Document:

EX-10.1 STOCK OPTION PLAN FOR KEY EMPLOYEES

 

Exhibit 10(1)

HUBBELL INCORPORATED

STOCK OPTION PLAN FOR KEY EMPLOYEES

	1.	 	Purpose of the Plan

     The purpose of the Hubbell Incorporated Stock Option Plan for Key
Employees (the “Plan”) is to further the growth and development of Hubbell
Incorporated (the “Company”) by providing an incentive through encouraging
ownership of stock of the Company to officers and other key employees who are
in a position to contribute materially to the prosperity of the Company, to
increase their interest in the Company’s welfare and continue their services,
and by affording a means through which the Company can attract to its services,
employees of outstanding ability.

	2.	 	Administration of the Plan

     The Plan shall be administered by the Compensation Committee (the
“Committee”), consisting solely of at least two or more members of the Board of
Directors of the Company (“Board of Directors”) who are each “non-employee
directors” within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934 (or any successor rule thereto). The members of the Committee shall be
appointed from time to time by the Board of Directors, to serve at the pleasure
of the Board. From and after the first meeting of shareholders at which
directors are to be elected that occurs after July 1, 1994, the Committee shall
contain at least two “outside directors” as that term is defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (or any
successor section thereto).

     Subject to the express provisions of the Plan, the Committee shall have
authority in its discretion to determine the individuals to whom, and the time
or times at which options shall be granted, and the number of shares to be
subject to each option. In making such determinations, the Committee may take
into account the nature of the services rendered by the respective employees,
their present and potential contribution to the Company’s success, and such
other factors as the Committee in its discretion shall deem relevant.

     Subject to the express provisions of the Plan, the Committee shall also
have authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical) and to make all
other determinations necessary or advisable for the administration of the Plan.

     The Committee shall select one of its members as a Chairman, who shall
preside at meetings and who shall have authority to execute and deliver
documents on behalf of the Committee. Meetings of the Committee shall be held
at such times and places as the members thereof may determine. The majority of
its members shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. No member of the Committee shall be
liable for anything done or omitted to be done by such member or by any

 

 

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other member of the Committee in connection with this Plan, except for such
member’s own willful misconduct or as expressly provided by statute.

	3.	 	Stock Subject to the Plan

     Subject to adjustment as provided in Paragraph 5(d) of this Plan, the
aggregate number of shares of stock which may be issued under options granted
under this Plan shall be 3,600,000 shares of the Company’s Class A Common
Stock, par value $.01 per share, and 19,845,670 shares of the Company’s Class B
Common Stock, par value $.01 per share. The number of shares of stock which may
be issued under options granted under this Plan to any one individual in any
fiscal year shall not exceed 300,000 shares, subject to adjustment pursuant to
Section 5(d) hereof.

     Options granted by the Committee may be “incentive stock options” (as
defined in Section 422 of the Code) or options which are not “incentive stock
options”, or a combination thereof, as determined by the Committee.

     Options may be granted with respect to authorized but unissued shares. In
the event that any option under the Plan expires or is terminated for any
reason prior to the end of the period during which options may be granted, the
shares allocable to the unexercised portion of such option shall again be
available for the purposes of this Plan.

	4.	 	Eligibility

     Options may be granted only to officers and other key employees of the
Company and subsidiary corporations (as defined in Section 424(f) of the Code).
Directors who are not officers or employees shall not be eligible. Subject to
the other provisions of this Plan, an individual may hold or be granted more
than one option. No incentive stock option shall be granted hereunder which
would permit the person to whom the option is granted to own (within the
meaning of Section 424(d) of the Code), immediately after the option is
granted, stock (including stock issuable upon the exercise of options)
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company, unless at the time any such option is granted
the option price is at least 110 percent of the fair market value of the stock
subject to the option, and such option by its terms is not exercisable after
the expiration of five years from the date such option is granted.

	5.	 	Terms and Conditions of Options

     Options shall be granted under this Plan upon such terms and conditions as
the Committee shall determine, subject to the following provisions:

(a) Option Price

     The option price of the stock subject to each option shall not be less
than 100 percent of the fair market value of such stock, as determined in good
faith by the Committee, on the date such option is granted.

 

 

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     (b)  Term of Option

     Options shall be granted for such term as the Committee shall determine
except that no option shall be exercisable after the expiration of ten years
from the date such option is granted.

     (c)  Exercise and Termination of Options

     The options granted under the Plan shall be exercisable immediately or in
such installments as the Committee may prescribe. The Committee may accelerate
the exercisability of options at any time in its sole discretion.

     Unless otherwise determined by the Committee, during the lifetime of the
individual to whom an option is granted, the option shall be exercisable only
by such individual.

     (A)  Termination of Employment — General

     If the participant ceases to be an employee of the Company or a subsidiary
for any reason (including, without limitation, the sale of a subsidiary) other
than death, retirement with the consent of the Company or retirement by reason
of “Permanent Disability,” such option shall expire on the earlier of (i) the
end of the option exercise period specified in the option or (ii) the date
three months from the date of the participant’s termination of employment (even
though such participant is subsequently reemployed). “Permanent Disability”
shall mean that the participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve months.

