Document:

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                                                                    EXHIBIT 10.1

                          CYPRESS COMMUNICATIONS, INC.
                          1997 MANAGEMENT OPTION PLAN
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                          CYPRESS COMMUNICATIONS, INC.
                          1997 MANAGEMENT OPTION PLAN

                               TABLE OF CONTENTS
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                                                                                       Page
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SECTION I.  DEFINITIONS..............................................................  1

 1.1  Definitions....................................................................  1

SECTION 2  THE STOCK INCENTIVE PLAN..................................................  4

 2.1  Purpose of the Plan............................................................  4
 2.2  Stock Subject to the Plan......................................................  4
 2.3  Administration of the Plan.....................................................  4
 2.4  Eligibility and Limits.........................................................  5

SECTION 3  TERMS OF OPTION...........................................................  5

 3.1  Number of Shares Subject to Options............................................  5
 3.2  Option Agreement...............................................................  5
 3.3  Date of Grant..................................................................  5
 3.4  Multiple Options...............................................................  5
 3.5  Nontransferability.............................................................  6
 3.6  Terms and Conditions of Options................................................  6
 3.7  Treatment of Options upon Termination of Employment or Termination of Service..  8

SECTION 4  GENERAL PROVISIONS........................................................  8

 4.1  Withholding....................................................................  8
 4.2  Changes in Capitalization; Merger; Liquidation.................................  9
 4.3  Cash Awards.................................................................... 10
 4.4  Compliance with Code........................................................... 10
 4.5  Right to Terminate Employment.................................................. 10
 4.6  Non-alienation of Benefits..................................................... 10
 4.7  Restrictions on Delivery and Sale of Shares; Legends........................... 10
 4.8  Stockholders' Agreement........................................................ 11
 4.9  Listing and Legal Compliance................................................... 11
 4.10  Termination and Amendment of the Plan......................................... 11
 4.11  Arbitration................................................................... 11
 4.12  Stockholder Approval.......................................................... 11
 4.13  Choice of Law................................................................. 11
 4.14  Effective Date of Plan........................................................ 12
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                          CYPRESS COMMUNICATIONS, INC.
                          1997 MANAGEMENT OPTION PLAN

                             SECTION 1 DEFINITIONS

     1.1  Definitions. Whenever used herein, the masculine pronoun will be
          -----------
deemed to include the feminine, and the singular to include the plural, unless
the context indicates otherwise, and the following capitalized words and phrases
are used herein with the meaning thereafter ascribed:

          (a)  "Affiliate" means an entity that directly or through one or more
                ---------
     intermediaries is controlled by the Company, and any entity in which the
     Company has a significant equity interest, as determined by the Company.

          (b)  "Board of Directors" means the board of directors of the Company.
                ------------------

          (c)  "Cause" means (1) the willful and continued failure of a
                -----
     Participant (other than any such failure resulting from incapacity or
     Disability) to substantially perform the Participant's normally required
     duties with the Company or an Affiliate continuing for thirty (30) days
     after notice by the Company to the Participant of such failure; (2) any act
     of fraud, misappropriation, embezzlement or similar conduct against the
     Company or an Affiliate, as finally determined through arbitration or final
     judgment of a court of competent jurisdiction (which arbitration or
     judgment, due to the passage of time or otherwise, is not subject to
     further appeal); or (3) conviction of the Participant for a felony or any
     other crime involving moral turpitude (which conviction, due to the passage
     of time or otherwise is not subject to further appeal).

          (d)  "Change in Control" means the first to occur of the following
                -----------------
     events:

               (i)       any person (as defined in Section 3(a)(9) of the
          Exchange Act and as used in Sections 13(d) and 14(f) thereof),
          excluding the Company, any present shareholders, any Subsidiary and
          any employee benefit plan sponsored or maintained by the Company or
          any Subsidiary (including any trustee of such plan acting as trustee)
          (the Company, all Subsidiaries, and such employee benefit plans and
          trustees acting as trustees being hereafter referred to as the
          "Company Group"), but including a `group' as defined in Section
          13(d)(3) of the Exchange Act (a "Person"), becomes the beneficial
          owner of shares of the Company having more than fifty percent (50%) of
          the total number of votes that may be cast for the election of
          directors of the Company (the "Voting Shares");

               (ii)      the shareholders of the Company shall approve any
          merger or other business combination of the Company, sale of
          substantially all of the Company's assets or combination of the
          foregoing transactions (a

                                      -1-
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          "Transaction") other than a Transaction involving only the Company and
          one or more of its Subsidiaries, or a Transaction immediately
          following which the shareholders of the Company immediately prior to
          the Transaction continue to have a majority of the voting power in the
          resulting entity excluding for this purpose any shareholder owning
          directly or indirectly more than ten percent (10%) of the shares of
          the other company involved in the merger; or

               (iii)     the liquidation or dissolution of the Company.

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

          (f)  "Committee" means the committee appointed by the Board of
                ---------
     Directors to administer the Plan. The Board of Directors shall consider the
     advisability of whether the members of the Committee shall consist solely
     of at least two members of the Board of Directors who are both "outside
     directors" as defined in Treas. Reg. (S) 1.162-27(e) as promulgated by the
     Internal Revenue Service and "non-employee directors" as defined in Rule
     16b-3(b)(3) as promulgated under the Exchange Act.

          (g)  "Company" means Cypress Communications, Inc., a Delaware
                -------
     corporation.

          (h)  "Director" means a member of the Board of Directors.
                --------

          (i)  "Disability" has the same meaning as provided in the long-term
                ----------
     disability plan or policy maintained or, if applicable, most recently
     maintained, by the Company or, if applicable, any Affiliate of the Company
     for the Participant. If no long-term disability plan or policy was ever
     maintained on behalf of the Participant or, if the determination of
     Disability relates to an Incentive Stock Option, Disability means that
     condition described in Code Section 22(e)(3), as amended from time to time.
     In the event of a dispute, the determination of Disability will be made by
     the Committee and will be supported by advice of a physician competent in
     the area to which such Disability relates.

          (j)  "Exchange Act" means the Securities Exchange Act of 1934, as
                ------------
     amended from time to time.

