Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                               GUARANTY AGREEMENT

         WHEREAS, the execution of this Guaranty Agreement is a condition to
COMPASS BANK, a bank organized and existing under the laws of the State of
Alabama ("Lender"), agreeing to enter into that certain Settlement and
Deficiency Agreement (herein so called) dated as of March 28, 2000 which is by
and between TOTAL BUILDING SYSTEMS, INC., a Texas corporation ("Total"), JOYVER
INVESTMENTS, LLC, a Texas limited liability company ("Joyver"), CHARLES D.
McPHAIL ("McPhail"), MEGA WORLD, INC., a Delaware corporation ("Mega World") and
TEXAS TBS, INC., a Texas corporation ("TBS") covering certain obligations more
fully described therein. Collectively hereinafter Total, Joyver and McPhail are
referred to as the "Borrower."

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, Mega World and TBS,
(collectively herein the "Guarantor"), hereby jointly and severally, irrevocably
and unconditionally guarantee to Lender the full and prompt payment and
performance of the Guaranteed Indebtedness (hereinafter defined), this Guaranty
Agreement being upon the following terms:

         1. The term "Guaranteed Indebtedness", as used herein means all
obligations, indebtedness, and liabilities of Borrower to Lender, fully
described in the Settlement and Deficiency Agreement and all extensions,
renewals, and modifications thereof. The term "Guaranteed Indebtedness" shall
include any and all post-petition interest and expenses (including attorneys'
fees) whether or not allowed under any bankruptcy, insolvency, or other similar
law. The Guarantors acknowledge that as of the date hereof, the principal amount
owing by the Borrower is the Deficiency described in the Settlement and
Deficiency Agreement.

         2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Lender or any
other party, or which Guarantor may have against Borrower, Lender, or any other
party, shall be available to, or shall be asserted by, Guarantor against Lender
or any subsequent holder of the Guaranteed Indebtedness or any part thereof or
against payment of the Guaranteed Indebtedness or any part thereof.

         3. If Guarantor becomes liable for any indebtedness owing by Borrower
to Lender by endorsement or otherwise, other than under this Guaranty Agreement,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Lender hereunder shall be cumulative of

<PAGE>   2

any and all other rights that Lender may ever have against Guarantor. The
exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

         4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Lender without notice or demand in
lawful money of the United States of America and it shall not be necessary for
Lender, in order to enforce such payment by Guarantor, first to institute suit
or exhaust its remedies against Borrower or others liable on such Guaranteed
Indebtedness, or to enforce any rights against any collateral which shall ever
have been given to secure such Guaranteed Indebtedness. In the event such
payment is made by Guarantor, then Guarantor shall be subrogated to the rights
then held by Lender with respect to the Guaranteed Indebtedness to the extent to
which the Guaranteed Indebtedness was discharged by Guarantor and, in addition,
upon payment by Guarantor of any sums to Lender hereunder, all rights of
Guarantor against Borrower or any collateral arising as a result therefrom by
way of right of subrogation, reimbursement, or otherwise shall in all respects
be subordinate and junior in right of payment to the prior indefeasible payment
in full of the Guaranteed Indebtedness.

         5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Lender.

         6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of
Borrower, Guarantor, or any other party at any time liable for the payment of
any or all of the Guaranteed Indebtedness; (d) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the
Guaranteed Indebtedness or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(e) any adjustment, indulgence, forbearance, waiver, or compromise that may be
granted or given by Lender to Borrower, Guarantor, or any other party ever
liable for any or all of the Guaranteed Indebtedness; (f) any neglect, delay,
omission, failure, or refusal of Lender to take or prosecute any action for the
collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action in connection with any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (g) the unenforceability or invalidity of any or all of the
Guaranteed Indebtedness or of any

                                       -2-
<PAGE>   3

instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Indebtedness; (h) any payment by Borrower or any
other party to Lender is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Lender is required to
refund any payment or pay the amount thereof to someone else; (i) the settlement
or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k) any impairment of any collateral securing any or all of the
Guaranteed Indebtedness; (l) the failure of Lender to sell any collateral
securing any or all of the Guaranteed Indebtedness in a commercially reasonable
manner or as otherwise required by law; (m) any change in the corporate
existence, structure, or ownership of Borrower; or (n) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or Guarantor.