     (B)  Retirement with Company Consent

     If the employment of the participant with the Company or its subsidiaries
shall terminate by reason of the participant’s retirement with the consent of
the Company, such participant’s stock option shall continue to mature in the
normal manner and the participant (or in the event of his death after the date
of retirement, his estate or the person who acquires his option by bequest or
inheritance or by reason of his death) shall have the right to exercise his
option until the later of (i) the date three years after the date of such
retirement or (ii) in the event that the participant’s death occurs during such
three-year period the date twelve months after the death of the participant;
but in no event later than the end of the option exercise period specified in
the option; provided, however, that in the event that the participant retires
with the consent of the Company, the Committee may, in its discretion, provide
that the participant shall have the right to exercise his option until the end
of the option exercise period specified in the option.

     (C)  Retirement Due to Permanent Disability

     If the employment of the participant with the Company or its subsidiaries
shall terminate by reason of the participant’s retirement due to Permanent
Disability, the participant (or in the event of his death after the date of
retirement, his estate or the person who acquires his option by

 

 

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bequest or inheritance or by reason of his death) shall have the right to
exercise his option, to the extent that he could have exercised it at the date
of such disability retirement, until the later of (i) the date twelve months
after the date of such termination of employment or (ii) in the event that the
participant’s death occurs during such twelve-month period the date twelve
months after the date of such death; but in no event later than the end of the
option exercise period specified in the option.

     (D)  Termination Due to Death

     If a participant’s employment by the Company or any subsidiary terminates
by reason of death, any option held by the participant may thereafter be
immediately exercised, to the extent then exercisable, by his estate or the
person who acquires his option by bequest or inheritance or by reason of his
death for a period of one year from the date of such death or until the end of
the option exercise period specified in the option, whichever period is the
shorter.

     (E)  Miscellaneous

     A participant who is absent from work with the Company or a subsidiary
because of illness or temporary disability, or who is on leave of absence for
such purpose or reason as the Committee may approve, shall not be deemed during
the period of such absence, by reason of such absence, to have ceased to be an
employee of the Company or a subsidiary. Where a cessation of employment is to
be considered a retirement with the consent of the Company or by reason of
Permanent Disability for the purpose of this Plan shall be determined by the
Committee, which determination shall be final and conclusive.

     No option shall be exercisable unless at the time of exercise the shares
are covered by a currently effective registration statement filed under the
provisions of the Securities Act of 1933, as amended, or, in the sole opinion
of the Company and its counsel, the purchase of the shares upon exercise of the
option is otherwise exempt from the registration requirements of that Act.

     Each participant shall be required, as a condition of exercising any
option, to make such arrangements with the Company as the Committee shall
determine for withholding (including, but not limited to, the retention of
shares by the Company or the delivery to the Company of shares, in each case
equal in fair market value as described in Paragraph 5(f) to the amount of all
or any portion of the withholding obligation pursuant to such rules as may be
prescribed by the Committee) and, in the event of the death of a participant, a
further condition of such exercise shall be the delivery to the Company of such
tax waivers and other documents as the Committee shall determine. With the
consent of the Committee, a participant may elect to have the Company retain a
number of shares otherwise issuable on the exercise of an option equal in fair
market value as described in Paragraph 5(f) to the amount of all or any portion
of the participant’s federal, state and local income tax obligation resulting
from such exercise determined at the Company’s minimum statutory tax
withholding rate for supplemental taxable income; in addition, the Committee
may at its discretion permit a participant to deliver shares of common stock of
the Company, held for at least six months by the participant, equal in fair
market value as described in Paragraph 5(f) to the amount of all or any portion
of the participant’s federal,

 

 

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state and local income tax obligation resulting from such exercise determined
at the participant’s maximum marginal tax rates.

     (d) Adjustments Upon Changes in Capitalization

     If (i) the Company shall at any time be involved in a transaction to which
Section 424(a) of the Code is applicable; (ii) the Company shall declare a
dividend payable in any class of shares, or shall subdivide or combine, its
shares; or (iii) any other event shall occur which in the judgment of the
Committee necessitates action by way of adjusting the terms of the outstanding
options, the Committee shall forthwith take any such action as in its judgment
shall be necessary to preserve the participant’s rights substantially
proportionate to the rights existing prior to such event and to the extent that
such action shall include an increase or decrease in the number of shares
subject to outstanding options, the number of shares available under Paragraph
3 above shall be increased or decreased, as the case may be, proportionately.
The judgment of the Committee with respect to any matter referred to in this
Paragraph shall be conclusive and binding upon each participant.

     In the event of the proposed dissolution or liquidation of the Company, or
in the event of any proposed reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the Company is not
the surviving corporation, or in the event of a proposed sale of all or
substantially all of the principal and/or assets of the Company to another
corporation, all options granted hereunder shall terminate as of a date to be
fixed by the Committee, provided that not less than 90 days’ written notice of
the date so fixed shall be given to each participant, and each participant
shall have the right during such period to exercise his option as to all or any
part of the shares covered thereby to the extent such option is then otherwise
exercisable pursuant to the provisions of this Plan and of the option; and
provided further, however, that the Board of Directors may, in their
discretion, substitute or cause to be substituted new options for each such
outstanding option, provided each such new option applies to the stock of the
new employer corporation or a parent or subsidiary corporation of such
corporation.

     (e)  Nontransferability of Options

     Unless otherwise determined by the Committee, no option shall be assigned
or transferable, except by will or by the laws of descent and distribution.

     (f)  Payment for Stock

     The option price payable upon exercise of an option shall be payable to
the Company either (i) in cash (including check, bank draft, or money order),
(ii) by delivery to the Company of shares (which have been held by the
participant for at least six months) of either class of common stock of the
Company or a combination of common stock and cash, or (iii) to the extent
authorized by the Committee, at the written election of the optionee, by
delivery of irrevocable instructions to a broker to sell shares of common stock
otherwise deliverable upon exercise of a stock option and to deliver to the
Company an amount equal to the aggregate exercise price. The

 

 

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value of any common stock so delivered shall be the fair market value of such
common stock, as determined in good faith by the Committee, on the date of the
stock option exercise.

