Document:

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                                                                   EXHIBIT 10.38

                        COVAD COMMUNICATIONS GROUP, INC.

                        2003 EMPLOYEE STOCK PURCHASE PLAN

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                        COVAD COMMUNICATIONS GROUP, INC.

                        2003 EMPLOYEE STOCK PURCHASE PLAN

                                TABLE OF CONTENTS

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1.    Definitions................................................................................................   1
2.    Stock Subject to the Plan..................................................................................   3
3.    Grant of Options...........................................................................................   4
4.    Exercise of Options; Option Price..........................................................................   7
5.    Multiple Options...........................................................................................   9
6.    Withdrawal from the Plan...................................................................................   9
7.    Termination of Employment..................................................................................  10
8.    Restriction upon Assignment................................................................................  10
9.    No Rights of Stockholders until Shares Issued..............................................................  10
10.      Changes in the Stock and Corporate Events; Adjustment of Options........................................  11
11.      Use of Funds; No Interest Paid..........................................................................  12
12.      Amendment, Suspension or Termination of the Plan........................................................  12
13.      Administration by Committee; Rules and Regulations......................................................  13
14.      Designation of Subsidiary Corporations..................................................................  14
15.      No Rights as an Employee................................................................................  14
16.      Plan Term; Approval by Stockholders.....................................................................  14
17.      Effect upon Other Plans.................................................................................  14
18.      Conditions to Issuance of Stock Certificates............................................................  14
19.      Notification of Disposition.............................................................................  15
20.      Notices.................................................................................................  15
21.      Additional Restrictions.................................................................................  15
22.      Equal Rights and Privileges.............................................................................  15
23.      Information to Participants.............................................................................  16
24.      Compliance with Laws....................................................................................  16
25.      Electronic Forms........................................................................................  16
26.      Headings................................................................................................  17
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                        COVAD COMMUNICATIONS GROUP, INC.

                        2003 EMPLOYEE STOCK PURCHASE PLAN

                  Covad Communications Group, Inc., a Delaware corporation,
hereby adopts the 2003 Covad Communications Group, Inc. Employee Stock Purchase
Plan (the "Plan"), effective as of the Effective Date (as defined below),
subject to approval of the Plan by the stockholders of the Company (as provided
herein).

                  The purposes of the Plan are as follows:

                  (1)      To assist eligible employees of the Company and its
Designated Subsidiary Corporations (as defined below) in acquiring stock
ownership in the Company pursuant to a plan which is intended to qualify as an
"employee stock purchase plan," within the meaning of Section 423(b) of the Code
(as defined below).

                  (2)      To help such employees provide for their future
security and to encourage them to remain in the employment of the Company and
its Subsidiary Corporations.

         1.       DEFINITIONS. Whenever any of the following terms is used in
the Plan with the first letter or letters capitalized, it shall have the
following meaning unless the context clearly indicates to the contrary (such
definitions to be equally applicable to both the singular and the plural forms
of the terms defined):

                  (a) "ACCOUNT" shall mean the account established for a
Participant under the Plan.

                  (b) "AGENT" shall mean the brokerage firm, bank or other
financial institution, entity or person(s), if any, engaged, retained, appointed
or authorized to act as the agent of the Company or an Employee with regard to
the Plan.

                  (c) "AUTHORIZATION" shall mean a Participant's payroll
deduction authorization provided by such Participant in accordance with Section
3(b) or, if applicable, Section 25.

                  (d) "BOARD" means the Board of Directors of the Company.

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

                  (f) "COMMITTEE" means the committee of the Board appointed to
administer the Plan pursuant to Section 13.

                  (g) "COMPANY" means Covad Communications Group, Inc., a
Delaware corporation.

                  (h) "COMPENSATION" of an Employee shall mean compensation paid
to an Employee by the Company or a Designated Subsidiary Corporation, including
salary, wages, and commissions; but excluding overtime, shift premiums,
incentive compensation, incentive payments, bonuses, the cost of employee
benefits paid by the Company or a Designated Subsidiary Corporation, education
or tuition reimbursements, imputed income arising under any

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Company or Designated Subsidiary Corporation group insurance or benefit program,
travel expenses, business and moving expense reimbursements, income received in
connection with stock options, contributions made by the Company or any
Designated Subsidiary Corporation under any employee benefit plan, and similar
items of compensation.

                  (i) "DATE OF EXERCISE" of an Option or a portion thereof means
the date on which such Option or such portion thereof is exercised, which shall
be the last Trading Day in any June or December occurring during the Offering
Period of such Option, in accordance with Sections 4(a) and 5 (except as
provided in Section 10 or 12).

                  (j) "DATE OF GRANT" of an Option means the date on which such
Option is granted, which shall be the first Trading Day of the Offering Period
of such Option, in accordance with Section 3(a).

                  (k) "DESIGNATED SUBSIDIARY CORPORATION" means any Subsidiary
Corporation designated by the Board in accordance with Section 14.

                  (l) "EFFECTIVE DATE" means July 1, 2003 (or such later date as
the Committee shall designate on which Options may be granted under the Plan in
compliance with federal and state securities laws and other applicable laws).

                  (m) "ELIGIBLE EMPLOYEE" means an Employee of the Company or
any Designated Subsidiary Corporation: (i) whose customary employment is more
than 20 hours per week, (ii) whose customary employment is for more than five
months in any calendar year, and (iii) who does not, immediately after the
Option is granted, own (directly or through attribution) stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of Stock or other stock of the Company, a Parent Corporation or a Subsidiary
Corporation (as determined under Section 423(b)(3) of the Code). For purposes of
paragraph (iii), the rules of Section 424(d) of the Code with regard to the
attribution of stock ownership shall apply in determining the stock ownership of
an individual, and Stock or other stock which an Employee may purchase under
outstanding Options or other options shall be treated as Stock or other stock
owned by the Employee.

                  (n) "EMPLOYEE" means an individual who renders services to the
Company or a Subsidiary Corporation in the status of an "employee," within the
meaning of Section 3401(c) of the Code. During a leave of absence meeting the
requirements of Treasury Regulation Section 1.421-7(h)(2), an individual shall
be treated as an Employee of the Company or Subsidiary Corporation employing
such individual immediately prior to such leave. "Employee" shall not include
any director of the Company or a Subsidiary Corporation who does not render
services to the Company or a Subsidiary Corporation in the status of an
"employee," within the meaning of Section 3401(c) of the Code.

                  (o) "ENROLLMENT DATE" with respect to an Offering Period means
the last Trading Day next preceding such Offering Period.

                  (p) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                  (q) "FAIR MARKET VALUE" shall have the meaning set forth in
Section 4(b).

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                  (r) "OFFERING PERIOD" with respect to an Option means the
twenty-four (24) month period during the Plan Term (as defined in Section 16)
commencing on (i) any January 1 and ending on the second December 31 to occur
thereafter, or (ii) commencing on any July 1 and ending on the second June 30 to
occur thereafter. The first Offering Period under the Plan shall commence on the
Effective Date and end on June 30, 2005. The last Offering Period under the Plan
shall commence on July 1, 2011 and end on June 30, 2013.

                  (s) "OPTION" means an option to purchase shares of Stock
granted under the Plan to an Eligible Employee in accordance with Section 3(a).

                  (t) "OPTION PRICE" means the option price per share of Stock
determined in accordance with Section 4(b).

                  (u) "PARENT CORPORATION" means any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if, at the
time of the granting of the Option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain, as
determined under Section 424(e) of the Code.

                  (v) "PARTICIPANT" means an Eligible Employee who has elected
to participate in the Plan, in accordance with the provisions of Section 3(b).

                  (w) "PAYDAY" means the regular and recurring established day
for payment of Compensation to an Employee of the Company or any Designated
Subsidiary Corporation.

                  (x) "PLAN" means the Covad Communications Group, Inc. 2003
Employee Stock Purchase Plan.

                  (y) "STOCK" means the shares of the Company's Common Stock,
$.001 par value.

                  (z) "SUBSIDIARY CORPORATION" means any corporation, other than
the Company, in an unbroken chain of corporations beginning with the Company if,
at the time of the granting of the Option, each of the corporations other than
the last corporation in an unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain, as determined under Section 424(f) of the Code.

                  (aa) "TRADING DAY" means a day on which the National Stock
Exchanges and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.

         2.       STOCK SUBJECT TO THE PLAN.

                  (a) Authorized Shares. Subject to the provisions of subsection
(b) and Section 10 (relating to adjustments upon changes in the Stock) and
Section 12 (relating to amendments of the Plan), the aggregate number of shares
of Stock that may be sold pursuant to Options granted under the Plan shall be
5,000,000 shares of Stock, provided, that, effective as of January 1, 2004, and
as of each subsequent January 1 during the Plan Term (as defined in Section 16),
the aggregate number of shares of Stock that may be sold pursuant to Options
granted under the Plan

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shall be increased by the least of: (a) 2% of the number of shares of Stock
outstanding on the date of such increase, (b) 7,000,000 shares of Stock, and (c)
such number of shares of Stock (which may be zero) as the Committee shall
designate in writing prior to the date of such increase.

                  (b) Aggregate Limit on Shares. Subject to Sections 10 and 12,
the aggregate number of shares of Stock that may be sold pursuant to Options
granted under the Plan shall not exceed 35,000,000 shares of Stock; provided,
however, that, to the extent necessary to comply with Section 260.140.45 of
Title 10 of the California Code of Regulations, at no time shall the total
number of shares of Stock issuable upon exercise of all outstanding Options and
the total number of shares of securities provided for under any stock bonus or
similar plan or agreement of the Company exceed 30% of the then outstanding
securities of the Company.

                  (c) Shares Issued under the Plan. The shares of Stock sold
pursuant to Options granted under the Plan may be unissued shares or treasury
shares of Stock, or shares reacquired in private transactions or open market
purchases. If and to the extent that any right under an Option to purchase
reserved shares of Stock shall not be exercised by any Participant for any
reason, or if such right to purchase shall terminate as provided herein, shares
of Stock that have not been so purchased hereunder shall again become available
for the purposes of the Plan, unless the Plan shall have been terminated, but
all shares of Stock sold under the Plan, regardless of source, shall be counted
against the limitations set forth above.