         7. Guarantor represents and warrants to Lender as follows:

                  (a) Guarantor has the power and authority and legal right to
         execute, deliver, and perform its obligations under this Guaranty
         Agreement and this Guaranty Agreement constitutes the legal, valid, and
         binding obligation of Guarantor, enforceable against Guarantor in
         accordance with its terms, except as limited by bankruptcy, insolvency,
         or other laws of general application relating to the enforcement of
         creditor's rights.

                  (b) The execution, delivery, and performance by Guarantor of
         this Guaranty Agreement do not and will not violate or conflict with
         any law, rule, or regulation or any order, writ, injunction, or decree
         of any court, governmental authority or agency, or arbitrator and do
         not and will not conflict with, result in a breach of, or constitute a
         default under, or result in the imposition of any lien upon any assets
         of Guarantor pursuant to the provisions of any indenture, mortgage,
         deed of trust, security agreement, franchise, permit, license, or other
         instrument or agreement to which Guarantor or its properties is bound.

                  (c) No authorization, approval, or consent of, and no filing
         or registration with, any court, governmental authority, or third party
         is necessary for the execution, delivery, or performance by Guarantor
         of this Guaranty Agreement or the validity or enforceability thereof.

                  (d) The value of the consideration received and to be received
         by Guarantor as a result of Lender making extensions of credit to
         Borrower and Guarantor executing and delivering this Guaranty Agreement
         is reasonably worth at least as much as the liability and obligation of
         Guarantor hereunder, and such liability and obligation and such
         extensions of credit have benefitted or may reasonably be expected to
         benefit Guarantor directly or indirectly.

                  (e) Guarantor has, independently and without reliance upon
         Lender and based upon such documents and information as Guarantor has
         deemed appropriate, made its own analysis and decision to enter into
         this Guaranty Agreement.

                                       -3-
<PAGE>   4

         8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or Lender has any commitment to
Borrower:

                  (a) Guarantor will furnish to Lender as soon as available, and
         in any event within ninety (90) days after the end of each fiscal year
         of Guarantor, beginning with the fiscal year ending December 31, 2000,
         (i) a copy of the financial statements of Guarantor for such fiscal
         year and (ii) a certificate of Guarantor to Lender disclosing and
         certifying as to all material changes in Guarantor's debt or net worth
         or otherwise certifying that there has been no material change in
         Guarantor's personal debt or net worth since the previous financial
         statement delivered to Lender.

                  (b) Guarantor will furnish promptly to Lender written notice
         of the occurrence of any default under this Guaranty Agreement.

                  (c) Guarantor will furnish promptly to Lender such additional
         information concerning Guarantor as Lender may request.

                  (d) Guarantor will obtain at any time and from time to time
         all authorizations, licenses, consents or approvals as shall now or
         hereafter be necessary or desirable under all applicable laws or
         regulations or otherwise in connection with the execution, delivery and
         performance of this Guaranty Agreement and will promptly furnish copies
         thereof to Lender.

                  (e) Guarantor will at all times own directly or indirectly and
         free and clear of all liens and encumbrances whatsoever at least the
         same percentage of voting shares of Borrower, if any, as it owns
         directly or indirectly on the date hereof.

         9. Lender shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Lender to Guarantor whether or not the Guaranteed Indebtedness is then due
and irrespective of whether or not Lender shall have made any demand under this
Guaranty Agreement. As security for this Guaranty Agreement and the Guaranteed
Indebtedness, Guarantor hereby grants Lender a security interest in all money,
instruments, certificates of deposit, and other property of Guarantor now or
hereafter held by Lender, including, without limitation, property held in
safekeeping. In addition to Lender's right of setoff and as further security for
this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby grants
Lender a security interest in all deposits (general or special, time or demand,
provisional or final) and all other accounts of Guarantor now or hereafter on
deposit with or held by Lender and all other sums at any time credited by or
owing from Lender to Guarantor. The rights and remedies of Lender hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which Lender may have.

