Document:

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

                           1998 STOCK OPTION PLAN

1.                PURPOSE.

                  The purpose of this plan (the  "Plan") is to secure for Fusion
Telecommunications  International, Inc. (the "Company") and its stockholders the
benefits  arising  from  capital  stock  ownership  by  employees,  officers and
directors  of, and  consultants  or advisors to, the Company who are expected to
contribute to the Company's future growth and success.  Except where the context
otherwise  requires,  the term  "Company"  shall  include all present and future
subsidiaries  of the  Company as defined  in  Sections  424(e) and 424(f) of the
Internal  Revenue  Code of 1986,  as amended or replaced  from time to time (the
"Code").  Those  provisions of the Plan which make express  reference to Section
422 shall apply only to Incentive  Stock Options (as that term is defined in the
Plan).

2.                TYPE OF OPTIONS AND ADMINISTRATION.

                  (a) TYPES OF  OPTIONS.  Options  granted  pursuant to the Plan
shall be  authorized  by action of the Board of  Directors  of the Company (or a
Committee  designated  by the Board of  Directors)  and may be either  incentive
stock options  ("Incentive  Stock Options")  meeting the requirements of Section
422 of the Code or  non-statutory  options  which are not  intended  to meet the
requirements of Section 422 of the Code.

                  (b) ADMINISTRATION. The Plan will be administered by the Board
of Directors or a committee  appointed by the Board of Directors of the Company,
whose  construction and  interpretation  of the terms and provisions of the Plan
shall be final and conclusive. Unless the context otherwise requires, references
in this Plan to the term  "Committee"  refer to either  the  Company's  Board of
Directors or such committee.  The delegation of powers to the Committee shall be
consistent with applicable laws or regulations  (including,  without limitation,
applicable state law and Rule 16b-3  promulgated  under the Securities  Exchange
Act of 1934 (the "Exchange  Act"),  or any successor rule ("Rule  16b-3")).  The
Committee may in its sole  discretion  grant  options to purchase  shares of the
Company's  Common Stock,  $0.01 par value per share  ("Common  Stock") and issue
shares upon  exercise of such  options as  provided in the Plan.  The  Committee
shall have authority, subject to the express provisions of the Plan, to construe
the respective option  agreements and 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, which need not be identical, and
to make all other  determinations in the judgment of the Committee  necessary or
desirable  for the  administration  of the Plan.  The  Committee may correct any
defect or supply any omission or reconcile any  inconsistency  in the Plan or in
any option  agreement in the manner and to the extent it shall deem expedient to
carry the Plan  into  effect  and it shall be the sole and  final  judge of such
expediency.  No director or person acting pursuant to authority delegated by the
Board of  Directors  shall be liable for any action or  determination  under the
Plan made in good faith.  Subject to adjustment as provided in Section 15 below,
the  aggregate  number of shares of Common  Stock that may be subject to Options
granted  to any person in a  calendar  year shall not exceed 35% of the  maximum
number of shares  which may be issued and sold  under the Plan,  as set forth in
Section 4 hereof, as such section may be amended from time to time.

                  (c) APPLICABILITY OF RULE 16B-3.  Those provisions of the Plan
which make  express  reference  to Rule 16b-3 shall apply to the Company only at
such time as the Company's  Common Stock is  registered  under the Exchange Act,
subject to Section  3(b),  and then only to such persons as are required to file
reports under Section 16(a) of the Exchange Act (a "Reporting Person").

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3.                ELIGIBILITY.

                  (a) GENERAL. Options may be granted to persons who are, at the
time of grant,  employees,  officers or directors of, or consultants or advisors
to, the Company or any subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Code ("Participants")  PROVIDED,  that Incentive Stock Options
may only be granted to individuals  who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an option
may, if he or she is otherwise  eligible,  be granted  additional options if the
Committee shall so determine.

                  (b) GRANT OF OPTIONS TO REPORTING PERSONS.  The selection of a
director or an officer who is a Reporting  Person (as the terms  "director"  and
"officer"  are defined for  purposes of Rule 16b-3) as a recipient of an option,
the timing of the option grant,  the exercise price of the option and the number
of shares  subject to the option shall be determined  either (i) by the Board of
Directors or (ii) by a committee consisting of two or more directors having full
authority to act in the matter, each of whom shall be an "Independent  Director"
as defined by Rule 1.62-27 of the Code.

4.                STOCK SUBJECT TO PLAN.

                  The stock  subject to options  granted under the Plan shall be
shares of  authorized  but  unissued  or  reacquired  Common  Stock.  Subject to
adjustment  as  provided in Section 15 below,  the  maximum  number of shares of
Common  Stock of the  Company  which  may be issued  and sold  under the Plan is
6,000,000 shares. If an option granted under the Plan shall expire, terminate or
is  cancelled  for any  reason  without  having  been  exercised  in  full,  the
unpurchased  shares  subject  to  such  option  shall  again  be  available  for
subsequent option grants under the Plan.

5.                FORMS OF OPTION AGREEMENTS.

                  As a condition to the grant of an option under the Plan,  each
recipient  of an  option  shall  execute  an option  agreement  in such form not
inconsistent  with the Plan as may be approved by the Board of  Directors.  Such
option agreements may differ among recipients.

6.                PURCHASE PRICE.

                  (a) GENERAL. The purchase price per share of stock deliverable
upon the exercise of an option shall be  determined by the Board of Directors at
the time of  grant of such  option;  PROVIDED,  HOWEVER,  that in the case of an
Incentive  Stock Option,  the exercise  price shall not be less than 100% of the
Fair Market Value (as  hereinafter  defined) of such stock, at the time of grant
of such  option,  or less  than 110% of such  Fair  Market  Value in the case of
options  described in Section  11(b).  "Fair Market  Value" of a share of Common
Stock of the Company as of a specified  date for the  purposes of the Plan shall
mean  the  closing  price  of a  share  of the  Common  Stock  on the  principal
securities  exchange (including the Nasdaq National Market) on which such shares
are traded on the day  immediately  preceding  the date as of which Fair  Market
Value is being  determined,  or on the next  preceding date on which such shares
are traded if no shares were traded on such immediately preceding day, or if the
shares are not traded on a  securities  exchange,  Fair  Market  Value  shall be
deemed to be the  average of the high bid and low asked  prices of the shares in
the  over-the-counter  market on the day  immediately  preceding  the date as of
which Fair Market Value is being  determined  or on the next  preceding  date on
which such high bid and low asked  prices were  recorded.  If the shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of shares,  any distributions  with respect thereto which
would be  repurchased  with the shares) shall be determined in

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good faith by the Board of  Directors.  In no case shall  Fair  Market  Value be
determined with regard to restrictions  other than restrictions  which, by their
terms, will never lapse.

                  (b) PAYMENT OF PURCHASE PRICE.  Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or a check
to the order of the  Company in an amount  equal to the  exercise  price of such
options,  or by any other  means  which the Board of  Directors  determines  are
consistent with the purpose of the Plan and with applicable laws and regulations
(including,  without  limitation,  the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board).

7.                OPTION PERIOD.

                  Subject to earlier  termination as provided in the Plan,  each
option and all rights  thereunder shall expire on such date as determined by the
Board of Directors and set forth in the applicable option  agreement,  PROVIDED,
that such date  shall not be later  than (10) ten years  after the date on which
the option is granted.