         3.       GRANT OF OPTIONS.

                  (a) Option Grants. The Company shall grant Options under the
Plan to all Eligible Employees with respect to successive, overlapping Offering
Periods until the earlier of: (i) the date on which the number of shares of
Stock available under the Plan have been sold, or (ii) the date on which the
Plan is suspended or terminates. Each Employee who is an Eligible Employee on
the Enrollment Date of an Offering Period, and on the first Trading Day of such
Offering Period, shall be granted an Option with respect to such Offering Period
on the Date of Grant, and such Eligible Employee shall, to the extent such
Eligible Employee elects to participate in the Plan in accordance with Section
3(b), be a Participant. Each Option with respect to an Offering Period shall
expire on the last Date of Exercise occurring during that Offering Period with
respect to which such Option was granted, unless such Option terminates earlier
in accordance with Section 6, 7, 10 or 12. Subject to Section 5, the number of
shares of Stock subject to an Option held by a Participant that may be purchased
on any Date of Exercise shall equal the balance then in the Participant's
Account (or portion thereof to be applied to the exercise of such Option),
determined as of such Date of Exercise, divided by the Option Price of such
Option; provided, however, that, on any Date of Exercise, a Participant may not
purchase an aggregate of more than 5,000 shares of Stock under the Option or
Options granted to and held by such Participant on such Date of Exercise; and,
provided, further, that the number of shares of Stock for which an Option shall
become exercisable on any Date of Exercise shall not exceed the number
determined in accordance with subsection (c), and, provided, further, that the
aggregate number of shares of Stock subject to an Option shall not exceed 20,000
shares. The Company shall not grant an Option with respect to an Offering Period
to any Participant who is not an Eligible Employee on the Enrollment Date of
such Offering Period, and the first Trading Day of such Offering Period.

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                  (b) Election to Participate; Payroll Deduction Authorization.

                  (i)      An Eligible Employee who is granted an Option shall
become a Participant in the Plan only by means of authorizing payroll
deductions. Each such Eligible Employee who elects to participate in the Plan
with respect to an Offering Period shall, not later than the Enrollment Date of
the Offering Period, deliver to the Company a completed written payroll
deduction authorization in a form prepared by the Committee; provided, however,
that, for the first Offering Period under the Plan, such written payroll
authorization shall be delivered or transmitted to the Company no later than
July 10, 2003 (or such later date as the Committee shall designate prior to the
grant of such Options). An Eligible Employee's written payroll deduction
authorization is referred to herein as the "Authorization." Each Participant's
Authorization shall give notice of such Participant's election to participate in
the Plan for the Offering Period (and subsequent Offering Periods) and shall
designate a whole percentage of such Participant's Compensation to be withheld
by the Company or the Designated Subsidiary Corporation employing such
Participant on each Payday during the Offering Period (and subsequent Offering
Periods); provided, however, that, for the first Offering Period under the Plan,
each Participant's Authorization shall designate a whole percentage of such
Participant's Compensation to be withheld on the Payday occurring on July 18,
2003 (or the first Payday occurring on or after the Date of Grant of the first
Offering Period) and each Payday thereafter. A Participant may designate any
whole percentage of Compensation which is not less than one percent (1%) and not
more than twenty percent (20%).

                  (ii)     A Participant's Compensation payable during an
Offering Period shall be withheld each Payday through payroll deduction in an
amount equal to the percentage specified in the Authorization, and such amount
shall be credited to such Participant's Account under the Plan. A Participant
may increase or decrease the percentage of Compensation designated in the
Authorization, subject to the limits of this subsection (b), or may suspend the
Authorization, provided, that any such change or suspension must be made no
later than five (5) business days before the end of a payroll period for such
change or suspension to apply with respect to the Payday for such payroll
period.

                  (iii)    An Eligible Employee who is granted an Option, and
who does not elect to participate in the Plan by delivering to the Company an
Authorization not later than the date prescribed in paragraph (i) may
subsequently become a Participant in such Offering Period effective as of the
first Trading Day following any Date of Exercise during such Offering Period by
delivering an Authorization to the Company prior to such Trading Day.

                  (iv)     Any Authorization shall remain in effect for each
subsequent Offering Period, unless the Participant submits a new Authorization
pursuant to this subsection (b), withdraws from the Plan pursuant to Section 6,
or terminates employment as provided in Section 7. Notwithstanding the
foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code
or Sections 3(a), (c) or (d) of the Plan, the Company may reduce a Participant's
rate of payroll deductions to zero at such time during any Offering Period.
Payroll deductions shall recommence at the rate provided by the Participant in
his or her Authorization to the extent such payroll deductions may be applied to
purchase shares of Stock in accordance with Section 423(b)(8) of the Code and
Sections 3(a), (c) and (d) of the Plan, unless such Participant submits a

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new Authorization pursuant to this subsection (b), withdraws from the Plan
pursuant to Section 6, or terminates employment as provided in Section 7 of the
Plan.

                  (c) $25,000 Limitation.

                  (i)      No Eligible Employee shall be granted an Option under
the Plan which permits his or her rights to purchase shares of Stock under the
Plan, together with other Options or options to purchase shares of Stock or
other stock under all other employee stock purchase plans of the Company, any
Parent Corporation or any Subsidiary Corporation subject to the Section 423 of
the Code, to accrue at a rate which exceeds $25,000 of fair market value of such
shares of Stock or other stock (determined at the time the Option or other
option is granted) for each calendar year in which the Option or other option is
outstanding. For purpose of the limitation imposed by this subsection (c), (A)
the right to purchase shares of Stock or other stock under an Option or other
option accrues when the Option or other option (or any portion thereof) first
becomes exercisable during the calendar year, (B) the right to purchase shares
of Stock or other stock under an Option or other option accrues at the rate
provided in the Option or other option, but in no case may such rate exceed
$25,000 of the fair market value of such Stock or other stock (determined at the
time such Option or other option is granted) for any one calendar year, and (C)
a right to purchase Stock or other stock which has accrued under an Option or
other option may not be carried over to any other Option or other option. The
limitation under this subsection (c) shall be applied in accordance with Section
423(b)(8) of the Code and the Treasury Regulations thereunder.

                  (ii)     For purposes of paragraph (i) (and subject to
paragraph (iii)), for a Date of Exercise, (A) a Participant's Option (if such
Participant then holds only one Option), or, (B) if a Participant has been
granted and then holds more than one Option, the Option designated by such
Participant (or deemed to have been designated by such Participant) to be
exercised on a Date of Exercise, shall become exercisable on such Date of
Exercise only to the extent permitted the limitation under paragraph (i).

                  (iii)    For purposes of paragraph (i), for a Date of
Exercise, if a Participant has been granted and holds more than one Option, and
has designated more than one Option to be exercised on a Date of Exercise in
accordance with Section 5(b)(i), then with respect to such Date of Exercise, the
Options designated by such Participant shall become exercisable only to the
extent permitted under paragraph (i), determined as follows:

                           (A)      The limitation under paragraph (i) first
                  shall be applied to the Option designated by such Participant
                  that has the least Option Price. If more than one outstanding
                  Option so designated by such Participant has the least Option
                  Price, then the limitation under paragraph (i) first shall be
                  applied to the Option designated by such Participant that had
                  the least Fair Market Value of a share of Stock on its Date of
                  Grant. If more than one such outstanding Option so designated
                  by such Participant has the least Fair Market Value of a share
                  of Stock on its Date of Grant, then the $25,000 limitation
                  under paragraph (i) first shall be applied to the Option that
                  has the earliest Date of Grant.

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                           (B)      The limitation under paragraph (i) shall be
                  applied to the other Options designated to be exercised by
                  such Participant on such Date of Exercise in sequential order
                  in accordance with subparagraph (A).

                           (C)      Each Option so designated by such
                  Participant shall become exercisable in accordance with
                  subparagraphs (A) and (B) on such Date of Exercise only to the
                  extent of the least of the following: (1) the number of shares
                  determined under limitation under paragraph (i) and taking
                  into account other Options that have already become
                  exercisable on such Date of Exercise, (2) the limits set forth
                  in Section 3(a) and taking into account other Options that
                  have already become exercisable on such Date of Exercise, and
                  (3) the number of shares of Stock purchasable under such
                  Option based on the percentage of the balance then credited to
                  the Participant's Account designated by the Participant with
                  respect to such Option in accordance with Section 5(b)(ii).

                           (D)      For purposes of paragraph (i), the rights to
                  purchase shares of Stock under the outstanding Options granted
                  to and held by such Participant which are not designated to be
                  exercised by such Participant on such Date of Exercise shall
                  not become exercisable on such Date of Exercise.

                  (d) Five Percent Holders. No Employee will be granted an
Option under the Plan if immediately after the grant, such Employee (or any
other person whose stock would be attributed to such Employee pursuant to
Section 424(d) of the Code) would own shares of Stock or other stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or of any Subsidiary Corporation or Parent Corporation.

         4.       EXERCISE OF OPTIONS; OPTION PRICE.

                  (a) Option Exercise. Subject to Sections 3 and 5, each
Participant's Option or Options shall become exercisable, on each Date of
Exercise occurring during the Offering Period of such Option to the extent that
the balance then in the Participant's Account is sufficient to purchase, at the
Option Price, shares of the Stock subject to the Option and, on such Date of
Exercise, such Participant, automatically and without any act on such
Participant's part, shall be deemed to have exercised such Option on such Date
of Exercise to the extent of the balance of the Account to be so applied,
provided, however, that any balance that is insufficient to purchase a full
share of Stock shall be carried over and remain credited to such Participant's
Account; and, provided, further, that any additional balance in such
Participant's Account shall not be carried over and shall be promptly refunded
to such Participant without interest thereon.

                  (b) Option Price Defined. The option price per share of Stock
(the "Option Price") to be paid by a Participant upon the exercise of the
Participant's Option on a Date of Exercise shall be equal to 85% of the lesser
of: (i) the Fair Market Value of a share of Stock on such Date of Exercise, and
(ii) the Fair Market Value of a share of Stock on the Date of Grant for such
Option; provided, however, that in no event may the Option Price be less than
par value of a share of Stock. The Fair Market Value of a share of Stock as of a
given date shall be: (A) the closing price of a share of Stock on the principal
exchange on which the Stock is then trading, if

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any, on such date (or, if shares of Stock were not traded on such date, then on
the next preceding trading day during which a sale occurred); (B) if the Stock
is not traded on an exchange, but is quoted on Nasdaq or a successor quotation
system, (I) the last sales price (if the Stock is then listed as a National
Market Issue under the NASD National Market System), or (II) the mean between
the closing representative bid and asked prices (in all other cases) for a share
of Stock on such date (or, if shares of Stock were not traded on such date, then
on the next preceding trading day during which a sale occurred) as reported by
Nasdaq or such successor quotation system; (III) if the Stock is not publicly
traded on an exchange and not quoted on Nasdaq or a successor quotation system,
the mean between the closing bid and asked prices for a share of Stock on such
date (or, if shares of Stock were not traded on such date, then on the next
preceding trading day during which a sale occurred), as determined in good faith
by the Committee; or (IV) if the Stock is not publicly traded, the fair market
value of a share of Stock established by the Committee acting in good faith.