     (g)  Limitation on Incentive Stock Options

     With respect to incentive stock options granted after December 31, 1986,
the aggregate fair market value (determined at the time the option is granted)
of the stock with respect to which incentive stock options are exercisable for
the first time by a participant during any calendar year (under all such plans
of the individual’s employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000.

	6.	 	Term of Plan

     No option shall be granted pursuant to the Plan after March 10, 2007.

	7.	 	Termination and Amendment of Plan

     The Board of Directors of the Company may at any time amend, suspend or
terminate the Plan, except that no amendment which would increase the maximum
number of shares which may be issued under options granted under this Plan
shall be effective unless, within twelve months before or after the Board
adopts such amendment, it is approved by shareholders. No amendment, suspension
or termination of this Plan shall, without the consent of the participant,
terminate, or adversely affect the participant’s rights under, any outstanding
option.

	8.	 	Privileges of Stock Ownership

     The holder of an option shall not be entitled to the privileges of stock
ownership as to any shares of the Company not actually issued to him. No shares
shall be issued upon the exercise of an option until all applicable legal
requirements shall have been complied with to the satisfaction of the Company
and its counsel.

	9.	 	Time of Granting of Options

     The granting of an option pursuant to this Plan shall take place at the
time the Committee makes a determination that an employee shall receive an
option.

	10.	 	Construction

     Words and terms used in this Plan which are defined or used in Sections
421, 422 or 424 of the Code shall, unless the context clearly requires
otherwise, have the meanings assigned to them therein, in the regulations
promulgated thereunder and in the decisions construing the provisions thereof.
The place of administration of this Plan shall be conclusively deemed to be
within the State of Connecticut, and the validity, construction, interpretation
and effect of the Plan, its rules and regulations and the rights of any and all
participants having or claiming to have an interest therein or thereunder,
shall be governed by and determined conclusively and solely in

 

 

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accordance with the laws of the State of Connecticut without regard to any
conflicts of laws provisions.

	11.	 	Provisions Relating to Change of Control

               (i) Each option granted under this Plan shall, to the extent then
exercisable determined after applying Paragraph 11(ii) below, have a limited
right of surrender allowing a participant who is an Officer, or any other
participant in the discretion of the Committee, to surrender his option within
the 30-day period following the Change of Control and to receive in cash, in
lieu of exercising the option, the amount by which the fair market value of the
common stock which the option represents exceeds the option exercise price for
all or part of the shares of common stock which are subject to the related
option. For this purpose, the fair market value of common stock shall be
determined as follows:

	 	(a)	 	if the share was a share of the Company’s Class A
Common Stock, the fair market value shall be deemed to be the
closing price of one share of the Company’s Class A Common
Stock on the New York Stock Exchange on that day, within the
60 days preceding the date on which the Change of Control
occurs, on which such closing price was the highest. In the
event that the shares are not listed or admitted to trading on
such exchange, the fair market value shall be deemed to be the
closing price of one share of the Company’s Class A Common
Stock on the principal national securities exchange on which
the shares are listed or admitted to trading, or, if the
shares are not listed or admitted to trading on any national
securities exchange, the average of the highest reported bid
and lowest reported asked prices as reported on the New York
Stock Exchange (the “NYSE”) or similar organization if the
NYSE is no longer reporting such information. If on any such
date the shares are not quoted by any such organization, the
fair market value of the shares on such date, as determined in
good faith by the Board of Directors of the Company, shall be
used; or
	 
	 	(b)	 	if the share was a share of the Company’s Class B
Common Stock, the fair market value shall be deemed to be the
closing price of one share of the Company’s Class B Common
Stock on the NYSE on that day, within the 60 days preceding
the date on which the Change of Control occurs, on which such
closing price was the highest. In the event that the shares
are not listed or admitted to trading on such exchange, the
fair market value shall be deemed to be the closing price of
one share of the Company’s Class B Common Stock on the
principal national securities exchange on which the shares are
listed or admitted to trading, or, if the shares are not
listed or admitted to trading on any national securities
exchange, the average of the highest reported bid and lowest
reported asked prices as reported on the NYSE or similar
organization if the NYSE is no longer reporting such
information. If on any such date the shares are not quoted

 

 

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	 	 	 	 by any such organization, the fair market value of the shares
on such date, as determined in good faith by the Board of
Directors of the Company, shall be used.

Notwithstanding the foregoing, if the payment of cash in respect of such option
would cause the Change in Control transaction to be ineligible for
pooling-of-interests accounting under APB No. 16, unless and until the
Committee provides otherwise, such payment shall not be made.

               (ii) Notwithstanding any other provisions of this Plan, in the event of a
Change of Control all outstanding options which are not then exercisable,
except for incentive stock options granted on or after January 1, 1987, shall
be immediately exercisable in full.