8.                EXERCISE OF OPTIONS.

                  Each option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as shall
be set forth in the option  agreement  evidencing  such  option,  subject to the
provisions of the Plan. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable,  the
Board of Directors may (i) in the agreement evidencing such option,  provide for
the  acceleration  of the exercise date or dates of the subject  option upon the
occurrence  of specified  events,  and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.

9.                NONTRANSFERABILITY OF OPTIONS.

                  No option  granted  under  this Plan  shall be  assignable  or
otherwise  transferable by the optionee except by will or by the laws of descent
and distribution or pursuant to a qualified  domestic relations order as defined
in the Code or Title I of the Employee  Retirement  Income  Security Act, or the
rules thereunder. An option may be exercised during the lifetime of the optionee
only by the optionee. In the event an optionee dies during his employment by the
Company or any of its subsidiaries,  or during the three-month  period following
the date of  termination  of such  employment,  his option shall  thereafter  be
exercisable,  during  the  period  specified  in the  option  agreement,  by his
executors  or  administrators  to the full  extent  to  which  such  option  was
exercisable  by the  optionee  at the time of his death  during the  periods set
forth in Section 10 or Section 11(d).

10.               EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

                  Except as provided in Section  11(d) with respect to Incentive
Stock Options and except as otherwise determined by the Committee at the date of
grant of an Option,  and subject to the  provisions of the Plan, an optionee may
exercise an option at any time within three months  following the termination of
the optionee's  employment or other  relationship with the Company or within one
(1) year if such  termination was due to the death or disability of the optionee
but,  except in the case of the  optionee's  death,  in no event  later than the
expiration date of the Option.  If the termination of the optionee's  employment
is for cause or is  otherwise  attributable  to a breach by the  optionee  of an
employment or  confidentiality  or  non-disclosure  agreement,  the option shall
expire immediately upon such termination.  The Board of Directors shall have the
power to determine  what  constitutes a termination  for cause or a breach of an
employment or confidentiality or non-disclosure  agreement,

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whether  an  optionee  has been  terminated  for cause or has  breached  such an
agreement,  and the date upon which such termination for cause or breach occurs.
Any such  determinations  shall be final and  conclusive  and  binding  upon the
optionee.

11.               INCENTIVE STOCK OPTIONS.

                  Options  granted  under  the Plan  which  are  intended  to be
Incentive Stock Options shall be subject to the following  additional  terms and
conditions:

                      (a)  EXPRESS  DESIGNATION.  All  Incentive  Stock  Options
granted under the Plan shall, at the time of grant,  be specifically  designated
as such in the option agreement covering such Incentive Stock Options.

                      (b) 10% STOCKHOLDER.  If any employee to whom an Incentive
Stock  Option  is to be  granted  under the Plan is, at the time of the grant of
such option,  the owner of stock  possessing more than 10% of the total combined
voting power of all classes of stock of the Company  (after  taking into account
the attribution of stock  ownership  rules of Section 424(d) of the Code),  then
the following  special  provisions  shall be  applicable to the Incentive  Stock
Option granted to such individual:

                           (i) The purchase  price per share of the Common Stock
                      subject to such  Incentive  Stock Option shall not be less
                      than 110% of the Fair Market  Value of one share of Common
                      Stock at the time of grant; and

                           (ii) The option exercise period shall not exceed five
                      years from the date of grant.

                      (c)  DOLLAR  LIMITATION.  For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other incentive
stock option plans of the Company)  which are intended to  constitute  Incentive
Stock Options shall not  constitute  Incentive  Stock Options to the extent that
such options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.

                      (d)  TERMINATION  OF EMPLOYMENT,  DEATH OR DISABILITY.  No
Incentive  Stock Option may be exercised  unless,  at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his or her
option, employed by the Company, except that:

                           (i) an Incentive Stock Option may be exercised within
the period of three months after the date the optionee  ceases to be an employee
of the  Company  (or  within  such  lesser  period  as may be  specified  in the
applicable option agreement),  PROVIDED, that the agreement with respect to such
option may designate a longer  exercise  period and that the exercise after such
three-month  period shall be treated as the exercise of a  non-statutory  option
under the Plan;

                           (ii) if the optionee  dies while in the employ of the
Company,  or  within  three  months  after  the  optionee  ceases  to be such an
employee,  the Incentive  Stock Option may be exercised by the person to whom it
is transferred by will or the laws of descent and distribution within the period
of one year  after the date of death (or  within  such  lesser  period as may be
specified in the applicable option agreement); and

                           (iii) if the optionee  becomes  disabled  (within the
meaning of Section  22(e)(3) of

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the  Code or any  successor  provisions  thereto)  while  in the  employ  of the
Company,  the Incentive  Stock Option may be exercised  within the period of one
year after the date the optionee  ceases to be such an employee  because of such
disability  (or within such lesser period as may be specified in the  applicable
option agreement).

For all  purposes  of the Plan and any option  granted  hereunder,  "employment"
shall be defined in accordance with the provisions of Section  1.421-7(h) of the
Income Tax  Regulations  (or any  successor  regulations).  Notwithstanding  the
foregoing  provisions,  no Incentive  Stock  Option may be  exercised  after its
expiration date.

12.               ADDITIONAL PROVISIONS.

                  (a) ADDITIONAL OPTION PROVISIONS.  The Board of Directors may,
in its sole  discretion,  include  additional  provisions  in option  agreements
covering  options  granted  under  the  Plan,   including   without   limitation
restrictions  on  transfer,   repurchase   rights,   rights  of  first  refusal,
commitments  to pay cash bonuses,  to make,  arrange for or guaranty loans or to
transfer  other  property to optionees  upon exercise of options,  or such other
provisions as shall be determined by the Board of Directors; PROVIDED, that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan and such additional  provisions  shall not cause any Incentive Stock
Option  granted  under the Plan to fail to qualify as an Incentive  Stock Option
within the meaning of Section 422 of the Code.

                  (b) ACCELERATION,  EXTENSION, ETC. The Board of Directors may,
in its sole  discretion,  (i)  accelerate  the date or dates on which all or any
particular  option or options  granted  under the Plan may be  exercised or (ii)
extend the dates during which all, or any particular,  option or options granted
under the Plan may be exercised; PROVIDED, HOWEVER, that no such extension shall
be  permitted  if it would cause the Plan to fail to comply with  Section 422 of
the Code or with Rule 16b-3 (if applicable).

13.               GENERAL RESTRICTIONS.

                  (a)  INVESTMENT  REPRESENTATIONS.  The Company may require any
person to whom an option is granted,  as a condition of exercising  such option,
to give written  assurances in substance and form satisfactory to the Company to
the effect that such person is acquiring  the Common Stock subject to the option
or award,  for his or her own  account for  investment  and not with any present
intention  of  selling or  otherwise  distributing  the same,  and to such other
effects as the Company deems  necessary or  appropriate  in order to comply with
federal  and   applicable   state   securities   laws,  or  with   covenants  or
representations  made by the Company in connection  with any public  offering of
its  Common   Stock,   including   any   "lock-up"  or  other   restriction   on
transferability.

