Document:

LIGHTHOUSE GLOBAL NETWORK, INC.

                            2000 STOCK INCENTIVE PLAN

1.       ESTABLISHMENT AND PURPOSE.

The Lighthouse  Global  Network,  Inc. 2000 Stock Incentive Plan (the "Plan") is
established by Lighthouse  Global  Network,  Inc. (the "Company") to attract and
retain persons eligible to participate in the Plan, to motivate  Participants to
achieve  long-term  Company goals and to further align  Participants'  interests
with  those of the  Company's  other  stockholders.  The Plan is  adopted  as of
January 1, 2000, subject to approval by the Company's stockholders within twelve
(12) months after such adoption date. Unless the Plan is discontinued earlier by
the Board as provided  herein,  no Award shall be granted  hereunder on or after
the date ten (10) years after the effective date.

Certain terms used herein are defined as set forth in Section 10.

2.       ADMINISTRATION; ELIGIBILITY.

The Plan shall be administered by a Committee;  provided,  however,  that, if at
any time no Committee shall be in office,  the Plan shall be administered by the
Board.  The Plan may be  administered  by different  Committees  with respect to
different   groups  of  Eligible   Individuals.   As  used   herein,   the  term
"Administrator"   means  the  Board  or  any  of  its  Committees  as  shall  be
administering the Plan.

The  Administrator  shall have plenary authority to grant Awards pursuant to the
terms of the Plan to  Eligible  Individuals.  Participation  shall be limited to
such  persons as are  selected  by the  Administrator.  Awards may be granted as
alternatives  to, in exchange or  substitution  for, or  replacement  of, awards
outstanding  under the Plan or any other plan or arrangement of the Company or a
Subsidiary  (including a plan or arrangement  of a business or entity,  all or a
portion of which is acquired by the Company or a Subsidiary).  The provisions of
Awards need not be the same with respect to each Participant.

Among other things, the Administrator  shall have the authority,  subject to the
terms of the Plan:

         (a)   to select the Eligible  Individuals  to whom Awards may from time
               to time be granted;

         (b)   to  determine  whether and to what extent  Stock  Options,  Stock
               Appreciation  Rights, Stock Awards or any combination thereof are
               to be granted hereunder;

         (c)   to determine  the number of shares of Stock to be covered by each
               Award granted hereunder;

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

         (e)   to determine the terms and conditions,  not inconsistent with the
               terms of this Plan,  of any Award granted  hereunder  (including,
               but not limited to, the option price, any vesting  restriction or
               limitation, any vesting acceleration or forfeiture waiver and any
               right of  repurchase,  right of first  refusal or other  transfer
               restriction  regarding any Award and the shares of Stock relating
               thereto,  based on such factors or criteria as the  Administrator
               shall determine);

         (f)   subject to Section 8(a), to modify, amend or adjust the terms and
               conditions  of any  Award,  at any  time  or from  time to  time,
               including,  but not limited to, with  respect to (i)  performance
               goals and targets applicable to performance-based Awards pursuant
               to  the   terms  of  the  Plan   and   (ii)   extension   of  the
               post-termination exercisability period of Stock Options;

         (g)   to  determine to what extent and under what  circumstances  Stock
               and other  amounts  payable  with  respect  to an Award  shall be
               deferred;

         (h)   to determine the Fair Market Value; and

         (i)   to determine the type and amount of  consideration to be received
               by the Company for any Stock Award issued under Section 6.

The  Administrator  shall have the  authority  to adopt,  alter and repeal  such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable,  to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any  agreement  relating  thereto)
and to otherwise supervise the administration of the Plan.

Except to the  extent  prohibited  by  applicable  law,  the  Administrator  may
allocate  all or any  portion of its  responsibilities  and powers to any one or
more of its members and may delegate all or any portion of its  responsibilities
and powers to any other person or persons selected by it. Any such allocation or
delegation may be revoked by the  Administrator  at any time. The  Administrator
may  authorize any one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the Administrator.

Any determination  made by the Administrator or pursuant to delegated  authority
pursuant to the  provisions  of the Plan with respect to any Award shall be made
in the sole discretion of the  Administrator or such delegate at the time of the
grant of the Award or, unless in  contravention of any express term of the Plan,
at  any  time  thereafter.  All  decisions  made  by  the  Administrator  or any
appropriately  delegated officer pursuant to the provisions of the Plan shall be
final and binding on all persons, including the Company and Participants.

No member of the Administrator,  and no officer of the Company,  shall be liable
for any action taken or omitted to be taken by such  individual  or by any other
member of the  Administrator  or officer of the Company in  connection  with the
performance of duties under this Plan,  except for such individual's own willful
misconduct or as expressly provided by law.

3.       STOCK SUBJECT TO PLAN.

Subject to  adjustment  as provided in this Section 3, the  aggregate  number of
shares of Stock which may be delivered under the Plan shall not exceed 1,400,000
shares.

To the  extent any shares of Stock  covered by an Award are not  delivered  to a
Participant or  beneficiary  thereof  because the Award  expires,  is forfeited,
canceled  or  otherwise  terminated,  or the  shares of Stock are not  delivered
because  the Award is  settled  in cash or used to satisfy  the  applicable  tax
withholding  obligation,  such shares shall not be deemed to have been delivered
for purposes of determining  the maximum number of shares of Stock available for
delivery under the Plan.

Subject to  adjustment  as  provided in this  Section 3, the  maximum  number of
shares that may be covered by Stock Options, Stock Appreciation Rights and Stock
Awards,  in the aggregate,  granted to any one  Participant  during any calendar
year shall be 250,000 shares.

In the event of any Company stock dividend, stock split, combination or exchange
of shares,  recapitalization  or other  change in the capital  structure  of the
Company,  corporate  separation or division of the Company  (including,  but not
limited  to,  a  split-up,   spin-off,  split-off  or  distribution  to  Company
stockholders other than a normal cash dividend), sale by the Company of all or a
substantial  portion  of  its  assets  (measured  on  either  a  stand-alone  or
consolidated  basis),  reorganization,  rights  offering,  partial  or  complete
liquidation, or any other corporate transaction, Company share offering or other
event  involving  the  Company  and  having  an  effect  similar  to  any of the
foregoing,  the  Administrator  may make such substitution or adjustments in the
(A)  number  and kind of  shares  that may be  delivered  under  the  Plan,  (B)
additional maximums imposed in the immediately  preceding paragraph,  (C) number
and  kind of  shares  subject  to  outstanding  Awards,  (D)  exercise  price of
outstanding  Stock  Options  and  Stock   Appreciation   Rights  and  (E)  other
characteristics  or terms of the Awards as it may determine  appropriate  in its
sole discretion to equitably reflect such corporate transaction,  share offering
or other  event;  provided,  however,  that the number of shares  subject to any
Award shall always be a whole number.

4.       STOCK OPTIONS.

Stock Options may be granted alone or in addition to other Awards  granted under
the Plan and may be of two types:  Incentive  Stock  Options  and  Non-Qualified
Stock Options.  Any Stock Option granted under the Plan shall be in such form as
the Administrator may from time to time approve.

The  Administrator  shall have the authority to grant any Participant  Incentive
Stock  Options,  Non-Qualified  Stock Options or both types of Stock Options (in
each case with or without Stock  Appreciation  Rights).  Incentive Stock Options
may be granted only to employees of the Company and its subsidiaries (within the
meaning of Section  424(f) of the Code).  To the extent that any Stock Option is
not designated as an Incentive Stock Option or, even if so designated,  does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified  Stock
Option.  Incentive  Stock Options may be granted only within ten (10) years from
the date the Plan is adopted,  or the date the Plan is approved by the Company's
stockholders, whichever is earlier.