     For purposes of this section the following definitions shall apply:

     “Change of Control” shall mean any one of the following:

	 	(w)	 	Continuing Directors no longer constitute at
least 2/3 of the Directors;
	 
	 	(x)	 	any person or group of persons (as defined in
Rule 13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial owner,
directly or indirectly, of 20% or more of the voting power of
the then outstanding securities of the Company entitled to
vote for the election of the Company’s Directors; provided
that this Paragraph 11 shall not apply with respect to any
holding of securities by (A) the trust under a Trust Indenture
dated September 2, 1957 made by Louie E. Roche, (B) the trust
under a Trust Indenture dated August 23, 1957 made by Harvey
Hubbell, and (C) any employee benefit plan (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended) maintained by the Company or any
affiliate of the Company;
	 
	 	(y)	 	the approval by the Company’s stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the assets of
the Company or the liquidation or dissolution of the Company,
unless, in the case of a merger or consolidation, the
incumbent Directors in office immediately prior to such merger
or consolidation will constitute at least 2/3 of the Directors
of the surviving corporation of such merger or consolidation
and any parent (as such term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934) of such corporation; or
	 
	 	(z)	 	at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be taken by
the Company’s stockholders determine that such proposed
action, if taken, would constitute a change of control of the
Company and such action is taken.

 

 

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     “Continuing Director” shall mean any individual who is a member of the
Company’s Board of Directors on December 9, 1986 or was designated (before such
person’s initial election as a Director) as a Continuing Director by 2/3 of the
then Continuing Directors.

     “Director” shall mean any individual who is a member of the Company’s
Board of Directors on the date the action in question was taken.

     “Officer” shall mean each of the officers specified in Section 1 of
Article IV of the by-laws of the Company except for any such officer whose
title begins with the word “Assistant”.

* * * * *

     Adopted by the Board of Directors on March 13, 1973 and amended May 5,
1980, December 9, 1980, March 9, 1982, June 12, 1985, March 10, 1987, May 7,
1990, September 12, 1991, May 2, 1994, May 5, 1997, May 3, 1999, December 8,
1999, May 7, 2001 and May 5, 2003.<PAGE>

                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of the
2nd day of June, 2003 between MPOWER COMMUNICATIONS CORP., a Nevada corporation
(the "COMPANY"), and Russell A. Shipley ("EXECUTIVE"). Capitalized terms that
are not defined within the text of this Agreement are defined in Section 6
hereof, except as otherwise indicated.

                  WHEREAS, Company has offered employment to Executive and
Executive has accepted the offer;

                  WHEREAS, the Company has agreed to employ Executive upon the
terms and conditions set forth herein.

                  NOW, THEREFORE, in consideration of the promises and the
covenants and agreements herein contained, the parties hereto agree as follows:

                  1.       EMPLOYMENT TERM. Subject to earlier termination in
accordance with the provisions of this Agreement, the Agreement shall become
effective as of the date hereof (the "EFFECTIVE DATE") and the term of
Executive's employment with the Company pursuant to this Agreement (the "TERM")
shall end on June 2, 2004; provided, however, that the Term shall automatically
be extended for additional one-year periods on June 2, 2004 and each year
thereafter (the "EXTENSION DATE") unless at least 60 days prior to the Extension
Date, either party shall give notice to the other in accordance with Section 7
of this Agreement of a desire not to extend the Term.

                  2.       DUTIES; RESPONSIBILITIES. Executive shall be employed
by the Company as New Technology Officer and shall report solely and directly to
the Company's Chief Operating Officer (the "COO"). The duties and
responsibilities of Executive shall be commensurate with those duties and
responsibilities that are customarily assigned to such positions, as may be
designated from time to time by the COO. During the Term, Executive shall devote
his full business time, attention and energies to the position of New Technology
Officer of the Company; provided, however, that Executive may devote reasonable
amounts of time to (i) passive personal investments and (ii) charitable
activities so long as such activities do not interfere with his performance
pursuant to this Agreement. While Executive may continue to reside in Rochester,
New York, Executive acknowledges that he may be required to travel in connection
with his employment.

                  3.       COMPENSATION AND BENEFITS.

                  3.01     FIXED SALARY. During the Term, as compensation for
Executive's services, the Company shall pay Executive a salary at the rate of
$160,000 per annum (the "FIXED SALARY") in equal bi-weekly installments less
appropriate payroll deductions as required by law. The Fixed Salary shall
increase to $175,000 per annum on September 29, 2003 and shall be reviewed at
least annually thereafter by the CEO or such other persons as appointed by the
CEO.

<PAGE>

                  3.02     ANNUAL BONUS. Until September 28, 2003, Executive
shall be eligible to receive an annual bonus (the "ANNUAL BONUS") of up to 30%
of the Fixed Salary, and after September 28, 2003 an Annual Bonus of up to 60%
of the fixed salary, contingent upon achieving established goals determined by
the Company in accordance with its customary procedures and standards. The
Annual Bonus shall be prorated to reflect both the percentage of the year the
Executive is with the Company as well as the percentage of time the executive is
at each of the bonus levels.

                  3.03     EXPENSES. The Company shall pay or reimburse
Executive for all reasonable business expenses incurred in the performance of
Executive's duties and which are consistent with the Company's policies,
practices and procedures, upon submission of appropriate vouchers and other
supporting data.

                  3.04     STOCK OPTIONS. Not later than June 2, 2003 (the
"GRANT DATE"), Executive shall be granted stock options to purchase 150,000
shares of the Company's common stock (the "NEW OPTIONS"). Such New Options shall
(i) have an exercise price equal to $0.75 per share, (ii) vest in three (3)
equal installments on each of the first three anniversaries of the Grant Date,
(iii) have a term (the "TERM") of (10) years from the Grant Date, (iv) remain
exercisable, to the extent vested on the Termination Date, for five (5) years
after the termination of Executive's employment with the Company for any reason,
but in no event after the expiration of the Term, and (v) be non-qualified
options within the meaning of the Internal Revenue Code.