                  (b)  COMPLIANCE  WITH  SECURITIES  LAW.  Each option  shall be
subject to the  requirement  that if, at any time,  counsel to the Company shall
determine that the listing,  registration or qualification of the shares subject
to such option upon any  securities  exchange or automated  quotation  system or
under any state or federal  law, or the consent or approval of any  governmental
or regulatory  body, or that the  disclosure  of non-public  information  or the
satisfaction  of any other  condition  is  necessary  as a  condition  of, or in
connection with the issuance or purchase of shares  thereunder,  such option may
not be  exercised,  in whole  or in part,  unless  such  listing,  registration,
qualification, consent or approval, or satisfaction of such condition shall have
been  effected or obtained on  conditions  acceptable to the Board of Directors.
Nothing  herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification, or to satisfy such condition.

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14.               RIGHTS AS A STOCKHOLDER.

                  The holder of an option shall have no rights as a  stockholder
with respect to any shares covered by the option (including, without limitation,
any rights to receive dividends or non-cash  distributions  with respect to such
shares)  until the date of issue of a stock  certificate  to him or her for such
shares.  No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.

15.               ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS, REORGANIZATION,
                  AND RELATED TRANSACTIONS.

                  (a) RECAPITALIZATIONS AND RELATED TRANSACTIONS. If, through or
as a result of any  recapitalization,  reclassification,  stock dividend,  stock
split,  reverse stock split or other similar  transaction,  (i) the  outstanding
shares of Common Stock are  increased,  decreased  or exchanged  for a different
number or kind of shares or other securities of the Company,  or (ii) additional
shares or new or different  shares or other non-cash assets are distributed with
respect to such shares of Common Stock or other  securities,  an appropriate and
proportionate  adjustment  shall be made in (x) the  maximum  number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other  securities  subject to any then  outstanding
options  under the Plan,  and (z) the price for each  share  subject to any then
outstanding  options under the Plan,  without  changing the  aggregate  purchase
price  as  to  which  such  options  remain  exercisable.   Notwithstanding  the
foregoing,  no  adjustment  shall be made  pursuant  to this  Section 15 if such
adjustment  (i) would cause the Plan to fail to comply  with  Section 422 of the
Code or with Rule 16b-3 or (ii) would be  considered  as the  adoption  of a new
plan requiring stockholder approval.

                  (b)  REORGANIZATION,  MERGER  AND  RELATED  TRANSACTIONS.  All
outstanding  options under the Plan shall become fully  exercisable for a period
of sixty (60) days following the occurrence of any Trigger Event, whether or not
such  Options  are then  exercisable  under  the  provisions  of the  applicable
agreements relating thereto.  For purposes of the Plan, a "Trigger Event" is any
one of the following events:

                  (i) the  date on  which  shares  of  Common  Stock  are  first
              purchased pursuant to a tender offer or exchange offer (other than
              such an offer by the Company, any subsidiary, any employee benefit
              plan of the  Company or of any  subsidiary  or any entity  holding
              shares or other  securities  of the Company for or pursuant to the
              terms of such  plan),  whether  or not such offer is  approved  or
              opposed  by the  Company  and  regardless  of the number of shares
              purchased pursuant to such offer;

                  (ii) the date the Company  acquires  knowledge that any person
              or group deemed a person under  Section  13d-3 of the Exchange Act
              (other than the Company, any subsidiary, any employee benefit plan
              of the Company or of any  subsidiary or any entity  holding shares
              of Common Stock or other securities of the Company for or pursuant
              to the terms of any such plan or any individual or entity or group
              or  affiliate  thereof  which  acquired its  beneficial  ownership
              interest prior to the date the Plan was adopted by the Board),  in
              a transaction or series of transactions, has become the beneficial
              owner,   directly  or  indirectly   (with   beneficial   ownership
              determined as provided in Rule 13d-3, or any successor rule, under
              the Exchange  Act),  of  securities  of the Company  entitling the
              person or group to 50% or more of all votes (without consideration
              of the  rights  of any  class or stock  to  elect  directors  by a
              separate  class  vote) to which all  stockholders  of the  Company
              would be entitled in the election of the Board of  Directors  were
              an election held on such date;

                  (iii) the date of approval by the  stockholders of the Company
              of an agreement (a

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              "reorganization agreement") providing for:

                  (A) The merger or  consolidation  of the Company  with another
              corporation  where the  stockholders  of the Company,  immediately
              prior to the merger or  consolidation,  do not  beneficially  own,
              immediately  after  the  merger  or  consolidation,  shares of the
              corporation   issuing  cash  or   securities   in  the  merger  or
              consolidation  entitling such  stockholders  to 80% or more of all
              votes (without  consideration  of the rights of any class of stock
              to  elect  directors  by a  separate  class  vote)  to  which  all
              stockholders of such corporation would be entitled in the election
              of directors or where the members of the Board of Directors of the
              Company, immediately prior to the merger or consolidation, do not,
              immediately  after  the  merger  or  consolidation,  constitute  a
              majority of the Board of Directors of the corporation issuing cash
              or securities in the merger or consolidation; or

                  (B) The sale or other  disposition of all or substantially all
              the assets of the Company.

                  (c) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under
this Section 15 will be made by the Board of Directors,  whose  determination as
to what adjustments,  if any, will be made and the extent thereof will be final,
binding and  conclusive.  No fractional  shares will be issued under the Plan on
account of any such adjustments.

16.               MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.

                  (a)  GENERAL.  In the event of any sale,  merger,  transfer or
acquisition of the Company or substantially  all of the assets of the Company in
which the Company is not the surviving corporation,  and provided that after the
Company shall have  requested the  acquiring or  succeeding  corporation  (or an
affiliate  thereof),  that  equivalent  options  shall be  substituted  and such
successor  corporation  shall  have  refused  or failed to  assume  all  options
outstanding under the Plan or issue substantially  equivalent options,  then any
or  all  outstanding   options  under  the  Plan  shall  accelerate  and  become
exercisable in full  immediately  prior to such event. The Committee will notify
holders  of  options  under  the  Plan  that  any  such  options  shall be fully
exercisable for a period of fifteen (15) days from the date of such notice,  and
the options will terminate upon expiration of such notice.

                  (b)  SUBSTITUTE  OPTIONS.  The Company may grant options under
the Plan in  substitution  for options held by employees of another  corporation
who become  employees of the Company,  or a  subsidiary  of the Company,  as the
result  of a merger  or  consolidation  of the  employing  corporation  with the
Company or a subsidiary of the Company, or as a result of the acquisition by the
Company,  or one of its  subsidiaries,  of  property  or stock of the  employing
corporation.  The Company may direct that substitute  options be granted on such
terms and  conditions  as the Board of Directors  considers  appropriate  in the
circumstances.

17.               NO SPECIAL EMPLOYMENT RIGHTS.

                  Nothing  contained  in the Plan or in any option  shall confer
upon any  optionee  any right  with  respect to the  continuation  of his or her
employment  by the Company or interfere in any way with the right of the Company
at any  time to  terminate  such  employment  or to  increase  or  decrease  the
compensation of the optionee.

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18.               OTHER EMPLOYEE BENEFITS.

                  Except as to plans which by their terms  include  such amounts
as  compensation,  the amount of any  compensation  deemed to be  received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not  constitute  compensation  with respect to which any
other  employee  benefits of such employee are  determined,  including,  without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary  continuation  plan, except as otherwise  specifically  determined by the
Board of Directors.

19.               AMENDMENT OF THE PLAN.

                  (a) The Board of Directors  may at any time,  and from time to
time, modify or amend the Plan in any respect; provided, however, that if at any
time the approval of the  stockholders  of the Company is required under Section
422 of the Code or any  successor  provision  with  respect to  Incentive  Stock
Options,  the Board of Directors may not effect such  modification  or amendment
without such approval.