          (k)  "Fair Market Value" with regard to a date means:
                -----------------

               (i)       the closing price at which Stock shall have been sold
          on the most recent trading date immediately prior to the date of
          determination as reported by any national securities exchange or any
          Nasdaq quotation system (or, if applicable, as reported by a national
          securities exchange selected by the Committee on which the shares of
          Stock are then actively traded) and published in The Wall Street
                                                           ---------------
          Journal,
          -------

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               (ii)      if Stock is not actively traded on any such exchange
          or system, the arithmetic mean of the bid and asked for prices for
          shares of Stock on the most recent trading date within a reasonable
          period prior to the determination date as reported by such exchange or
          system, or

               (iii)     if there are no bid and asked for prices within a
          reasonable time or if the shares of Stock are not traded on any
          exchange or system as of the determination date, Fair Market Value
          means the fair market value of a share of Stock as determined in good
          faith by the Board of Directors to the value of the Stock in the hands
          of the Participant; provided that, the Fair Market Value as determined
          by the Board of Directors is subject to arbitration if the Participant
          disagrees with the Board of Directors' determination. In such event,
          the Participant and the Board of Directors may each select a qualified
          independent appraiser and each appraiser will independently determine
          the Fair Market Value of the Stock. If the lower of the two
          independent appraisals is within five percentage points of the higher
          of the two appraisals, the Fair Market Value will be the arithmetic
          mean of the independent appraisals. If the independent appraisals
          differ by an amount which is greater then five percentage points, the
          independent appraisers must select a third appraiser, and the Fair
          Market Value will be the arithmetic mean of the two appraisals which
          are closest in amount. Each party will be obligated to pay its share
          of the costs associated with the use of the independent appraisers.

          (l)  "Option" means a non-qualified stock option or an incentive stock
                ------
     option.

          (m)  "Over 10% Owner" means an individual who at the time an Incentive
                --------------
     Stock Option is granted owns Stock possessing more than 10% of the total
     combined voting power of the Company or one of its Subsidiaries, determined
     by applying the attribution rules of Code Section 424(d).

          (n)  "Participant" means an individual who receives an Option
                -----------
     hereunder.

          (o) "Plan" means the Cypress Communications, Inc. 1997 Management
               ----
     Option Plan.

          (p)  "Stock" means the Company's common stock, $.001 par value.
                -----

          (q)  "Option Agreement" means an agreement between the Company and a
                ----------------
     Participant or other documentation evidencing an award of an Option.

          (r)  "Subsidiary" means any corporation (other than the Company)
                ----------
     in an unbroken chain of corporations beginning with the Company if, with
     respect to Incentive Stock Options, at the time of the granting of the
     Option, each of the

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     corporations other than the last corporation in the unbroken chain owns
     stock possessing 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in the chain.

          (s)  "Termination of Employment" means the termination of the
                -------------------------
     employee-employer relationship between a Participant and the Company and
     its Affiliates, regardless of whether severance or similar payments are
     made to the Participant for any reason, including, but not by way of
     limitation, a termination by resignation, discharge, death, Disability or
     retirement. The Committee will, in its absolute discretion, determine the
     effect of all matters and questions relating to a Termination of
     Employment, including, but not by way of limitation, the question of
     whether a leave of absence constitutes a Termination of Employment.

          (t)  "Termination of Service" means with respect to a Director, the
                ----------------------
     cessation of services as a Director, regardless of whether severance or
     similar payments are made to the Participant for any reason, including, but
     not by way of limitation, a cessation by resignation, removal, death,
     Disability or retirement. With respect to a consultant, the phrase
     "Termination of Service" shall mean the termination of the consultant
     services rendered to the Company. The Committee will, in its absolute
     discretion, determine the effect of all matters and questions relating to a
     Termination of Service.

                      SECTION 2  THE STOCK INCENTIVE PLAN

     2.1  Purpose of the Plan.  The Plan is intended to (a) provide incentive to
          -------------------
officers, Directors and key employees of the Company and its Affiliates to
stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; and (b) encourage stock ownership by
officers, Directors and key employees by providing them with a means to acquire
a proprietary interest in the Company, acquire shares of Stock, or to receive
compensation which is based upon appreciation in the value of Stock.

     2.2  Stock Subject to the Plan. Subject to adjustment in accordance with
          -------------------------
Section 4.2, 223,265 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Options. At no time may the
Company have outstanding under the Plan, Options subject to Section 16 of the
Exchange Act and shares of Stock issued in respect of Options under the Plan in
excess of the Maximum Plan Shares. The shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Option that is forfeited or cancelled or expires or terminates for any
reason without becoming vested, paid, exercised, converted or otherwise settled
in full will again be available for purposes of the Plan.

     2.3  Administration of the Plan. The Plan is administered by the Committee.
          --------------------------
The Committee has full authority in its discretion to determine the officers and
key

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employees of the Company or its Affiliates to whom Options will be granted and
the terms and provisions of Options, subject to the Plan. Subject to the
provisions of the Plan, the Committee has full and conclusive authority to
interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
Option Agreements and to make all other determinations necessary or advisable
for the proper administration of the Plan. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan (whether or not such
persons are similarly situated). The Committee's decisions are final and binding
on all Participants.

     2.4  Eligibility and Limits.  Options may be granted only to officers,
          ----------------------
Directors, key employees and consultants of the Company or any Affiliate of the
Company; provided, however, that an incentive stock option may only be granted
to an employee of the Company or any Subsidiary.  In the case of incentive stock
options, the aggregate Fair Market Value (determined as at the date an incentive
stock option is granted) or stock with respect to which stock options intended
to meet the requirements of Code Section 422 become exercisable for the first
time by an individual during any calendar year under all plans of the Company
and its Subsidiaries may not exceed $100,000; provided further, that if the
limitation is exceeded, the incentive stock option(s) which cause the limitation
to be exceeded will be treated as non-qualified stock option(s).

                          SECTION 3  TERMS OF OPTION

     3.1  Number of Shares Subject to Options.  The number of shares of Stock
          -----------------------------------
as to which an Option may be granted will be determined by the Committee in its
sole discretion, subject to the provisions of Section 2.2 as to the total number
of shares available for grant under the Plan.

     3.2  Option Agreement.  Each Option will be evidenced by an Option
          ----------------
Agreement containing such terms, conditions and restrictions as the Committee
may in its sole discretion determine; provided, however, that as to any Option
granted to an employee of the Company or any Subsidiary, the Option shall
contain such conditions and restrictions as are no less favorable to the
Participant than those set forth in the Plan. Each Option Agreement is subject
to the terms of the Plan and any provisions contained in the Option Agreement
that are inconsistent with the Plan are null and void.

     3.3  Date of Grant.  The date an Option is granted will be the date on
          -------------
which he Committee has approved the terms and conditions of the Option and has
determined the recipient of the Option and the number of shares covered by the
Option, and has taken all such other actions necessary to complete the grant of
the Option.

     3.4  Multiple Options.  Any Option may be granted in connection with all or
          ----------------
any portion of a previously or of a contemporaneously granted Option.  Exercise
or vesting of an Option granted in connection with another Option may result in
a pro rata

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surrender or cancellation of any related Option, as specified in the applicable
Option Agreement.

     3.5  Nontransferability. Options are not transferable or assignable except
          ------------------
by will or by the laws of descent and distribution and are exercisable, during
the Participant's lifetime, only by the Participant; or in the event of the
Disability of the Participant, by the legal representative of the Participant;
or in the event of death of the Participant, by the legal representative of the
Participant's estate or if no legal representative has been appointed, by the
successor in interest determined under the Participant's will.

