufacturer has not given any notice
         that the Acquired Company has not complied with the terms of such
         warranties.

4.23     No Foreseeable Adverse Changes. Except as set forth in Schedule 4.23
         the Acquired Company and the Shareholders do not know of any
         development including trends or changes in technology or industry
         practice which would effect its business as presently conducted or
         contemplated to be conducted by it or otherwise adversely effect the
         business plan. Moreover, they know of no reasons why any customers of
         or suppliers to or key executive of the Acquired Company will terminate
         or substantially diminish any relationship with the Acquired Company.

4.24     Related Transactions. Schedule 4.24 lists all agreements, arrangements
         or transactions involving or relating to any Shareholder, officer,
         director of the Acquired Company or their affiliates on the one hand
         and the Acquired Company in connection therewith. Save as so disclosed,
         there is not outstanding:

         (a)      any loan, guarantee or indemnity given by the Acquired Company
                  in favor of any Shareholder, any past or present director of
                  the Acquired Company or any person who is connected with any
                  Shareholder or any such director (each an "Insider") or in
                  favor of any other person in respect of any liability of any
                  Insider;

         (b)      any loan, guarantee or indemnity given by any Insider in favor
                  of the Acquired Company or in favor of any other person in
                  respect of any liability of the Acquired Company; or

         (c)      any other contract to which the Acquired Company is or was a
                  party and in which any Insider is or was interested in any way
                  whatsoever;

                                       18

<PAGE>

         No Shareholder (nor any company owned or controlled by him, whether
         alone or with any persons connected with him) has any interest, direct
         or indirect, in any trade or business which competes or is likely to
         compete the Acquired Company's business.

4.25     IntotheNet Organisation Limited has no assets or liabilities.

                                    ARTICLE V

                    REPRESENTATIONS AND WARRANTIES OF TELTRAN

5        Except as set forth in the Teltran Disclosure Schedule, Teltran
         represents and warrants to, and agrees with, the Shareholders as
         follows as of the date hereof and the Closing Date with the knowledge
         and understanding that Shareholders are relying materially upon such
         representations and warranties:

5.1      Organization and Standing of Teltran. Teltran is a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware and has the corporate power to carry on its business
         as now conducted and to own its assets and is duly qualified to
         transact business as a foreign corporation in each state where such
         qualification is necessary except where the failure to qualify will not
         have a Material Adverse Effect. The copies of the Articles of
         Incorporation and By-laws of Teltran and delivered to the Shareholders,
         are true and complete copies of those documents as now in effect.

5.2      Documents. Teltran has delivered a copy of its Form 10 SB and Form 10-Q
         for the quarter ending September 30, 1999 and its Amended SB-2 all as
         filed with the United States Securities and Exchange Commission in
         November 1999. The aforesaid filed documents are true and correct in
         all material respects at the time they were filed and there has been no
         Material Adverse Change since the filing of such documents.

5.3      Governmental Approval; Consents. No authorization, license, permit,
         franchise, approval, order or consent of, and no registration,
         declaration or filing by Teltran with, any governmental authority,
         domestic or foreign, federal, state or local, is required in connection
         with Teltran's execution, delivery and performance of this Agreement
         and consummation of the transaction. No Consents of any other parties
         are required to be received by or on the part of Teltran to enable
         Teltran to enter into and carry out this Agreement.

5.4      Authority,. This Agreement constitutes, and all other agreements
         contemplated hereby will constitute, when executed and delivered by
         Teltran in accordance herewith, the valid and binding obligations of
         Teltran enforceable in accordance with their respective terms, subject
         to the Enforceability Exceptions.

5.5      Accuracy of Representations. None of the representations or warranties
         contained in this Agreement, including the Teltran Disclosure Schedule,
         contains, or will contain at the Closing Date, any false or misleading
         statement, or omits, or will omit at the Closing Date, any fact or
         statement necessary to make the other statements or facts set forth
         herein or therein not false or misleading.