                  (b) The  modification  or  amendment  of the Plan  shall  not,
without the  consent of an  optionee,  affect his or her rights  under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of  Directors  may amend  outstanding  option  agreements  in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or  modify  (i) the  terms  and  provisions  of the Plan and of any  outstanding
Incentive  Stock  Options  granted  under the Plan to the  extent  necessary  to
qualify any or all such options for such favorable  federal income tax treatment
(including  deferral of taxation  upon  exercise)  as may be afforded  incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any  outstanding  option to the extent  necessary  to ensure the
qualification of the Plan under Rule 16b-3.

20.               WITHHOLDING.

                  (a) The Company  shall have the right to deduct from  payments
of any kind  otherwise due to the optionee any federal,  state or local taxes of
any kind  required by law to be withheld  with respect to any shares issued upon
exercise  of  options  under the Plan.  Subject  to the  prior  approval  of the
Company,  which may be  withheld  by the  Company  in its sole  discretion,  the
optionee  may elect to satisfy  such  obligations,  in whole or in part,  (i) by
causing  the  Company to  withhold  shares of Common  Stock  otherwise  issuable
pursuant  to the  exercise  of an option or (ii) by  delivering  to the  Company
shares of Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such withholding  obligation as
of the date  that the  amount  of tax to be  withheld  is to be  determined.  An
optionee  who has made an  election  pursuant  to this  Section  20(a)  may only
satisfy his or her withholding  obligation with shares of Common Stock which are
not subject to any repurchase,  forfeiture, unfulfilled vesting or other similar
requirements.

                  (b) The  acceptance of shares of Common Stock upon exercise of
an Incentive  Stock Option shall  constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are  disposed of by the optionee
within two years  from the date the  option was  granted or within one year from
the date the shares were issued to the optionee  pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the  case of any  such.disposition,  an  amount  sufficient  to  satisfy  the
Company's  federal,  state and local withholding tax obligations with respect to
such  disposition,  whether or not, as to both (i) and (ii),  the optionee is in
the employ of the Company at the time of such disposition.

                                       8
<PAGE>

                  (c) Notwithstanding the foregoing,  in the case of a Reporting
Person whose  options have been granted in  accordance  with the  provisions  of
Section  3(b) herein,  no election to use shares for the payment of  withholding
taxes  shall  be  effective  unless  made  in  compliance  with  any  applicable
requirements of Rule 16b-3.

21.               CANCELLATION AND NEW GRANT OF OPTIONS, ETC.

                  The Board of Directors shall have the authority to effect,  at
any time and from time to time, with the consent of the affected optionees,  (i)
the cancellation of any or all outstanding  options under the Plan and the grant
in  substitution  therefor of new options  under the Plan  covering  the same or
different  numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise  price per share of the
cancelled  options or (ii) the amendment of the terms of any and all outstanding
options  under the Plan to provide an option  exercise  price per share which is
higher  or  lower  than  the  then-current  exercise  price  per  share  of such
outstanding options.

22.               EFFECTIVE DATE AND DURATION OF THE PLAN.

                  (a)  EFFECTIVE  DATE.  The Plan shall  become  effective  when
adopted by the Board of Directors,  but no Incentive  Stock Option granted under
the Plan  shall  become  exercisable  unless  and until the Plan shall have been
approved by the  Company's  stockholders.  If such  stockholder  approval is not
obtained  within  twelve  months  after the date of the Board's  adoption of the
Plan,  no  options  previously  granted  under  the Plan  shall be  deemed to be
Incentive  Stock  Options.  Amendments  to the  Plan not  requiring  stockholder
approval  shall  become  effective  when  adopted  by the  Board  of  Directors;
amendments  requiring  stockholder approval (as provided in Section 19(a)) shall
become effective when adopted by the Board of Directors,  but no Incentive Stock
Option granted after the date of such amendment shall become exercisable (to the
extent  that such  amendment  to the Plan was  required to enable the Company to
grant such  Incentive  Stock Option to a particular  optionee)  unless and until
such amendment shall have been approved by the Company's  stockholders.  If such
stockholder  approval  is not  obtained  within  twelve  months  of the  Board's
adoption of such amendment,  any Incentive Stock Options granted on or after the
date of such amendment  shall terminate to the extent that such amendment to the
Plan was  required to enable the  Company to grant such  option to a  particular
optionee.  Subject to this limitation,  options may be granted under the Plan at
any time after the effective  date and before the date fixed for  termination of
the Plan.

                  (b) TERMINATION.  Unless sooner  terminated in accordance with
Section  16,  the Plan  shall  terminate  upon the  earlier  of (i) the close of
business  on the day next  preceding  the tenth  anniversary  of the date of its
adoption  by the  Board of  Directors,  or (ii) the  date on  which  all  shares
available  for  issuance  under the Plan shall have been issued  pursuant to the
exercise  or  cancellation  of options  granted  under the Plan.  If the date of
termination is determined under (i) above, then options outstanding on such date
SHALL continue to have force and effect in accordance with the provisions of the
instruments evidencing such options.

23.               PROVISION FOR FOREIGN PARTICIPANTS.

                  The Board of Directors may, without amending the Plan,  modify
awards or options granted to participants who are foreign  nationals or employed
outside the United States to recognize  differences in laws, rules,  regulations
or customs  of such  foreign  jurisdictions  with  respect  to tax,  securities,
currency, employee benefit or other matters.

                                       9
<PAGE>

24.               GOVERNING LAW.

                  The provisions of this Plan shall be governed and construed in
accordance  with  the  laws of the  State  of  Delaware  without  regard  to the
principles of conflicts of laws.

                  Adopted by the Board of  Directors on May 31,1998 and November
                  16, 1999.
                  Approved by the Stockholders on February 17, 2000.

                                       10EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
the  11th  day of  November,  2004  by  and  between  Fusion  Telecommunications
International,  Inc., a Delaware corporation (hereinafter called the "Company"),
and Matthew Rosen (hereinafter called the "Executive").

                                    RECITALS

         A.       The Board of Directors of the Company (the "Board") desires to
assure the Company of the  Executive's  continued  employment  as President  and
Chief Operating Officer and to compensate him therefor.

         B.       The Board has  determined  that this  Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company.

         C.       The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.

                                    AGREEMENT

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:

         1.       EMPLOYMENT.

                  1.1      EMPLOYMENT  AND TERM.  The Company  hereby  agrees to
employ the Executive and the  Executive  hereby agrees to serve the Company,  on
the terms and conditions set forth herein, for the period commencing on the date
hereof and  expiring on January  31, 2007 (the  "Initial  Term")  unless  sooner
terminated as  hereinafter  set forth;  provided,  however,  that  commencing on
January  1, 2007 the  Initial  Term of this  Agreement  shall  automatically  be
extended for one additional  year unless at least ninety (90) days prior to such
date, the Company shall have  delivered to the Executive or the Executive  shall
have delivered to the Company  written  notice that the term of the  Executive's
employment hereunder will not be extended.