Stock Options shall be evidenced by option  agreements,  each in a form approved
by the Administrator.  An option agreement shall indicate on its face whether it
is intended to be an agreement for an Incentive  Stock Option or a Non-Qualified
Stock  Option.  The  grant  of a Stock  Option  shall  occur  as of the date the
Administrator determines.

Anything  in the  Plan to the  contrary  notwithstanding,  no  term of the  Plan
relating to Incentive  Stock Options shall be  interpreted,  amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so as
to disqualify  the Plan under Section 422 of the Code or, without the consent of
the Optionee  affected,  to disqualify any Incentive  Stock Option under Section
422 of the Code.

Stock  Options  granted  under this Section 4 shall be subject to the  following
terms and conditions and shall contain such  additional  terms and conditions as
the Administrator shall deem desirable:

         (a)   Exercise Price. The exercise price per share of Stock purchasable
               under a Stock Option shall be determined by the Administrator. If
               the Stock  Option is  intended to qualify as an  Incentive  Stock
               Option,  the exercise  price per share shall be not less than the
               Fair  Market  Value  per  share on the date the  Stock  Option is
               granted,  or if granted  to an  individual  who is a Ten  Percent
               Holder,  not less than 110% of such Fair Market  Value per share.
               In the case of an Option  granted to a UK- resident  Optionee who
               is an employee or  director of the Company or any  Subsidiary  or
               Affiliate,  there shall be added to the exercise  price per share
               an amount ("A") equal to the prevailing rate of employer national
               insurance  at the date of  exercise  on the  amount  of gain that
               would arise on exercise of the Option in the absence of A.

         (b)   Option Term.  The term of each Stock Option shall be fixed by the
               Administrator,  but no Incentive Stock Option (and in the case of
               a UK-resident  Optionee,  no Non-Qualified Stock Option) shall be
               exercisable  more  than ten (10)  years (or five (5) years in the
               case of an individual who is a Ten Percent Holder) after the date
               the Option is granted.

         (c)   Exercisability.   Except  as  otherwise  provided  herein,  Stock
               Options shall be exercisable  at such time or times,  and subject
               to such  terms  and  conditions,  as shall be  determined  by the
               Administrator.  If the  Administrator  provides  that  any  Stock
               Option is exercisable only in installments, the Administrator may
               at any time waive such installment exercise provisions,  in whole
               or in  part,  based  on such  factors  as the  Administrator  may
               determine.  In addition,  the  Administrator  may at any time, in
               whole or in part,  accelerate  the  exercisability  of any  Stock
               Option.

         (d)   Method of Exercise.  Subject to the provisions of this Section 4,
               Stock Options may be exercised,  in whole or in part, at any time
               during the option  term by giving  written  notice of exercise to
               the Company  specifying  the number of shares of Stock subject to
               the Stock Option to be purchased.

               The  option  price of any Stock  Option  shall be paid in full in
               cash (by certified or bank check or such other  instrument as the
               Company  may  accept)  or,  unless  otherwise   provided  in  the
               applicable option agreement, by one or more of the following: (i)
               in the form of  unrestricted  Stock already owned by the Optionee
               (or, in the case of the exercise of a Non-Qualified Stock Option,
               Restricted Stock subject to a Stock Award hereunder) based in any
               such  instance on the Fair Market  Value of the Stock on the date
               the Stock Option is exercised;  (ii) by  certifying  ownership of
               shares of Stock owned by the Optionee to the  satisfaction of the
               Administrator  for later  delivery to the Company as specified by
               the  Company;  (iii) by  irrevocably  authorizing  a third  party
               approved by the Company to sell shares of Stock (or a  sufficient
               portion of the shares) acquired upon exercise of the Stock Option
               and  remit  to the  Company  a  sufficient  portion  of the  sale
               proceeds to pay the entire exercise price and any tax withholding
               resulting from such exercise;  or (iv) by any combination of cash
               and/or any one or more of the methods  specified  in clauses (i),
               (ii) and (iii).  Notwithstanding the foregoing, a form of payment
               shall not be  permitted  to the extent it would cause the Company
               to recognize a compensation  expense (or additional  compensation
               expense) with respect to the Stock Option for financial reporting
               purposes.

               If payment of the option exercise price of a Non-Qualified  Stock
               Option  is made in  whole  or in part in the  form of  Restricted
               Stock,  the  number of shares of Stock to be  received  upon such
               exercise  equal to the number of shares of Restricted  Stock used
               for payment of the option  exercise price shall be subject to the
               same forfeiture  restrictions to which such Restricted  Stock was
               subject, unless otherwise determined by the Administrator.

               No  shares  of Stock  shall be issued  upon  exercise  of a Stock
               Option until full payment  therefor has been made.  Upon exercise
               of a Stock Option (or a portion thereof),  the Company shall have
               a  reasonable  time to issue the Stock for which the Stock Option
               has been  exercised,  and the Optionee  shall not be treated as a
               stockholder for any purposes  whatsoever  prior to such issuance.
               No  adjustment  shall be made for cash  dividends or other rights
               for which  the  record  date is prior to the date  such  Stock is
               recorded  as issued and  transferred  in the  Company's  official
               stockholder  records,  except as otherwise  provided herein or in
               the applicable option agreement.

         (e)   Transferability of Stock Options. Except as otherwise provided in
               the  applicable  option   agreement,   an  Option  shall  not  be
               transferable   except  by  will  or  the  laws  of  descent   and
               distribution.  A Stock  Option shall be  exercisable,  during the
               Optionee's  lifetime,  only by the Optionee or by the guardian or
               legal  representative  of the Optionee,  it being understood that
               the terms "holder" and "Optionee"  include the guardian and legal
               representative  of the Optionee  named in the  applicable  option
               agreement and any person to whom the Stock Option is  transferred
               (X)  pursuant  to the  first  sentence  of this  Section  4(e) or
               pursuant to the applicable option agreement or (Y) by will or the
               laws of descent and distribution.  Notwithstanding the foregoing,
               references herein to the termination of an Optionee's  employment
               or provision of services shall mean the termination of employment
               or  provision  of services of the person to whom the Stock Option
               was originally granted.

         (f)   Termination by Death. Unless otherwise provided in the applicable
               option  agreement,  if an  Optionee's  employment or provision of
               services  terminates by reason of death, any Stock Option held by
               such Optionee may  thereafter  be  exercised,  to the extent then
               exercisable,  or on such accelerated  basis as the  Administrator
               may  determine,  for a period of six (6) months  from the date of
               such death or until the  expiration  of the  stated  term of such
               Stock  Option,  whichever  period  is  shorter.  In the  event of
               termination  of employment or provision of services due to death,
               if an Incentive Stock Option is exercised after the expiration of
               the  exercise  periods  that apply for purposes of Section 422 of
               the Code,  such  Stock  Option  will  thereafter  be treated as a
               Non-Qualified Stock Option.

         (g)   Termination by Reason of Disability. Unless otherwise provided in
               the applicable option agreement,  if an Optionee's  employment or
               provision of services  terminates  by reason of  Disability,  any
               Stock Option held by such Optionee may thereafter be exercised by
               the  Optionee,  to the extent it was  exercisable  at the time of
               termination,  or on such accelerated  basis as the  Administrator
               may  determine,  for a period of six (6) months  from the date of
               such  termination of employment or provision of services or until
               the expiration of the stated term of such Stock Option, whichever
               period is shorter;  provided,  however, that if the Optionee dies
               within such  period,  an  unexercised  Stock  Option held by such
               Optionee  shall,  notwithstanding  the expiration of such period,
               continue  to be  exercisable  to  the  extent  to  which  it  was
               exercisable  at the time of death for a period of six (6)  months
               from the date of such death or until the expiration of the stated
               term of such Stock Option,  whichever  period is shorter.  In the
               event of  termination  of  employment or provision of services by
               reason of Disability,  if an Incentive  Stock Option is exercised
               after the  expiration  of the  exercise  periods  that  apply for
               purposes  of  Section  422 of the Code,  such Stock  Option  will
               thereafter be treated as a Non-Qualified Stock Option.