                                       19

<PAGE>

                                   ARTICLE V1

                                  NO PROVISION

                                   ARTICLE V11

                                  NO PROVISION

                                  ARTICLE VIII

                                  NO PROVISION

                                   ARTICLE IX

                                  NO PROVISION

                                    ARTICLE X

                                    INDEMNITY

10.1     Indemnity. The Shareholders shall indemnify, defend, and hold Teltran
         harmless from and against any and all losses, costs, liabilities,
         damages, and expenses (including reasonable legal and other expenses
         incident thereto) of every kind, nature, and description, including any
         unassumed liabilities, and any undisclosed liabilities (collectively
         "Losses") resulting from or arising out of (i) the breach of any
         representation or warranty of the Acquired Company or Shareholders set
         forth in this Agreement (including the exhibits hereto) including a
         failure to disclose any liability as required therein or in any
         certificate or schedule, or other instrument delivered to Teltran
         pursuant hereto; or (ii) the breach of any of the covenants of
         Shareholders contained in this Agreement.

10.2     Claims Procedure. Should any claim covered by Section 10.1 be asserted
         against a party entitled to indemnification under this Article X (the
         "Indemnitee") or the Acquired Company, the Indemnitee shall promptly
         notify the party obligated to make indemnification (the "Indemnitor"),
         provided that any delay or failure in notifying the Indemnitor shall
         not affect the Indemnitor's liability under this Article X if such
         delay or failure was not prejudicial to the Indemnitor. The Indemnitor
         upon receipt of such notice shall be entitled to assume the defense
         thereof with counsel reasonably satisfactory to the Indemnitee and the
         Indemnitee shall extend reasonable cooperation to the Indemnitor in
         connection with such defense. No settlement of any such claim shall be
         made without the consent of the Indemnitor, such consent not to be
         unreasonably withheld, nor shall any such settlement be made by the
         Indemnitor which does not provide for the absolute, complete, and
         unconditional release of the Indemnitee from such claim. In the event
         that the Indemnitor shall fall, within a reasonable time, to defend a
         claim, the Indemnitee shall have the right, to assume the defense
         thereof without prejudice to its rights to indemnification hereunder.

                                       20

<PAGE>

 10.3     Payment-Set Off. No Teltran Shares shall be delivered out of Escrow
          until all claims have been settled. If the Shareholders disputes the
          payment of any amount claimed hereunder in writing within fifteen (15)
          days after demand the parties shall promptly proceed to resolve such
          dispute. In the event any dispute herein is litigated, the losing
          party shall bear all costs of litigation including reasonable
          attorneys' fees, and costs of experts. Interest on any improperly
          withheld amount by either party shall accrue at prime rate.

          If Teltran has any claim which is finally determined (whether by
          agreement or a final nonappealable order of a court of competent
          jurisdiction) against the Shareholders (whether individually or
          collectively) under the Agreement entitling it indemnity in
          satisfaction of such claim, then such claim should first be paid out
          of the assets held by the Escrow Agent in or towards satisfaction of
          such claim the Escrow Agent shall first pay any cash entitlement of
          such Shareholder held by the Escrow Agent to Teltran and, if the claim
          is not thereby satisfied in full it shall sell on the open market
          sufficient number of such Shareholder or Shareholders' entitlement to
          Teltran Shares as is required to satisfy such claim and shall upon
          receipt of the proceeds thereof apply them in or towards satisfaction
          of such claim.

  10.4    Limitations.

          (a)      There shall be no claim for Indemnity until the amount of
                   such claims exceeds $50,000 and no isolated claim shall be
                   made for an amount of (pound)3,000 or less (unless such claim
                   is related to other claims).

          (b)      If any proceeds of Teltran Shares are to be utilized in
                   satisfaction of an indemnity claim, the Teltran Shares will
                   be sold on pro-rata basis.