                  1.2      DUTIES OF EXECUTIVE. The Executive shall serve as the
President and Chief  Operating  Officer of the Company and shall have powers and
authority  superior  to any other  officer or  employee of the Company or of any
subsidiary of the Company other than the Company's Chief Executive  Officer (the
"CEO").  Subject to the preceding sentence,  during the term of Employment,  the
Executive shall diligently perform all services as may be reasonably assigned to
him by the CEO, and shall  exercise such power and authority as may from time to
time be delegated to him by the CEO. The  Executive  shall be required to report
solely to, and shall be subject solely to the  supervision  and direction of the
CEO and no other person or group shall be given authority to supervise or direct
Executive in the  performance of his duties.  In addition,  the Executive  shall
regularly  consult with the Chairman of the Board with respect to the  Company's
business and affairs.  The Executive shall devote  substantially all his working
time and  attention to the business  and affairs of the Company  (excluding  any
vacation  and sick  leave to which  the  Executive  is  entitled),  render  such
services to the best of his  ability,  and use his  reasonable  best  efforts to
promote  the  interests  of the  Company.  It shall not be a  violation  of this
Agreement  for the  Executive  to (A) serve on  corporate,  civic or  charitable
boards or committees,  (B) deliver  lectures,  fulfill  speaking  engagements or
teach at educational institutions,  and (C) manage personal investments, so long
as such  activities do not  significantly  interfere with the performance of the
Executive's  responsibilities  as an employee of the Company in accordance  with
this Agreement.

<PAGE>

                  1.3      PLACE  OF   PERFORMANCE.   In  connection   with  his
employment  by the  Company,  the  Executive  shall be  based  at the  Company's
principal executive offices except for travel reasonably necessary in connection
with the Company's business.

         2.       COMPENSATION.

                  2.1      BASE SALARY. Commencing on the effective date of this
Agreement,  the Executive  shall receive a base salary at the annual rate of not
less than $250,000 (the "Base Salary") during the term of this  Agreement,  with
such Base Salary payable in installments  consistent  with the Company's  normal
payroll  schedule,  subject to applicable  withholding and other taxes. The Base
Salary shall also be reviewed, every six months, for merit increases and may, by
action  and in the  discretion  of the  Compensation  and  Nominating  Committee
established  by the Board,  be increased  at any time or from time to time.  The
Base Salary  shall also be  increased at any time and from time to time as shall
be  substantially  consistent  with  increases  in base  salary  awarded  in the
ordinary  course of  business  to other key  executives  of the  Company and its
subsidiaries.  The Base Salary, if increased,  shall not thereafter be decreased
for any reason.

                  2.2      INCENTIVE   COMPENSATION.   The  Executive  shall  be
entitled to receive  such bonus  payments or  incentive  compensation  as may be
determined  at any time or from  time to time by the  Board  (or any  authorized
committee  thereof) in its  discretion.  Such potential  bonus  payments  and/or
incentive  compensation  shall be considered  at least  annually by the Board or
committee.  In no event  shall  Executive's  annual  bonus  be less  than 25% of
Executive's annual salary then in effect. In the event that the Company achieves
positive  Earnings Before Income Tax,  Depreciation and Amortization  ("EBITDA")
for two successive  fiscal  quarters,  Executive will be immediately  paid a one
time bonus  equal to 50% of his annual  salary then in effect.  Thereafter,  the
Compensation  Committee  shall  review  Executive's  bonus  at  least  annually;
provided  ,  however  that for each  successive  fiscal  year  that the  Company
achieves positive EBITDA, the Executive's  minimum annual bonus will not be less
than 50% of his annual salary then in effect. In addition to the bonus discussed
immediately  above,  the  Executive  shall be  entitled  to a one-time  bonus of
$25,000 in the event that the Company  consummates an initial public offering of
its securities,  which $25,000 payment shall be in addition to the minimum bonus
otherwise discussed immediately above.

                  2.3      STOCK OPTION.

                                    (a)      The Executive  shall be entitled to
participate in all stock option plans (the "Plans") in effect during the term of
this Agreement.

                                    (b)      The Company  hereby agrees that all
existing  stock options held by the Executive are hereby amended to provided for
a three year vesting schedule,  as opposed to the four year vesting schedule now
in effect.

                                    (c)      Notwithstanding    the    preceding
clause (b), the Option shall become  immediately  exercisable  as to 100% of the
shares of Common Stock not otherwise  vested upon any termination of Executive's
employment  pursuant  to Section 4.5  hereof,  it being  agreed that the Company
shall  cooperate in good faith to afford the Executive the right to exercise the
Option in full  immediately  prior to any  "Change in Control"  (as  hereinafter
defined).  In the event that  Executive is  terminated  pursuant to Section 4.5,
Executive  shall have the greater of (i) five years after  termination,  or (ii)
the remaining term of the option, in order to exercise his options.

                                    (d)      The  Company  shall take all action
reasonably  requested by the Executive to permit any "cashless"  exercise of the
Option that is permitted under the Plan.

                                    (e)      Upon proper  exercise of an Option,
the Executive shall be deemed for all purposes the owner of the shares of Common
Stock that are purchasable upon such exercise.

                                       2
<PAGE>

                                    (f)      The  provisions  of the Plan  shall
not be adversely  modified as to the  Executive  without the  Executive's  prior
written consent.

         3.       EXPENSE REIMBURSEMENT AND OTHER BENEFITS.

                  3.1      EXPENSE REIMBURSEMENT. During the term of Executive's
employment hereunder,  the Company, upon the submission of reasonable supporting
documentation by the Executive, shall reimburse the Executive for all reasonable
expenses  actually  paid or  incurred  by the  Executive  in the  course  of and
pursuant  to the  business of the  Company,  including  expenses  for travel and
entertainment.

                  3.2      INCENTIVE,  SAVINGS AND RETIREMENT PLANS.  During the
Initial Term,  the Executive  shall be entitled to participate in all incentive,
savings and retirement  plans,  practices,  policies and programs  applicable to
other  key  executives  of the  Company  and  its  subsidiaries,  in  each  case
comparable to those currently in effect or as subsequently  amended. Such plans,
practices,  policies and programs, in the aggregate, shall provide the Executive
with  compensation,  benefits and reward  opportunities at least as favorable as
the most  favorable  of such  compensation,  benefits  and reward  opportunities
provided at any time hereafter with respect to other key executives.

                  3.3      WELFARE  BENEFIT PLANS.  During the Initial Term, the
Executive and/or the Executive's  family,  as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices,  policies and programs  provided by the Company and its  subsidiaries
(including,  without  limitation,  medical,  prescription,  dental,  disability,
salary  continuance,  employee  life,  group life,  accidental  death and travel
accident  insurance  plans  and  programs),  at least as  favorable  as the most
favorable of such plans, practices,  policies and programs in effect at any time
hereafter with respect to other key executives.

                  3.4      WORKING  FACILITIES.  During the term of  Executive's
employment hereunder,  the Company shall furnish the Executive with an office, a
secretary and such other  facilities  and services  suitable to his position and
adequate for the performance of his duties hereunder.

                  3.5      VACATION.  During the  Initial  Term,  the  Executive
shall be entitled to paid vacation in accordance with the most favorable  plans,
policies,  programs  and  practices  of the Company and its  subsidiaries  as in
effect at any time hereafter with respect to other key executives of the Company
and its  subsidiaries;  PROVIDED,  HOWEVER,  that in no event shall Executive be
entitled to fewer than five weeks paid vacation per year.