                  3.05     BENEFITS. Executive and his eligible dependents shall
be entitled to participate in all general pension, profit-sharing, life,
medical, disability and other insurance, welfare and fringe benefit plans in
effect for similarly situated executives of the Company.

                  3.06     PAID TIME OFF. As set forth in Appendix B, attached
hereto and incorporated herein by reference, Executive shall not be entitled to
receive paid time off in accordance with the Company's paid time off policy;
provided, however, Executive has the liberty and ability to take time off on a
reasonable - as needed - basis, and is not required to record or track such time
off.

                  4.       TERMINATION OF EMPLOYMENT. Subject to the terms of
this Section 4, the Company may terminate Executive's employment under this
Agreement at any time and for any reason.

                  4.01     TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD
REASON. In the event that Executive's employment is terminated by the Company
for Cause, the Executive fails to extend the Agreement pursuant to Section 1, or
Executive resigns without Good Reason, Executive shall receive the following:
(i) accrued and unpaid Fixed Salary through the Termination Date and
reimbursement for any outstanding business expenses; and (ii) such other accrued
compensation and benefits (including post-retirement benefits) as may be due
under the terms of the compensation and benefit plans in which Executive
participates.

                                        2

<PAGE>

                  4.02     TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD
REASON. In the event of (A) the Company's termination of Executive's employment
hereunder without Cause, (B) Executive's resignation for Good Reason, (C)
Executive's death, or (D) Executive's Disability, Executive shall be entitled to
the following: (i) the payments and benefits set forth in Section 4.01 hereto
and (ii) a severance benefit (the "SEVERANCE BENEFIT") equal to three quarters
of the Fixed Salary immediately preceding the Termination Date. Payment of the
Severance Benefit shall be contingent upon Executive's execution of a waiver and
release of claims (a "RELEASE") in favor of the Company and its affiliates and
their respective employees and agents, substantially in the form set forth in
Appendix A. The Severance Benefit shall be paid by the Company over
approximately nine months in bi-weekly installments less appropriate payroll
deductions as required by law. The Severance Benefit payments shall commence
within one week after the expiration of the Revocation Period, as defined in the
Release.

                  4.03     TERMINATION DUE TO DEATH OR DISABILITY. In the event
of Executive's death or Disability, the Fixed Salary shall immediately cease.
Neither Executive, nor his estate, as the case may be, shall be entitled to
continue to receive any benefits other than the Severance Benefit, proceeds from
insurance per the terms of any applicable policy and reimbursement of expenses.
In addition, all further vesting of options shall cease on the Termination Date.

                  4.04     NO OTHER PAYMENTS OR BENEFITS. As of the Termination
Date, other than the payments and benefits expressly provided for or referred to
in this Section 4, all obligations of the Company to Executive, other than as
required by law or provided under any applicable employee benefit plan of the
Company, shall cease.

                  4.05     NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive during the Term shall be communicated
by a Notice of Termination to the other party hereto. The Notice of Termination
shall, if applicable, indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.

                  4.06     BREACH OF RESTRICTIVE COVENANTS. If, at any time
Executive breaches any of the provisions of Sections 5.01, 5.02, 5.03 and/or
5.05 below, he shall not be eligible, as of the date of such breach, for any
severance benefits described in this Section 4 and all obligations of the
Company to pay any such severance benefits hereunder shall thereupon cease.

                  5.       RESTRICTIVE COVENANTS.

                  5.01     CONFIDENTIALITY; NONDISCLOSURE. Executive understands
and acknowledges that in the course of Executive's employment, he has had and
will continue to have access to and will learn information proprietary to the
Company and its subsidiaries affiliates (the "COMPANY GROUP") that concerns the
technological innovations, operation and

                                        3

<PAGE>

methodology of the Company Group, including, without limitation, business plans,
financial information, protocols, proposals, manuals, procedures and guidelines,
computer source codes, programs, software, know-how and specifications,
copyrights, trade secrets, market information, Developments (as hereinafter
defined), data and customer information (collectively, "PROPRIETARY
INFORMATION"). Executive agrees that during the period beginning on the date of
his hiring and continuing in perpetuity thereafter, Executive shall keep
confidential and shall not disclose any such Proprietary Information to any
third party, except as required to fulfill his duties in connection with his
employment by the Company, and shall not misuse, misappropriate or exploit such
Proprietary Information in any way. The restrictions contained herein shall not
apply to any information which Executive can demonstrate (i) was already
available to the public at the time of disclosure, or subsequently became
available to the public, otherwise than by breach of this Agreement or (ii) was
the subject of a court order to disclose. Upon any termination of Executive's
employment, Executive will immediately return to the Company all Proprietary
Information and copies thereof in Executive's possession.

                  "DEVELOPMENTS" shall mean all data, discoveries, findings,
reports, designs, inventions, improvements, methods, practices, techniques,
developments, programs, concepts and ideas, whether or not patentable, relating
to the present or planned activities, or the products and services of the
Company.