     3.6  Terms and Conditions of Options. Each Option granted under the Plan
          -------------------------------
must be evidenced by an Option Agreement. Each Option shall, to the extent
possible, be an incentive stock option described in Code Section 422 and, as to
the remaining Options, if any, each shall be a non-qualified stock option. At
the time any incentive stock option granted under the Plan is exercised, the
Company will be entitled to legend the certificates representing the shares of
Stock purchased pursuant to the Option to clearly identify them as representing
the shares purchased upon the exercise of an incentive stock option. An
incentive stock option may only be granted within ten (10) years from the
earlier of the date the Plan is adopted or approved by the Company's
stockholders.

          (a) Option Price.  Subject to adjustment in accordance with Section
              ------------
     5.2 and the other provisions of this Section 3.6, the exercise price (the
     "Exercise Price") per share of Stock purchasable under any Option must be
     Fair Market Value on the date the Option is granted. With respect to each
     grant of an incentive stock option to a Participant who is an Over 10%
     Owner, the Exercise Price may not be less than 110% of the Fair Market
     Value on the date the Option is granted.

          (b) Option Term.  Any stock option granted to a Participant who is not
              -----------
     an Over 10% Owner is not exercisable after the expiration of ten (10) years
     after the date the Option is granted. Any incentive stock option granted to
     an Over 10% Owner is not exercisable after the expiration of five (5) years
     after the date the Option is granted. The term of any non-qualified stock
     option shall be ten (10) years.

          (c) Payment.  Payment for all shares of Stock purchased pursuant to
              -------
     exercise of an Option will be made in one or more of the following forms:

              (i)   cash or certified check;

              (ii)  by delivery to the Company of a number of shares of Stock
          which have been owned by the holder for at least six (6) months prior
          to the date of exercise having an aggregate Fair Market Value of not
          less than the product of the Exercise Price multiplied by the number
          of shares the Participant intends to purchase upon exercise of the
          Option on the date of delivery or in combination with cash or
          certified check; or

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              (iii) if or when the Stock becomes traded on a national securities
          exchange by receipt of the purchase price in cash from a proper
          broker, dealer or other creditor following delivery of instructions by
          the Participant to the Board of Directors in a form acceptable to the
          Board of Directors regarding delivery to such broker, dealer or other
          creditor of that number of option shares with respect to which the
          option is exercised.

     In its discretion, the Committee also may authorize (at the time an Option
     is granted or thereafter) Company financing to assist the Participant as to
     payment of the Exercise Price on such terms as may be offered by the
     Committee in its discretion. Payment must be made at the time that the
     Option or any part thereof is exercised, and no shares may be issued or
     delivered upon exercise of an option until full payment has been made by
     the Participant. The holder of an Option, as such, has none of the rights
     of a stockholder.

          (d) Conditions to the Exercise of an Option.  Each Option granted
              ---------------------------------------
     under the Plan is exercisable by the Participant when vested. The Options
     granted to employees of the Company and any Subsidiary shall vest in a 20%
     increment as of the first anniversary of the date of grant and shall vest
     in additional 5% increments as of the end of each subsequent quarter
     measured from the first anniversary of the date of grant; provided that the
     Participant has at all times since the date of grant remained continuously
     employed by the Company or an Affiliate, or with respect to Options granted
     to Directors, remained in the service of the Company; and provided further
     that, the Options shall fully vest upon a Change of Control. Options
     granted to consultants shall become vested as provided for in the Option
     Agreement. Provided further, however, that subsequent to the grant of an
     Option, the Committee, at any time before complete termination of such
     Option, may accelerate the time or times at which such Option may be
     exercised in whole or in part, including, without limitation, upon a Change
     in Control and may permit the Participant or any other designated person to
     exercise the Option, or any portion thereof, for all or part of the
     remaining Option term, notwithstanding any provision of the Option
     Agreement to the contrary.

          (e) Termination of Stock Option. In the event of Termination of
              ---------------------------
     Employment of a Participant, the Option or portion thereof held by the
     Participant which is unexercised will expire, terminate, and become
     unexercisable no later than the expiration of three (3) months after the
     date of Termination of Employment; provided, however, that in the case of a
     holder whose Termination of Employment is due to death or Disability, one
     (1) year will be substituted for such three (3) month period; provided,
     further that such time limits may be exceeded by the Committee under the
     terms of the grant, in which case, any incentive stock option will be a
     nonqualified option if it is exercised after the time limits that would
     otherwise apply.  For purposes of this Subsection (e), Termination of
     Employment will not be deemed to have occurred if the Participant is
     employed by another corporation (or a parent or subsidiary

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<PAGE>

     corporation of such other corporation) which has assumed the incentive
     stock option of the Participant in a transaction to which Code Section
     424(a) is applicable. Notwithstanding the foregoing, Options granted to
     consultants may provide for a longer post-termination of service exercise
     period, as set forth in the applicable Option Agreement.

          (f) Special Provisions for Certain Substitute Options.  Notwith-
              -------------------------------------------------
     standing anything to the contrary in this Section 3.6, any Option issued in
     substitution for an option previously issued by another entity, which
     substitution occurs in connection with a transaction to which Code Section
     424(a) is applicable, may provide for an exercise price computed in
     accordance with such Code Section and the regulations thereunder and may
     contain such other terms and conditions as the Committee may prescribe to
     cause such substitute Option to contain as nearly as possible the same
     terms and conditions (including the applicable vesting and termination
     provisions) as those contained in the previously issued option being
     replaced thereby.

     3.7  Treatment of Options upon Termination of Employment or Termination of
          ---------------------------------------------------------------------
Service. Any Option under this Plan to a Participant who has died, who has
-------
experienced a Termination of Employment either without Cause or due to a
Disability, or has experienced a Termination of Service due to a Disability,
shall fully vest and be exercisable as of the date of Termination of Employment
or Termination of Service. In the event of the Participant's Termination of
Employment for Cause, any outstanding Options shall become void and
unexercisable.

                         SECTION 4 GENERAL PROVISIONS

     4.1  Withholding.  The Company must deduct from all cash distributions
          -----------
under the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan, the Company has the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. A Participant may pay the
withholding tax in cash, or, if the applicable Option Agreement provides, a
Participant may elect to have the number of shares of Stock to be received
reduced by the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise or payment of an Option (a "Withholding
Election"). A Participant may make a Withholding Election only if both of the
following conditions are met:

          (a) The Withholding Election must be made on or prior to the date on
     which the amount of tax required to be withheld is determined (the "Tax
     Date") by executing and delivering to the Company a properly completed
     notice of Withholding Election as prescribed by the Committee; and

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          (b) Any Withholding Election made will be irrevocable except on six
     months advance written notice delivered to the Company; however, the
     Committee may in its sole discretion disapprove and give no effect to the
     Withholding Election.