          (c)      The liability of Other Shareholders shall be limited to the
                   then Teltran Shares or other consideration retained in escrow
                   including any proceeds of sale.

          (d)      The liability of the Management Shareholders shall be limited
                   to the value of consideration received by them.

          (e)      Notwithstanding the foregoing there shall be no limitation
                   with respect to the warranties made herein relating to taxes,
                   capitalization or with respect to the individual Share
                   ownership and authority to enter into the transaction.

          (f)      Each Shareholder shall only be liable for his Percentage
                   Ownership of the amount of any claim for Indemnity for breach
                   of any warranty or representation in this Agreement (save in
                   respect of those given individually) where that Shareholder
                   (and no other Shareholder) shall be responsible for the whole
                   amount of the liability.

          (g)      No claim shall be capable of being made against the
                   Shareholders under this Agreement unless written notice
                   thereof (specifying so far as practicable all material
                   details, to the extent available, of the breach or other
                   event to which the claim shall relate and Teltran's bona fide
                   estimate of the amount claimed) shall have been given to the
                   Shareholders not later than the second anniversary of

                                                     21

<PAGE>

                  Completion. Teltran shall provide to the Shareholders details
                  of any such claim or potential claim as soon as it becomes
                  aware that It may have a claim but a breach of this obligation
                  shall have no effect unless the Shareholders are adversely
                  affected.

         (h)      No liability shall attach to the Shareholders in respect of a
                  claim under this Agreement to the extent that the liability
                  giving rise to such claim would have been insured had Teltran
                  arranged insurance cover with effect from Closing which would
                  be equivalent to the policies currently in force in respect of
                  tile Acquired Company;

         (i)      In assessing the amount of any claim under this Agreement
                  there shall be taken into account any benefit to Teltran or
                  the Acquired Company as a consequence of the relevant breach.

        (j)       In the event that Teltran or the Acquired Company is entitled
                  to recover from a third party, including insurers, (whether by
                  payment, discount, credit, relief or otherwise howsoever) any
                  sum in relation to any loss, liability or damage which is the
                  subject of a claim under this Agreement, Teltran shall (or
                  shall procure that the Acquired Group Company shall):

                  (i)      notify the Shareholders as soon as reasonably
                           practicable and provide such information and
                           assistance as they may reasonably require, including
                           making available all relevant books and documents,
                           relating to such entitlement or claim and the action
                           taken or proposed to be taken by Teltran or the
                           Acquired Company in respect of it;

                  (ii)     subject to the Shareholders assuming responsibility
                           for and paying all costs and liabilities incurred by
                           Teltran or the Acquired Company, allow the
                           Shareholders conduct of any such claim and take such
                           reasonable steps or proceedings as the Shareholders
                           may reasonably require and shall keep the
                           Shareholders promptly informed of the progress of
                           any such steps, proceedings or actions and shall not
                           settle or compromise any such claim or make any
                           admission of liability without the prior consent of
                           the Shareholders.

          (k)      The amount of any claim shall be reduced by the proceeds
                   received by Teltran or Acquired Company with respect to such
                   specific claims pursuant to any insurance policy or any
                   recovery or payment from any other independent third party.

 10.5     Brokers' Fees. Teltran and the Acquired Company and Shareholders shall
          save and hold the other harmless from any claims made against the
          other on account of their acts or alleged acts from any person for any
          other agent's, broker's or finder's fee or commission incurred in
          connection with the Transactions. The provisions of paragraph 10.5
          shall apply to any claim within the scope of the preceding sentence.