                  5.02     NO COMPETING EMPLOYMENT. Executive hereby
acknowledges that in the course of Executive's employment with the Company,
Executive has become familiar, and will become familiar, with the trade secrets
of the Company Group and with other confidential information concerning the
Company Group, and that Executive's services have been and will be of special,
unique and extraordinary value to the Company Group. Therefore, Executive hereby
agrees that for the duration of the Restricted Period, Executive shall not,
unless Executive receives the prior written consent of the Board of Directors of
the Company (the "BOARD"), directly or indirectly, knowingly own an interest in,
manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any individual, partnership,
firm, corporation or other business organization or entity that competes with
the business of the Company as such businesses exist or are in the process of
being formed or acquired as of the Termination Date, within any geographical
area in which the Company is engaged, services customers, or was actively
planning to engage during the Term or as of the Termination Date; provided,
however, that this Section 5.02 shall not proscribe Executive's ownership,
either directly or indirectly, of less than one percent of any class of
securities which are listed on a national securities exchange or quoted on the
automated quotation system of the National Association of Securities Dealers,
Inc.

                  5.03     RESTRICTIONS ON SOLICITATION. During the Restricted
Period and except as required pursuant to Executive's duties to the Company in
connection with the employment relationship, Executive will not, directly or
indirectly: (i) solicit or contact any customer of the Company Group (or any
other entity that Executive knows is a potential customer with respect to
specific products of the Company Group and with which Executive have had contact
during the period of Executive's employment with the Company Group) for

                                        4

<PAGE>

any commercial pursuit that to Executive's knowledge is in competition with the
Company, or that to Executive's knowledge is contemplated from time to time
during the period of Executive's employment with the Company by the Company's
business plan; (ii) take away or interfere or attempt to interfere with any
custom, trade, business, patronage or other business relation of the Company, or
induce, or attempt to induce, any employees, agents or consultants of or to the
Company Group to do anything from which Executive is restricted by reason of
this Section 5; or (iii) induce or aid others to induce employees, agents or
consultants of the Company Group to terminate their employment with the Company
Group, or interfere or attempt to interfere with any employees, agents or
consultants of the Company Group.

                  5.04     EXTENSION OF RESTRICTED PERIOD. The Restricted Period
shall be extended by the length of any period during which Executive is in
breach of any of the terms of Section 5 hereof.

                  5.05     ASSIGNMENT OF DEVELOPMENTS. During the Term, all
Developments that are at any time made, conceived or suggested by Executive,
whether acting alone or in conjunction with others, shall be the sole and
absolute property of the Company, free of any reserved or other rights of any
kind on Executive's part. During the Term, if such Developments were made,
conceived or suggested by Executive during or as a result of Executive's
employment relationship with the Company, thereafter, Executive shall promptly
make full disclosure of any such Developments to the Company and, at the
Company's cost and expense, do all acts and things (including, among others, the
execution and delivery under oath of patent and copyright applications and
instruments of assignment) deemed by the Company to be necessary or desirable at
any time in order to effect the full assignment to the Company, or of
Executive's right and title, if any, to such Developments. Executive
acknowledges and agrees that any invention, concept, design or discovery that
concretely relates to or is associated with Executive's work for the Company
that is described in a patent application or is disclosed to a third party
directly or indirectly by Executive during the Restricted Period shall be the
property of and owned by the Company and such disclosure by patent application
or otherwise shall constitute a breach of Section 5.01 above.

                  5.06     APPLICATION OF COVENANTS. The activities described in
this Section 5 shall be prohibited regardless of whether undertaken by Executive
in an individual or representative capacity, and regardless of whether performed
for Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization (other than the
Company Group).

                  5.07     INJUNCTIVE RELIEF. Without limiting the remedies
available to the Company, Executive acknowledges that a breach of any of the
covenants contained in this Section 5 may result in material irreparable injury
to the Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to seek a
temporary restraining order or a preliminary or permanent injunction restraining
Executive from engaging in activities prohibited by this Section 5 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 5.

                                        5

<PAGE>

                  5.08     REASONABLENESS OF COVENANTS. If, at the time of
enforcement of the covenants set forth in this Section 5, a court holds that the
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area.

                  5.09     VIOLATION AND REMEDY. If the Company reasonably
determines that Executive has breached any of the provisions of this Section 5,
in addition to any other remedies available to the Company in law or equity, the
Company shall be entitled to immediately suspend as of the date of such breach
the provision to Executive of any payments or benefits under this Agreement,
including without limitation, the Severance Benefit outlined in Section 4 of
this Agreement, and any Severance Benefits already paid shall be immediately
returned to the Company. In addition, should the Company breach any of its
obligations under this Agreement, including without limitation, the Severance
Benefit outlined in Section 4, Executive will not be bound by the provisions of
Sections 5.02 and 5.03.

                  6.       DEFINITIONS.

                  "CAUSE" shall mean the occurrence of any of the following
events: (i) Executive's willful material violation of any law or regulation
applicable to the business of the Company; (ii) Executive's conviction of, or
plea of "no contest" to, a felony; (iii) any willful perpetration by Executive
of an act involving moral turpitude or common law fraud whether or not related
to Executive's activities on behalf of the Company; (iv) any act of gross
negligence by Executive in the performance of Executive's duties as an employee;
(v) any violation of the "Standards of Conduct" set forth in the Company's
employee manual, as in effect from time to time; or (vi) any willful misconduct
by Executive that is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company.

                  "DISABILITY" shall have the meaning set forth in the Company's
long-term disability plan applicable to Executive.

                  "GOOD REASON" shall mean the occurrence of any of the
following events: (i) a material adverse change in Executive's title or duties
in effect on the Effective Date; (ii) a material reduction in Executive's Fixed
Salary or Annual Bonus opportunity in effect on the Effective Date; and (iii)
the relocation of Executive's principal place of business to a location that is
more than 35 miles from Rochester, New York.