     4.2  Changes in Capitalization; Merger; Liquidation.
          ----------------------------------------------

          (a)  The number of shares of Stock reserved for the grant of Options;
     the number of shares of Stock reserved for issuance upon the exercise or
     payment, as applicable, of each outstanding Option; and the Exercise Price
     of each outstanding Option must be proportionately adjusted for (1) any
     increase or decrease in the number of issued shares of Stock resulting from
     a subdivision or combination of shares, (2) the payment of a stock dividend
     in shares of Stock to holders of outstanding shares of Stock, (3) any other
     increase or decrease in the number of shares of Stock outstanding, (4) the
     effect of other distributions to shareholders, including, but not limited
     to, distributions, below fair market value sales of stock, stock splits or
     spin-off transactions. Any such adjustment must be in a manner which, after
     giving effect to such adjustment, will return for the Participant the value
     of the Option as of the date of grant.

          (b)  In the event of a merger, consolidation or other reorganization
     of the Company or tender offer for shares of Stock, the Committee may make
     such adjustments with respect to awards and take such other action as it
     deems necessary or appropriate to reflect such merger, consolidation,
     reorganization or tender offer, including, without limitation, the
     substitution of new awards, or the adjustment of outstanding awards, the
     acceleration of awards, the removal of restrictions on outstanding awards,
     or the termination of outstanding awards in exchange for the cash value of
     the vested portion of the award determined based upon the terms of the
     merger, consolidation, reorganization or tender offer by the Committee in
     good faith. Any adjustment pursuant to this Section 4.2 may provide, in the
     Committee's discretion, for the elimination without payment therefor of any
     fractional shares that might otherwise become subject to any Option, but
     except as set forth in this Section may not otherwise diminish the then
     value of the Option. Not less than fifteen (15) days prior to effecting
     such an action, the Committee shall notify the Participants in writing of
     such planned action, and shall give the Participants the opportunity to
     exercise their Options prior to any merger, consolidation, reorganization
     or tender offer.

          (c)  The existence of the Plan and the Options granted pursuant to the
     Plan must not affect in any way the right or power of the Company to make
     or authorize any adjustment, reclassification, reorganization or other
     change in its capital or business structure, any merger or consolidation of
     the Company, any issue of debt or equity securities having preferences or
     priorities as to the Stock or the rights thereof, the dissolution or
     liquidation of the Company, any sale or transfer of all or any part of its
     business or assets, or any other corporate act or proceeding. Any and all
     options issued under the Cypress Communications,

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     L.L.C. 1996 Share Incentive Plan (the "1996 Plan") shall be replaced with
     non-qualified Options issued pursuant to this Plan, with each having the
     same terms, exercise price and number of shares as set forth in the 1996
     Plan.

     4.3  Cash Awards. The Committee may, at any time and in its discretion,
          -----------
grant to any holder of a Option the right to receive, at such times and in such
amounts as determined by the Committee in its discretion, a cash amount which is
intended to reimburse such person for all or a portion of the federal, state and
local income taxes imposed upon such person as a consequence of the receipt of
the Option or the exercise of rights thereunder.

     4.4  Compliance with Code.  All incentive stock options to be granted
          --------------------
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all incentive stock options granted hereunder must be construed in
such manner as to effectuate that intent.

     4.5  Right to Terminate Employment.  Nothing in the Plan or in any Option
          -----------------------------
confers upon any Participant the right to continue as an employee, Director or
officer of the Company or any of its Affiliates or affect the right to the
Company or any of its Affiliates to terminate the Participant's employment or
service at any time.

     4.6  Non-alienation of Benefits.  Other than as specifically provided
          --------------------------
with regard to the death of a Participant, no benefit under the Plan may be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No such
benefit may, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.

     4.7  Restrictions on Delivery and Sale of Shares; Legends.  Each Option
          ----------------------------------------------------
is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Option upon any securities exchange or under any
state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such Option may
be withheld unless and until such listing, registration or qualification shall
have been effected. If a registration statement is not in effect under the
Securities Act of 1933 or any applicable state securities laws with respect to
the shares of Stock purchasable or otherwise deliverable under Options then
outstanding, the Committee may require, as a condition of exercise of any Option
as a condition to any other delivery of Stock pursuant to an Option, that the
Participant or other recipient of an Option represent, in writing, that the
shares received pursuant to the Option are being acquired for investment and not
with a view to distribution and agree that the shares will not be disposed of
except pursuant to an effective registration statement, unless the Company shall
have received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state securities
laws. The Company may include on certificates representing shares delivered
pursuant to an

                                     -10-
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Option such legends referring to the foregoing representations or restrictions
or any other applicable restrictions on resale as the Company, in its
discretion, shall deem appropriate.

     4.8  Stockholders' Agreement.  As a condition to the exercise of the
          -----------------------
Options, the Participants must execute a stockholders' agreement if there is one
in place at the time the option is exercised and if requested to do so by the
Company. At the time of grant of an award under the Plan, the Company shall
deliver to the Optionee any such stockholders' agreement that is in effect as of
the date of grant.

     4.9  Listing and Legal Compliance.  The Committee may suspend the exercise
          ----------------------------
or payment of any Option so long as it determines that securities exchange
listing or registration or qualification under any securities laws is required
in connection herewith and has not been completed on terms acceptable to the
Committee.

     4.10 Termination and Amendment of the Plan.  The Board of Directors at any
          -------------------------------------
time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment may adversely affect the rights of the Participant under such Option
without the consent of the holder of an Option.

     4.11 Arbitration.  Any controversy or claim arising out of or relating to
          -----------
Options issued under the Plan shall be settled by arbitration in accordance with
the Commercial Arbitration rules of the American Arbitration Association. The
arbitration shall take place in Atlanta, Georgia. Each party to the Agreement
may select on neutral arbitrator. The selected arbitrators shall in turn appoint
a third neutral arbitrator, and the three so chosen shall comprise the
arbitration panel. The decision of the arbitration panel shall be final and
binding on the parties, and judgment upon the award rendered by the arbitration
panel may be entered by any court having jurisdiction thereof.

     4.12 Stockholder Approval.  The Plan must be submitted to the stockholders
          --------------------
of the Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors of the Company. If such approval
is not obtained, any Stock Incentive granted hereunder will be void.

     4.13 Choice of Law.  The laws of the State of Georgia govern the Plan, to
          -------------
the extent not preempted by federal law, without reference to the principles of
conflict of laws.

                                     -11-
<PAGE>

     4.14 Effective Date of Plan.  The Plan shall become effective _________,
          ----------------------
subject, however, to the approval of the Plan by the Company's stockholders.
Options granted hereunder prior to such approval shall be conditioned upon such
approval. Unless such approval is obtained within one year after the effective
date of this Plan and any Options awarded hereunder shall become void
thereafter.

                                        CYPRESS COMMUNICATIONS, INC.