         4.       TERMINATION.

                  4.1      TERMINATION  FOR  CAUSE.   Notwithstanding   anything
contained to the contrary in this Agreement, this Agreement may be terminated by
the Company for Cause. As used in this Agreement, "Cause" shall only mean (i) an
act or acts of personal dishonesty taken by the Executive and intended to result
in  substantial  personal  enrichment  of the  Executive  at the  expense of the
Company,  (ii) subject to the  following  sentences,  repeated  violation by the
Executive of the Executive's material obligations under this Agreement which are
demonstrably  willful and deliberate on the  Executive's  part and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company,  or (iii) the conviction of the Executive for any criminal act which is
a felony.  Upon any determination by the Company's Board of Directors that Cause
exists under clauses (i) and (ii) of the preceding  sentence,  the Company shall
cause a special  meeting of the Board to be called  and held at a time  mutually
convenient  to the  Board and  Executive,  but in no event  later  than ten (10)
business days after  Executive's  receipt of the notice  contemplated by clauses
(i) and (ii).  Executive  shall  have the right to appear  before  such  special
meeting  of  the  Board  with  legal  counsel  of his  choosing  to  refute  any
determination  of  Cause  specified  in  such  notice,  and any  termination  of
Executive's  employment  by  reason  of such  Cause  determination  shall not be
effective  until  Executive  is  afforded  such   opportunity  to  appear.   Any
termination  for Cause  pursuant to clause (i) or (iii) of the first sentence of
this Section 4.1 shall be made in writing to  Executive,  which notice shall set
forth in detail all acts or omissions upon which the Company is relying for

                                       3
<PAGE>

such  termination.  Upon any  termination  pursuant  to this  Section  4.1,  the
Executive  shall  be  entitled  to be  paid  his  Base  Salary  to the  date  of
termination  and the Company shall have no further  liability  hereunder  (other
than for  reimbursement  for reasonable  business expenses incurred prior to the
date of termination).

                  4.2      DISABILITY.  Notwithstanding  anything  contained  in
this Agreement to the contrary, the Company, by written notice to the Executive,
shall  at all  times  have  the  right  to  terminate  this  Agreement,  and the
Executive's  employment  hereunder,  if the  Executive  shall,  as the result of
mental or physical incapacity, illness or disability, fail to perform his duties
and  responsibilities  provided for herein for a period of more than one hundred
twenty (120)  consecutive  days in any  12-month  period.  Upon any  termination
pursuant to this  Section 4.2,  the  Executive  shall be entitled to be paid his
Base  Salary  for the  remaining  term of the  Agreement.  In the event that the
Agreement has less than six months  remaining at such time,  Executive  shall be
entitled  to a payment  equal to six  months of his Base  Salary.  In  addition,
Executive shall be entitled to reimbursement  for all business expenses incurred
prior to his disability.

                  4.3      DEATH.  In the  event of the  death of the  Executive
during the term of his employment hereunder, the Company shall pay to the estate
of the deceased  Executive an amount equal to the Base Salary for the  remaining
term of this Agreement. In the event that the Agreement has less than six months
remaining at such time,  Executive  shall be entitled to a payment  equal to six
months  of his  Base  Salary.  In  addition,  Executive  shall  be  entitled  to
reimbursement for all business expenses incurred prior to his death.

                  4.4      OPTIONAL   TERMINATION    Notwithstanding    anything
contained in this  Agreement to the contrary,  the  Executive,  by giving thirty
days  notice to the  Company,  shall one year after the date of this  Agreement,
have the right to  terminate  this  Agreement at his sole  discretion.  Upon any
termination  pursuant to this Section 4.4, the Execution shall be entitled to be
paid his Base Salary to the date of  termination  and the Company  shall have no
further  liability  hereunder  (other  than  for  reimbursement  for  reasonable
business  expenses  incurred  prior  to the  date of  termination),  unless  the
Executive and the Company agree to a different arrangement.

                  4.5      TERMINATION  WITHOUT  CAUSE.  At any time the Company
shall have the right to terminate  Executive's  employment  hereunder by written
notice  to  Executive;  provided,  however,  that the  Company  shall (i) pay to
Executive  any  unpaid  Base  Salary  accrued  through  the  effective  date  of
termination  specified  in such  notice,  and any  pro-rata  bonus that would be
payable had Executive  completed a full year of employment,  and (ii) pay to the
Executive  in a lump sum,  in cash  within 30 days after the date of  employment
termination,  an amount equal to 150% of his Base Salary then in effect and 150%
of  his  highest  annual  bonus  for  the  three  years  preceding   Executive's
termination.  The Company  shall be deemed to have  terminated  the  Executive's
employment  pursuant to this Section 4.4 if such employment is terminated (i) by
the  Company  without  Cause,  or (ii) by the  Executive  voluntarily  for "Good
Reason." For purposes of this Agreement, "Good Reason" means

                           (a)      the  assignment  to  the  Executive  of  any
duties  inconsistent  in any respect with the  Executive's  position  (including
status,  offices,  titles  and  reporting  requirements),  authority,  duties or
responsibilities as contemplated by Section 1.2 of this Agreement,  or any other
action by the Company which results in a diminution in such position, authority,
duties  or   responsibilities,   excluding   for  this   purpose  an   isolated,
insubstantial  and  inadvertent  action  not  taken in bad  faith  and  which is
remedied by the Company  promptly  after receipt of notice  thereof given by the
Executive;

                           (b)      any  failure by the  Company to comply  with
any of the provisions of Section 2, Section 3, or Section 16 of this  Agreement,
other than an isolated,  insubstantial and inadvertent  failure not occurring in
bad faith and which is remedied by the Company  promptly after receipt of notice
thereof given by the Executive;

                                       4
<PAGE>

                           (c)      the Company's  requiring the Executive to be
based at any office or location more than 25 miles from Grand Central Station in
New York, New York, except for travel reasonably  required in the performance of
the Executive's responsibilities;

                           (d)      any  change  in  the   designation   of  the
particular  executive that the Executive is obligated to report to under Section
1.2 hereof;

                           (e)      in the event of any  change  in the  current
CEO where the  Executive is not first  offered the position as CEO on terms that
are at least as  favorable  as those in place (at such  time) for  Executive  as
President and Chief Operating Officer;

                           (f)      any purported  termination by the Company of
the  Executive's  employment  otherwise  than  as  expressly  permitted  by this
Agreement;

                           (g)      any  failure by the  Company to comply  with
and satisfy Section 10(c) of this Agreement; or

                           (h)      any  termination  by the  Executive  for any
reason during the three-month period following the effective date of any "Change
in Control".

         For purposes of this Section 4.5, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.