                                       -4-
<PAGE>   5

         10. (a) Guarantor hereby agrees that the Subordinated Indebtedness
shall be subordinate and junior in right of payment to the prior payment in full
of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
Indebtedness to Lender as security for the Guaranteed Indebtedness. If any sums
shall be paid to Guarantor by Borrower or any other person or entity on account
of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor
for the benefit of Lender and shall forthwith be paid to Lender without
affecting the liability of Guarantor under this Guaranty Agreement and may be
applied by Lender against the Guaranteed Indebtedness in such order and manner
as Lender may determine in its sole discretion. Upon the request of Lender,
Guarantor shall execute, deliver, and endorse to Lender such documents and
instruments as Lender may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of Borrower
to Guarantor, whether such indebtedness, liabilities, and obligations now exist
or are hereafter incurred or arise, or whether the obligations of Borrower
thereon are direct, indirect, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such indebtedness,
liabilities, or obligations are evidenced by a note, contract, open account, or
otherwise, and irrespective of the person or persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor.

             (b) Guarantor agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon Borrower's assets securing
payment of any Subordinated Indebtedness shall be and remain inferior and
subordinate to any and all liens, security interests, judgment liens, charges,
or other encumbrances upon Borrower's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such encumbrances in
favor of Guarantor or Lender presently exist or are hereafter created or
attached. Without the prior written consent of Lender, Guarantor shall not (i)
file suit against Borrower or exercise or enforce any other creditor's right it
may have against Borrower, or (ii) foreclose, repossess, sequester, or otherwise
take steps or institute any action or proceedings (judicial or otherwise,
including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any liens, security interests, collateral rights,
judgments or other encumbrances held by Guarantor on assets of Borrower.

             (c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower as debtor, Lender shall have the right to prove and vote any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness. Lender may apply any such
dividends, distributions, and payments against the Guaranteed Indebtedness in
such order and manner as Lender may determine in its sole discretion.

             (d) Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice

                                       -5-
<PAGE>   6

thereon that the indebtedness evidenced thereby is subordinated under the terms
of this Guaranty Agreement.

         11. No amendment or waiver of any provision of this Guaranty Agreement
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender. No failure
on the part of Lender to exercise, and no delay in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         12. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of Guarantor against Lender shall have commenced
to run, toll the running of such statute of limitations and, if the period of
such statute of limitations shall have expired, prevent the operation of such
statute of limitations.

         13. This Guaranty Agreement is for the benefit of Lender and its
successors and assigns, and in the event of an assignment of the Guaranteed
Indebtedness, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty Agreement is binding not only on Guarantor, but on
Guarantor's heirs and personal representatives.

         14. Guarantor recognizes that Lender is relying upon this Guaranty
Agreement and the undertakings of Guarantor hereunder in making extensions of
credit to Borrower and further recognizes that the execution and delivery of
this Guaranty Agreement is a material inducement to Lender in making extensions
of credit to Borrower. Guarantor hereby acknowledges that there are no
conditions to the full effectiveness of this Guaranty Agreement.

         15. This Guaranty Agreement is executed and delivered as an incident to
a lending transaction negotiated, consummated, and performable in Harris County,
Texas, and shall be governed by and construed in accordance with the laws of the
State of Texas. Any action or proceeding against Guarantor under or in
connection with this Guaranty Agreement may be brought in any state or federal
court in Harris County, Texas. Guarantor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Guarantor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified below. Nothing herein shall affect
the right of Lender to serve process in any other matter permitted by law or
shall limit the right of Lender to bring any action or proceeding against
Guarantor or with respect to any of Guarantor's property in courts in other
jurisdictions. Any action or proceeding by Guarantor against Lender shall be
brought only in a court located in Harris County, Texas.