                  (c) Book Entry/Share Certificates. As soon as practicable
after the purchase of shares of Stock upon the exercise of an Option by a
Participant, the Company shall issue the shares of Stock to such Participant and
such shares shall be held in the custody of the Company, or if applicable, the
Agent, for the benefit of the Participant. The Company or the Agent shall make
an entry on its books and records indicating that the shares of Stock purchased
in connection with such exercise (including any partial share) have been duly
issued as of that date to such Participant. A Participant shall have the right
at any time to request in writing a certificate or certificates for all or a
portion of the whole shares of Stock purchased hereunder. Upon receipt of a
Participant's written request for any such certificate, the Company shall (or
shall cause the Agent to), within ten (10) days after the date of such receipt,
deliver any such certificate to the Participant; provided, however, that
Committee, in its sole discretion, may place restrictions on the issuance of
certificates with respect to Stock purchased hereunder in accordance with
applicable law. Nothing in this subsection (c) shall prohibit the sale or other
disposition by a Participant of shares of Stock purchased hereunder. In the
event the Company is required to obtain authority from any commission or agency
to issue any certificate or certificates for all or a portion of the whole
shares of Stock purchased hereunder, the Company shall seek to obtain such
authority as soon as reasonably practicable.

                  (d) Pro Rata Allocations. If the total number of shares of
Stock for which Options are to be exercised on any date exceeds the number of
shares of Stock remaining unsold under the Plan (after deduction for all shares
of Stock for which Options have theretofore been exercised), the Committee shall
make a pro rata allocation of the available remaining shares of Stock in as
nearly a uniform manner as shall be practicable and the balance of the amount
credited to the Account of each Participant which has not been applied to the
purchase of shares of Stock shall be paid to such Employee in one lump sum in
cash within thirty (30) days after the Date of Exercise, without any interest
thereon.

                  (e) Information Statement. The Company shall provide each
Participant whose Option is exercised with an information statement in
accordance with Section 6039(a) of the Code and the Treasury Regulations
thereunder. The Company shall maintain a procedure for identifying certificates
of shares of Stock sold upon the exercise of Options in accordance with Section
6039(b) of the Code.

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         5.       MULTIPLE OPTIONS.

                  (a) An Eligible Employee shall be granted an Option for an
Offering Period in accordance with Section 3(a), irrespective of whether such
Eligible Employee was granted one or more Options for prior Offering Periods,
and, accordingly, an Eligible Employee may hold Options with respect to more
than one Offering Period.

                  (b) Subject to Section 3, if a Participant has been granted
and holds Options with respect to more than one Offering Period as of a Date of
Exercise, such Option or Options shall be exercisable on such Date of Exercise
as follows:

                  (i)      Such Participant may designate in writing one or more
of the outstanding Options to be exercised on the Date of Exercise, on a form
prepared by the Committee. Such written designation must be made and delivered
to the Company not later than five (5) days prior to such Date of Exercise. The
outstanding Options not designated by the Participant will not become
exercisable and will not be exercised on such Date of Exercise. A separate
written designation shall be required for each Date of Exercise on which a
Participant has more than one outstanding Option.

                  (ii)     If such Participant designates more than one Option
to be exercised in accordance with paragraph (i), the written designation also
shall include the percentage of the balance then credited to such Participant's
Account to be applied to each Option to be so exercised on the Date of Exercise.
The Participant may designate 10% increments (or any multiple thereof) of the
balance in such Participant's Account to be applied to each Option to be so
exercised, and totaling 100% of the balance credited to the Participant's
Account for the Options to be exercised. On the Date of Exercise, to the extent
each Option designated by the Participant becomes exercisable, the Participant
shall automatically exercise each such Option, in accordance with percentage
designated by the Participant of the balance then credited to the Participant's
Account in accordance with Section 4(a) and subject to the limitations of
Section 3(c)(iii).

                  (iii)    If such Participant fails to make a timely written
designation in accordance with paragraph (i) with respect to a Date of Exercise,
such Participant shall be deemed to have designated the outstanding Option with
the least Option Price (as determined under Section 4(b)) for such Date of
Exercise to be exercised, and to have applied 100% of the balance then credited
to the Participant's Account in accordance with Section 4(a) of such Option and
subject to the limitations of Section 3(c)(ii). For purposes of the foregoing
sentence, if more than one outstanding Option held by such Participant has the
least Option Price, then the Participant shall be deemed to have designated the
outstanding Option with the earliest Date of Grant to be exercised.

         6.       WITHDRAWAL FROM THE PLAN.

                  (a) Withdrawal Election. A Participant may withdraw from
participation under the Plan at any time, except that a Participant may not
withdraw from an Offering Period on or after the Trading Day next preceding the
last Date of Exercise of such Offering Period. Subject to the foregoing, a
Participant electing to withdraw from the Plan must deliver to the Company a
notice of withdrawal in a form prepared by the Committee (the "Withdrawal
Election"), not later than the last Trading Day preceding a Date of Exercise for
such Offering Period. Upon receipt

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of a Participant's Withdrawal Election, the Company or Subsidiary Corporation
employing the Participant shall pay to the Participant the amount credited to
the Participant's Account in one lump sum payment in cash, without any interest
thereon, and subject to Section 4(c), the Company shall (or shall cause the
Agent to) deliver to the Participant certificates for any whole shares of Stock
previously purchased by the Participant, in either case within thirty (30) days
of receipt of the Participant's Withdrawal Election. Upon receipt of a
Participant's Withdrawal Election by the Company, the Participant shall cease to
participate in the Plan and the Participant's Option for such Offering Period
shall terminate.

                  (b) Eligibility following Withdrawal. A Participant who
withdraws from the Plan preceding a Date of Exercise with respect to an Offering
Period and who is still an Eligible Employee (i) may again become a Participant
in such Offering Period effective as of the first Trading Day following any Date
of Exercise with respect to such Offering Period occurring after such
Participant's withdrawal, by delivering an Authorization to the Company prior to
such Trading Day, or (ii) may elect to participate in any subsequent Offering
Period by delivering to the Company an Authorization pursuant to Section 3(b).

         7.       TERMINATION OF EMPLOYMENT. If the employment of a Participant
with the Company or a Designated Subsidiary Corporation terminates for any
reason, the Participant's participation in the Plan automatically and without
any act on the Participant's part shall terminate as of the date of the
termination of the Participant's employment. As soon as practicable after such a
termination of employment, the Company or Designated Subsidiary Corporation
employing the Participant shall pay to the Participant (or, in the event of the
Participant's death, the legal representative of the Participant's estate) the
amount credited to the Participant's Account in one lump sum payment in cash,
without any interest thereon, and subject to Section 4(c), the Company shall (or
shall cause the Agent to) deliver to the Participant (or, in the event of the
Participant's death, the legal representative of the Participant's estate)
certificates for any whole shares of Stock previously purchased by the
Participant. Upon a Participant's termination of employment covered by this
Section, the Participant's Authorization and Options under the Plan shall
terminate.

         8.       RESTRICTION UPON ASSIGNMENT. An Option granted under the Plan
shall not be transferable and is exercisable during the Participant's lifetime
only by the Participant. An Option granted under the Plan shall not be
exercisable after the death of the Participant. The Company shall not recognize
and shall be under no duty to recognize any assignment or alienation of the
Participant's interest in the Plan, the Participant's Option or any rights under
the Participant's Option.

         9.       NO RIGHTS OF STOCKHOLDERS UNTIL SHARES ISSUED. With respect to
shares of Stock subject to an Option, a Participant shall not be deemed to be a
stockholder of the Company, and the Participant shall not have any of the rights
or privileges of a stockholder, until such shares have been issued to the
Participant following exercise of the Participant's Option. No adjustments shall
be made for dividends (ordinary or extraordinary, whether in cash securities, or
other property) or distribution or other rights for which the record date occurs
prior to the date of such issuance, except as otherwise expressly provided
herein.

                                       10
<PAGE>

         10.      CHANGES IN THE STOCK AND CORPORATE EVENTS; ADJUSTMENT OF
OPTIONS.

                  (a) Subject to Section 10(c), in the event that the Committee,
in its sole discretion, determines that any dividend or other distribution
(whether in the form of cash, Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Stock or other securities of the Company, issuance of warrants or
other rights to purchase Stock or other securities of the Company, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to an Option, then the Committee shall, in such manner as it may
deem equitable, proportionately adjust any or all of:

                  (i)      the number and kind of shares of Stock (or other
securities or property) with respect to which Options may be granted (including,
but not limited to, adjustments of the limitation in Section 3(a) on the maximum
number of shares of Stock which may be purchased),

                  (ii)     the number and kind of shares of Stock (or other
securities or property) subject to outstanding Options, and

                  (iii)    the exercise price with respect to any Option.

                  (b) Subject to Section 10(c), in the event of any transaction
or event described in Section 10(a) or any unusual or nonrecurring transactions
or events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations, or accounting principles, the Committee, in its sole discretion,
and on such terms and conditions as it deems appropriate, either by the terms of
the Option or by action taken prior to the occurrence of such transaction or
event and either automatically or upon the Participant's request, is hereby
authorized to take any one or more of the following actions whenever the
Committee determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:

                  (i)      To provide that all Options outstanding shall
terminate without being exercised on such date as the Committee determines in
its sole discretion;

                  (ii)     To provide that all Options outstanding shall be
exercised prior to the Date of Exercise of such Options on such date as the
Committee determines in its sole discretion and such Options shall terminate
immediately after such exercises.

                  (iii)    To provide for either the purchase of any Option
outstanding for an amount of cash equal to the amount that could have been
obtained upon the exercise of such Option had such Option been currently
exercisable, or the replacement of such Option with other rights or property
selected by the Committee in its sole discretion;

                                       11
<PAGE>

                  (iv)     To provide that such Option be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or shall
be substituted for by similar options, covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and

                  (v)      To make adjustments in the number and type of shares
of Stock (or other securities or property) subject to outstanding Options, or in
the terms and conditions of outstanding Options, or Options which may be granted
in the future.

                  (c) No adjustment or action described in this Section 10 or in
any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to fail to satisfy the requirements of
Section 423 of the Code. Furthermore, no such adjustment or action shall be
authorized to the extent such adjustment or action would result in short-swing
profits liability under Section 16 of the Exchange Act, or violate the exemptive
conditions of Rule 16b-3 unless the Committee determines that the Option is not
to comply with such exemptive conditions. The number of shares of Common Stock
subject to any Option shall always be rounded to the next whole number.