         5.       CHANGE IN CONTROL.  For purposes of this Agreement,  a "Change
in Control" shall mean:

                  (a)      The acquisition  (other than by or from the Company),
at any time after the date hereof, by any person, entity or "group",  within the
meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange Act of 1934
(the "Exchange Act"), of beneficial  ownership (within the meaning of Rule 13d-3
promulgated  under  the  Exchange  Act)  of 30%  or  more  of  either  the  then
outstanding shares of common stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the election of
directors; or

                  (b)      All or any of the fourteen (14)  individuals  who, as
of the date hereof,  constitute  the Board (as of the date hereof the "Incumbent
Board")  cease for any reason to  constitute  at least a majority  of the Board,
provided that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then  comprising the Incumbent
Board  (other than an election or  nomination  of an  individual  whose  initial
assumption  of office is in  connection  with an actual or  threatened  election
contest relating to the election of the directors of the Company,  as such terms
are used in Rule 14a-11 of Regulation  14A  promulgated  under the Exchange Act)
shall be, for purposes of this Agreement,  considered as though such person were
a member of the Incumbent Board; or

                  (c)      Approval by the  shareholders of the Company of (A) a
reorganization,  merger or consolidation  with respect to which persons who were
the shareholders of the Company immediately prior to such reorganization, merger
or  consolidation  do not,  immediately  thereafter,  own  more  than 75% of the
combined voting power entitled to vote generally in the election of directors of
the  reorganized,  merged or  consolidated  company's  then  outstanding  voting
securities,  (B) a liquidation or dissolution of the Company, or (C) the sale of
all or  substantially  all of the assets of the  Company,  unless  the  approved
reorganization,  merger,  consolidation,  liquidation,  dissolution  or  sale is
subsequently abandoned.

                  (d)      The  approval by the Board of the sale,  distribution
and/or other transfer or action (and/or  series of sales,  distributions  and/or
other  transfers  or actions  from time to time or over a period of time),  that
results in the  Company's  ownership of less than 50% of the  Company's  current
assets.

                                       5
<PAGE>

         6.       RESTRICTIVE COVENANTS.

                  6.1      NONDISCLOSURE.  During his  employment and for twelve
(12) months  thereafter,  Executive shall not divulge,  communicate,  use to the
detriment of the Company or for the benefit of any other  person or persons,  or
misuse  in any  way,  any  Confidential  Information  (as  hereinafter  defined)
pertaining to the business of the Company. Any Confidential  Information or data
now or hereafter  acquired by the Executive  with respect to the business of the
Company shall be deemed a valuable, special and unique asset of the Company that
is received by the  Executive in  confidence  and as a fiduciary,  and Executive
shall remain a fiduciary to the Company with respect to all of such information.
For purposes of this Agreement,  "Confidential  Information"  means all material
information about the Company's  business disclosed to the Executive or known by
the  Executive  as a  consequence  of or through his  employment  by the Company
(including  information  conceived,  originated,  discovered or developed by the
Executive) after the date hereof, and not generally known.

                  6.2      NONSOLICITATION  OF EMPLOYEES.  While employed by the
Company and for a period of twelve (12) months  thereafter,  Executive shall not
directly or indirectly,  for himself or for any other person, firm, corporation,
partnership,  association  or other entity,  attempt to employ or enter into any
contractual  arrangement  with any  employee or former  employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six months.

                  6.3      COVENANT NOT TO COMPETE.  Executive  will not, at any
time, during the term of this Agreement, and for one (1) year thereafter, either
directly  or  indirectly,  engage in, with or for any  enterprise,  institution,
whether or not for profit,  business, or company,  competitive with the business
(as identified herein) of Employer as such business may be conducted on the date
thereof, as a creditor,  guarantor, or financial backer, stockholder,  director,
officer,  consultant,  advisor, employee, member, or otherwise of or through any
corporation,  partnership,  association,  sole  proprietorship  or other entity;
provided,  that an  investment  by  Employee,  his  spouse  or his  children  is
permitted  if such  investment  is not more than four  percent (4%) of the total
debt or equity capital of any such competitive  enterprise or business.  As used
in this  Agreement,  the  business  of  Employer  shall be deemed to include any
business  which  directly   competes  with  the  Company  in  the  provision  of
traditional voice services,  VoIP services,  private network services,  Internet
access services and Internet based video conferencing services. The covenant not
to  compete  for one year  after  termination  shall  only be  effective  if the
Executive has received all  compensation  due to him pursuant to this Agreement.
The  Company  shall  have  the  right  in  its  sole  discretion  to  waive  the
non-compete.

                  6.4      INJUNCTION.  It is recognized and hereby acknowledged
by the parties  hereto that a breach by the  Executive  of any of the  covenants
contained in Section 6.1, 6.2 or 6.3 of this  Agreement  will cause  irreparable
harm and damage to the Company,  the  monetary  amount of which may be virtually
impossible  to  ascertain.  As a result,  the  Executive  recognizes  and hereby
acknowledges  that the Company shall be entitled to an injunction from any court
of competent  jurisdiction enjoining and restraining any violation of any or all
of the  covenants  contained  in this  Section 6 by the  Executive or any of his
affiliates,  associates,  partners or agents, either directly or indirectly, and
that such right to injunction  shall be  cumulative  and in addition to whatever
other remedies the Company may possess.

         7.       GOVERNING  LAW.  This  Agreement  shall  be  governed  by  and
construed in accordance with the laws of the State of New York.

         8.       NOTICES:  Any notice  required or  permitted to be given under
this  Agreement  shall be in writing and shall be deemed to have been given when
delivered by hand or when  deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

                                       6
<PAGE>

         If to the Company:     Fusion Telecommunications Intl, Inc.
                                420 Lexington Avenue - Suite 518
                                New York, New York 10170
                                Attention:  CEO

         If to the Executive:   Matthew Rosen
                                420 Lexington Avenue, Suite 518
                                New York, New York 10170

               WITH A COPY TO:  Gersten, Savage, Kaplowitz, Wolf &
                                Marcus, LLP
                                600 Lexington Avenue
                                New York, New York 10022
                                Attention:  Jay M. Kaplowitz

or to such other  addresses  as either  party  hereto may from time to time give
notice of to the other in the aforesaid manner.

         9.       SUCCESSORS.

                  (a)      This  Agreement  is  personal  to the  Executive  and
without the prior written  consent of the Company shall not be assignable by the
Executive  otherwise than by will or the laws of descent and distribution.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
legal representatives.

                  (b)      This  Agreement  shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c)      The  Company  will  require  any  successor  (whether
direct or indirect, by purchase,  merger,  consolidation or otherwise) to all or
substantially  all of the  business  and/or  assets of the Company to  expressly
assume and agree to perform  this  Agreement  in the same manner and to the same
extent  that the Company  would be required to perform it if no such  succession
had taken place. As used in this Agreement,  "Company" shall mean the Company as
hereinbefore  defined and any  successor  to its  business  and/or  assets which
assumes and agrees to perform this Agreement by operation of law or otherwise.

         10.      SEVERABILITY.  The invalidity of any one or more of the words,
phrases,  sentences,  clauses or sections  contained in this Agreement shall not
affect the  enforceability  of the remaining  portions of this  Agreement or any
part thereof,  all of which are inserted  conditionally  on their being valid in
law,  and, in the event that any one or more of the words,  phrases,  sentences,
clauses or sections contained in this Agreement shall be declared invalid,  this
Agreement  shall be  construed  as if such  invalid  word or  words,  phrase  or
phrases,  sentence or sentences,  clause or clauses,  or section or sections had
not been  inserted.  If such  invalidity  is caused by length of time or size of
area, or both, the otherwise  invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.

         11.      WAIVERS.  The  waiver  by either  party  hereto of a breach or
violation of any term or provision  of this  Agreement  shall not operate nor be
construed as a waiver of any subsequent breach or violation.

         12.      DAMAGES.  Nothing  contained  herein  shall  be  construed  to
prevent the Company or the Executive from seeking and recovering  from the other
damages  sustained by either or both of them as a result of its or his breach of
any term or provision of this Agreement.