                                       -6-
<PAGE>   7

         16. Guarantor shall pay on demand all attorneys' fees and all other
costs and expenses incurred by Lender in connection with the preparation,
administration, enforcement, or collection of this Guaranty Agreement.

         17. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.

         18. Guarantor hereby represents and warrants to Lender that Guarantor
has adequate means to obtain from Borrower on a continuing basis information
concerning the financial condition and assets of Borrower and that Guarantor is
not relying upon Lender to provide (and Lender shall have no duty to provide)
any such information to Guarantor either now or in the future.

         19. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND
LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY
AGREEMENT, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

         20. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION,
OR ENFORCEMENT THEREOF.

                                       -7-<PAGE>

                                                                     EXHIBIT 4.1

                           IPC COMMUNICATIONS, INC.
                           1999 STOCK INCENTIVE PLAN

Section 1.        Purpose
                  -------

                  The Plan authorizes the Compensation Committee of the Board to
provide employees, directors and consultants of the Corporation or its
Subsidiaries, who are in a position to contribute to the long-term success of
the Corporation and its Subsidiaries, with Options to acquire Common Stock of
the Corporation. The Corporation believes that this incentive program will cause
those persons to increase their interests in the welfare of the Corporation and
its Subsidiaries, and aid in attracting and retaining employees and consultants
of outstanding ability.

Section 2.        Definitions
                  -----------

                  Unless the context clearly indicates otherwise, the following
terms, when used in the Plan, shall have the meanings set forth in this Section:

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

                  (b) "Cause" means any of the following: (i) commission of the
any act of fraud or dishonesty with respect to the business of the Corporation
or its Subsidiaries, (ii) willful misconduct or gross negligence in connection
with the performance of a Grantee's duties to the Corporation and its
Subsidiaries, (iii) indictment for, or conviction of, any crime or an offence
involving moral turpitude, (iv) commission of any act injurious to the interest
of the Corporation, or (v) breach of any material provision of any applicable
employment or consulting agreement. Notwithstanding the foregoing, if any
Grantee is party to an employment or consulting agreement governing the terms of
his employment or consultancy with the Corporation or its Subsidiaries, and such
agreement includes a definition of cause, then for purposes hereof, cause shall
have the meaning ascribed thereto in such agreement.

                  (c) "Change in Control" shall mean (i) approval by the
stockholders of the Corporation of a transaction that would result in the
reorganization, merger or consolidation of the Corporation with one or more
persons, and, upon consummation thereof, would result in persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934) at least 50%
of the securities entitled to vote generally in the election of directors of the
Corporation, beneficially owning (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) in the aggregate immediately after
such transaction less than 50% of the securities entitled to vote generally in
the election of directors of the entity resulting from such transaction; (ii)
the acquisition of all or substantially all of the assets of the Corporation or
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of at least 50% of the outstanding securities
of the Corporation entitled to vote generally in the election of directors by
any person or by any persons acting in concert, or approval by the stockholder
of the Corporation of any transaction which would result in such an acquisition
<PAGE>

                                                                               2

(other than by any person or persons who beneficially own (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934), immediately
after the closing date of the transactions contemplated by the Merger Agreement
at least 50% of the outstanding securities of the Corporation entitled to vote
generally in the election of directors); or (iii) a complete liquidation or
dissolution of the Corporation, or approval of the Corporation of a plan for
such liquidation or dissolution; provided, however, that in no event shall any
of the transactions contemplated by the Merger Agreement (or shareholder
approval thereof) constitute a Change in Control.

                  (d) "Committee" means the Compensation Committee of the Board;
provided, however, that with respect to any Option granted or to be granted to
any member of the Compensation Committee, Committee shall mean the Board acting
through a majority of its members who are not members of the Compensation
Committee.

                  (e) "Common Stock" means the common stock par value $.01 per
share, of the Corporation.

                  (f) "Consultant" means any person who is engaged to perform
services for the Corporation or any of its Subsidiaries, or has agreed to
perform services for the Corporation or any of its Subsidiaries, other than as
an Employee or Director.

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

                  (h) "Corporation" means IPC Communications, Inc., a Delaware
corporation.