                  (d) The existence of the Plan and the Options granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Stock or the rights thereof of which are convertible into or
exchangeable for Stock, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

         11.      USE OF FUNDS; NO INTEREST PAID. All funds received or held by
the Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction and may be used for any corporate
purpose. No interest will be paid to any Participant or credited to any
Participant's Account with respect to such funds.

         12.      AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board or
the Committee may amend, suspend, or terminate the Plan at any time and from
time to time, provided, however, that only the Board may amend the Plan: (a) to
increase the number of shares of Stock that may be sold pursuant to Options
under the Plan, as provided in Section 2, (b) to change the corporations or
class of corporations whose employees will be offered Options under the Plan, or
(c) in any manner that would cause the Plan to no longer be an "employee stock
purchase plan," within the meaning of Section 423(b) of the Code. No such
amendment, suspension or termination shall adversely affect the rights of any
Participant in any Option previously granted; provided, however, that the Board
or the Committee may amend Section 2 at any time and from time to time to
decrease the number of shares of Stock that may be sold pursuant to Options
under the Plan; provided, further, that the Board or the Committee may at any
time and from time to time terminate all outstanding Options, or the outstanding
Options with respect to one or more Offering Period or amend all outstanding
Options, or the outstanding Options with respect to one or more Offering
Periods, to suspend payroll deductions otherwise to

                                       12
<PAGE>

be applied to the exercise of such Options. In the event all of a Participant's
outstanding Options are terminated, the balance then in such Participant's
Account shall be refunded to such Participant without interest thereon. To the
extent necessary to comply with Rule 16b-3 under the Exchange Act, or under
Section 423 of the Code (or any successor rule or provision or any applicable
law or regulation), the Company will obtain stockholder approval for any
amendment in such a manner and to such a degree as so required.

         13.      ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS.

                  (a) Appointment of Committee. The Plan shall be administered
by the Committee, which shall be composed of not less than two members of the
Board, each of whom shall be a "non-employee director" within the meaning of
Rule 16b-3 which has been adopted by the Securities and Exchange Commission
under the Exchange Act. Each member of the Committee shall serve for a term
commencing on a date specified by the Board and continuing until the member
dies, resigns or is removed from office by the Board. The Committee at its
option may utilize the services of an agent to assist in the administration of
the Plan, including establishing and maintaining an individual securities
account under the Plan for each Participant.

                  (b) Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with the provisions of the Plan. The Committee shall have the power to interpret
the Plan and the terms of the Options and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan.

                  (c) Majority Rule. The Committee shall act by a majority of
its members in office. The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the Committee.

                  (d) Compensation; Professional Assistance; Good Faith Actions.
All expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The Committee
may, with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination, or interpretation.

                  (e) Delegation of Authority. The Committee at its option may
delegate its authority hereunder to a committee of one or more officers of the
Company, except to the extent necessary to comply with the requirements of Rule
16b-3 of the Exchange Act. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation of authority and may be rescinded at any time by the Committee. At
all times,

                                       13
<PAGE>

any committee appointed under this Section 13(e) shall serve in such capacity at
the pleasure of the Committee.

         14.      DESIGNATION OF SUBSIDIARY CORPORATIONS. The Board shall
designate from among the Subsidiary Corporations, as determined from time to
time, the Subsidiary Corporation or Subsidiary Corporations whose Employees
shall be eligible to be granted Options under the Plan. The Board may designate
a Designated Subsidiary Corporation, or terminate the designation of a
Subsidiary Corporation, without the approval of the stockholders of the Company.

         15.      NO RIGHTS AS AN EMPLOYEE. Nothing in the Plan shall be
construed to give any person (including any Participant) the right to remain in
the employ of the Company, a Parent Corporation or a Subsidiary Corporation or
to affect the right of the Company, any Parent Corporation or any Subsidiary
Corporation to terminate the employment of any person (including any
Participant) at any time, with or without cause.

         16.      PLAN TERM; APPROVAL BY STOCKHOLDERS. Subject to approval by
the stockholders of the Company in accordance with this Section, the Plan shall
be in effect from the Effective Date until June 30, 2013 (the "Plan Term"),
unless sooner terminated in accordance with Section 12. No Option may be granted
during any period of suspension of the Plan or after termination of the Plan.
The Plan shall be submitted for the approval of the Company's stockholders
within twelve (12) months after the date of the adoption of the Plan by the
Board. Options may be granted prior to such stockholder approval; provided,
however, that such Options shall not be exercisable prior to the time when the
Plan is approved by the Company's stockholders; and, provided, further, that if
such approval has not been obtained by the end of said 12-month period, all
Options previously granted under the Plan shall thereupon terminate without
being exercised.

         17.      EFFECT UPON OTHER PLANS. The adoption of the Plan shall not
affect any other compensation or incentive plans in effect for the Company, any
Parent Corporation or any Subsidiary Corporation. Nothing in this Plan shall be
construed to limit the right of the Company, any Parent Corporation or any
Subsidiary Corporation to: (a) establish any other forms of incentives or
compensation for employees of the Company, any Parent Corporation or any
Subsidiary Corporation or (b) grant or assume options otherwise than under the
Plan in connection with any proper corporate purpose, including, but not by way
of limitation, the grant or assumption of options in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.

         18.      CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of Stock purchased upon the exercise of Options prior to fulfillment of
all the following conditions:

                  (a) The admission of such shares to listing on all stock
exchanges, if any, on which is then listed; and

                                       14
<PAGE>

                  (b) The completion of any registration or other qualification
of such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall, in its absolute discretion, deem
necessary or advisable; and

                  (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

                  (d) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law upon exercise of the
Option; and

                  (e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

         19.      NOTIFICATION OF DISPOSITION. Each Participant shall give
prompt notice to the Company of any disposition or other transfer of any shares
of Stock purchased upon exercise of an Option if such disposition or transfer is
made: (a) within two (2) years from the Date of Grant of the Option, or (b)
within one (1) year after the transfer of such shares of Stock to such
Participant upon exercise of such Option. Such notice shall specify the date of
such disposition or other transfer and the amount realized, in cash, other
property, assumption of indebtedness or other consideration, by the Participant
in such disposition or other transfer.

         20.      NOTICES. Any notice to be given under the terms of the Plan to
the Company shall be addressed to the Company in care of its Secretary and any
notice to be given to any Participant shall be addressed to such Participant at
such Participant's last address as reflected in the Company's records. By a
notice given pursuant to this Section, either party may designate a different
address for notices to be given to it, him or her. Any notice which is required
to be given to a Participant shall, if the Participant is then deceased, be
given to the Participant's personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section. Any notice shall have been deemed duly given if enclosed in
a properly sealed envelope or wrapper addressed as aforesaid at the time it is
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

         21.      ADDITIONAL RESTRICTIONS. (a) The terms and conditions of
Options granted under the Plan to, and the purchase of shares of Stock by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3 of the Exchange Act. This Plan shall be
deemed to contain, and such Options shall contain, and the shares of Stock
issued upon exercise thereof will be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 of the Exchange Act to qualify for
the maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.

         22.      EQUAL RIGHTS AND PRIVILEGES. All Eligible Employees of the
Company (or of any Designated Subsidiary Corporation) will have equal rights and
privileges under this Plan so that this Plan qualifies as an "employee stock
purchase plan" within the meaning of Section 423 of

                                       15
<PAGE>

the Code or applicable Treasury regulations thereunder. Any provision of this
Plan that is inconsistent with Section 423 or applicable Treasury regulations
will, without further act or amendment by the Company or the Board, be reformed
to comply with the equal rights and privileges requirement of Section 423 or
applicable Treasury regulations.

         23.      INFORMATION TO PARTICIPANTS. To the extent required by Section
260.140.46 of Title 10 of the California Code of Regulations, the Company shall
provide to each Participant, not less frequently than annually during the period
such Participant has one or more Options outstanding, and, in the case of an
individual who acquires Stock pursuant to the Plan, during the period such
individual owns such Stock, copies of annual financial statements.
Notwithstanding the preceding sentence, the Company shall not be required to
provide such statements to key employees whose duties in connection with the
Company assure their access to equivalent information.

         24.      COMPLIANCE WITH LAWS. The Plan, the granting and vesting of
Options under the Plan and the issuance and delivery of shares of Stock and the
payment of money under the Plan or under Options granted or awarded hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Options granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

         25.      ELECTRONIC FORMS.

                  (a) To the extent permitted by applicable state law, in the
discretion of the Committee, an Eligible Employee may submit (i) an
Authorization in accordance with Section 3(b) or Section 6(b), (ii) an election
to increase, decrease or suspend payroll deductions in accordance with Section
3(b), (iii) a Withdrawal Election in accordance with Section 6(a), or (iv) a
designation as to which Options shall be exercised in accordance with Section
5(b), by means of an electronic form prepared by the Committee ("Electronic
Form"). Prior to the commencement of an Offering Period, the Committee shall
prescribe the time limits within which any Electronic Form shall be submitted to
the Committee with respect to such Offering Period in order to be a valid
election.

                  (b) With respect to an Authorization by means of Electronic
Form in accordance with Section 3(b) or Section 6(b), the Committee shall
provide an Eligible Employee who transmits an Electronic Form with written
notice of such Electronic Form and shall request that such Eligible Employee
provide written confirmation of such Electronic Form. If such Eligible Employee
fails to provide written confirmation of such Electronic Form as required by the
Committee, the Electronic Form shall terminate and shall be null and void and
such Eligible Employee's cumulative payroll deductions shall be refunded to such
Eligible Employee without any interest thereon.

         26.      HEADINGS. Headings are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.

                                       16<PAGE>

                                                                   EXHIBIT 10.39

                        COVAD COMMUNICATIONS GROUP, INC.

                            EXECUTIVE SEVERANCE PLAN

                                       AND

                            SUMMARY PLAN DESCRIPTION

                         Effective Date: August 1, 2003

<PAGE>

                        COVAD COMMUNICATIONS GROUP, INC.
                            EXECUTIVE SEVERANCE PLAN
                                       AND
                            SUMMARY PLAN DESCRIPTION

SECTION 1. INTRODUCTION. The Covad Communications Group, Inc. Executive
Severance Plan (the "Plan") is primarily designed to provide those eligible
employees of Covad Communications Group, Inc. (the "Company") and its
subsidiaries whose employment is terminated for reasons delineated in the Plan
with financial assistance while they are seeking new employment opportunities.
The Plan is also intended to satisfy, where applicable, the obligations of the
Company under the Federal Worker Adjustment and Retraining Notification ("WARN")
Act. The Plan is effective for eligible employees who are notified between
August 1, 2003 and December 31, 2004 that their employment will be terminated.