                  "NOTICE OF TERMINATION" shall mean the notice provided in the
event of any termination of Executive's employment by the Company or resignation
by Executive during the Term which shall be communicated to the other party
hereto.

                  "RESTRICTED PERIOD" shall mean: (i) the period during which
Executive is employed with the Company; and (ii) following a termination of
Executive's employment with the Company for any reason, the period beginning on
the Termination Date and ending on the first anniversary of the Termination
Date.

                                        6

<PAGE>

                  "TERMINATION DATE" shall be determined as follows: (i) if
Executive's employment is terminated for Disability, sixty days after a Notice
of Termination is given (provided that Executive shall not have returned to the
full-time performance of his duties during such sixty-day period); (ii) if
Executive's employment is terminated by the Company without Cause, the date
specified in the Notice of Termination, which date shall be no earlier than 30
days after the date such notice is delivered to Executive, as the case may be
(or if no date is specified in the Notice of Termination, sixty days after the
Notice of Termination is received by the Company or delivered to Executive, as
the case may be); (iii) if Executive's employment is terminated by the Company
for Cause, the date specified in the Notice of Termination; (iv) in the event of
Executive's resignation of employment, the Termination Date shall be the date
set forth in the Notice of Termination, which date shall be no earlier than
thirty days after the date such notice is received by the Company; or (v) the
Termination Date in the event of Executive's death shall be the date of
Executive's death.

                  7.       NOTICES. All notices under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered
against receipt or if mailed by registered or certified mail, return receipt
requested, addressed to the Company and to Executive, at the address indicated
below or to such other person or address as may be designated by like notice
hereunder. Any such notice shall be deemed to have been given on the day
delivered, if personally delivered, or on the third business day after the date
of mailing, if mailed.

                     To the Company:

                               Mpower Communications Corp.
                               175 Sully's Trail, Suite 300
                               Pittsford, NY 14534

                               Attention: Rolla P. Huff

                     To Executive:

                               Russell A. Shipley
                               5 Bunker Trail
                               Pittsford, NY 14534

                  8.       DISPUTE RESOLUTION PROCESS. Any future dispute,
controversy or claim between the parties arising from or relating to this
Agreement, its breach or any matter addressed by the Agreement shall be resolved
through binding confidential arbitration in Rochester, New York, to be conducted
by an arbitrator that is mutually agreeable to both Executive and the Company,
all in accordance with the rules of the American Arbitration Association then in
effect. If Executive and the Company cannot agree upon an arbitrator, the
arbitration shall be settled before a panel of three arbitrators, one to be
selected by the Company, one by Executive and the other by the two persons so
selected, all in accordance with the rules of the American Arbitration
Association then in effect. Judgment upon the award rendered by the

                                        7

<PAGE>

arbitrator(s) may be entered by any court having jurisdiction over the matter.
Costs and fees of the arbitration will be divided equitably by the arbitrator
between both parties; provided, however, that, in the event that either party
prevails over the other party in connection with an arbitration arising out of a
breach of this Agreement, the non-prevailing party shall be liable for all
reasonable attorney's fees and expenses incurred in connection with any action
for damages or the enforcement of any provision of this Agreement brought by the
other party.

                  9.       MISCELLANEOUS.

                  9.01     NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this
Agreement nor any of the rights or benefits evidenced hereby shall confer upon
Executive any right to continuance of employment by the Company or interfere in
any way with the right of the Company to terminate Executive's employment,
subject to the provisions of Section 4 above, for any reason, with or without
Cause.

                  9.02     EXECUTIVE'S REPRESENTATION. Executive hereby
represents and warrants to the Company that the execution and delivery by
Executive of this Agreement to the Company will not breach the terms of any
contract, agreement or understanding to which Executive is party. Executive
further acknowledges and agrees that a breach of this representation by
Executive shall render this Agreement void ab initio and of no further force and
effect.

                  9.03     SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and, in the case of the
Company, business successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise), but no other person shall acquire or have any
rights under or by virtue of this Agreement, and the obligations of Executive
under this Agreement may not be assigned or delegated.

                  9.04     SEVERABILITY. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

                  9.05     WITHHOLDING. Amounts paid to Executive's hereunder
shall be subject to all applicable federal, state and local tax withholdings.

                  9.06     HEADINGS. The headings contained in this Agreement
are intended solely for convenience of reference and shall not affect the rights
of the parties to this Agreement.

                                        8

<PAGE>

                  9.07     SURVIVAL. All of the provisions and restrictions set
forth in Section 5 shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Term.

                  9.08     COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.

                  9.09     GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws and decisions of the
State of New York applicable to contracts made and to be performed therein
without giving effect to the principles of conflict of laws.

                  9.10     ENTIRE AGREEMENT; MODIFICATION; WAIVER;
INTERPRETATION. This Agreement contains the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes all
prior negotiations and oral understandings concerning the subject matter hereof.
Neither this Agreement nor any of its provisions may be modified, amended,
waived, discharged or terminated, in whole or in part, except in writing signed
by the party to be charged. No waiver of any such provision or any breach of or
default under this Agreement shall be deemed or shall constitute a waiver of any
other provision, breach or default. All pronouns and words used in this
Agreement shall be read in the appropriate number and gender, the masculine,
feminine and neuter shall be interpreted interchangeably and the singular shall
include the plural and vice versa, as the circumstances may require.

                                        9

<PAGE>

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

                                            MPOWER COMMUNICATIONS CORP.