         (h)   Termination by Reason of Retirement. Unless otherwise provided in
               the applicable option agreement,  if an Optionee's  employment or
               provision of services  terminates  by reason of  Retirement,  any
               Stock Option held by such Optionee may thereafter be exercised by
               the  Optionee,  to the extent it was  exercisable  at the time of
               such   Retirement,   or  on  such   accelerated   basis   as  the
               Administrator may determine,  for a period of six (6) months from
               the  date of such  termination  of  employment  or  provision  of
               services or until the expiration of the stated term of such Stock
               Option, whichever period is shorter;  provided,  however, that if
               the  Optionee  dies within such  period,  any  unexercised  Stock
               Option  held  by  such  Optionee   shall,   notwithstanding   the
               expiration  of such  period,  continue to be  exercisable  to the
               extent  to which it was  exercisable  at the time of death  for a
               period of six (6) months from the date of such death or until the
               expiration  of the stated  term of such Stock  Option,  whichever
               period is shorter.  In the event of  termination of employment or
               provision  of services by reason of  Retirement,  if an Incentive
               Stock Option is exercised  after the  expiration  of the exercise
               periods that apply for purposes of Section 422 of the Code,  such
               Stock Option will thereafter be treated as a Non-Qualified  Stock
               Option.

         (i)   Other  Termination.  Unless otherwise  provided in the applicable
               option  agreement,  if an  Optionee's  employment or provision of
               services  terminates for any reason other than death,  Disability
               or  Retirement,  any Stock  Option  held by such  Optionee  shall
               thereupon terminate; provided, however, that, if such termination
               of employment or provision of services is involuntary on the part
               of the  Optionee and without  Cause,  such Stock  Option,  to the
               extent  then  exercisable,  or on such  accelerated  basis as the
               Administrator  may determine,  may be exercised for the lesser of
               90 days  from  the  date of such  termination  of  employment  or
               provision  of services and the  remainder of such Stock  Option's
               term,  and  provided,  further,  that if the Optionee dies within
               such period,  any unexercised  Stock Option held by such Optionee
               shall, notwithstanding the expiration of such period, continue to
               be exercisable  to the extent to which it was  exercisable at the
               time of death  for a period  of six (6)  months  from the date of
               such death or until the  expiration  of the  stated  term of such
               Stock  Option,  whichever  period  is  shorter.  In the  event of
               termination of employment or provision of services for any reason
               other than death, Disability or Retirement, if an Incentive Stock
               Option is exercised after the expiration of the exercise  periods
               that apply for  purposes of Section  422 of the Code,  such Stock
               Option  will  thereafter  be  treated  as a  Non-Qualified  Stock
               Option.

         (j)   Participant  Loans.  The  Administrator  may  in  its  discretion
               authorize the Company to:

                        (i)   lend  to an  Optionee  an  amount  equal  to  such
                              portion of the exercise price of a Stock Option as
                              the Administrator may determine; or

                        (ii)  guarantee a loan  obtained  by an Optionee  from a
                              third-party  for the  purpose  of  tendering  such
                              exercise price.

               The terms and conditions of any loan or guarantee,  including the
               term,  interest rate,  whether the loan is with recourse  against
               the  Optionee  and any  security  interest  thereunder,  shall be
               determined  by the  Administrator,  except that no  extension  of
               credit or guarantee  shall  obligate the Company for an amount to
               exceed the lesser of (i) the  aggregate  Fair Market Value on the
               date of exercise,  less the par value,  of the shares of Stock to
               be purchased upon the exercise of the Stock Option,  and (ii) the
               amount  permitted  under  applicable  laws or the regulations and
               rules of the  Federal  Reserve  Board and any other  governmental
               agency having jurisdiction.

5.       STOCK APPRECIATION RIGHTS.

Stock  Appreciation  Rights may be granted  either on a stand-alone  basis or in
conjunction  with all or part of any Stock Option granted under the Plan. In the
case of a  Non-Qualified  Stock Option,  such rights may be granted either at or
after the time of grant of such Stock Option.  In the case of an Incentive Stock
Option,  such  rights  may be  granted  only at the time of grant of such  Stock
Option. A Stock  Appreciation Right shall terminate and no longer be exercisable
as determined by the  Administrator,  or, if granted in conjunction  with all or
part of any Stock Option,  upon the termination or exercise of the related Stock
Option.

A Stock  Appreciation  Right may be exercised by a Participant  as determined by
the  Administrator  in  accordance  with this  Section  5, and,  if  granted  in
conjunction with all or part of any Stock Option, by surrendering the applicable
portion of the related Stock Option in accordance with procedures established by
the  Administrator.  Upon such exercise and surrender,  the Participant shall be
entitled  to  receive an amount  determined  in the  manner  prescribed  in this
Section 5. Stock Options which have been so surrendered, if any, shall no longer
be  exercisable  to the extent the related Stock  Appreciation  Rights have been
exercised.

Stock Appreciation Rights shall be subject to such terms and conditions as shall
be determined by the Administrator, including the following:

                        (i)   Stock Appreciation Rights granted on a stand-alone
                              basis  shall be  exercisable  only at such time or
                              times  and to such  extent  as  determined  by the
                              Administrator.  Stock Appreciation  Rights granted
                              in  conjunction  with  all or  part  of any  Stock
                              Option  shall be  exercisable  only at the time or
                              times and to the extent that the Stock  Options to
                              which they relate are  exercisable  in  accordance
                              with the  provisions of Section 4 and this Section
                              5.

                        (ii)  Upon the exercise of a Stock Appreciation Right, a
                              Participant shall be entitled to receive an amount
                              in cash,  shares  of  Stock or both,  which in the
                              aggregate  are equal in value to the excess of the
                              Fair  Market  Value of one share of Stock over (i)
                              such   value  per  share  of  Stock  as  shall  be
                              determined  by the  Administrator  as the  time of
                              grant (if the Stock  Appreciation Right is granted
                              on a  stand-alone  basis),  or (ii)  the  exercise
                              price per share  specified  in the  related  Stock
                              Option (if the Stock Appreciation Right is granted
                              in  conjunction  with  all or  part  of any  Stock
                              Option),  multiplied  by the  number  of shares in
                              respect  of which  the  Stock  Appreciation  Right
                              shall have been exercised,  with the Administrator
                              having the right to determine the form of payment.

                       (iii)  A Stock  Appreciation  Right shall be transferable
                              only to, and shall be  exercisable  only by,  such
                              persons permitted in accordance with Section 4(e).

6.       STOCK AWARDS OTHER THAN OPTIONS.

Stock  Awards may be directly  issued under the Plan  (without  any  intervening
options),   subject  to  such  terms,  conditions,   performance   requirements,
restrictions,  forfeiture  provisions,  contingencies  and  limitations  as  the
Administrator  shall  determine.  Stock Awards may be issued which are fully and
immediately  vested upon issuance or which vest in one or more installments over
the  Participant's  period of employment or other service to the Company or upon
the  attainment of specified  performance  objectives,  or the Company may issue
Stock  Awards which  entitle the  Participant  to receive a specified  number of
vested shares of Stock upon the attainment of one or more  performance  goals or
service requirements established by the Administrator.

Shares  representing  a Stock  Award  shall be  evidenced  in such manner as the
Administrator  may  deem  appropriate,   including  book-entry  registration  or
issuance  of one or  more  certificates  (which  may  bear  appropriate  legends
referring to the terms,  conditions and restrictions  applicable to such Award).
The  Administrator  may require that any such certificates be held in custody by
the  Company  until any  restrictions  thereon  shall  have  lapsed and that the
Participant  deliver a stock  power,  endorsed  in blank,  relating to the Stock
covered by such Award.