                                      22

<PAGE>

                                   ARTICLE XI

                              POST CLOSING MATTERS

   11.1     Post Closing Operation. Teltran through November 1, 2000 shall
            cause the Acquired Company to

            (i)     to continue operations of the Acquired Company consistent
                    with the development plans of the Acquired Company as
                    evidenced by reference to the attached expenditure schedule
                    and in accordance with reasonable business judgement
                    provided nothing herein shall require Teltran to finance the
                    operations of the Acquired Company (in excess of the
                    (pound)1.9 million share subscription monies) or shall
                    prevent Teltran or the Acquired Company from effecting
                    changes in the Acquired Company's operations (including
                    changes in expenditures) if revenues, cash flow and losses
                    or net income of the Acquired Company in its reasonable
                    judgement warrant a change;

            (ii)    maintain separate books and records of the Acquired
                    Company; and

            (iii)   not change accounting policy in a manner which would
                    adversely effect Value and ensure that accounting policies
                    are in accordance with UK GAAP;

            (iv)    only enter into transactions with affiliates on terms and
                    conditions as may be fair. A determination of an independent
                    Investment Banker of fairness shall be conclusive.
                    Notwithstanding the foregoing, nothing shall prevent Teltran
                    from its U.K. operations with IPL and or charging a nominal
                    amount for services as accounting services.

           Notwithstanding the above, Teltran may cause the Acquired Company to
           make acquisitions or issue shares in connection therewith provided
           that the business of the Acquired Company shall continue to be
           operated separately in accordance with the above and the value of the
           Acquired Company to be determined in accordance with paragraph 2.6
           shall not be effected whether adversely or beneficially.

   11.2    Right to Rescind. If prior to March 31, 2001 Teltran files any type
           of bankruptcy petition under the U.S. Bankruptcy Law or if a petition
           is filed against it, and any such petition is not dismissed within 60
           days the Shareholders have a right to elect within such time to
           rescind their sale hereby returning all the Teltran Shares or other
           consideration in exchange for all the Acquired Company Shares
           exchanged hereby plus the repayment of the initial cash payment to
           the Acquired Company.

                                       23

<PAGE>

                                  ARTICLE XII

                                 MISCELLANEOUS

 12.1     Franchises. Except as otherwise provided herein, the Acquired Company,
          the Shareholders and Teltran shall each pay their own expenses
          incident to the negotiation, preparation, and carrying out of this
          Agreement, including all fees and expenses of its counsel and
          accountants for all activities of such counsel and accountants
          undertaken pursuant to this Agreement, irrespective of whether or not
          the transactions contemplated hereby are consummated. Notwithstanding
          the foregoing, the Acquired Company may not incur more than $15,000
          of expense to be paid by Teltran out of the initial cash payment for
          its Acquired Company Shares.

 12.2     Survival of Representations, Warranties and Covenants. All statements
          contained in this Agreement or in any certificate delivered by or on
          behalf of the Shareholders or Teltran pursuant hereto, or in
          connection with the transactions contemplated hereby shall be deemed
          representations, warranties and covenants by the Shareholders or
          Teltran, as the case may be, hereunder. All representations,
          warranties, and covenants made by the Shareholders or Teltran in this
          Agreement, or pursuant hereto, shall survive the Closing, but shall
          terminate two years from the Closing Date,

 12.3     Succession and Assignments; Third Party Beneficiaries. This Agreement
          may not be assigned (either voluntarily or involuntarily) by any party
          hereto without the express written consent of the other party. Any
          attempted assignment in violation of this Section shall be void and
          ineffective for all purposes. In the event of an assignment permitted
          by this Section, this Agreement shall be binding upon the heirs,
          successors and assigns of the parties hereto. Except as expressly set
          forth in this Section, there shall be no third party beneficiaries of
          this Agreement.

          The provisions of this Section shall not apply to the acquisition of
          the Acquired Company by a wholly owned subsidiary corporation of
          Teltran. Without limiting the generality of the preceding sentence,
          references to Teltran herein shall be deemed to include references to
          the Subsidiary.

 12.4     Accuracy of Documents. All documents delivered by the Acquired Company
          Shareholder to Teltran, and by Teltran to the Acquired Company, as
          photocopies faithfully reproduce the originals thereof, and such
          originals are authentic and were, to the extent execution was
          required, duly executed.