                                         By:   /s/ Rolla P. Huff
                                             -------------------------
                                              Rolla P. Huff
                                              Chairman and CEO

                                                /s/ Russell A. Shipley
                                             --------------------------
                                              Russell A. Shipley

                                       10

<PAGE>

                                   APPENDIX A

Mpower Communications Corp.
175 Sully's Trail, Suite 300
Pittsford, NY 14534

                                     RELEASE

                  I, Russell A. Shipley, am a party to an Employment Agreement
(the "AGREEMENT"), dated June 2, 2003, with Mpower Communications Corp., a
Nevada corporation (the "COMPANY"). The Agreement contemplates that, in
consideration for my receipt of the Severance Benefit (as such term is defined
in the Agreement), I will deliver a Release in the form set forth below, and I
now desire to deliver such Release to the Company in the manner contemplated by
the Agreement.

                  1. General Release. In consideration of the Severance Benefit,
I hereby release and forever discharge the Released Parties (as defined below)
from any and all claims, actions, causes of action, suits, costs controversies,
judgments, decrees, verdicts, damages, liabilities, attorney's fees, covenants,
contracts and agreements (collectively, including claims, actions and causes of
action set forth in Section 2 below, "CLAIMS") that I may have against the
Released Parties based on or arising out of (i) my employment relationship with
and service as an employee, officer or director of the Company, and the
termination of such relationship or service, or (ii) any event, condition,
circumstance or obligation that occurred, existed or arose on or prior to the
date hereof, including, without limitation, any Claims arising under any
applicable federal, state or local law, or any law of any foreign jurisdiction,
whether such Claim arises under statute, common law or in equity, and whether or
not I am presently aware of such claim. I further agree that the payments and
benefits described in the Agreement are in full satisfaction of any and all
Claims for payments or benefits that I may have against the Company arising out
of my employment relationship, my service as an employee, officer or director of
the Company and the termination thereof. I also do forever release, discharge
and waive any rights that I may have to recover in any proceedings brought by
any federal, state or local agency against the Released Parties to enforce any
laws.

                  For purposes of this release, the "RELEASED PARTIES" means,
individually and collectively, the Company, its present, former and future
shareholders, partners, limited partners, affiliates, parents, subsidiaries,
successors, directors, officers, employees, agents, attorneys, successors and
assigns.

                  2. Specific Release of ADEA Claims. In further consideration
of the Severance Benefit, I hereby release and forever discharge the Company and
its employees, officers and directors from any and all Claims that I may have as
of the date of my signing of this Release arising under the FEDERAL AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, and the applicable rules
and regulations promulgated thereunder ("ADEA").

                  3. Release of Unknown Claims. I understand that I am releasing
Claims pursuant to this Agreement that I may not know about, and that is my
intent. I expressly waive all rights that I might have under any law that is
intended to prevent unknown Claims from being released and I understand the
significance of doing so. In addition, I expressly acknowledge that the Release
under this Agreement is intended to include and does include in its effect,
without limitation, all Claims which I do not know or suspect to exist in my
favor at the time of execution of this Release and that this Release expressly
contemplates the extinguishment of all such Claims.

                  4. No Pending Litigation. I hereby represent and agree that I
have not filed, and will not file, any action, complaint, charge, grievance or
arbitration against any Released Party.

                  5. No Right to Commence any Legal Action. I will not commence
or join any legal action, which term includes, without limitation, any demand
for arbitration proceedings and any complaint to any federal, state or

                                      A-1

<PAGE>

local agency, court or other tribunal, to assert any Claim released by me under
this Agreement against a Released Party.

                  6. Acknowledgment. By signing this Release, I hereby
acknowledge and confirm the following:

                  (a) Consultation with an Attorney. I was advised in writing by
         the Company in connection with my termination of employment to consult
         with an attorney of my choice prior to signing the Agreement and this
         Release and to have such attorney explain to me the terms of the
         Agreement and this Release, including, without limitation, the terms
         relating to my release of claims arising under ADEA.

                  (b) Understand this Agreement. I have read the Agreement and
         this Release carefully and completely and understand each of the terms
         thereof.

                  (c) Twenty-One Days to Consider. I was given not less than
         twenty-one days to consider the terms of the Agreement and this Release
         and to consult with an attorney of my choosing with respect thereto,
         and that for a period of seven days following my signing of this
         Release, I have the option to revoke this Release in accordance with
         the terms set forth below.

                  (d) Consideration. By signing this Release, I hereby
         acknowledge and confirm that I am providing the Release and discharge
         set forth herein only in exchange for consideration in addition to
         anything of value to which I am already entitled.

                  1. 7. Revocation. I have the right to revoke this Release
during the seven-day period (the "REVOCATION PERIOD") commencing immediately
following the date I sign and deliver this Release to the Company. The
Revocation Period shall expire at 5:00 p.m., New York time, on the last day of
the Revocation Period; PROVIDED, HOWEVER, that if such seventh day is not a
business day, the Revocation Period shall extend to 5:00 p.m. on the next
succeeding business day. In the event of any such revocation by me, the
obligations of the Company to pay the Severance Benefit pursuant to the
Agreement shall terminate and be of no further force and effect as of the date
of such revocation. No such revocation by me shall be effective unless it is in
writing and signed by me and received by a representative of the Company prior
to the expiration of the Revocation Period.

         My signature below indicates my agreement with the terms and provisions
described above.

    /s/ Russell A. Shipley
--------------------------------

Russell A. Shipley

_________________________________

Date

                                      A-2

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