A Stock  Award  may be  issued  in  exchange  for any  consideration  which  the
Administrator  may deem  appropriate  in each  individual  instance,  including,
without limitation:

                        (i)   cash or cash equivalents;

                        (ii)  past  services  rendered  to  the  Company  or any
                              Affiliate; or

                        (iii) future  services  to be rendered to the Company or
                              any Affiliate  (provided  that, in such case,  the
                              par value of the stock subject to such Stock Award
                              shall be paid in cash or cash equivalents,  unless
                              the Administrator provides otherwise).

A Stock  Award that is subject to  restrictions  on transfer  and/or  forfeiture
provisions may be referred to as an award of  "Restricted  Stock" or "Restricted
Stock Units."

7.       CHANGE IN CONTROL PROVISIONS.

         (a)   Impact of Event.  Notwithstanding any other provision of the Plan
               to the contrary,  except as explicitly  provided  otherwise in an
               Award agreement, in the event of a Change in Control:

                  (i)      With   respect  to  any  Stock   Options   and  Stock
                           Appreciation  Rights which are  outstanding as of the
                           date such  Change in  Control is  determined  to have
                           occurred,  and  which  are not then  exercisable  and
                           vested,  each Participant  shall be credited with one
                           additional  year of  service  with the  Company  or a
                           Subsidiary   or   Affiliate   for   purposes  of  any
                           applicable  schedule relating to  exercisability  and
                           vesting;

                  (ii)     With   respect   to  any  Stock   Awards   which  are
                           outstanding  as of the date such Change in Control is
                           determined  to have  occurred,  and  which  are  then
                           subject to restrictions,  each  Participant  shall be
                           credited with one additional year of service with the
                           Company or a Subsidiary  or Affiliate for purposes of
                           any   applicable   schedule   relating  to  lapse  of
                           restrictions;

                  (iii)     All  outstanding  repurchase  rights of the  Company
                            with  respect  to  any   outstanding   Awards  shall
                            terminate; and

                  (iv)     Outstanding  Awards shall be subject to any agreement
                           that effects a Change in Control, which agreement may
                           provide for:

                           (A)  The  continuation of the  outstanding  Awards by
                                the  Company,  if  the  Company  is a  surviving
                                corporation;

                           (B)  The assumption of the outstanding  Awards by the
                                surviving   corporation   or   its   parent   or
                                subsidiary;

                           (C)  The substitution by the surviving corporation or
                                its parent or subsidiary  of similar  awards for
                                the outstanding Awards; or

                           (D)  Settlement  of each share of Stock subject to an
                                outstanding exercisable and vested Award for the
                                Change in  Control  Price  (less,  to the extent
                                applicable,  the per share exercise price),  or,
                                if  the  per  share  exercise  price  equals  or
                                exceeds  the  Change  in  Control   Price,   the
                                outstanding   Award  shall   terminate   and  be
                                canceled,  and, in any event, any  unexercisable
                                or  unvested   Award  shall   terminate  and  be
                                canceled.

                  (v)       In  the  absence  of a  provision  to  the  contrary
                            contained in any agreement  effecting such Change in
                            Control,  unless the Committee determines otherwise,
                            (A) immediately prior to the Change in Control, each
                            share of Stock subject to an outstanding exercisable
                            and vested  Award shall be settled for the Change in
                            Control Price (less, to the extent  applicable,  the
                            per share exercise price),  and (B) if the per share
                            exercise  price  equals  or  exceeds  the  Change in
                            Control Price, the outstanding Award shall terminate
                            and   be   canceled,   and,   in  any   event,   any
                            unexercisable  or unvested Award shall terminate and
                            be canceled.

         (b)   Definition  of Change in Control.  For  purposes  of the Plan,  a
               "Change  in  Control"  shall  mean  the  happening  of any of the
               following events:

                  (i)       An  acquisition by any  individual,  entity or group
                            (within the meaning of Section  13(d)(3) or 14(d)(2)
                            of the  Exchange  Act) (a  "Person")  of  beneficial
                            ownership   (within   the   meaning  of  Rule  13d-3
                            promulgated  under  the  Exchange  Act) of more than
                            fifty   percent   (50%)  of  either   (1)  the  then
                            outstanding  shares of common  stock of the  Company
                            (the "Outstanding  Company Common Stock") or (2) the
                            combined voting power of the then outstanding voting
                            securities of the Company entitled to vote generally
                            in  the  election  of  directors  (the  "Outstanding
                            Company Voting Securities"); excluding, however, the
                            following:  (1) any  acquisition  directly  from the
                            Company,  other than an acquisition by virtue of the
                            exercise  of  a  conversion   privilege  unless  the
                            security  being so  converted  was  itself  acquired
                            directly from the Company;  (2) any  acquisition  by
                            the  Company;  (3) any  acquisition  by any employee
                            benefit  plan  (or  related   trust)   sponsored  or
                            maintained   by  the  Company  or  any   corporation
                            controlled by the Company; or (4) any acquisition by
                            any Person pursuant to a transaction  which complies
                            with clauses (1), (2) and (3) of subsection  (ii) of
                            this Section 7(b); or

                  (ii)      The approval by the stockholders of the Company of a
                            reorganization,  merger or consolidation as a result
                            of which the  outstanding  securities of the Company
                            subject to options  hereunder  are  changed  into or
                            exchanged  for cash or  property  or  securities  of
                            another entity, or any combination  thereof, or sale
                            of all or  substantially  all of the  assets  of the
                            Company   ("Corporate   Transaction");    excluding,
                            however,  such a Corporate  Transaction  pursuant to
                            which   (1)   all  or   substantially   all  of  the
                            individuals  and  entities  who are  the  beneficial
                            owners,  respectively,  of the  outstanding  Company
                            Common   Stock  and   Outstanding   Company   Voting
                            Securities   immediately  prior  to  such  Corporate
                            Transaction  will   beneficially  own,  directly  or
                            indirectly,  more  than  50% of,  respectively,  the
                            outstanding  shares of common stock, or the combined
                            voting   power  of  the  then   outstanding   voting
                            securities   entitled  to  vote   generally  in  the
                            election  of  directors,  as the case may be, of the
                            corporation    resulting    from   such    Corporate
                            Transaction   (including,   without  limitation,   a
                            corporation  which as a result  of such  transaction
                            owns the Company or all or substantially  all of the
                            Company's assets,  either directly or through one or
                            more   subsidiaries)  in   substantially   the  same
                            proportions as their ownership, immediately prior to
                            such  Corporate  Transaction,   of  the  outstanding
                            Company Common Stock and Outstanding  Company Voting
                            Securities, as the case may be, (2) no Person (other
                            than the  Company;  any  employee  benefit  plan (or
                            related  trust)   sponsored  or  maintained  by  the
                            Company,  by  any  corporation   controlled  by  the
                            Company, or by such corporation  resulting from such
                            Corporate   Transaction)   will   beneficially  own,
                            directly   or   indirectly,   more   than   25%  of,
                            respectively, the outstanding shares of common stock
                            of the  corporation  resulting  from such  Corporate
                            Transaction  or the  combined  voting  power  of the
                            outstanding  voting  securities of such  corporation
                            entitled  to  vote  generally  in  the  election  of
                            directors,  except to the extent that such ownership
                            existed  with  respect to the  Company  prior to the
                            Corporate  Transaction,  or (3) individuals who were
                            members  of  the  Board  immediately  prior  to  the
                            approval by the  stockholders  of the Corporation of
                            such Corporate  Transaction will constitute at least
                            a majority of the members of the board of  directors
                            of the  corporation  resulting  from such  Corporate
                            Transaction.