This Plan is designed to be an "employee welfare benefit plan," as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). This Plan is governed by ERISA and, to the extent applicable, the
laws of the State of California. This document constitutes both the official
plan document and the required summary plan description under ERISA.

Only those employees who are notified in writing of their participation in the
Plan shall be eligible for Severance Benefits under the Plan.

SECTION 2. DEFINITIONS.

         "1934 ACT": The Securities Exchange Act of 1934, as amended.

         "BENEFICIAL OWNER": As defined in Rule 13d-3 of the SEC under the 1934
Act.

         "CHANGE OF CONTROL" shall include any of the following:

                  1.       Any person (as such term is used in Rule 13d-5 of the
SEC under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a Subsidiary of the Company or any employee benefit
plan (or any related trust) of the Company or a Subsidiary of the Company,
becomes the Beneficial Owner of 50% or more of the common stock of Group or of
Voting Securities representing 50% or more of the combined voting power of all
Voting Securities of the Company;

                  2.       Incumbent Directors cease for any reason to
constitute at least 50% of the members of the Board of Directors of the Company
("Board"), for which purpose "Incumbent Director" means (a) any individual
serving on the date hereof as a member of the Board, and (b) any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by the stockholders was approved by a vote or written
consent of at least a majority of the directors who are then Incumbent Directors
unless the initial assumption of office of such subsequently-elected or
appointed director is in connection with an Imminent Change of Control Date;

                                       2

<PAGE>

                  3.       Approval by the stockholders of the Company of any of
the following:

                  (A)      a merger, reorganization or consolidation ("Merger")
with respect to which the individuals and entities who were the respective
Beneficial Owners of the stock and Voting Securities of the Company immediately
before such Merger do not, after such Merger, beneficially own, directly or
indirectly, more than 50% of, respectively, the common stock and the combined
voting power of the Voting Securities of the corporation resulting from such
Merger in substantially the same proportion as their ownership immediately
before such Merger, or

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

         "CHANGE IN POSITION OR JOB DUTIES": Any of the following constitutes a
change in a position or job duties:

                  (1)      Your position (including offices, titles, reporting
requirements and responsibilities), authority and duties are not commensurate in
all material respects with the principal position, authority and duties held by,
exercised by and assigned to you at any time during the 90-day period
immediately before the effective date of the Change of Control;

                  (2)      You are requested to principally perform your
services at a location more than 40 miles from the location you were performing
them during the 90-day period immediately before the effective date of the
Change of Control;

                  (3)      A reduction of ten percent (10%) or more in the level
of your base salary, bonus, stock options or employee benefits (in the
aggregate), other than a reduction implemented with your consent or a reduction
that is equivalent to a reduction in base salaries, bonus opportunities, stock
options and/or employee benefits (in the aggregate), as applicable, imposed on
peer executives of the Company (if you are an employee of Company) or a
Subsidiary (if you are an employee of a Subsidiary); or

                  (4)      There is any material change in welfare and fringe
benefits you received in the year prior to the effective date of the Change of
Control.

         "CODE": The Internal Revenue Code of 1986, as amended.

         "IMMINENT CHANGE OF CONTROL DATE": Any date on which occurs (a) a
presentation to the Board or to Group's stockholders generally of a proposal or
offer for a Change of Control, or (b) the public announcement (whether by
advertisement, press release, press interview, public statement, SEC filing or
otherwise) of a proposal or offer for a Change of Control, or (c) the lapse of a
one-year period following a prior Imminent Change of Control Date if the
proposal or offer triggering such prior Imminent Change of Control Date remains
effective and unrevoked on such date.

                                       3

<PAGE>

         "INVOLUNTARY TERMINATION": Any purported termination of your employment
by Group or a Subsidiary other than as expressly excluded under this definition.
Involuntary termination does not include termination of employment due to:

                  (1)      "Disability" defined as any medically determinable
physical or mental impairment that has lasted for a continuous period of not
less than six months and can be expected to be permanent or of indefinite
duration, and that renders you unable to perform the essential functions of your
job with or without reasonable accommodation.

                  (2)      Death;

                  (3)      "Cause" defined as any of the following: (i)
conviction of any felony which includes as an element of the crime a
premeditated intention to commit the act, (ii) serious misconduct involving
dishonesty in the course of employment, or (iii) habitual neglect of your duties
(other than on account of disability) which habitual neglect materially
adversely affects your performance of your duties and continues for 30 days
following your receipt of notice from the Board of Directors of the Company (if
you are an employee of the Company), or the Board of Directors of a Subsidiary
(if you are an employee of a Subsidiary), which specifically identifies the
nature of the habitual neglect and the duties that are materially adversely
affected and states that, if not cured, such habitual neglect constitutes
grounds for termination; except that Cause shall not mean: (1) bad judgment or
negligence other than habitual neglect of duty; (2) any act or omission believed
by you in good faith to have been in or not opposed to the interest of Group and
its Subsidiaries (without intent to gain, directly or indirectly, a profit to
which you were not legally entitled); (3) any act or omission with respect to
which a determination could properly have been made by the board of directors of
your employer that you met the applicable standard of conduct for
indemnification or reimbursement under such employer's by-laws, any applicable
indemnification agreement, or applicable law, in each case in effect at the time
of such act or omission; or (4) any act or omission with respect to which notice
of termination is given more than 12 months after the earliest date on which any
member of the board of directors of your employer, not a party to the act or
omission, knew or should have known of such act or omission.

         "SEC": The Securities and Exchange Commission.

         "SUBSIDIARY" OR "SUBSIDIARIES": Any corporation as defined in Section
424(f) of the Code with the Company being treated as the employer corporation
for purposes of this definition, and any partnership or limited liability
company in which Group or any Subsidiary has a direct or indirect interest
(whether in the form of voting power or participation in profits or capital
contribution) of 50% or more. The determination of Subsidiary status shall be
made, in the case of a Change of Control, at the time of the occurrence of the
event constituting a Change of Control; and in the case of an event relating to
employment status or benefits, at the time such event occurs.

         "UNCORRECTED PERFORMANCE DEFICIENCIES": Means the performance of your
duties fails to meet an acceptable level as determined by the CEO thirty (30)
days following your receipt of written notice from the CEO which specifically
identifies the nature of the performance deficiencies and the acceptable level
of performance which he/she expects the executive to achieve.

                                       4

<PAGE>

         "VOTING SECURITIES": Means securities of a corporation that are
entitled to vote generally in the election of directors of such corporation.

SECTION 3. ELIGIBILITY TO PARTICIPATE.

         A. GENERAL RULES. You will generally be eligible to participate and to
receive benefits under the Plan if you meet all of the following requirements:

                           1.       you are a regular full-time employee of the
         Company or a Subsidiary in Salary Grades M4J, M5K or M6L;

                           2.       you meet one of the following requirements:

                                    (a)      you are notified during the term of
                                             the Plan (that is, the period
                                             commencing August 1, 2003 and
                                             ending on December 31, 2004) of
                                             your Involuntary Termination for
                                             reasons other than Cause or
                                             Uncorrected Performance
                                             Deficiencies; or

                                    (b)      a "Change of Control" occurs as
                                             defined herein and one of the
                                             following two (2) events happens
                                             within six (6) months of the
                                             effective date of the Change of
                                             Control:

                                             (1)      you experience a "Change
                                                      in Position and Job
                                                      Duties" as defined herein;
                                                      or

                                             (2)      you are notified of your
                                                      Involuntary Termination
                                                      for reasons other than
                                                      Cause;

                           3.       you have returned to the Company all company
         documents created and received by you during your employment
         (electronic and paper) with the exception only of your personal copies
         of documents evidencing your hire, termination, compensation, benefits
         and stock options, and any other documents you have received as a
         shareholder of Group;

                           4.       you have returned to the Company all items
         of property provided to you for your use during employment with the
         Company and its Subsidiaries including, but not limited to, computers
         (laptops or otherwise), software, modems, routers, cell phones, all
         peripherals, building access/ID cards, keys and passes, credit and
         calling cards issued to you;

                           5.       you execute the General Release of All
         Claims, a copy of which is attached as Exhibit A, within five (5) days
         after your termination date if you are under age forty (40), or you
         execute the General Release of All Claims, a copy of which is attached
         as Exhibit B, within twenty-one (21) days after your termination date
         if you are age forty (40) or over; and

                           6.       you are not in one of the excluded
         categories listed below:

                                       5

<PAGE>

         B. EXCEPTIONS. You will not be eligible for severance benefits under
this Plan if:

                           1. you voluntarily terminate employment where there
         has been no Change in Position or Job Duties, unless such voluntary
         termination occurs after you receive notice of an involuntary
         termination for reasons other than Cause or Uncorrected Performance
         Deficiencies which would otherwise qualify you for benefits and the
         Plan Administrator determines, in its sole discretion, that your
         earlier voluntary termination is in the best interests of the Company
         or a Subsidiary;

                           2. you are a temporary or seasonal employee or work
         for the Company or a Subsidiary solely as a leased employee,
         independent contractor, consultant or agent or you are otherwise
         classified as such by the Company or a Subsidiary (whether or not such
         classification is upheld upon governmental or judicial review); or

                           3. you are covered by any other severance or
         separation pay plan or arrangement with the Company or a Subsidiary or
         by an employment agreement with the Company or a Subsidiary that
         provides for severance benefits and that is in effect on your
         termination.

SECTION 4. SEVERANCE BENEFITS.

         A. TIME OF PAYMENT AND FORM OF BENEFIT. If you are eligible for
severance benefits under the Plan you will receive these benefits in the form of
a single lump sum payment (unless the Plan Administrator determines, in its sole
discretion, to pay such benefits in installments; provided, however, that all
payments under the Plan will be completed within twenty-four (24) months of your
termination date) and are subject to all applicable withholdings. Your benefits
will be paid as soon as administratively feasible after the occurrence of the
following events:

                           1. (a) you have been notified in writing of an
         Involuntary Termination for reasons other than Cause or Uncorrected
         Performance Deficiencies; (b) within 6 months of a Change In Control
         you have been notified in writing that it is determined that you have
         experienced a "Change in Position and Job Duties" or an Involuntary
         Termination for reasons other than Cause under the Plan; and

                           2. the Company or a Subsidiary's receipt of your
         executed General Release; and

                           3. the expiration of any rescission or revocation
         period applicable to your executed General Release.