                                        By:    _________________________________

                                        Title: _________________________________

ATTEST:

By:    _______________________

Title: _______________________

                                     -12-<PAGE>

                                                                    EXHIBIT 10.2

                                    FORM OF

                     2000 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
           ----------------------------------------

     The name of the plan is the Cypress Communications, Inc. 2000 Stock Option
and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, Independent Directors and other key persons
(including consultants) of Cypress Communications, Inc. (the "Company") and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.

     The following terms shall be defined as set forth below:

     "Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

     "Administrator" is defined in Section 2(a).

     "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock
Awards and Performance Share Awards.

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

     "Change of Control" is defined in Section 15.

     "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

     "Committee" means the Compensation Committee of the Board.

     "Covered Employee" means an employee who is a "Covered Employee" within the
meaning of Section 162(m) of the Code.

     "Deferred Stock Award" means Awards granted pursuant to Section 7.

     "Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
<PAGE>

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

     "Fair Market Value" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Administrator; provided,
however, that if the Stock is admitted to quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ National
System or a national securities exchange, the determination shall be made by
reference to market quotations. If there are no market quotations for such date,
the determination shall be made by reference to the last date preceding such
date for which there are market quotations; provided further, however, that if
the date for which Fair Market Value is determined is the first day when trading
prices for the Stock are reported on NASDAQ or on a national securities
exchange, the Fair Market Value shall be the "Price to the Public" (or
equivalent) set forth on the cover page for the final prospectus relating to the
Company's Initial Public Offering.

     "Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.

     "Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

     "Initial Public Offering" means the consummation of the first fully
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4 or S-8 or their
then equivalents, covering the offer and sale by the Company of its equity
securities, or such other event as a result of or following which the Stock
shall be publicly held.

     "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

     "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

     "Performance Share Award" means Awards granted pursuant to Section 9.

     "Performance Cycle" means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more performance criteria will be measured for the
purpose of determining a grantee's right to and the payment of a Performance
Share Award, Restricted Stock Award or Deferred Stock Award.

     "Restricted Stock Award" means Awards granted pursuant to Section 6.

                                       2
<PAGE>

     "Stock" means the Common Stock, par value $.001 per share, of the Company,
subject to adjustments pursuant to Section 3.

     "Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50
percent or more of the economic interest or the total combined voting power of
all classes of stock or other interests in one of the other corporations or
entities in the chain.

     "Unrestricted Stock Award" means any Award granted pursuant to Section 8.

SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
           ------------------------------------------------------------------
           AND DETERMINE AWARDS
           --------------------

     (a)   Committee. The Plan shall be administered by either the Board or the
           ---------
Committee (in either case, the "Administrator").

     (b)   Powers of Administrator. The Administrator shall have the power and
           -----------------------
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

           (i)   to select the individuals to whom Awards may from time to time
     be granted;

           (ii)  to determine the time or times of grant, and the extent, if
     any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted
     Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards and
     Performance Share Awards, or any combination of the foregoing, granted to
     any one or more grantees;

           (iii) to determine the number of shares of Stock to be covered by any
     Award;

           (iv)  to determine and modify from time to time the terms and
     conditions, including restrictions, not inconsistent with the terms of the
     Plan, of any Award, which terms and conditions may differ among individual
     Awards and grantees, and to approve the form of written instruments
     evidencing the Awards;

           (v)   to accelerate at any time the exercisability or vesting of all
     or any portion of any Award;

           (vi)  subject to the provisions of Section 5(a)(ii), to extend at any
     time the period in which Stock Options may be exercised;

           (vii) to determine at any time whether, to what extent, and under
     what circumstances distribution or the receipt of Stock and other amounts
     payable with

                                       3
<PAGE>

     respect to an Award shall be deferred either automatically or at the
     election of the grantee and whether and to what extent the Company shall
     pay or credit amounts constituting interest (at rates determined by the
     Administrator) or dividends or deemed dividends on such deferrals; and

           (viii) at any time to adopt, alter and repeal such rules, guidelines
     and practices for administration of the Plan and for its own acts and
     proceedings as it shall deem advisable; to interpret the terms and
     provisions of the Plan and any Award (including related written
     instruments); to make all determinations it deems advisable for the
     administration of the Plan; to decide all disputes arising in connection
     with the Plan; and to otherwise supervise the administration of the Plan.

     All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan grantees.

     (c)   Delegation of Authority to Grant Awards. The Administrator, in its
           ---------------------------------------
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Exchange Act or "covered employees"
within the meaning of Section 162(m) of the Code. The Chief Executive Officer
shall be deemed a one-person committee of the Board. Any such delegation by the
Administrator shall include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain guidelines as to
the determination of the exercise price of any Stock Option or Stock
Appreciation Right, the conversion ratio or price of other Awards and the
vesting criteria. The Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Administrator's delegate or delegates that were consistent with the terms of
the Plan.

     (d)   Indemnification. Neither the Board nor the Committee, nor any member
           ---------------
of either or any delegatee thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Committee (and any delegatee
thereof) shall be entitled in all cases to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys' fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors' and officers'
liability insurance coverage which may be in effect from time to time.

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
           ----------------------------------------------------

     (a)   Stock Issuable. The maximum number of shares of Stock reserved and
           --------------
available for issuance under the Plan shall be _______ shares, subject to
adjustment as provided in this Section 3(a) and Section 3(b). For purposes of
this limitation, the shares of Stock underlying any Awards under this Plan which
are forfeited, canceled, reacquired by the Company,

                                       4
<PAGE>

satisfied without the issuance of Stock or otherwise terminated (other than by
exercise) shall be added back to the shares of Stock available for issuance
under the Plan. In addition, the shares of Stock underlying any awards under the
Company's 1997 Management Option Plan which are forfeited, canceled, reacquired
by the Company, satisfied without the issuance of Stock or otherwise terminated
(other than by exercise) shall be added to the shares of Stock available for
issuance under the Plan, thereby increasing the maximum number of shares of
Stock reserved and available for issuance under the Plan set forth above.
Subject to such overall limitation, shares of Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided, however, that
from and after the date grants under this Plan become subject to Section 162(m)
of the Code, Stock Options with respect to no more than _______ shares of Stock
may be granted to any one individual grantee during any one calendar year
period. The shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the Company and held
in its treasury.

     (b)  Changes in Stock. Subject to Section 3(c) hereof, if, as a result of
          ----------------
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company's capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor entity (or a parent
or subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under the Plan, (ii) the number of Stock Options that can be granted to
any one individual grantee and the maximum number of shares that may be granted
under a Performance-based Award, (iii) the number and kind of shares or other
securities subject to any then outstanding Awards under the Plan, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (v) the price for each share subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options) as to which such Stock
Options remain exercisable. The adjustment by the Administrator shall be final,
binding and conclusive. No fractional shares of Stock shall be issued under the
Plan resulting from any such adjustment, but the Administrator in its discretion
may make a cash payment in lieu of fractional shares.