         (c)   Change in Control  Price.  For  purposes of the Plan,  "Change in
               Control Price" means the net consideration  (which may consist of
               any combination of cash or non-cash  consideration) received on a
               per share basis by a holder of Common  Stock in  connection  with
               the Change in Control (as  determined  in the sole  discretion of
               the Board).

8.       MISCELLANEOUS.

         (a)      Amendment.  The Board may amend,  alter,  or  discontinue  the
                  Plan, but no amendment, alteration or discontinuation shall be
                  made which would adversely  affect the rights of a Participant
                  under an Award  theretofore  granted without the Participant's
                  consent, except such an amendment (i) made to avoid an expense
                  charge to the Company or an Affiliate,  or (ii) made to permit
                  the Company or an  Affiliate a  deduction  under the Code.  No
                  such  amendment  shall be made  without  the  approval  of the
                  Company's stockholders to the extent such approval is required
                  by law, agreement or the rules of any stock exchange or market
                  on which the Stock is listed.

                  The  Administrator  may amend the terms of any Stock Option or
                  other   Award    theretofore    granted,    prospectively   or
                  retroactively,  but no such amendment shall  adversely  affect
                  the rights of the holder thereof without the holder's consent.

                  Notwithstanding  anything in the Plan to the contrary,  if any
                  right  under  this  Plan  would  cause  a  transaction  to  be
                  ineligible for pooling of interests accounting that would, but
                  for the  right  hereunder,  be  eligible  for such  accounting
                  treatment, the Administrator may modify or adjust the right so
                  that  pooling  of  interests  accounting  shall be  available,
                  including  the  substitution  of  Common  Stock  having a Fair
                  Market Value equal to the cash otherwise payable hereunder for
                  the right which would  otherwise  cause the  transaction to be
                  ineligible for pooling of interests accounting.

         (b)      Unfunded  Status of Plan.  It is intended that this Plan be an
                  "unfunded" plan for incentive and deferred  compensation.  The
                  Administrator  may  authorize  the creation of trusts or other
                  arrangements to meet the  obligations  created under this Plan
                  to  deliver  Common  Stock or make  payments,  provided  that,
                  unless the Administrator  otherwise determines,  the existence
                  of such trusts or other  arrangements  is consistent  with the
                  "unfunded" status of this Plan.

         (c)      General Provisions.

                  (i)      The  Administrator may require each person purchasing
                           or receiving shares 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 the
                           distribution   thereof.  The  certificates  for  such
                           shares may include any legend which the Administrator
                           deems  appropriate  to reflect  any  restrictions  on
                           transfer.

                           All   certificates  for  shares  of  Stock  or  other
                           securities  delivered under the Plan shall be subject
                           to such stock transfer orders and other  restrictions
                           as the  Administrator  may deem  advisable  under the
                           rules,  regulations  and  other  requirements  of the
                           Commission, any stock exchange or market on which the
                           Stock is then  listed and any  applicable  Federal or
                           state securities law, and the Administrator may cause
                           a  legend   or   legends   to  be  put  on  any  such
                           certificates  to make  appropriate  reference to such
                           restrictions.

                  (ii)     Nothing  contained  in the  Plan  shall  prevent  the
                           Company or any  Subsidiary or Affiliate from adopting
                           other or additional compensation arrangements for its
                           employees.

                  (iii)    The  adoption  of the Plan shall not confer  upon any
                           employee,  director,  consultant or advisor any right
                           to continued employment, directorship or service, nor
                           shall it  interfere  in any way with the right of the
                           Company or any  Subsidiary  or Affiliate to terminate
                           the employment or service of any employee, consultant
                           or advisor at any time.

                  (iv)     No later  than the date as of which an  amount  first
                           becomes   includible  in  the  gross  income  of  the
                           Participant  for  Federal  income tax  purposes  with
                           respect to any Award under the Plan, the  Participant
                           shall  pay  to  the  Company,  or  make  arrangements
                           satisfactory to the Company regarding the payment of,
                           any  Federal,  state,  local or foreign  taxes of any
                           kind  required by law to be withheld or accounted for
                           with  respect  to  such  amount.   Unless   otherwise
                           determined   by   the   Administrator,    withholding
                           obligations  may be  settled  with  Stock,  including
                           Stock  that is part of the Award  that  gives rise to
                           the withholding  requirement.  The obligations of the
                           Company under the Plan shall be  conditional  on such
                           payment  or  arrangements,   and  the  Company,   its
                           Subsidiaries and its Affiliates  shall, to the extent
                           permitted  by law,  have the right to deduct any such
                           taxes  from  any   payment   otherwise   due  to  the
                           Participant.  The  Administrator  may establish  such
                           procedures as it deems appropriate for the settlement
                           of withholding obligations with Stock.

                  (v)      The Administrator  shall establish such procedures as
                           it deems appropriate for a Participant to designate a
                           beneficiary to whom any amounts  payable in the event
                           of the Participant's death are to be paid.

                  (vi)     Any amounts  owed to the Company or an  Affiliate  by
                           the  Participant of whatever  nature may be offset by
                           the  Company  from the value of any  shares of Common
                           Stock,  cash or other  thing of value under this Plan
                           or an agreement to be transferred to the Participant,
                           and no shares of Common Stock, cash or other thing of
                           value  under  this  Plan  or an  agreement  shall  be
                           transferred unless and until all disputes between the
                           Company  and the  Participant  have  been  fully  and
                           finally  resolved and the  Participant has waived all
                           claims to such against the Company or an Affiliate.

                  (vii)    The  grant of an Award  shall  in no way  affect  the
                           right  of  the   Company   to   adjust,   reclassify,
                           reorganize   or  otherwise   change  its  capital  or
                           business   structure   or  to   merge,   consolidate,
                           dissolve,  liquidate  or sell or transfer  all or any
                           part of its business or assets.

                  (viii)   If any  payment or right  accruing  to a  Participant
                           under  this Plan  (without  the  application  of this
                           Section (8)(c)(viii)),  either alone or together with
                           other payments or rights  accruing to the Participant
                           from the Company or an Affiliate  ("Total  Payments")
                           would constitute a "parachute payment" (as defined in
                           Section 280G of the Code and regulations thereunder),
                           such payment or right shall be reduced to the largest
                           amount  or  greatest  right  that  will  result in no
                           portion of the amount payable or right accruing under
                           this  Plan  being  subject  to an  excise  tax  under
                           Section  4999 of the  Code or being  disallowed  as a
                           deduction  under Section 280G of the Code;  provided,
                           however,  that the  foregoing  shall not apply to the
                           extent provided otherwise in an Award or in the event
                           the  Participant  is party to an  agreement  with the
                           Company or an Affiliate that explicitly  provides for
                           an  alternate  treatment  of  payments or rights that
                           would    constitute    "parachute    payments."   The
                           determination  of whether any reduction in the rights
                           or payments under this Plan is to apply shall be made
                           by the Administrator in good faith after consultation
                           with the Participant, and such determination shall be
                           conclusive  and  binding  on  the  Participant.   The
                           Participant  shall  cooperate  in good faith with the
                           Administrator  in  making  such   determination   and
                           providing the necessary information for this purpose.
                           The foregoing  provisions of this Section  8(c)(viii)
                           shall apply with respect to any person only if, after
                           reduction  for  any  applicable  Federal  excise  tax
                           imposed  by  Section  4999 of the  Code  and  Federal
                           income tax  imposed by the Code,  the Total  Payments
                           accruing to such person would be less than the amount
                           of the Total  Payments  as  reduced,  if  applicable,
                           under the foregoing provisions of this Plan and after
                           reduction for only Federal income taxes.

                  (ix)     To the extent that the Administrator  determines that
                           the  restrictions  imposed by the Plan  preclude  the
                           achievement of the material purposes of the Awards in
                           jurisdictions   outside   the  United   States,   the
                           Administrator  in its  discretion  may  modify  those
                           restrictions  as it  determines  to be  necessary  or
                           appropriate to conform to applicable  requirements or
                           practices  of  jurisdictions  outside  of the  United
                           States.