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

                  (j) "Disability" means a physical or mental impairment that
causes the Grantee to be unable to engage in any substantial gainful activity
and that is expected to result in death or is expected to last for a continuous
period of at least 12 months. Notwithstanding the foregoing, if any Grantee is
party to any employment or consulting agreement governing the terms of his
employment or consultancy with the Corporation or its Subsidiaries, and such
agreement includes a definition of disability, then for purposes hereof,
disability shall have the meaning ascribed thereto in such agreement.

                  (k) "Employee" means any employee of the Corporation or any of
its Subsidiaries, or any person who has agreed to become an employee of the
Corporation or any of its Subsidiaries. The term Employee shall include
directors who are otherwise employed by the Corporation or any Subsidiary.

                  (l) "Fair Market Value" means, as of any date, the fair market
value of a share of Common Stock as determined by the Committee acting in good
faith in its sole discretion; provided, however, that if the Common Stock is
listed on a national securities exchange or quoted in an interdealer quotation
system, the fair market value shall be based on the last sales
<PAGE>

                                                                               3

price or, if unavailable, the average of the closing bid and asked prices per
share of the Common Stock on such date (or, if there was no trading or quotation
in the Common Stock on such date, on the next preceding date on which there was
trading or quotation) as provided by one of such organizations. Notwithstanding
the foregoing, the Fair Market Value of a share of Common Stock on the closing
date of the transactions contemplated by the Merger Agreement shall be deemed to
be the "Cash Election Price" as defined in the Merger Agreement.

                  (m) "Incentive Stock Option" means an Option designated by the
Committee as an Option that is intended to be an incentive stock option within
the meaning of Section 422(b) of the Code.

                  (n) "Grantee" means a person granted an Option under the Plan.

                  (o) "Merger Agreement" means the Agreement and Plan of Merger,
dated as of December 18, 1997 by and between the Corporation and Arizona
Acquisition Corp., a Delaware corporation.

                  (p) "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option, or an Incentive Stock Option that, subsequent to the
date of grant thereof, fails to satisfy the requirements of Section 422(b) or
(d) of the Code.

                  (q) "Option" means an option granted pursuant to the Plan to
purchase shares of the Common Stock.

                  (r) "Plan" means this Stock Incentive Plan as set forth herein
and as amended from time to time.

                  (s) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder as presently in effect of
hereafter amended.

                  (t) "Stock Option Agreement" shall mean a written agreement
between the Corporation and the Grantee, or a certificate accepted by the
Grantee, evidencing the grant of an Option hereunder and containing such terms
and conditions, not inconsistent with the Plan, as the Committee shall approve.

                  (u) "Subsidiary" shall mean (i) any corporation with respect
to which the Corporation owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such corporation, or (ii) any
entity which the Committee reasonably expects to become a Subsidiary within the
meaning of clause (i).

Section 3.        Shares of Common Stock Subject to the Plan
                  ------------------------------------------

                  Subject to adjustment as provided in Section 7, the Common
Stock which may be issued pursuant to Options granted under the Plan shall not
exceed 1,538,322 shares in the aggregate (16% of outstanding on fully diluted
basis). Common Stock issuable under the Plan
<PAGE>

                                                                               4

may be authorized but unissued shares or reacquired shares of Common Stock.
Common Stock subject to Options that are forfeited, lapse or terminate in whole
or in part for any reason, shall be available for issuance pursuant to other
Options.

SECTION 4.        Administration of the Plan

                  (a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

                           (i) to select the Employees, Directors and
                  Consultants to whom Options may be granted;

                           (ii) to determine the number of shares of Common
                  Stock subject to each such Option; provided, however, that
                  during any calendar year, no individual may be granted Options
                  with respect to more than 250,000 shares of Common Stock;

                           (iii) to determine whether an Option shall be an
                  Incentive Stock Option or a Nonqualified Stock Option;