     The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

                                       5
<PAGE>

     (c)  Mergers and Other Transactions. In the case of and subject to the
          ------------------------------
consummation of (i) the dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company on a consolidated basis
to an unrelated person or entity, (iii) a merger, reorganization or
consolidation in which the outstanding shares of Stock are converted into or
exchanged for a different kind of securities of the successor entity and the
holders of the Company's outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iv) the
sale of all of the Stock of the Company to an unrelated person or entity (in
each case, a "Sale Event"), all Options that are not exercisable immediately
prior to the effective time of the Sale Event shall become fully exercisable as
of the effective time of the Sale Event and all other Awards with conditions and
restrictions relating solely to the passage of time and continued employment
shall become fully vested and nonforfeitable as of the effective time of the
Sale Event, except as the Administrator may otherwise specify with respect to
particular Awards. Upon the effective time of the Sale Event, the Plan and all
outstanding Awards granted hereunder shall terminate, unless provision is made
in connection with the Sale Event in the sole discretion of the parties thereto
for the assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate, the per share exercise prices, as such
parties shall agree (after taking into account any acceleration hereunder). In
the event of such termination, each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale Event as
determined by the Administrator, to exercise all outstanding Options held by
such grantee, including those that will become exercisable upon the consummation
of the Sale Event; provided, however, that the exercise of Options not
exercisable prior to the Sale Event shall be subject to the consummation of the
Sale Event.

     Notwithstanding anything to the contrary in this Section 3.2(c), in the
event of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the Sale Event, the Company shall have the right, but not the obligation, to
make or provide for a cash payment to the grantees holding Options, in exchange
for the cancellation thereof, in an amount equal to the difference between (A)
the value as determined by the Administrator of the consideration payable per
share of Stock pursuant to the Sale Event (the "Sale Price") times the number of
shares of Stock subject to outstanding Options (to the extent then exercisable
at prices not in excess of the Sale Price) and (B) the aggregate exercise price
of all such outstanding Options.

     (d)  Substitute Awards. The Administrator may grant Awards under the Plan
          -----------------
in substitution for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a Subsidiary or
the acquisition by the Company or a Subsidiary of property or stock of the
employing corporation. The Administrator may direct that the substitute awards
be granted on such terms and conditions as the Administrator

                                       6
<PAGE>

considers appropriate in the circumstances. Any substitute Awards granted under
the Plan shall not count against the share limitation set forth in Section 3(a).

SECTION 4.  ELIGIBILITY
            -----------

     Grantees under the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.

SECTION 5.  STOCK OPTIONS
            -------------

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

     Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a Non-
Qualified Stock Option.

     No Incentive Stock Option shall be granted under the Plan after December
20, 2010.

     (a)  Stock Options Granted to Employees and Key Persons. The Administrator
          --------------------------------------------------
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or any Subsidiary. Stock Options granted pursuant to this Section
5(a) shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the
optionee's election, subject to such terms and conditions as the Administrator
may establish.

          (i)  Exercise Price. The exercise price per share for the Stock
               --------------
     covered by a Stock Option granted pursuant to this Section 5(a) shall be
     determined by the Administrator at the time of grant but shall not be less
     than 100 percent of the Fair Market Value on the date of grant in the case
     of Incentive Stock Options, or 85 percent of the Fair Market Value on the
     date of grant, in the case of Non-Qualified Stock Options (other than
     options granted in lieu of cash compensation). If an employee owns or is
     deemed to own (by reason of the attribution rules of Section 424(d) of the
     Code) more than 10 percent of the combined voting power of all classes of
     stock of the Company or any parent or subsidiary corporation and an
     Incentive Stock Option is granted to such employee, the option price of
     such Incentive Stock Option shall be not less than 110 percent of the Fair
     Market Value on the grant date.

                                       7
<PAGE>

          (ii)  Option Term. The term of each Stock Option shall be fixed by the
                -----------
     Administrator, but no Stock Option shall be exercisable more than 10 years
     after the date the Stock Option is granted. If an employee owns or is
     deemed to own (by reason of the attribution rules of Section 424(d) of the
     Code) more than 10 percent of the combined voting power of all classes of
     stock of the Company or any parent or subsidiary corporation and an
     Incentive Stock Option is granted to such employee, the term of such Stock
     Option shall be no more than five years from the date of grant.

          (iii) Exercisability; Rights of a Stockholder. Stock Options shall
                ---------------------------------------
     become exercisable at such time or times, whether or not in installments,
     as shall be determined by the Administrator at or after the grant date. The
     Administrator may at any time accelerate the exercisability of all or any
     portion of any Stock Option. An optionee shall have the rights of a
     stockholder only as to shares acquired upon the exercise of a Stock Option
     and not as to unexercised Stock Options.

          (iv)  Method of Exercise. Stock Options may be exercised in whole or
                ------------------
     in part, by giving written notice of exercise to the Company, specifying
     the number of shares to be purchased. Payment of the purchase price may be
     made by one or more of the following methods to the extent provided in the
     Option Award agreement:

                (A) In cash, by certified or bank check or other instrument
          acceptable to the Administrator;

                (B) Through the delivery (or attestation to the ownership) of
          shares of Stock that have been purchased by the optionee on the open
          market or that have been beneficially owned by the optionee for at
          least six months and are not then subject to restrictions under any
          Company plan. Such surrendered shares shall be valued at Fair Market
          Value on the exercise date;

                (C) By the optionee delivering to the Company a properly
          executed exercise notice together with irrevocable instructions to a
          broker to promptly deliver to the Company cash or a check payable and
          acceptable to the Company for the purchase price; provided that in the
          event the optionee chooses to pay the purchase price as so provided,
          the optionee and the broker shall comply with such procedures and
          enter into such agreements of indemnity and other agreements as the
          Administrator shall prescribe as a condition of such payment
          procedure; or

                (D) By the optionee delivering to the Company a promissory note
          if the Board has expressly authorized the loan of funds to the
          optionee for the purpose of enabling or assisting the optionee to
          effect the exercise of his Stock Option; provided that at least so
          much of the exercise price as represents the par value of the Stock
          shall be paid other than with a promissory note if otherwise required
          by state law.

                                       8
<PAGE>

     Payment instruments will be received subject to collection. The delivery of
     certificates representing the shares of Stock to be purchased pursuant to
     the exercise of a Stock Option will be contingent upon receipt from the
     optionee (or a purchaser acting in his stead in accordance with the
     provisions of the Stock Option) by the Company of the full purchase price
     for such shares and the fulfillment of any other requirements contained in
     the Option Award agreement or applicable provisions of laws. In the event
     an optionee chooses to pay the purchase price by previously-owned shares of
     Stock through the attestation method, the number of shares of Stock
     transferred to the optionee upon the exercise of the Stock Option shall be
     net of the number of shares attested to.