                  (x)      The headings contained in this Plan are for reference
                           purposes  only and shall not  affect  the  meaning or
                           interpretation of this Plan.

                  (xi)     If any provision of this Plan shall for any reason be
                           held to be invalid or unenforceable,  such invalidity
                           or  unenforceability   shall  not  effect  any  other
                           provision hereby, and this Plan shall be construed as
                           if  such  invalid  or  unenforceable  provision  were
                           omitted.

                  (xii)    This  Plan  shall  inure  to  the  benefit  of and be
                           binding  upon  each   successor  and  assign  of  the
                           Company.  All obligations imposed upon a Participant,
                           and all  rights  granted  to the  Company  hereunder,
                           shall be binding upon the Participant's  heirs, legal
                           representatives and successors.

                  (xiii)   This  Plan  and  each  agreement  granting  an  Award
                           constitute  the entire  agreement with respect to the
                           subject  matter hereof and thereof,  provided that in
                           the event of any inconsistency  between this Plan and
                           such agreement,  the terms and conditions of the Plan
                           shall control.

                  (xiv)    In  the  event  there  is an  effective  registration
                           statement  under the Securities Act pursuant to which
                           shares  of  Stock  shall  be  offered  for sale in an
                           underwritten   offering,  a  Participant  shall  not,
                           during  the  period  requested  by  the  underwriters
                           managing the registered  public offering,  effect any
                           public  sale  or  distribution  of  shares  of  Stock
                           received,  directly  or  indirectly,  as an  Award or
                           pursuant to the exercise or settlement of an Award.

                  (xv)     None   of   the   Company,   an   Affiliate   or  the
                           Administrator  shall have any duty or  obligation  to
                           disclose  affirmatively  to a  record  or  beneficial
                           holder of Stock or an Award,  and such  holder  shall
                           have  no  right  to  be  advised  of,  any   material
                           information regarding the Company or any Affiliate at
                           any time prior to, upon or in connection with receipt
                           or the exercise of an Award or the Company's purchase
                           of Stock or an Award from such  holder in  accordance
                           with the terms hereof.

                  (xvi)    This Plan,  and all  Awards,  agreements  and actions
                           hereunder,  shall be governed  by, and  construed  in
                           accordance  with,  the laws of the state of  Delaware
                           (other than its law respecting choice of law).

9.       DEFERRAL OF AWARDS.

The Administrator (in its sole discretion) may permit a Participant to:

         (a)      have cash that otherwise would be paid to such  Participant as
                  a result of the exercise of a Stock  Appreciation Right or the
                  settlement   of  a  Stock   Award   credited   to  a  deferred
                  compensation  account  established for such Participant by the
                  Administrator as an entry on the Company's books;

         (b)      have  Stock  that   otherwise   would  be  delivered  to  such
                  Participant as a result of the exercise of a Stock Option or a
                  Stock  Appreciation  Right  converted  into an equal number of
                  Stock units; or

         (c)      have  Stock  that   otherwise   would  be  delivered  to  such
                  Participant  as a result of the  exercise of a Stock Option or
                  Stock  Appreciation  Right or the  settlement of a Stock Award
                  converted  into  amounts  credited to a deferred  compensation
                  account  established for such Participant by the Administrator
                  as an entry on the  Company's  books.  Such  amounts  shall be
                  determined  by reference to the Fair Market Value of the Stock
                  as of the  date  on  which  they  otherwise  would  have  been
                  delivered to such Participant.

A deferred compensation account established under this Section 9 may be credited
with  interest  or other  forms  of  investment  return,  as  determined  by the
Administrator.  A Participant for whom such an account is established shall have
no rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and  conditions of the  applicable  agreement  between such
Participant  and the  Company.  If the  deferral  or  conversion  of  awards  is
permitted or required,  the Administrator (in its sole discretion) may establish
rules,  procedures  and forms  pertaining  to such  awards,  including  (without
limitation) the settlement of deferred  compensation  accounts established under
this Section 9.

10.      DEFINITIONS.

For purposes of this Plan, the following terms are defined as set forth below:

         (a)     "Affiliate"  means a corporation or other entity controlled by
                  the Company and designated by the Administrator as such.

         (b)      "Award"  means a Stock  Appreciation  Right,  Stock  Option or
                  Stock Award.

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

         (d)      "Cause"  means  (i)  the  conviction  of the  Participant  for
                  committing a felony under  Federal law or the law of the state
                  in which such action  occurred,  (ii) dishonesty in the course
                  of  fulfilling  the  Participant's  duties as an  employee  or
                  director of, or  consultant  or advisor to, the Company or any
                  Affiliate or (iii) willful and deliberate  failure on the part
                  of the  Participant  to perform  such  duties in any  material
                  respect. Notwithstanding the foregoing, if the Participant and
                  the Company or the  Affiliate  have entered into an employment
                  or services  agreement  which  defines the term  "Cause" (or a
                  similar term),  such  definition  shall govern for purposes of
                  determining  whether such  Participant has been terminated for
                  Cause for purposes of this Plan.  The  determination  of Cause
                  shall be made by the Administrator, in its sole discretion.

         (e)      "Code"  means the Internal  Revenue  Code of 1986,  as amended
                  from time to time, and any successor thereto.

         (f)      "Commission"  means the Securities and Exchange  Commission or
                  any successor agency.

         (g)      "Committee"  means a committee of  Directors  appointed by the
                  Board to administer this Plan. With respect to Options granted
                  at the time the Company is publicly  held, if any,  insofar as
                  the  Committee  is   responsible   for  granting   Options  to
                  Participants hereunder, it shall consist solely of two or more
                  directors,  each of whom is a "Non-Employee  Director"  within
                  the meaning of Rule 16b-3 and each of whom is also an "outside
                  director" under Section 162(m) of the Code.

         (h)      "Company" means  Lighthouse  Global Network,  Inc., a Delaware
                  corporation.

         (i)      "Director" means a member of the Company's Board of Directors.

         (j)      "Disability"  means mental or physical  illness that  entitles
                  the  Participant  to  receive  benefits  under  the  long-term
                  disability  plan of the  Company  or an  Affiliate,  or if the
                  Participant  is not covered by such a plan or the  Participant
                  is not an employee of the Company or an Affiliate, a mental or
                  physical  illness  that  renders  a  Participant  totally  and
                  permanently  incapable of performing the Participant's  duties
                  for the Company or an  Affiliate;  provided,  however,  that a
                  Disability  shall  not  qualify  under  this Plan if it is the
                  result of (i) a willfully  self-inflicted  injury or willfully
                  self-induced   sickness;   or  (ii)  an  injury   or   disease
                  contracted,  suffered or  incurred  while  participating  in a
                  criminal  offense.   Notwithstanding  the  foregoing,  if  the
                  Participant  and the Company or an Affiliate have entered into
                  an  employment  or services  agreement  which defines the term
                  "Disability" (or a similar term), such definition shall govern
                  for purposes of determining whether such Participant suffers a
                  Disability  for purposes of this Plan.  The  determination  of
                  Disability  shall  be made by the  Administrator,  in its sole
                  discretion.  The  determination  of Disability for purposes of
                  this  Plan  shall  not  be  construed  to be an  admission  of
                  disability for any other purpose.

         (k)      "Effective Date" means January 1, 2000.

         (l)      "Eligible Individual" means any officer,  employee or director
                  of the Company or a Subsidiary or Affiliate, or any consultant
                  or advisor  providing  services to the Company or a Subsidiary
                  or Affiliate.

         (m)      "Exchange Act" means the  Securities  Exchange Act of 1934, as
                  amended from time to time, and any successor thereto.