         B. AMOUNT OF SEVERANCE PAY. If you do not sign the General Release, you
will receive two (2) weeks of Salary. If you do sign the General Release, the
amount of your severance benefit will generally be determined in accordance with
the guidelines set forth below, measured as of the effective date of your
termination of active employee status:

                           1. Employees who have been notified of an Involuntary
         Termination because of Uncorrected Performance Deficiencies will
         receive sixty (60) days of salary;

                                       6

<PAGE>

                           2. Employees who have been notified of an Involuntary
         Termination for reasons other than Cause or Uncorrected Performance
         Deficiencies will receive one hundred and eighty (180) days of salary;

                           3. Within 6 months of a Change In Control, employees
         who have been determined to have experienced a "Change in Position and
         Job Duties" or an Involuntary Termination for reasons other than Cause
         will receive one hundred and eighty (180) days of salary.

                           4. SALARY generally means your annual base salary
         determined as of your termination date and generally does not include,
         for example, bonuses, overtime compensation, incentive pay, shift
         premiums or differentials, compensation associated with employee stock
         options or stock purchase plans, reimbursements, or expense allowances.
         If you are a commissioned sales personnel, your salary will also
         include sales commissions for the number of days of Salary you will
         receive as severance pay as outlined above (such commissions will be
         determined using the amount of your monthly commission target or, if
         you are in a ramp-up period as of your termination date, your monthly
         ramp-up commission target). Sixty (60) days of Salary means the base
         salary you would earn during the sixty (60) calendar days immediately
         following your date of termination. One hundred and eighty (180) days
         of Salary means the base salary you would earn during the One hundred
         and eighty (180) calendar days immediately following your date of
         termination. If you are paid on an hourly basis, your base salary shall
         be computed based on a forty (40) hour work week.

                           5. Notwithstanding any other provision of the Plan to
         the contrary, your total severance pay under this Plan shall not exceed
         one (1) time your "annual compensation" earned during the calendar year
         immediately preceding your termination of employment (calculated on an
         annualized basis). 'Annual compensation' means the total of all
         compensation, including wages, salary, and any other benefit of
         monetary value, whether paid in the form of cash or otherwise, which
         was paid as consideration for the employee's service during the year,
         or which would have been so paid at the employee's usual rate of
         compensation if the employee had worked a full year.

                           6. If your termination is deemed covered by WARN, the
         benefit payable under this Plan shall be considered to be payments
         required by that Act. For employees who sign the General Release and
         are subject to WARN, the benefits payable under this Plan shall not be
         less than the amount required by WARN plus an additional amount to be
         determined by the Company or its Subsidiary.

         C. OTHER SEVERANCE AGREEMENTS. The Plan Administrator may, as it deems
appropriate and in its sole discretion, authorize severance benefits in an
amount different from the guideline amount. Under certain circumstances, the
Plan Administrator may, in its sole discretion, waive or modify, with respect to
one or more classes of employees, the eligibility requirements for severance
benefits or modify the method of calculating their severance benefits.

         D. VACATION PAY. You will also receive a lump sum payment for all your
accrued and unused vacation through your termination date in a separate
paycheck.

                                       7

<PAGE>

         E. REEMPLOYMENT. In the event you are re-employed by Group or a
Subsidiary during the period following your termination date that is equal to
the number of days of Salary you will receive as severance pay as outlined in
subsection 4.B., you will be required to repay to the Company or its Subsidiary
a prorated portion of the severance pay received under subsection 4.B.

SECTION 5. COBRA CONTINUATION COVERAGE. Your existing coverage under the
Company's group health plan (and, if applicable, the existing group health
coverage for your eligible dependents) will end on the last day of the month in
which your employment terminates. You and your eligible dependents may then be
eligible to elect temporary continuation coverage under the Company's group
health plan in accordance with the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"). You and your eligible dependents will be
provided with a COBRA election form and notice which describe your rights to
continuation coverage under COBRA. If you are eligible for severance benefits
under the Plan at the time of your termination of employment and elect COBRA
continuation coverage, then the Company will pay for COBRA coverage for you and,
if applicable, your eligible dependents (such payments shall not include COBRA
coverage with respect to the Company's Section 125 health care reimbursement
plan) for up to six (6) months - the actual amount received will be equivalent
to the days of salary of severance you receive. After such period of
Company-paid coverage, you (and, if applicable, your eligible dependents) may
continue COBRA coverage at your own expense in accordance with COBRA. No
provision of this Plan will affect the continuation coverage rules under COBRA.
Therefore, the period during which you must elect to continue the Company's
group health plan coverage under COBRA, the length of time during which COBRA
coverage will be made available to you, and all your other rights and
obligations under COBRA will be applied in the same manner that such rules would
apply in the absence of this Plan. Any such election is your responsibility, not
the Company's or a Subsidiary's.

In addition, the Company or a Subsidiary shall provide, at no cost to you,
continued eligibility for you and your eligible dependents in the Company's
Employee Assistance Program for up to six (6) months - the actual amount
received will be equivalent to the days of salary of severance you receive.

SECTION 6. OTHER EMPLOYEE BENEFITS. All non-health benefits (such as life
insurance and disability coverage) terminate as of your termination date (except
to the extent that any conversion privilege is available thereunder). This Plan
does not affect any vested benefits you may have under stock option, stock
purchase, or 401(k) plans of the Company or its Subsidiaries; your rights, if
any, under these plans, including any rights you may have to exercise vested
option shares, continue as set forth in the documents governing such plans.

SECTION 7. PLAN ADMINISTRATION. As the Plan Administrator, the Company has full
discretionary authority to administer and interpret the Plan, including
discretionary authority to determine eligibility for participation and for
benefits under the Plan, the amount of benefits (if any) payable per
participant, and to interpret ambiguous terms. The Plan Administrator may
delegate any or all of its administrative duties to personnel of the Company or
a Subsidiary. Any such delegation will carry with it the full discretionary
authority of the Plan Administrator to carry out the delegated duties. The
Company, as the Plan Administrator, will indemnify and hold harmless any person
to whom it delegates its responsibilities; provided, however, such

                                       8

<PAGE>

person does not act with gross negligence or willful misconduct. All
determinations by the Plan Administrator or its delegate will be final and
conclusive upon all persons.

SECTION 8. BENEFITS. All benefits will be paid from the general assets of the
Company. The Company will not establish a trust to fund the benefits which may
become due and payable under the Plan. The benefits provided under the Plan are
not assignable and may be conditioned upon your compliance with any
confidentiality agreement you have entered into with the Company or upon your
compliance with any Company policy or program.

SECTION 9. CLAIMS PROCEDURE.

                  A. INITIAL BENEFIT CLAIM PROCEDURE.

                  Benefits under this Plan will be calculated and paid
automatically to eligible Participants. If, however, you believe that you were
not paid the benefits due and owing to you, you may file a claim with the
Administrator. The claim must be in writing and state the basis on which you
claim additional benefits. No claim for Plan benefits shall be valid unless it
is submitted in writing to the Administrator within sixty (60) days following
the receipt or denial of the disputed benefit. Employees who are denied Plan
benefits at the termination of their employment and who feel they are entitled
to Plan benefits must file a claim for Plan benefits within sixty (60) days
following their Termination Date.

If your claim for benefits under the Plan is denied in whole or in part, you
will be notified by the Administrator in writing or electronically within ninety
(90) days after the date the claim is delivered to the Administrator. Any
electronic notification shall comply with Department of Labor regulations
regarding such matters. If the Administrator determines that special
circumstances require an extension of time for processing the claim, you will be
given written notice of the extension prior to the expiration of the initial
ninety (90) day period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
expects to decide the claim. In no event shall such extension exceed a period of
ninety (90) days from the end of the initial period.

If a claim for benefits is denied, the Administrator will notify you in writing.
The notification will be written in understandable language and will state: (i)
the specific reasons for denial of the claim, (ii) specific references to Plan
provisions on which the denial is based, (iii) a description (if appropriate) of
any additional material or information necessary for you to perfect the claim,
and (iv) an explanation of the Plan's review procedure and a statement of your
rights to bring a civil action under Section 502(a) of ERISA if your claim for
benefits is denied on appeal.

         B. REVIEW OF DENIED CLAIMS.

Within 60 days after a claim has been denied, in whole or in part, you (or your
authorized representative) may request a review by submitting to the
Administrator a written statement: (a) requesting a review of the denial of the
claim; (b) setting forth all of the grounds upon which the request for review is
based and any facts in support thereof; and (c) setting forth any issues or
comments which you deem relevant to the claim. You may, in addition to written
comments, submit documents, records, and other information relating to the claim
for benefits. You will be

                                       9

<PAGE>

provided, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to the claim for benefits.
A document, record or other information shall be considered "relevant" to the
claim if the document, record or other information (i) was relied upon in making
the benefit determination; (ii) was submitted, considered or generated in the
course of making the benefit determination, without regard to whether it was
relied upon in making the benefit determination; or (iii) if it demonstrates the
Administrator's compliance with administrative processes and safeguards.

The Administrator shall make a decision on review within sixty (60) days after
the receipt of your request for review by the Plan, unless the Administrator
determines that special circumstances (such as the need to hold a hearing)
require an extension of time for processing the claim. If the Administrator
determines that an extension of time for processing is required, written notice
of the extension shall be furnished to you prior to the termination of the
initial sixty (60) day period. In no event shall such extension exceed a period
of sixty (60) days from the end of the initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Plan expects to make its determination on review.

The Administrator will provide you with written or electronic notification of
the Plan's benefit determination on review. An adverse benefit determination
shall set forth (i) the specific reason(s) for the adverse determination; (ii)
reference to the specific Plan provisions on which the benefit determination is
based; (iii) a statement that you are entitled to receive, upon request and free
of charge, reasonable access to, and copies of all documents, records and other
information relevant to your claim for benefits; and (iv) a statement of your
rights to bring a civil action under Section 502(a) of ERISA.

SECTION 10. PLAN TERMS. The Plan supersedes any and all prior separation,
severance and salary continuation arrangements, programs and plans which were
previously offered by the Company or a Subsidiary to the covered employees.

SECTION 11. PLAN AMENDMENT OR TERMINATION. The Company reserves the right to
terminate or amend the Plan at any time and in any manner. Any action amending
or terminating the Plan shall be in writing and executed by the Chief Financial
Officer or the Executive in charge of Human Resources for the Company. The
provisions of the Plan are intended to serve as mere guidelines for the payment
of severance benefits under certain prescribed circumstances and are not
intended to provide any employee with a vested right to severance benefits.
Accordingly, any termination or amendment of the Plan may be made effective
immediately with respect to any benefits not yet paid, whether or not prior
notice of such amendment or termination has been given to affected employees.
This Plan terminates by its own terms when all benefits hereunder have been
paid.