          (v)  Annual Limit on Incentive Stock Options. To the extent required
               ---------------------------------------
     for "incentive stock option" treatment under Section 422 of the Code, the
     aggregate Fair Market Value (determined as of the time of grant) of the
     shares of Stock with respect to which Incentive Stock Options granted under
     this Plan and any other plan of the Company or its parent and subsidiary
     corporations become exercisable for the first time by an optionee during
     any calendar year shall not exceed $100,000. To the extent that any Stock
     Option exceeds this limit, it shall constitute a Non-Qualified Stock
     Option.

     (b)  Reload Options. At the discretion of the Administrator, Options
          --------------
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the sum of (i) the number delivered to exercise the original Option and (ii)
the number withheld to satisfy tax liabilities, with an Option term equal to the
remainder of the original Option term unless the Administrator otherwise
determines in the Award agreement for the original Option grant.

     (c)  Non-transferability of Options. No Stock Option shall be transferable
          ------------------------------
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee, or by the optionee's legal representative or
guardian in the event of the optionee's incapacity. Notwithstanding the
foregoing, the Administrator, in its sole discretion, may provide in the Award
agreement regarding a given Option that the optionee may transfer his Non-
Qualified Stock Options to members of his immediate family, to trusts for the
benefit of such family members, or to partnerships in which such family members
are the only partners, provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and the
applicable Option.

                                       9
<PAGE>

SECTION 6.  RESTRICTED STOCK AWARDS

     (a)  Nature of Restricted Stock Awards. A Restricted Stock Award is an
          ---------------------------------
Award entitling the recipient to acquire, at such purchase price as determined
by the Administrator, shares of Stock subject to such restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent on the grantee
executing the Restricted Stock Award agreement. The terms and conditions of each
such agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.

     (b)  Rights as a Stockholder. Upon execution of a written instrument
          -----------------------
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 6(d) below, and the grantee shall be required,
as a condition of the grant, to deliver to the Company a stock power endorsed in
blank.

     (c)  Restrictions. Restricted Stock may not be sold, assigned, transferred,
          ------------
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. If a grantee's employment (or
other service relationship) with the Company and its Subsidiaries terminates for
any reason, the Company shall have the right to repurchase Restricted Stock that
has not vested at the time of termination at its original purchase price, from
the grantee or the grantee's legal representative.

     (d)  Vesting of Restricted Stock. The Administrator at the time of grant
          ---------------------------
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-
transferability of the Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed "vested." Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below, in
writing after the Award agreement is issued, a grantee's rights in any shares of
Restricted Stock that have not vested shall automatically terminate upon the
grantee's termination of employment (or other service relationship) with the
Company and its Subsidiaries and such shares shall be subject to the Company's
right of repurchase as provided in Section 6(c) above.

     (e)  Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock
          ----------------------------------------------
Award agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.

                                       10
<PAGE>

SECTION 7. DEFERRED STOCK AWARDS
           ---------------------

     (a)   Nature of Deferred Stock Awards. A Deferred Stock Award is an Award
           -------------------------------
of phantom stock units to a grantee, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of pre-
established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the grantee executing the Deferred Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees. At the end of the deferral period, the Deferred Stock Award, to
the extent vested, shall be paid to the grantee in the form of shares of Stock.

     (b)   Election to Receive Deferred Stock Awards in Lieu of Compensation.
           -----------------------------------------------------------------
The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.

     (c)   Rights as a Stockholder. During the deferral period, a grantee shall
           -----------------------
have no rights as a stockholder; provided, however, that the grantee may be
credited with Dividend Equivalent Rights with respect to the phantom stock units
underlying his Deferred Stock Award, subject to such terms and conditions as the
Administrator may determine.

     (d)   Restrictions. A Deferred Stock Award may not be sold, assigned,
           ------------
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

     (e)   Termination. Except as may otherwise be provided by the Administrator
           -----------
either in the Award agreement or, subject to Section 13 below, in writing after
the Award agreement is issued, a grantee's right in all Deferred Stock Awards
that have not vested shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

SECTION 8. UNRESTRICTED STOCK AWARDS
           -------------------------

     Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
     -----------------------------------
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any grantee pursuant to
which such grantee may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

                                       11
<PAGE>

SECTION 9.  PERFORMANCE SHARE AWARDS
            ------------------------

     (a)    Nature of Performance Share Awards. A Performance Share Award is an
            ----------------------------------
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals, the periods
during which performance is to be measured, and all other limitations and
conditions.

     (b)    Rights as a Stockholder. A grantee receiving a Performance Share
            -----------------------
Award shall have the rights of a stockholder only as to shares actually received
by the grantee under the Plan and not with respect to shares subject to the
Award but not actually received by the grantee. A grantee shall be entitled to
receive a stock certificate evidencing the acquisition of shares of Stock under
a Performance Share Award only upon satisfaction of all conditions specified in
the Performance Share Award agreement (or in a performance plan adopted by the
Administrator).

     (c)    Termination. Except as may otherwise be provided by the
            -----------
Administrator either in the Award agreement or, subject to Section 13 below, in
writing after the Award agreement is issued, a grantee's rights in all
Performance Share Awards shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

     (d)    Acceleration, Waiver, Etc. At any time prior to the grantee's
            -------------------------
termination of employment (or other service relationship) by the Company and its
Subsidiaries, the Administrator may in its sole discretion accelerate, waive or,
subject to Section 13, amend any or all of the goals, restrictions or conditions
applicable to a Performance Share Award.

SECTION 10. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
            ---------------------------------------------

     Notwithstanding anything to the contrary contained herein, if any
Restricted Stock Award, Deferred Stock Award or Performance Share Award granted
to a Covered Employee is intended to qualify as "Performance-based Compensation"
under Section 162(m) of the Code and the regulations promulgated thereunder (a
"Performance-based Award"), such Award shall comply with the provisions set
forth below:

     (a)    Performance Criteria. The performance criteria used in performance
            --------------------
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following: (i) the Company's return on equity, assets,
capital or investment, (ii) pre-tax or after-tax profit levels of the Company or
any Subsidiary, a division, an operating unit or a business segment of the
Company, or any combination of the foregoing; (iii) cash flow, funds from
operations or similar measure; (iv) total shareholder return; (v) changes in the
market price of the Stock; (vi) sales or market share; or (vii) earnings per
share.

                                       12
<PAGE>

     (b)    Grant of Performance-based Awards. With respect to each Performance-
            ---------------------------------
based Award granted to a Covered Employee, the Committee shall select, within
the first 90 days of a Performance Cycle (or, if shorter, within the maximum
period allowed under Section 162(m) of the Code) the performance criteria for
such grant, and the achievement targets with respect to each performance
criterion (including a threshold level of performance below which no amount will
become payable with respect to such Award). Each Performance-based Award will
specify the amount payable, or the formula for determining the amount payable,
upon achievement of the various applicable performance targets. The performance
criteria established by the Committee may be (but need not be) different for
each Performance Cycle and different goals may be applicable to Performance-
based Awards to different Covered Employees.