                           (iv) to determine the terms and conditions of any
                  Option granted under the Plan (including, but not limited to,
                  the exercise price, the period, if any, over which Options
                  shall vest and become excercisable (which period may be
                  accelerated at any time in the discretion of the Committee),
                  and performance conditions relating to an Option, based in
                  each case on such considerations as the Committee shall
                  dertermine), and all other matters to be determined in
                  connection with an Option;

                           (v) to determine whether, to what extent and under
                  what circumstances the exercise price of an Option may be
                  paid, in cash, Common Stock, or other property, or an Option
                  may expire or be canceled, forfeited, or surrendered;

                           (vi) to determine the restrictions or conditions
                  related to the delivery, holding and disposition of shares of
                  Common Stock received upon excercise of an Option;

                           (vii) to prescribe the form of each Stock Option
                  Agreement, which need not be identical for each Grantee;

                           (viii) to adopt, amend, suspend, waive and rescind
                  such rules and regulations and appoint such agents as the
                  Committee may deem necessary of advisable to administer the
                  Plan;
<PAGE>

                                                                               5

                           (ix) to correct any defect or supply any omission or
                  reconcile any inconsistency in the Plan and to construe and
                  interpret the Plan and any Option, Stock Option Agreement or
                  other instrument hereunder; and

                           (x) to make all other decisions and determinations as
                  may be required under the terms of the Plan or as the
                  Committee may deem necessary or advisable for the
                  administration of the Plan.

The Committee may, at any time, grant new or additional options to any eligible
Employee, Director or Consultant who has previously received Options under the
Plan, or options under other plans, whether such prior Options or other options
are still outstanding, have been exercised previously in whole or in part, or
have been canceled. The exercise price of such new or additional Options may be
established by the Committee, without regard to such previously granted Options
or other options.

                  Other provisions of the Plan notwithstanding, the Board may
perform any function of the Committee under the Plan, including without
limitation for the purpose of ensuring that transactions under the Plan by
Grantees who are then subject to Section 16 of the Securities Exchange Act of
1934 in respect of the Corporation are exempt under Rule 16b-3 thereunder. In
any case in which the Board is performing a function of the Committee under the
Plan, each reference to the Committee herein shall be deemed to refer to the
Board.

                  (b) MANNER OF EXCERCISE OF COMMITTEE AUTHORITY. Any action of
the Committee with respect to the Plan shall be final, conclusive and binding on
all persons, including the Corporation, Subsidiaries, Grantees, any person
claiming any rights under the Plan from or through any Grantee and stockholders,
except to the extent the Committee may subsequently modify, or take further
action not consistent with, its prior action. If not specified in the Plan, the
time at which the Committee must or may make any determination shall be
determined by the Committee, and any such determination may thereafter by
modified by the the Committee (subject to Section 10). The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee. The
Committee may delegate to officers or managers of the Corporation or any
subsidiary of the Corporation the authority, subject to such terms as the
Committee shall determine, to perform such functions as the Committee may
determine, to the extent permitted under applicable law.

                  (c) LIMITATION OF LIABILITY. Each member of the Committee
shall be entitled to, in good faith, rely or act upon any report of other
information furnished to him by any officer or other employee of the Corporation
or any subsidiary, the Corporation's independent certified public accountants or
any executive compensation consultant, legal counsel or other proessional
retained by the Corporation to assist in the administration of the Plan. To the
fullest extent permitted by applicable law, no member of the Committee, nor any
officer or employee of the Corporation acting on behalf of the Committee, shall
be personally liable for any action, determination or interpretation taken or
made in good faith with respect to the Plan, and all
<PAGE>

                                                                               6

members of the Committee any any officer or employee of the Corporation acting
on its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Corporation with respect to any such action, determination or
interpretation.

Section 5.        Option Terms
                  ------------

                  Unless otherwise determined by the Committee and set forth in
a Stock Option Agreement, Options granted under the Plan shall contain the
following terms and conditions:

                  (a) TYPE OF OPTION. Each Option shall be an Incentive Stock
Option to the maximum extent permitted by Section 422(d) of the Code, and any
excess over such maximum shall be a Nonqualified Stock Option.