SECTION 12. TAXES. The Company or a Subsidiary will withhold taxes and all other
applicable payroll deductions from any severance payment.

SECTION 13. NO RIGHT TO EMPLOYMENT. No provision of the Plan is intended to
provide you or any other employee with any right to continue employment with the
Company or a Subsidiary or otherwise affect the right of the Company or any such
Subsidiary, which right is hereby

                                       10

<PAGE>

expressly reserved, to terminate the employment of any individual at any time
for any reason, with or without cause.

SECTION 14. STATEMENT OF ERISA RIGHTS. As a participant in the Covad
Communications Group, Inc. Severance Plan (the "Plan"), you are entitled to
certain rights and protections under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). ERISA provides that all Plan participants shall
be entitled to:

         A. Examine, without charge, at the Plan Administrator's office and at
other specified locations such as worksites, all Plan documents, including all
documents filed by the Plan with the U.S. Department of Labor, such as plan
descriptions.

         B. Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may make a
reasonable charge for the copies.

                  In addition to creating rights for certain employees of the
Company and its Subsidiaries under the Plan, ERISA imposes duties upon the
people who are responsible for the operation of the employee welfare benefit
plan. The people who operate the Plan (called "fiduciaries") have a duty to do
so prudently and in the interest of the employees who are covered by the Plan.

                  No one, including your employer or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a welfare benefit to which you are entitled under the Plan or from
exercising your rights under ERISA.

                  If your claim for a welfare (severance) benefit is denied in
whole or in part, you must receive a written explanation of the reason for the
denial. You have the right to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
thirty (30) days, you may file suit in a federal court. In such a case, the
court may require the Plan Administrator to provide the materials and pay you up
to $110 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Plan Administrator. If you
have a claim for a severance benefit which is denied or ignored, in whole or in
part, you may file suit in a federal or a state court. If it should happen that
the Plan fiduciaries misuse the Plan's money (if any) or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor or you may file suit in a federal court. The court
will decide who should pay court costs and legal fees. If you are successful in
your lawsuit, the court may order the party you have sued to pay your legal
costs, including attorney fees. However, if you lose, the court may order you to
pay these costs and fees, for example, if it finds that your claim or suit is
frivolous.

         If you have any questions about the Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest office of the Pension and
Welfare Benefits Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries,
Pension and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain
publications

                                       11

<PAGE>

about your rights and responsibilities under ERISA by calling the publications
hotline of the Pension and Welfare Benefits Administration.

SECTION 15. EXECUTION. To record the amendment and restatement of the Plan as
set forth herein, effective as of August 1, 2003, Covad Communications Group,
Inc. has caused its duly authorized officer to execute the same this 1st day of
August.

                                           COVAD COMMUNICATIONS GROUP, INC.

                                                 By: /s/ Michael Hanley
                                                     --------------------------

                                           Michael Hanley
                                           Senior Vice President, Organizational
                                           Transformation

                                       12

<PAGE>

                           ADDITIONAL PLAN INFORMATION

<TABLE>
<S>                                         <C>
Name of Plan:                               Covad Communications Group, Inc. Severance Plan
--------------------------------------------------------------------------------------------------------------------
Company Sponsoring Plan:                    Covad Communications Group, Inc.
                                            3420 Central Expressway
                                            Santa Clara, California 95051
--------------------------------------------------------------------------------------------------------------------
Employer Identification Number:             94- 3255161
--------------------------------------------------------------------------------------------------------------------
Plan Number:                                50
--------------------------------------------------------------------------------------------------------------------
Plan Year:                                  The calendar year.
--------------------------------------------------------------------------------------------------------------------
Plan Administrator:                         Covad Communications Group, Inc.
                                            c/o Michael Hanley, Senior Vice President, Organizational Transformation
                                            3420 Central Expressway
                                            Santa Clara, California 95051
                                            Phone: (408) 616-6628
--------------------------------------------------------------------------------------------------------------------
Direct Inquiries to:                        Kristin Ming
                                            (408) 616-6927
--------------------------------------------------------------------------------------------------------------------
Agent for Service of Legal Process:         Plan Administrator
--------------------------------------------------------------------------------------------------------------------
Type of Plan:                               Severance Plan/Employee Welfare Benefit Plan
--------------------------------------------------------------------------------------------------------------------
Plan Costs:                                 The cost of the Plan is paid by Covad Communications Group, Inc. and its
                                            subsidiaries
</TABLE>

                                       13

<PAGE>

                                    Exhibit A

                          GENERAL RELEASE OF ALL CLAIMS

         In consideration of the payments and benefits_________________[amount
of benefit] to be received by me,______________________________ [employee name]
under the Covad Communication Group, Inc. Severance Plan on behalf of myself, my
heirs, executors, administrators, successors, and assigns, hereby make the
following agreements and acknowledgements:

I.       RELEASE AND WAIVER OF ALL CLAIMS

         A. I hereby agree that I fully and forever discharge, waive and release
any and all claims and causes of action of any kind that I may have had or now
have against Covad Communications Group, Inc., and any of its affiliates,
predecessors, successors, parents, subsidiaries or assigns and any of their
respective officers, directors, agents, employees, and representatives
(collectively, the "COMPANY" or "COVAD") arising out of or relating in any way
to (1) my employment with the Company and the termination thereof, including but
not limited to claims of wrongful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, violation of public policy, defamation,
personal injury, infliction of emotional distress, claims for unpaid wages,
salaries and commissions, claims under Title VII of the 1964 Civil Rights Act,
as amended, the California Fair Employment and Housing Act, the Equal Pay Act of
1963, the California Labor Code including Section 1197.5 thereof, the Americans
with Disabilities Act, the Civil Rights Act of 1866, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), WARN, and any other local,
state and federal laws and regulations relating to employment, except any claims
I may have for unemployment and workers' compensation insurance benefits.

         B. I hereby agree that I fully and forever waive any and all rights and
benefits conferred upon me by the provisions of Section 1542 of the Civil Code
of the State of California, or analogous law of any other state, which states as
follows:

A general release does not extend to claims which the creditor [i.e., employee]
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
the debtor [i.e., the Company].

         C. I understand that various lawsuits have been brought against the
Company alleging fraud and/or other legal violations relating to transactions in
the Company's securities, and that some of those cases have been brought as
purported class actions on behalf of various classes of persons who acquired
such securities. I have made my own determination as to whether I wish to
consult with the law firms purporting to represent such classes, and as to
whether I am eligible to and wish to participate in such cases. I understand
that by signing this Agreement I will be precluded from such participation, and
will be waiving any rights I might otherwise have had as a result of such
lawsuits.

                                       14

<PAGE>

                  I agree and understand that if, hereafter, I discover facts
different from or in addition to those which I now know or believe to be true,
that the waivers of this General Release of All Claims ("GENERAL RELEASE") shall
be and remain effective in all respects notwithstanding such different or
additional facts or the discovery thereof.

II. CONFIDENTIAL INFORMATION & COMPANY EMPLOYEES

                  I hereby agree and understand that:

         A.       I am required to return to the Company immediately upon my
termination of employment all Company Information, including but not limited to
notebooks, notes, manuals, memoranda, records, diagrams, blueprints, bulletins,
formulas, reports, computer programs, or other data or memorializations of any
kind, as well as any Company property or equipment, that I have in my possession
or under my control. I further agree and understand that I am not entitled or
authorized to keep any portions, summaries or copies of Company Information, and
that I am under a continuing obligation to keep all Company Information
confidential and not to disclose it to any third party in the future. I
understand that the term "COMPANY INFORMATION" includes, but is not limited to,
the following:

                  -        Trade secret, information, matter or thing of a
         confidential, private or secret nature, connected with the actual or
         anticipated products, research, development or business of the Company
         or its customers, including information received from third parties
         under confidential conditions; and

                  -        Other technical, scientific, marketing, business,
         product development or financial information, the use or disclosure of
         which might reasonably be determined to be contrary to the interests of
         the Company.

         B.       I am prohibited for a period of one (1) year after the
termination of my employment, from soliciting for employment, whether as an
employee, independent contractor, or agent, any Company employee; and for that
same time period I am prohibited from encouraging or otherwise enticing any
Company employee to terminate his or her employment with the Company.

         C.       The promises and agreements of this Section II. are a material
inducement to the Company to provide me with the payments and benefits under the
Plan and that, for the breach thereof, the Company will be entitled to pursue
its legal and equitable remedies against me, including, without limitation, the
right to immediately cease payments made pursuant to the Plan and/or seek
injunctive relief; provided, however, this General Release will remain in full
force and effect.

         III. ENTIRE AGREEMENT

                  I agree and understand that this General Release contains the
entire agreement between the Company and me with respect to any matters referred
to in the General Release, and supersedes any and all previous oral or written
agreements.

                                       15

<PAGE>

         IV. NO ADMISSION

                  I agree and understand that neither the fact nor any aspect of
this General Release is intended, should be deemed, or should be construed at
any time to be an admission of liability or wrongdoing by either myself or the
Company.

         V. SEVERABILITY

                  I agree and understand that if any provision, or portion of a
provision, of this General Release is, for any reason, held to be unenforceable,
that such unenforceability will not affect any other provision, or portion of a
provision, of this General Release and this General Release shall be construed
as if such unenforceable provision or portion had never been contained herein.

         VI. DISPUTE RESOLUTION

                  I hereby agree and understand that any and all disputes
regarding any alleged breach of this General Release shall be settled by final
and binding arbitration in the County of Santa Clara, California, or in the
County where I reside at the time the dispute arises, at my option, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association, or its successor, and judgment upon the
award rendered may be entered in any court with jurisdiction.

VII. TIME TO CONSIDER AND SIGN GENERAL RELEASE

                  I understand that I may have five (5) days after receipt of
this General Release within which I may review and consider, discuss with an
attorney of my own choosing and at my own expense, and decide whether or not to
sign this General Release.

VIII. EFFECTIVE DATE

                  I understand that this General Release becomes effective
immediately upon signing it.