         (n)      "Fair  Market  Value"  means,  as of any given date,  the fair
                  market value of the Stock as determined  by the  Administrator
                  or under procedures  established by the Administrator.  Unless
                  otherwise determined by the Administrator:

                           (i)      For  purposes  of any  Award  made as of the
                                    Underwriting  Date,  the Fair  Market  Value
                                    shall be deemed to be equal to the price per
                                    share  at which  the  Stock is to be sold to
                                    the public in the initial public offering of
                                    the Stock; and

                           (ii)     After the Underwriting Date, the Fair Market
                                    Value per share shall be the  closing  sales
                                    price per  share of the Stock on Nasdaq  (or
                                    the  principal  stock  exchange or market on
                                    which the Stock is then  traded) on the date
                                    as of which such  value is being  determined
                                    or the last previous day on which a sale was
                                    reported.

         (o)      "Family  Member"  means  any  child,  stepchild,   grandchild,
                  parent,  stepparent,   grandparent,   spouse,  former  spouse,
                  sibling,   niece,   nephew,   mother-in-law,    father-in-law,
                  son-in-law,  daughter-in-law,  brother-in-law or sister-in-law
                  of  a  Participant  (including  adoptive  relationships);  any
                  person  sharing  the  Participant's  household  (other  than a
                  tenant or employee);  any trust in which the  Participant  and
                  any of these persons have  substantially all of the beneficial
                  interest;  any foundation in which the  Participant and any of
                  these  persons  control  the  management  of the  assets;  any
                  corporation,  partnership,  limited liability company or other
                  entity in which the Participant and any of these other persons
                  are the direct and beneficial  owners of substantially  all of
                  the equity interests (provided the Participant and these other
                  persons  agree in writing to remain the direct and  beneficial
                  owners  of  all  such  equity  interests);  and  any  personal
                  representative of the Participant upon the Participant's death
                  for purposes of administration of the Participant's  estate or
                  upon  the  Participant's  incompetency  for  purposes  of  the
                  protection and management of the assets of the Participant.

         (p)      "Incentive Stock Option" means any Stock Option intended to be
                  and  designated  as an  "incentive  stock  option"  within the
                  meaning of Section 422 of the Code.

         (q)      "Nasdaq"  means The Nasdaq Stock Market,  including the Nasdaq
                  National Market and the Nasdaq SmallCap Market.

         (r)      "Non-Employee Director" means a Director who is not an officer
                  or employee of the Company.

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

         (t)      "Optionee" means a person who holds a Stock Option.

         (u)      "Participant" means a person granted an Award.

         (v)      "Representative"  means (i) the person or entity acting as the
                  executor or administrator  of a Participant's  estate pursuant
                  to the last will and testament of a Participant or pursuant to
                  the laws of the  jurisdiction in which the Participant had his
                  or her  primary  residence  at the  date of the  Participant's
                  death;  (ii) the person or entity  acting as the  guardian  or
                  temporary  guardian  of a  Participant;  (iii)  the  person or
                  entity which is the  beneficiary  of the  Participant  upon or
                  following the Participant's  death; or (iv) any person to whom
                  an Option  has been  transferred  with the  permission  of the
                  Administrator  or by operation of law;  provided that only one
                  of the foregoing shall be the  Representative  at any point in
                  time as determined  under applicable law and recognized by the
                  Administrator.

         (v)      "Retirement"  means retirement from active  employment under a
                  pension plan of the Company or any subsidiary or Affiliate, or
                  under an employment  contract with any of them, or termination
                  of  employment  or  provision  of  services at or after age 55
                  under  circumstances  which  the  Administrator,  in its  sole
                  discretion, deems equivalent to retirement.

         (w)      "Stock"  means  Class B Common  Stock,  par value  $.0001  per
                  share, of the Company.

         (x)      "Stock Appreciation Right" means a right granted under Section
                  5.

         (y)      "Stock  Award"  means an Award,  other than a Stock  Option or
                  Stock  Appreciation  Right,  made in Stock or  denominated  in
                  shares of Stock.

         (z)      "Stock Option" means an option granted under Section 4.

         (aa)     "Subsidiary"  means any company  during any period in which it
                  is a  "subsidiary  corporation"  (as such term is  defined  in
                  Section 424(f) of the Code) with respect to the Company.

         (bb)     "Ten  Percent  Holder"  means an  individual  who owns,  or is
                  deemed  to own,  stock  possessing  more than 10% of the total
                  combined  voting  power of all classes of stock of the Company
                  or of any parent or  subsidiary  corporation  of the  Company,
                  determined   pursuant  to  the  rules  applicable  to  Section
                  422(b)(6) of the Code.

         (cc)     "Underwriting  Agreement"  means  the  agreement  between  the
                  Company  and the  underwriter  or  underwriters  managing  the
                  initial public offering of the Stock.

         (dd)     "Underwriting  Date" means the date on which the  Underwriting
                  Agreement   is   executed  in   connection   with  an  initial
                  underwritten public offering of the Stock.

In addition,  certain other terms used herein have the definitions given to them
in the first places in which they are used.<PAGE>   1
                                                                     Exhibit 4.1

                                 August 28, 2000

American Stock Transfer and
   Trust Company
40 Wall Street
New York, NY 10005

Attention:  Administration

                     Re: Amendment No. 1 to Rights Agreement
                         -----------------------------------

Ladies and Gentlemen:

         Pursuant to Section 27 of the Shareholder Rights Agreement (the "Rights
Agreement"), dated as of July 8, 1999, between Interstate Hotels Corporation
(the "Company"), and American Stock Transfer and Trust Company, as rights agent,
the Company, by resolution adopted by its Directors, hereby amends the Rights
Agreement as follows:

         1. Section 1(a) of the Rights Agreement is hereby amended by adding the
following four paragraphs prior to the last paragraph of Section 1(a):

         In addition, notwithstanding the foregoing, the Investor (as defined in
         Section 1 (rr)), or any Affiliate or Associate of the Investor, shall
         not become an Acquiring Person solely as a result of the approval,
         execution or delivery of the Purchase Agreement (as defined in Section
         1(xx)) or the Ancillary Documents (as defined in Section 1(oo)) or the
         consummation of the transactions contemplated thereby, including
         without limitation the conversion of the Notes or Series B Preferred
         Stock in accordance with the terms thereof or the acquisition of
         Beneficial Ownership of additional shares of Common Stock in compliance
         with the provisions of the Investor Agreement (as defined in Section
         1(tt)), unless and until such time as (i) the Investor, or any
         Affiliate or Associate of the Investor, thereafter becomes the
         Beneficial Owner of additional shares of Common Stock other than as a
         result of a transfer permitted by the Investor Agreement or as the
         result of a stock dividend, stock split or similar transaction effected
         by the

<PAGE>   2

American Stock Transfer and
   Trust Company
August 28, 2000
Page 2

         Company in which all holders of Common Stock are treated equally, or
         (ii) any other Person who is the Beneficial Owner of Common Stock
         representing 1% or more of the then-outstanding shares of Common Stock
         thereafter becomes an Affiliate or Associate of the Investor.

         In addition, notwithstanding the foregoing, a Related Transferee (as
         defined in the Investor Agreement), or any Affiliate or Associate of a
         Related Transferee, shall not become an Acquiring Person solely as a
         result of an acquisition of Beneficial Ownership of Common Stock in
         accordance with Section 4.1(f) of the Investor Agreement, unless and
         until such time as (i) such Related Transferee, or any Affiliate or
         Associate of such Related Transferee, thereafter becomes the Beneficial
         Owner of additional shares of Common Stock other than as a result of a
         transfer permitted by the Investor Agreement or as the result of a
         stock dividend, stock split or similar transaction effected by the
         Company in which all holders of Common Stock are treated equally, or
         (ii) any other Person who is the Beneficial Owner of Common Stock
         representing 1% or more of the then-outstanding shares of Common Stock
         thereafter becomes an Affiliate or Associate of such Related
         Transferee.