 12.5     Notices. All notices, requests, demands, or other communications with
          respect to this Agreement shall be in writing and shall be (i) sent by
          facsimile transmission, (ii) or with respect of notices from the
          United States sent by the United States Postal Service, registered or
          certified mail, return receipt requested, (iii) or with respect to
          notices from United Kingdom sent by recorded delivery or (iv)
          personally delivered by a nationally recognized express overnight
          courier service, charges prepaid, to the following addresses (or such
          other addresses as the parties may specify from time to time in
          accordance with this Section):

                                       24

<PAGE>

                  (a)      Teltran International Group, Inc.
                           One Penn Plaza, Suite 3632
                           New York, New York 10119

                           With a copy to:

                           Parker Duryee Rosoff & Haft
                           529 Fifth Avenue
                           New York, New York 10017
                           Attn: Michael DiGiovanna, Esq.
                           Fax No.: (212) 972-9487

                  (b)      (i)      To Shareholder Representative

                                    Nicholas Le Seelleur

                                    At address set forth on the signature page

                           (ii)     To Shareholder (if required)

                           At the address set forth below this name on the
                           signature page.

                           With a copy to:

                           Hewitson Becke + Shaw Solicitors
                           Attn: Mr. James Lawrence
                           Shakespeare House, 42 Newmarket Road
                           Cambridge, CB5 8EP

          All such notices shall, when sent in accordance with the preceding
          sentence, be deemed to have been given and received on the earliest of
          (i) the day delivered to such address or sent by facsimile
          transmission, (ii) the fifth business day following the date deposited
          with the United States Postal Service, or (iii) the next business day
          after shipment by such courier service.

 12.6     Construction. This Agreement shall be construed and enforced in
          accordance with the internal laws of the State of New York (US)
          without giving effect to the principles of conflicts of law thereof.

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

 12.8     No Implied Waiver; Remedies. No failure or delay on the part of the
          parties hereto to exercise any right, power, or privilege hereunder or
          under any instrument executed pursuant hereto shall operate as a
          waiver nor shall any single or partial exercise of any right, power,
          or privilege preclude any other or further exercise thereof or the
          exercise of any other right, power, or privilege. All rights, powers,
          and privileges granted herein shall be in addition to other rights
          and remedies to which the parties may be entitled at law or in equity.

                                       25

<PAGE>

 12.9     Entire Agreement. This Agreement, including any exhibits and
          Disclosure Schedules attached hereto, sets forth the entire
          understandings of the parties with respect to the subject matter
          hereof, and it incorporates and merges any and all previous
          communications, understandings, oral or written as to the subject
          matter hereof, and cannot be amended, waived or changed except in
          writing, signed by the party to be bound thereby.

 12.10    Headings. The headings of the Sections of this Agreement, where
          employed, are for the convenience of reference only and do not form a
          part hereof and in no way modify, interpret or construe the meanings
          of the parties.

 12.11    Severability. To the extent that any provision of this Agreement shall
          be invalid or unenforceable, it shall be considered deleted hereof and
          the remainder of such provision and of this Agreement shall be
          unaffected and shall continue in full force and effect.

IN WITNESS WHEREOF, the parties have executed this agreement as of the
date hereof

                                        TELTRAN INTERNATIONAL GROUP, LTD.