                  (b) EXERCISE PRICE. The exercise price per share of Common
Stock subject to each Option shall equal the Fair Market Value on the date the
Option is granted.

                  (c) VESTING. Each Option shall vest and become exercisable in
five equal installments on each of the first five anniversaries on the date the
Option is granted; provided, however that the Option shall be vested and
exercisable as to no less than 75% of the shares of Common Stock subject thereto
as of the end of any period of 30 consecutive trading days during which the Fair
Market value averages at least 300% of the Fair Market Value on the date the
Option is granted, and shall be vested and exercisable as to 100% of the shares
of Common Stock subject thereto as of the end of any period of 30 consecutive
trading days during which the Fair Market value averages at least 450% of the
Fair Market Value on the date the Option is granted; and provided further that
each Option shall become vested and exercisable in full immediately prior to a
Change in Control.

                  (d) TERMINATION. Options held by any Grantee shall terminate
upon the earliest of:

                           (i)  the termination of the Grantee's employment,
                  directorship or consultancy with the Corporation and its
                  Subsidiaries for Cause;

                           (ii) the later of (x) 180 days after the Grantee's
                  termination of employment, directorship or consultancy with
                  the Corporation and its Subsidiaries (which shall be deemed to
                  include the sale of any Subsidiary of the Corporation that
                  employs such Grantee) for any reason other than Cause, death
                  or Disability, or (y) 180 days following the end of any
                  "blackout period" imposed by the Corporation's general counsel
                  that is in effect on the date of such termination; provided,
                  however, that during any such 180-day period, the Options
                  shall be exercisable only to the extent vested and exercisable
                  as of the date of such termination;
<PAGE>

                                                                               7

                           (iii) one year after the Grantee's termination of
                  employment, directorship or consultancy with the Corporation
                  and its Subsidiaries by reason of death or Disability;
                  provided, however, that during any such one year period, the
                  Options shall be exercisable to the extent such Options would
                  have been vested and exercisable pursuant to Section 5(c) (but
                  without regard to the provisos contained therein) as of the
                  anniversary of the date of grant next following such
                  termination, assuming such termination had not occurred;

                           (iv) the tenth anniversary of the date of grant; and

                           (v) upon the consummation of any transaction whereby
                  the Corporation (or any successor to the Corporation or
                  substantially all of its business) becomes a wholly-owned
                  subsidiary of any other corporation (but after giving effect
                  to Section 5(c)), unless such other corporation shall continue
                  or assume the Plan as it relates to Options then outstanding
                  (in which case such other corporation shall be treated as the
                  Corporation for all purposes hereunder, and, pursuant to
                  Section 7, the Committee of such other corporation shall make
                  appropriate adjustment in the number and kind of shares of
                  Common Stock subject thereto and the exercise price per share
                  thereof to reflect consummation of such transaction). If the
                  Plan is not to be so assumed, the Corporation shall notify the
                  Grantee of consummation of such transaction at least ten days
                  in advance thereof. If such other corporation is an affiliate
                  of the Corporation immediately prior to consummation of any
                  such transaction, Options shall not terminate and shall remain
                  Options to purchase Common Stock of the Corporation unless the
                  Plan is in fact so continued or assumed by such other
                  corporation.

Section 6.        Exercise of Options
                  -------------------

                  A Grantee shall exercise an Option by delivery of written
notice to the Corporation setting forth the number of shares with respect to
which the Option is to be exercised, together with cash, certified check, bank
draft, wire transfer, or postal or express money order payable to the order of
the Corporation for an amount equal to the exercise price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price or tax
withholding obligations by delivery of Common Stock or other property (including
notes or other contractual obligations of the Grantee to make payment on a
deferred basis, such as through "cashless exercise" arrangements, to the extent
permitted by applicable law), and the methods by which Common Stock will be
delivered or deemed to be delivered by the Grantee.