IX. MISCELLANEOUS ACKNOWLEDGEMENTS

         A. I hereby acknowledge that I understand that, but for my signing of
this General Release, I would not be entitled to nor would I be provided with
any of the payments and benefits under the Plan. I understand further that, even
if I did not sign this General Release, I would still be entitled to:

                           1.       All wages, including any paid vacation, less
         applicable deductions, earned by me through my termination date; and

                           2.       The opportunity, if I am eligible, to elect
         to continue to participate in (and, if applicable, my dependents are
         eligible to elect to continue their participation in) the group health
         insurance plans provided by the Company pursuant to the terms and

                                       16

<PAGE>

         conditions of the Consolidated Omnibus Budget Reconciliation Act of
         1985, as amended ("COBRA").

         B. I hereby acknowledge that any agreement that I signed in connection
with my employment with the Company regarding employee inventions, authorship,
proprietary and confidential information shall remain in full force and effect
following the termination of my employment.

                    EMPLOYEE'S ACCEPTANCE OF GENERAL RELEASE

BEFORE SIGNING MY NAME TO THIS GENERAL RELEASE, I STATE THAT: I HAVE READ IT; I
UNDERSTAND IT AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I AM AWARE OF MY
RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING IT; AND I HAVE SIGNED IT
KNOWINGLY AND VOLUNTARILY.

Date delivered to employee ____________________, 2003

Signed this _____ day of ___________, 2003

                                              ________________________________
                                                     Employee's Signature

                                              ________________________________
                                                   Employee's Name (Printed)

         Copies of the signed release or revocation letter should be mailed or
faxed to:

                                    Kristin Ming
                                    Benefits Analyst
                                    3420 Central Expressway
                                    Santa Clara, California 95051
                                    Fax: (408) 616-6639

                                       17

<PAGE>

                                    Exhibit B
                          GENERAL RELEASE OF ALL CLAIMS

         In consideration of the payments and benefits_______________[amount of
benefit] to be received by me,_________________________________[employee name]
under the Covad Communication Group, Inc. Severance Plan on behalf of myself, my
heirs, executors, administrators, successors, and assigns, hereby make the
following agreements and acknowledgements:

I. RELEASE AND WAIVER OF ALL CLAIMS

         A. I hereby agree that I fully and forever discharge, waive and release
any and all claims and causes of action of any kind that I may have had or now
have against Covad Communications Group, Inc., and any of its affiliates,
predecessors, successors, parents, subsidiaries or assigns and any of their
respective officers, directors, agents, employees, and representatives
(collectively, the "COMPANY" or "COVAD") arising out of or relating in any way
to (1) my employment with the Company and the termination thereof, including but
not limited to claims of wrongful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, violation of public policy, defamation,
personal injury, infliction of emotional distress, claims under Title VII of the
1964 Civil Rights Act, as amended, the California Fair Employment and Housing
Act, the Equal Pay Act of 1963, the California Labor Code including Section
1197.5 thereof, the Age Discrimination in Employment Act of 1967, as amended,
the Americans with Disabilities Act, the Civil Rights Act of 1866, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), WARN, and any
other local, state and federal laws and regulations relating to employment,
except any claims I may have for unemployment and workers' compensation
insurance.

         B. I hereby agree that I fully and forever waive any and all rights and
benefits conferred upon me by the provisions of Section 1542 of the Civil Code
of the State of California, or analogous law of any other state, which states as
follows:

A general release does not extend to claims which the creditor [i.e., employee]
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
the debtor [i.e., the Company].

         C. I understand that various lawsuits have been brought against the
Company alleging fraud and/or other legal violations relating to transactions in
the Company's securities, and that some of those cases have been brought as
purported class actions on behalf of various classes of persons who acquired
such securities. I have made my own determination as to whether I wish to
consult with the law firms purporting to represent such classes, and as to
whether I am eligible to and wish to participate in such cases. I understand
that by signing this Agreement I will be precluded from such participation, and
will be waiving any rights I might otherwise have had as a result of such
lawsuits.

                  I agree and understand that if, hereafter, I discover facts
different from or in addition to those which I now know or believe to be true,
that the waivers of this General

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Release of All Claims ("GENERAL RELEASE") shall be and remain effective in all
respects notwithstanding such different or additional facts or the discovery
thereof.

II. CONFIDENTIAL INFORMATION & COMPANY EMPLOYEES

                  I hereby agree and understand that:

         A. I am required to return to the Company immediately upon my
termination of employment all Company Information, including but not limited to
notebooks, notes, manuals, memoranda, records, diagrams, blueprints, bulletins,
formulas, reports, computer programs, or other data or memorializations of any
kind, as well as any Company property or equipment, that I have in my possession
or under my control. I further agree and understand that I am not entitled or
authorized to keep any portions, summaries or copies of Company Information, and
that I am under a continuing obligation to keep all Company Information
confidential and not to disclose it to any third party in the future. I
understand that the term "COMPANY INFORMATION" includes, but is not limited to,
the following:

                  -        Trade secret, information, matter or thing of a
         confidential, private or secret nature, connected with the actual or
         anticipated products, research, development or business of the Company
         or its customers, including information received from third parties
         under confidential conditions; and

                  -        Other technical, scientific, marketing, business,
         product development or financial information, the use or disclosure of
         which might reasonably be determined to be contrary to the interests of
         the Company.

         B. I am prohibited for a period of one (1) year after the termination
of my employment, from soliciting for employment, whether as an employee,
independent contractor, or agent, any Company employee; and for that same time
period I am prohibited from encouraging or otherwise enticing any Company
employee to terminate his or her employment with the Company.

         C. The promises and agreements of this Section II. are a material
inducement to the Company to provide me with the payments and benefits under the
Plan and that, for the breach thereof, the Company will be entitled to pursue
its legal and equitable remedies against me, including, without limitation, the
right to immediately cease payments made pursuant to the Plan and/or seek
injunctive relief; provided, however, this General Release will remain in full
force and effect.

         III. ENTIRE AGREEMENT

                  I agree and understand that this General Release contains the
entire agreement between the Company and me with respect to any matters referred
to in the General Release, and supersedes any and all previous oral or written
agreements.

         IV. NO ADMISSION

                                       19

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                  I agree and understand that neither the fact nor any aspect of
this General Release is intended, should be deemed, or should be construed at
any time to be an admission of liability or wrongdoing by either myself or the
Company.

         V. SEVERABILITY

                  I agree and understand that if any provision, or portion of a
provision, of this General Release is, for any reason, held to be unenforceable,
that such unenforceability will not affect any other provision, or portion of a
provision, of this General Release and this General Release shall be construed
as if such unenforceable provision or portion had never been contained herein.

         VI. DISPUTE RESOLUTION

                  I hereby agree and understand that any and all disputes
regarding any alleged breach of this General Release shall be settled by final
and binding arbitration in the County of Santa Clara, California, or in the
County where I reside at the time the dispute arises, at my option, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association, or its successor, and judgment upon the
award rendered may be entered in any court with jurisdiction.

VII. WAIVER

                  By signing this Agreement, I acknowledge that:

                  a.       I have carefully read, and understand, this
                           Agreement;

                  b.       I have been given twenty-one (21) days to consider my
                           rights and obligations under this Agreement and to
                           consult with an attorney;

                  c.       The Company advised me to consult with an attorney
                           and/or any other advisors of my choice before signing
                           this Agreement;

                  d.       I understand that this Agreement is legally binding
                           and by signing it I give up certain rights;

                  e.       I have voluntarily chosen to enter into this
                           Agreement and have not been forced or pressured in
                           any way to sign it;

                  f.       I knowingly and voluntarily release Covad, including
                           its affiliates, predecessors, successors, parents,
                           subsidiaries or assigns and any of their respective
                           officers, directors, agents, employees, and
                           representatives from any and all claims I may have,
                           known or unknown, in exchange for the payments I have
                           obtained by signing this Agreement, and that these
                           payments are in addition to any payments I would have
                           otherwise received if I did not sign this Agreement;

                                       20

<PAGE>

                  g.       The General Release in this Agreement includes a
                           waiver and release of all claims I may have under the
                           Age Discrimination in Employment Act of 1967 (29
                           U.S.C. Section 621 et seq.); and

                  h.       This Agreement does not waive any rights or claims
                           that may arise after this Agreement is signed and
                           becomes effective, which is eight (8) days after I
                           sign it.

VIII. OPPORTUNITY TO REVOKE AND EFFECTIVE DATE

                  I understand that this General Release will not become
effective until expiration of the seventh (7) day after I sign it; provided that
I do not revoke it during those seven (7) days, and that for a period of seven
(7) days after I sign this General Release, I may revoke it. I agree and
understand that if I decide to revoke this General Release after I sign it, I
can do so only by delivering a written notification of my revocation, no later
than the seventh day after I sign this General Release, to:

                                    Kristin Ming
                                    Benefits Analyst
                                    3420 Central Expressway
                                    Santa Clara, California 95051
                                    Fax: (408) 616-6639

         IX. MISCELLANEOUS ACKNOWLEDGEMENTS

         A. I hereby acknowledge that I understand that, but for my signing of
this General Release and failure to revoke it during seven (7) days thereafter,
I would not be entitled to nor would I be provided with any of the payments and
benefits under the Plan. I understand that no payments and benefits will be
provided to me until this General Release becomes effective. I understand
further that, even if I did not sign this General Release or if I sign and then
revoke it within seven (7) days thereafter, I would still be entitled to:

                  1.       All wages, including any paid vacation, less
         applicable deductions, earned by me through my termination date; and

                  2.       The opportunity, if I am eligible, to elect to
         continue to participate in (and, if applicable, my dependents are
         eligible to elect to continue their participation in) the group health
         insurance plans provided by the Company pursuant to the terms and
         conditions of the Consolidated Omnibus Budget Reconciliation Act of
         1985, as amended ("COBRA").

         B. I hereby acknowledge that any agreement that I signed in connection
with my employment with the Company regarding employee inventions, authorship,
proprietary and confidential information shall remain in full force and effect
following the termination of my employment.

                                       21

<PAGE>

                    EMPLOYEE'S ACCEPTANCE OF GENERAL RELEASE

BEFORE SIGNING MY NAME TO THIS GENERAL RELEASE, I STATE THAT: I HAVE READ IT; I
UNDERSTAND IT AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I AM AWARE OF MY
RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING IT; AND I HAVE SIGNED IT
KNOWINGLY AND VOLUNTARILY.

Date delivered to employee ____________________, 2003

Signed this _____ day of ___________, 2003

                                               ________________________________
                                                      Employee's Signature

                                               ________________________________
                                                   Employee's Name (Printed)

         Copies of the signed release or revocation letter should be mailed or
faxed to:

                                   Kristin Ming
                                   Benefits Analyst
                                   3420 Central Expressway
                                   Santa Clara, California 95051
                                   Fax: (408) 616-6639

                                       22

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