         In addition, notwithstanding the foregoing, any Person that acquires
         securities from the Investor or a Related Transferee (each a "Permitted
         Transferee"), pursuant to a transfer of securities permitted by Section
         4.1 of the Investor Agreement, (such a transfer, an "Exempt Transfer"),
         shall not become an Acquiring Person solely as a result of the Exempt
         Transfer, so long as such Permitted Transferee's Beneficial Ownership
         of the Common Stock does not exceed the Maximum Ownership (as defined
         in the Investor Agreement) (except in the case of an acquisition
         pursuant to Section 4.1(f), in which case the Maximum Ownership
         restriction shall not apply) unless and until such time as (i) such
         Permitted Transferee or any Affiliate or Associate of such Permitted
         Transferee thereafter becomes the Beneficial Owner of additional shares
         of Common Stock other than as a result of an Exempt Transfer after
         which such Permitted Transferee's Beneficial Ownership of Common Stock
         does not exceed the Maximum Ownership or as the result of a stock
         dividend, stock split or similar transaction effected by the Company in
         which all holders of Common Stock are treated equally, or (ii) any
         other Person who is the Beneficial Owner of Common Stock representing
         1% or more of the then-outstanding shares of Common Stock thereafter
         becomes an Affiliate or Associate of such Permitted Transferee.

         In addition, notwithstanding the foregoing, MK/CG-GP I, LP or any
         Affiliate or Associate of MK/CG-GP I, LP, shall not become an Acquiring
         Person solely as a result of the Beneficial Ownership of shares of
         Common Stock as of the date

<PAGE>   3

American Stock Transfer and
   Trust Company
August 28, 2000
Page 3

         hereof, unless and until such time as (i) MK/CG-GP I, LP, or any
         Affiliate or Associate of MK/CG-GP I, LP, thereafter becomes the
         Beneficial Owner of additional shares of Common Stock other than as a
         result of the Investor or any Affiliate or Associate of the Investor
         acquiring Beneficial Ownership of additional shares of Common Stock as
         a result of a transfer permitted by the Investor Agreement or as the
         result of a stock dividend, stock split or similar transaction effected
         by the Company in which all holders of Common Stock are treated
         equally, or (ii) any other Person who is the Beneficial Owner of Common
         Stock representing 1% or more of the then-outstanding shares of Common
         Stock thereafter becomes an Affiliate or Associate of MK/CG-GP I, LP.

         2. Section 1 (c) of the Rights Agreement shall be amended and restated
in its entirety as follows:

         (c) "Affiliate" and "Associate" shall have the respective meanings
         ascribed to such terms in Rule 12b-2 of the General Rules and
         Regulations (the "Rules") under the Securities and Exchange Act of
         1934, as amended (the "Exchange Act"), as in effect on the date of this
         Agreement; provided, however, that no Person who is a director or
         officer of the Company shall be deemed an Affiliate or an Associate of
         any other director or officer of the Company solely as a result of his
         or her position as a director or officer of the Company; provided,
         further, however, that an Exempt Affiliate (as defined in the Investor
         Agreement) shall not be deemed an Affiliate or Associate of the
         Investor, and the Investor shall not be deemed an Affiliate or
         Associate of an Exempt Affiliate.

         3. Section 1 of the Rights Agreement shall be amended by adding the
following Subsections (oo), (pp), (qq), (rr), (ss), (tt), (uu), (vv), (ww),
(xx), (yy), (zz), (aaa) and (bbb).

         (oo) "Ancillary Documents" means the Registration Rights Agreement, the
         Investor Agreement, the Articles Supplementary and all other contracts,
         agreements, schedules, certificates and other documents delivered
         pursuant to or in connection with the Purchase Agreement by any party
         thereto at or prior to the closing of the transactions contemplated
         thereby.

         (pp) "Articles Supplementary" means the Company's Articles
         Supplementary setting forth the rights and preferences of the Series B
         Preferred Stock.

         (qq) "Exempt Affiliate" has the meaning set forth in the Investor
         Agreement.

         (rr) "Exempt Transfer" has the meaning set forth in Section 1(a).
<PAGE>   4

American Stock Transfer and
   Trust Company
August 28, 2000
Page 4

         (ss) "Investor" means CGLH Partners I LP or CGLH Partners II LP.

         (tt) "Investor Agreement" means the Investor Agreement by and among the
         Company and CGLH Partners I LP and CGLH Partners II LP, to be entered
         into pursuant to the Purchase Agreement at the Purchase Closing.

         (uu) "Maximum Ownership" has the meaning set forth in the Investor
         Agreement.

         (vv) "Notes" means the 8.75% Subordinated Convertible Notes to be
         issued by the Company to CGLH Partners I LP and CGLH Partners II LP
         pursuant to the Purchase Agreement at the Purchase Closing.

         (ww) "Permitted Transferee" has the meaning set forth in Section 1(a).

         (xx) "Purchase Agreement" means the Securities Purchase Agreement,
         dated as of August ____, 2000, by and among the Company and CGLH
         Partners I LP and CGLH Partners II LP.

         (yy) "Purchase Closing" means the consummation of the transactions
         contemplated by the Purchase Agreement.

         (zz) "Registration Rights Agreement" means the Registration Rights
         Agreement by and among the Company and CGLH Partners I LP and CGLH
         Partners II LP, to be entered into pursuant to the Purchase Agreement
         at the Purchase Closing.

         (aaa) "Related Transferee" has the meaning set forth in the Investor
         Agreement.

         (bbb) "Series B Preferred Stock" means the Company's Series B
         Convertible Preferred Stock, par value $.01 per share.

         4. The Rights Agreement shall not otherwise be supplemented or amended
by virtue of this Amendment No. 1 to the Rights Agreement, but shall remain in
full force and effect.

         5. Capitalized terms used without other definition in this Amendment
No. 1 to the Rights Agreement shall be used as defined in the Rights Agreement.

<PAGE>   5

American Stock Transfer and
   Trust Company
August 28, 2000
Page 5

         6. This Amendment No. 1 to the Rights Agreement shall be deemed to be a
contract made under the laws of the State of Maryland and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and to be performed entirely within Maryland.
The courts of the State of Maryland and of the United States of America located
in the State of Maryland (the "Maryland Courts") shall have exclusive
jurisdiction over any litigation arising out of or relating to this Amendment
No. 1 and the transactions contemplated hereby, and any Person commencing or
otherwise involved in any such litigation shall waive any objection to the
laying of venue of such litigation in the Maryland Courts and shall not plead or
claim in any Maryland Court that such litigation brought therein has been
brought in an inconvenient forum.

         7. This Amendment No. 1 to the Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

         8. This Amendment No. 1 to the Rights Agreement shall be effective as
of, and immediately prior to, the execution and delivery of the Purchase
Agreement, and all references to the Rights Agreement shall, from and after such
time, be deemed to be references to the Rights Agreement as amended hereby.

         9. Exhibits B and C to the Rights Agreement shall be deemed amended in
a manner consistent with this Amendment No. 1 to the Rights Agreement.

                   [BALANCE OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>   6

American Stock Transfer and
   Trust Company
August 28, 2000
Page 6

                                       Very truly yours,

                                       INTERSTATE HOTELS CORPORATION

                                       By: /s/ Timothy Q. Hudak
                                           -------------------------
                                           Name: Timothy Q. Hudak
                                           Title: Senior Vice President

                                       Accepted and agreed to as
                                       of the effective time
                                       specified above:

                                       AMERICAN STOCK TRANSFER AND
                                       TRUST COMPANY

                                       By: /s/ Herbert J. Lemmer
                                           -------------------------
                                           Name: Herbert J. Lemmer
                                           Title: Vice President

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