                                        By: /s/ James Tubbs
                                           ----------------------------------

                                        INTERNET PROTOCOLS LIMITED

                                        By: /s/ David Scanlan
                                           ----------------------------------

Investors - Signature & Address         Acquired Company     Initial Shares
                                        Shares
                                        36,675               543,360
Name:         /s/ Roger Pellew
      --------------------------------

Name:    ROGER PELLEW
Address: The Manor House
         Coltishall
         Norfolk NR12 7DU

                                      26

<PAGE>

Signed by: /s/ David Scanlan            15,000               222,233
          ------------------------------

Name:    VESEN HOLDINGS LIMITED
Address: Suite 4, 10th Floor
         International Commercial Center
         2a Main Street
         Gibraltar

Signed by: /s/ David Scanlan            10,950               162,230
          ------------------------------

 Name:         DAVID SCANLAN
 Address:      2 Thornhill Road
               Barnham
               Ipswich
               Suffolk IP6 0BJ

Signed by: /s/ Nicholas le Seelleur      9,125               135,192
          ------------------------------

Name:         NICHOLAS LE SEELLEUR
Address:      2 Stafford Terrace
              London W8 7BH

Signed by: /s/ Nicholas le Seelleur      9,125               135,192
          ------------------------------

Name:          SOL ALAN SAAD
Address:       Five Oaks
               12 Eaton Park Road
               Cobham
               Surrey KTII 2JH

Signed by: /s/  Roger Pellew             5,000                74,078
          ------------------------------

Name:        MILLER BRAZIL MARKETING
             CONSULTANTS LIMITED
Address:     Acre House
             11 - 15 William Road
             London NW1 3ER

                                       27

<PAGE>

Signed by: /s/ Nicholas le Seelleur      4,562.5              67,596
          ------------------------------

 Name:        JAMES MUSCHETTE
 Address:     15 Park Lane
              Hornchurch
              Essex RMII 1BB

Signed by: /s/ Nicholas le Seelleur      4,562.5              67,596
          ------------------------------

 Name:        BARCLAY BRYDON LIMITED
 Address:     Enterprise House
              15 Whitworth Street
              Manchester MI 5WG

Signed by: /s/ David Scanlan             3,000                44,447
          ------------------------------

Name:         THE NUMBER PORTABILITY
              COMPANY LIMITED
Address:      20 Princes Street
              Ipswich
              Suffolk IPI 1QT

Signed by: /s/ David Scanlan             1,000                14,816
          ------------------------------

 Name:        JANET PHILOMENA MURPHY
 Address:     3 Kenton Close
              Merseyside L37 7EA

Signed by: /s/ David Scanlan             1,000                14,816
          ------------------------------

 Name:        LEAH VALJALO
 Address:     33 Lynden Road
              Boothstown
              Worsley
              Manchester M28 1JW

                                      28<PAGE>   1
                                                                  EXHIBIT 10.10

                                 EXTENSITY, INC.

                             1996 STOCK OPTION PLAN

                            (AS AMENDED OCTOBER 1999)

         1. Purposes of the Plan. The purposes of this 1996 Stock Option Plan
are:

         -        to attract and retain the best available personnel for
                  positions of substantial responsibility,

         -        to provide additional incentive to Employees, Directors and
                  Consultants, and

         -        to promote the success of the Company's business.

         Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

         2. Definitions. As used herein, the following definitions shall apply:

                  (a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.

                  (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

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

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

                  (e) "Committee" means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.

                  (f) "Common Stock" means the common stock of the Company.

                  (g) "Company" means Extensity, Inc., a Delaware corporation.

                  (h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.

                  (i) "Director" means a member of the Board.

<PAGE>   2

                  (j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

                  (k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

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

                  (m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                              (i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                              (ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

                              (iii) In the absence of an established market for
the Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

                  (n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

                  (o) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

                  (p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.

                                      -2-
<PAGE>   3

                  (q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                  (r) "Option" means a stock option granted pursuant to the
Plan.

                  (s) "Option Agreement" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.

                  (t) "Option Exchange Program" means a program whereby
outstanding Options are surrendered in exchange for Options with a lower
exercise price.

                  (u) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.

                  (v) "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.

                  (w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (x) "Plan" means this 1996 Stock Option Plan.

                  (y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.

                  (z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

                  (aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

                  (bb) "Section 16(b)" means Section 16(b) of the Exchange Act.

                  (cc) "Service Provider" means an Employee, Director or
Consultant.