     (c)    Payment of Performance-based Awards. Following the completion of a
            -----------------------------------
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

     (d)    Maximum Award Payable. The maximum Performance-based Award payable
            ---------------------
to any one Covered Employee under the Plan for a Performance Cycle is 200,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 11. TAX WITHHOLDING
            ---------------

     (a)    Payment by Grantee. Each grantee shall, no later than the date as of
            ------------------
which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the grantee for Federal income
tax purposes, pay to the Company, or make arrangements satisfactory to the
Administrator regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the grantee. The
Company's obligation to deliver stock certificates to any grantee is subject to
and conditioned on tax obligations being satisfied by the grantee.

     (b)    Payment in Stock. Subject to approval by the Administrator, a
            ----------------
grantee may elect to have the minimum required tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the grantee with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the withholding amount
due.

                                       13
<PAGE>

SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
            -------------------------------

     For purposes of the Plan, the following events shall not be deemed a
termination of employment:

     (a)    a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or

     (b)    an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to re-
employment is guaranteed either by a statute or by contract or under the policy
pursuant to which the leave of absence was granted or if the Administrator
otherwise so provides in writing.

SECTION 13. AMENDMENTS AND TERMINATION
            --------------------------

     The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code or to ensure that compensation
earned under Awards qualifies as performance-based compensation under Section
162(m) of the Code, if and to the extent intended to so qualify, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 13 shall limit the
Administrator's authority to take any action permitted pursuant to Section 3(c).

SECTION 14. STATUS OF PLAN
            --------------

     With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 15. CHANGE OF CONTROL PROVISIONS
            ----------------------------

     Upon the occurrence of a Change of Control as defined in this Section 15:

     (a)    Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option and Stock Appreciation Right shall automatically become
fully exercisable.

                                       14
<PAGE>

     (b)    Except as otherwise provided in the applicable Award Agreement,
conditions and restrictions on each outstanding Restricted Stock Award, Deferred
Stock Award and Performance Share Award which relate solely to the passage of
time and continued employment will be removed. Performance or other conditions
(other than conditions and restrictions relating solely to the passage of time
and continued employment) will continue to apply unless otherwise provided in
the applicable Award agreement.

     (c)    "Change of Control" shall mean the occurrence of any one of the
following events:

            (i)    any "Person," as such term is used in Sections 13(d) and
     14(d) of the Act (other than the Company, any of its Subsidiaries, or any
     trustee, fiduciary or other person or entity holding securities under any
     employee benefit plan or trust of the Company or any of its Subsidiaries),
     together with all "affiliates" and "associates" (as such terms are defined
     in Rule 12b-2 under the Act) of such person, shall become the "beneficial
     owner" (as such term is defined in Rule 13d-3 under the Act), directly or
     indirectly, of securities of the Company representing 25 percent or more of
     the combined voting power of the Company's then outstanding securities
     having the right to vote in an election of the Company's Board of Directors
     ("Voting Securities") (in such case other than as a result of an
     acquisition of securities directly from the Company); or

            (ii)   persons who, as of the Effective Date, constitute the
     Company's Board of Directors (the "Incumbent Directors") cease for any
     reason, including, without limitation, as a result of a tender offer, proxy
     contest, merger or similar transaction, to constitute at least a majority
     of the Board, provided that any person becoming a director of the Company
     subsequent to the Effective Date shall be considered an Incumbent Director
     if such person's election was approved by or such person was nominated for
     election by either (A) a vote of at least a majority of the Incumbent
     Directors or (B) a vote of at least a majority of the Incumbent Directors
     who are members of a nominating committee comprised, in the majority, of
     Incumbent Directors; but provided further, that any such person whose
     initial assumption of office is in connection with an actual or threatened
     election contest relating to the election of members of the Board of
     Directors or other actual or threatened solicitation of proxies or consents
     by or on behalf of a Person other than the Board, including by reason of
     agreement intended to avoid or settle any such actual or threatened contest
     or solicitation, shall not be considered an Incumbent Director; or

            (iii)  the approval by the stockholders of the Company of a
     consolidation, merger or consolidation or sale or other disposition of all
     or substantially all of the assets of the Company (a "Corporate
     Transaction") or if consummation of such Corporate Transaction is subject,
     at the time of such approval by stockholders, to the consent of any
     government or governmental agency, obtaining of such consent (either
     explicitly or implicitly by consummation); excluding, however, a Corporate

                                       15
<PAGE>

     Transaction in which the stockholders of the Company immediately prior to
     the Corporate Transaction, would, immediately after the Corporate
     Transaction, beneficially own (as such term is defined in Rule 13d-3 under
     the Act), directly or indirectly, shares representing in the aggregate more
     than 50 percent of the voting shares of the corporation issuing cash or
     securities in the Corporate Transaction (or of its ultimate parent
     corporation, if any); or

            (iv)   the approval by the stockholders of any plan or proposal for
     the liquidation or dissolution of the Company.

     Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person to 25 percent or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
--------  -------
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 25 percent or more of the
combined voting power of all then outstanding Voting Securities, then a "Change
of Control" shall be deemed to have occurred for purposes of the foregoing
clause (i).

SECTION 16. GENERAL PROVISIONS
            ------------------

     (a)    No Distribution; Compliance with Legal Requirements. The
            ---------------------------------------------------
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

     No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

     (b)    Delivery of Stock Certificates. Stock certificates to grantees under
            ------------------------------
this Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee's last known address on
file with the Company.

     (c)    Other Compensation Arrangements; No Employment Rights. Nothing
            -----------------------------------------------------
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not

                                       16
<PAGE>

confer upon any employee any right to continued employment with the Company or
any Subsidiary.

     (d)    Trading Policy Restrictions. Option exercises and other Awards under
            ---------------------------
the Plan shall be subject to such Company's insider trading policy, as in effect
from time to time.

     (e)    Loans to Grantees. The Company shall have the authority to make
            -----------------
loans to grantees of Awards hereunder (including to facilitate the purchase of
shares) and shall further have the authority to issue shares for promissory
notes hereunder.

     (f)    Designation of Beneficiary. Each grantee to whom an Award has been
            --------------------------
made under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee's estate.

SECTION 17. EFFECTIVE DATE OF PLAN
            ----------------------

     This Plan shall become effective upon approval by the holders of a majority
of the votes cast at a meeting of stockholders at which a quorum is present or
by written consent of stockholders. Subject to such approval by the stockholders
and to the requirement that no Stock may be issued hereunder prior to such
approval, Stock Options and other Awards may be granted hereunder on and after
adoption of this Plan by the Board.

SECTION 18. GOVERNING LAW
            -------------

     This Plan and all Awards and actions taken thereunder shall be governed by,
and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS:  December 21, 1999

DATE APPROVED BY STOCKHOLDERS:

                                       17

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