Section 7.        Adjustment upon Changes in Capitalization
                  -----------------------------------------

                  In the event any recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
exchange of Common Stock or other securities, Common Stock dividend or other
special and nonrecurring dividend or distribution
<PAGE>

                                                                               8

(whether in the form of cash, securities or other property), liquidation,
dissolution, or other similar corporate transaction or event, affects the Common
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of Common Stock deemed to be available thereafter for grants of
Options under Section 3, (ii) the number and kind of shares of Common Stock that
may be delivered or deliverable in respect of outstanding Options, (iii) the
number of shares with respect to which Options may be granted to a given Grantee
in the specified period as set forth in Section 4(a)(ii), and (iv) the exercise
price. In addition, the Committee is authorized to make adjustments in the terms
and conditions of, and the criteria included in, Options (including, without
limitation, cancellation of Options in exchange for the in-the-money value, if
any, of the vested portion thereof, or substitution of Options using stock of a
successor or other entity) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence)
affecting the Corporation or any Subsidiary or the financial statements of the
Corporation or any Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles.

Section 8.        Restrictions on Issuance of Shares
                  ----------------------------------

                  The Corporation shall not be obligated to deliver Common Stock
upon the exercise or settlement of any Option or take any other action under the
Plan until the Corporation shall have determined that applicable federal and
state laws, rules, and regulations have been complied with and such approvals of
any regulatory or governmental agency have been obtained and contractual
obligations to which the Option may be subject have been satisfied. The
Corporation, in its discretion, may postpone the issuance or delivery of Common
Stock under any Option until completion of such stock exchange listing or
registration or qualification of Common Stock or other required action under any
federal or state law, rule, or regulation as the Corporation may consider
appropriate, and may require any Grantee to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Common Stock under the Plan. The Corporation shall file
a registration statement on Form S-8 (or other appropriate form) with respect to
the Common Stock to be issued pursuant to the Plan and shall use its best
efforts to maintain the effectiveness of such registration statement (and
maintain the currency of any related prospectus) for so long as Options are
outstanding or may be granted under the Plan.

Section 9.        General Provisions
                  ------------------

                  (a) Each Option grant shall be evidenced by a Stock Option
Agreement.

                  (b) The grant of an Option in any year shall not give the
Grantee any right to similar grants in future years or any right to continue
such Grantee's employment relationship with the Corporation. All Grantees shall
remain subject to discharge to the same extent as if the Plan were not in
effect.
<PAGE>

                                                                               9

                  (c) No Grantee, and no beneficiary or other persons claiming
under or through the Grantee shall have any right, title or interest by reason
of any Option to any particular assets of the Corporation, or any shares of
Common Stock allocated or reserved for the purposes of the Plan or subject to
any Option except as set forth herein. The Corporation shall not be required to
establish any fund or make any other segregation of assets to assure the payment
of any Option.

                  (d) Unless otherwise permitted in the discretion of the
Committee with respect to Nonqualified Stock Options, no Option or other right
under the Plan may be sold, transferred, assigned, pledged or otherwise
encumbered, except by will or the laws of descent and distribution, and an
Option shall be exercisable during the Grantee's lifetime only by the Grantee.

                  (e) The Corporation shall have the right to require that the
Grantee make such provision, or furnish the Corporation such authorization,
necessary or desirable so that the Corporation may satisfy its obligation, under
applicable laws, to withhold or otherwise pay for income or other taxes of the
Grantee attributable to the grant, exercise or cancellation of Options granted
under the Plan or the sale of Common Stock issued with respect to Options. This
authority shall include authority to withhold or receive Common Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Grantee's tax obligations.

Section 10.       Amendment or Termination
                  ------------------------

                  The Board may alter, amend, suspend, discontinue or terminate
the Plan at any time; provided, however, that no such action shall adversely
affect the rights of Grantees of Options previously granted hereunder and,
provided further, however, that any stockholder approval necessary or desirable
in order to comply with applicable law, regulation or listing requirement shall
be obtained in the manner required therein.

Section 11.       Effective Date of Plan
                  ----------------------

                  The Plan shall be effective immediately after the closing of
the transactions contemplated by the Merger Agreement, subject to the approval
of the Plan by the Corporation's shareholders either before or after such
effective date.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]