                                       7
<PAGE>

         13.      NO THIRD PARTY  BENEFICIARY.  Nothing  expressed or implied in
this  Agreement is intended,  or shall be construed,  to confer upon or give any
person (other than the parties hereto and, in the case of Executive,  his heirs,
personal  representative(s)  and/or legal representative) any rights or remedies
under or by reason of this Agreement.

         14.      FULL SETTLEMENT. The Company's obligation to make the payments
provided  for in  this  Agreement  and  otherwise  to  perform  its  obligations
hereunder  shall  not be  affected  by any  set-off,  counterclaim,  recoupment,
defense or other  claim,  right or action which the Company may have against the
Executive or others.  In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts  payable
to the  Executive  under any of the  provisions of this  Agreement.  The Company
agrees to pay, to the full extent  permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest  (regardless
of  the  outcome   thereof)  by  the  Company  or  others  of  the  validity  or
enforceability  of, or liability  under,  any provision of this Agreement or any
guarantee of  performance  thereof  (including as a result of any contest by the
Executive  about the  amount  of any  payment  pursuant  to  Section  15 of this
Agreement),  plus in each case interest at the applicable  Federal rate provided
for in Section 7872(f)(2) of the Code.

         15.      CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.

                           (d)      Anything in this  Agreement  to the contrary
notwithstanding,  in the  event it  shall be  determined  that  any  payment  or
distribution by the Company to or for the benefit of the Executive, whether paid
or  payable  or  distributed  or  distributable  pursuant  to the  terms of this
Agreement or otherwise (a "Payment"),  would be nondeductible by the Company for
Federal  income  tax  purposes  because of  Section  280G of the Code,  then the
aggregate  present  value of  amounts  payable  or  distributable  to or for the
benefit  of  the  Executive   pursuant  to  this  Agreement  (such  payments  or
distributions  pursuant  to  this  Agreement  are  hereinafter  referred  to  as
"Agreement  Payments")  shall be reduced to the  Reduced  Amount.  The  "Reduced
Amount"  shall be an amount  expressed  in present  value  which  maximizes  the
aggregate present value of Agreement  Payments without causing any Payment to be
nondeductible  by the Company  because of Section 280G of the Code.  Anything to
the contrary notwithstanding, if the Reduced Amount is zero and it is determined
further that any Payment which is not an Agreement Payment would nevertheless be
nondeductible  by the Company for Federal income tax purposes because of Section
280G of the Code,  then the aggregate  present  value of Payments  which are not
Agreement  Payments  shall  also be  reduced  (but not below  zero) to an amount
expressed  in present  value which  maximizes  the  aggregate  present  value of
Payments  without causing any Payment to be nondeductible by the Company because
of Section  280G of the Code.  For purposes of this  Section 16,  present  value
shall be  determined  in accordance  with Section  280G(d)(4)  of the Code.  Any
amount  which  is not  paid in the  taxable  year  in  which  it was  originally
scheduled to be paid as a result of the  postponement  thereof  pursuant  hereto
shall be payable in the next succeeding  taxable year in which such payment will
not result in the disallowance of a deduction  pursuant to either Section 162(m)
or 280G of the Code;  provided,  however,  that all postponed  payments shall be
placed in a Rabbi trust or similar  vehicle for the benefit of the  Executive in
such a way that the  amounts so  transferred  are not  taxable to such person or
deductible  by the Company  until  payment from such vehicle to the Executive is
made. In the event a payment has been made to the Executive, but then disallowed
as a  deduction  by the  Internal  Revenue  Service and return of the payment is
required  into the trust,  said payment to the  Executive  shall be treated as a
loan and said  payment to the trust shall be treated as  repayment of said loan.
The Company shall not pledge, hypothecate or otherwise encumber any amounts held
in the  trust  or  other  similar  vehicle  for  the  benefit  of the  Executive
hereunder.

                           (e)      All determinations required to be made under
this  Section 15 shall be made by  Rothstein,  Kass & Company,  P.C.  or, at the
Executive's  option,  any other  nationally  or  regionally  recognized  firm of
independent  public  accountants  selected by the  Executive and approved by the
Company,  which  approval  shall not be  unreasonably  withheld or delayed  (the
"Accounting  Firm"),  which shall provide (i) detailed  supporting  calculations
both to the Company and the  Executive  within  twenty (20) business days of the
termination  of  Executive's  employment or such earlier time as is requested by
the

                                       8
<PAGE>

Company, and (ii) an opinion to the Executive that he has substantial  authority
not to report any excise tax on his Federal  income tax return  with  respect to
any Payments.  Any such  determination  by the Accounting  Firm shall be binding
upon the Company and the Executive.  The Executive shall determine which and how
much of the  Payments  shall  be  eliminated  or  reduced  consistent  with  the
requirements  of this Section 15,  provided that, if the Executive does not make
such  determination  within ten business days of the receipt of the calculations
made by the  Accounting  Firm, the Company shall elect which and how much of the
Payments shall be eliminated or reduced consistent with the requirements of this
Section 15 and shall notify the Executive promptly of such election. Within five
business days  thereafter,  the Company shall pay to or distribute to or for the
benefit of the  Executive  such amounts as are then due to the  Executive  under
this  Agreement.  All fees and  expenses  of the  Accounting  Firm  incurred  in
connection  with the  determinations  contemplated  by this  Section 15 shall be
borne by the Company.

                           (f)      As  a  result  of  the  uncertainty  in  the
application of Section 280G of the Code at the time of the initial determination
by the Accounting  Firm  hereunder,  it is possible that Payments will have been
made by the  Company  which  should not have been made  ("Overpayment")  or that
additional Payments which will not have been made by the Company could have been
made  ("Underpayment"),  in each case, consistent with the calculations required
to be made  hereunder.  In the event that the  Accounting  Firm,  based upon the
assertion of a deficiency by the Internal  Revenue Service against the Executive
which the Accounting Firm believes has a high probability of success, determines
that an Overpayment has been made, any such  Overpayment  paid or distributed by
the  Company to or for the  benefit of the  Executive  shall be treated  for all
purposes as a loan ab initio to the Executive which the Executive shall repay to
the Company  together with interest at the applicable  federal rate provided for
in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount  shall be payable by the  Employee to the
Company if and to the  extent  such  deemed  loan and  payment  would not either
reduce the amount on which the  Executive is subject to tax under  Section 1 and
Section  4999 of the Code or generate a refund of such taxes.  In the event that
the  Accounting  Firm,  based upon  controlling  precedent or other  substantial
authority,  determines that an Underpayment has occurred,  any such Underpayment
shall be promptly  paid by the  Company to or for the  benefit of the  Executive
together  with interest at the  applicable  federal rate provided for in Section
7872(f)(2) of the Code.

         16.      REIMBURSEMENT  OF LEGAL  EXPENSES.  The Company shall promptly
reimburse  Executive  for all  reasonable  legal fees  incurred by  Executive in
connection with the preparation, negotiation and execution of this Agreement and
ancillary documents.

         17.      INDEMNIFICATION.  The Company  agrees to promptly  execute and
deliver to Executive an Indemnification Agreement in substantially the same form
as set forth on EXHIBIT A.

                                       9
<PAGE>

         IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of
the date first above written.

                                   FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

                                   By:
                                       -------------------------------------
                                       Philip Turits
                                       Treasurer

                                   EXECUTIVE:

                                       -------------------------------------
                                       Matthew Rosen

                                       10

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