                  (dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

                  (ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

                  (ff) "Subsidiary" means a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.

         3. Stock Subject to the Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 7,000,000

                                      -3-
<PAGE>   4
Shares plus an annual increase to be added on the first day of the Company's
fiscal year beginning January 1, 2001, equal to the lesser of (i) 1,300,000
shares, (ii) 4.0% of the outstanding shares on such date or (iii) a lesser
amount determined by the Board. The Shares may be authorized, but unissued, or
reacquired Common Stock.

                  If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Stock Purchase Right,
shall not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.

         4. Administration of the Plan.

                  (a) Procedure.

                              (i) Multiple Administrative Bodies. Different
Committees with respect to different groups of Service Providers may administer
the Plan.

                              (ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

                              (iii) Rule 16b-3. To the extent desirable to
qualify transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.

                              (iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.

                  (b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

                              (i) to determine the Fair Market Value;

                              (ii) to select the Service Providers to whom
Options and Stock Purchase Rights may be granted hereunder;

                              (iii) to determine the number of shares of Common
Stock to be covered by each Option and Stock Purchase Right granted hereunder;

                              (iv) to approve forms of agreement for use under
the Plan;

                                      -4-
<PAGE>   5

                              (v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;

                              (vi) to reduce the exercise price of any Option or
Stock Purchase Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was granted;

                              (vii) to institute an Option Exchange Program;

                              (viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;

                              (ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

                              (x) to modify or amend each Option or Stock
Purchase Right (subject to Section 15(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options longer than is otherwise provided for in the Plan;

                              (xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;

                              (xii) to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

                              (xiii) to make all other determinations deemed
necessary or advisable for administering the Plan.

                  (c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.

         5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.

                                      -5-
<PAGE>   6

         6. Limitations.

                  (a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

                  (b) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.

                  (c) The following limitations shall apply to grants of
Options:

                              (i) No Service Provider shall be granted, in any
fiscal year of the Company, Options to purchase more than 500,000 Shares.

                              (ii) In connection with his or her initial
service, a Service Provider may be granted Options to purchase up to an
additional 500,000 Shares, which shall not count against the limit set forth in
subsection (i) above.

                              (iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.

                              (iv) If an Option is cancelled in the same fiscal
year of the Company in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be counted
against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.

         7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.

         8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.

                                      -6-
<PAGE>   7

         9. Option Exercise Price and Consideration.

                  (a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                              (i) In the case of an Incentive Stock Option

                                    (A) granted to an Employee who, at the time
the Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                                    (B) granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

                              (ii) In the case of a Nonstatutory Stock Option,
the per Share exercise price shall be determined by the Administrator. In the
case of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                              (iii) Notwithstanding the foregoing, Options may
be granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.

                  (b) Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions that must be satisfied before
the Option may be exercised.

                  (c) Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

                              (i) cash;

                              (ii) check;

                              (iii) promissory note;

                              (iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;

                              (v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;

                                      -7-
<PAGE>   8

                              (vi) a reduction in the amount of any Company
liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation program
or arrangement;

                              (vii) any combination of the foregoing methods of
payment; or

                              (viii) such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws.

         10. Exercise of Option.

                  (a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.

                           An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

                           Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

                  (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

                                      -8-
<PAGE>   9

                  (c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

                  (d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

                  (e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

         11. Stock Purchase Rights.

                  (a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.

                  (b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

                                      -9-
<PAGE>   10

                  (c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.

                  (d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.

         12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

         13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

                  (a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

                  (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously

                                      -10-
<PAGE>   11
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action.

                  (c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

         14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

         15. Amendment and Termination of the Plan.

                  (a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

                  (b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

                  (c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to

                                      -11-
<PAGE>   12

exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.

         16. Conditions Upon Issuance of Shares.

                  (a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

                  (b) Investment Representations. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.

         17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

         18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

         19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -12-

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