Document:

<PAGE>

                                                                   Exhibit 4.9.1

                               FIRST AMENDMENT TO
                           INVESTOR RIGHTS AGREEMENT

          THIS FIRST AMENDMENT TO INVESTOR RIGHTS AGREEMENT (this "Amendment")
is entered into as of April 20, 2000 (the "Effective Date"), by and among NETtel
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), GOLD & APPEL
TRANSFER, S.A., WILLIAMS COMMUNICATIONS, INC., NORTEL NETWORKS, INC. AND ALLIED
CAPITAL CORPORATION (each a "Series B Purchaser" and collectively, the "Series B
Purchasers") and certain persons and entities listed on the signature page to
the Series C Purchase Agreement (as defined below) (each a "Series C Purchaser"
and collectively, the "Series C Purchasers" and together with the Series B
Purchasers, the "Purchasers" and each, a "Purchaser").

          WHEREAS, the Company entered into that certain Securities Purchase
Agreement by and among the Company and certain of the Series B Purchasers dated
as of July 23, 1999 and amended on August 2, 1999 (the "Series B Purchase
Agreement") pursuant to which the Company issued to certain of the Series B
Purchasers certain shares of the Company's Series B Convertible Preferred Stock,
par value $.0001 per share (the "Series B Preferred Stock");

          WHEREAS, the Company entered into that certain Investor Rights
Agreement by and among the Company and the Series B Purchasers dated as of July
23, 1999 and amended on August 2, 1999 (the "Investor Rights Agreement"), which
provided for certain rights and responsibilities as set forth therein;

          WHEREAS, the Company has issued shares of the Company's Series C
Convertible Preferred Stock, par value $.0001 per share (the "Series C Preferred
Stock" and together with the Series B Preferred Stock, the "Preferred Stock") to
the Series C Purchasers pursuant to that certain Securities Purchase Agreement
dated as of the Effective Date by and among the Company and the Series C
Purchasers (the "Series C Purchase Agreement");

          WHEREAS, the parties desire to amend the Investor Rights Agreement to
include the Series C Preferred Stock and the Series C Purchasers in the
definition of "Purchasers" as set forth in the introduction herein and to
provide for certain rights and responsibilities as set forth in the Investor
Rights Agreement;

          WHEREAS, Section 6.2 of the Investor Rights Agreement provides for
amendments in a writing signed by the Company and sixty-six and two-thirds
percent of the Series B Purchasers; and

          WHEREAS, capitalized terms used herein without definition shall have
the meanings given to such terms in the Investor Rights Agreement.

          NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
<PAGE>

1.  All references to "Series B Preferred Stock" in the Investor Rights
    Agreement are deleted in their entirety and are hereby replaced with the
    term "Preferred Stock," as such term is defined in this Amendment; provided,
                                                                       --------
    however, that the foregoing shall not apply to Section 2.4 of the Investor
    -------
    Rights Agreement, which shall retain its reference to "Series B Preferred
    Stock" and shall retain its original intent; provided further, that the
                                                 -------- -------
    foregoing shall not apply to the definition of "Series B Preferred Stock"
    set forth in Section 5 of the Investor Rights Agreement.

2.  The first sentence of Section 2.4 is hereby deleted in its entirety and is
    replaced with the following:

          "The following Purchasers may designate one person to serve as an
observer (an "Observer"): (i) any Purchaser holding at least 2,000 shares of
Series B Preferred Stock, and so long as such Purchaser continues to
beneficially own at least (a) 2,000 shares of Series B Preferred Stock or (b)
2,000,000 shares of Common Stock issued on conversion of Series B Preferred
Stock, and (ii) Allied Capital Corporation ("Allied"), until the later of the
expiration of (A) the period during which the aggregate of the following totals
at least $10,000,000: (a) the balance outstanding under Term Loan B Facility
pursuant to that certain Credit Agreement by and among NET-tel Corporation, a
wholly-owned subsidiary of the Company (the "Operating Subsidiary"), Nortel
Networks Inc. and the lenders named therein, dated as of July 28, 1999, as
amended from time to time, owed by the Operating Subsidiary to Allied; (b) the
stated value of the shares of Series B Preferred Stock held by Allied; and (c)
the stated value of the shares of Series C Preferred Stock held by Allied or (B)
the Lock-up Period.  As used herein "Lock-up Period" shall mean that specified
period of time following an initial public offering by the Company pursuant to
which certain stockholders of the Company are prohibited by the managing
underwriter of such initial public offering from transferring or disposing of
certain capital stock of the Company.

3.  Section 6.7(a) is hereby deleted in its entirety and is replaced with the
    following:

    "(a)  If to the Purchasers, to the addresses and numbers set forth next to
    the name of each Purchaser on Schedule 1 hereto."
                                   ----------

4.  The Investor Rights Agreement is hereby amended to include the Schedule 1
                                                                   ----------
    attached hereto.

5.  Except as otherwise provided in this Amendment, the Investor Rights
    Agreement remains unchanged and in full force and effect, and references to
    the "Agreement" contained in the Investor Rights Agreement shall for all
    purposes be deemed to refer to the Investor Agreement as amended by this
    Amendment.

6.  The Investor Rights Agreement, as amended hereby, constitutes the entire
    understanding and agreement among the parties hereto with respect to the
    subject matter hereof, and supersedes all prior and contemporaneous
    agreements and understandings, inducements or conditions, express or
    implied, oral or written, among the parties hereto except as herein and
    therein contained.

                                      -2-
<PAGE>

7.  This Amendment may be executed in counterparts, each of which shall be
    deemed an original, but all of which together shall constitute one and the
    same instrument, and a facsimile signature shall be deemed and original.

             [The remainder of this page intentionally left blank.]

                                      -3-
<PAGE>

          IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
to Investor Rights Agreement, or have caused this First Amendment to Investor
Rights Agreement to be duly executed on their behalf, as of the day and year
first hereinabove set forth.

                                    COMPANY:

                                    NETTEL COMMUNICATIONS, INC.

                                    By:  /s/ James F. Kenefick
                                        ------------------------
                                    Name: James Kenefick
                                         -----------------------
                                    Title: CEO
                                          ----------------------

                                    PURCHASERS:

                                    ALLIED CAPITAL CORPORATION

                                    By: /s/ Scott S. Binder
                                        ------------------------
                                    Name: Scott S. Binder
                                         -----------------------
                                    Title: Principal
                                          ----------------------

                                    FOUNDATION FOR THE INTERNATIONAL NON-
                                    GOVERNMENTAL DEVELOPMENT OF SPACE

                                    By: /s/ Walt Anderson
                                       -------------------------
                                    Name: Walt Anderson
                                         -----------------------
                                    Title: President
                                           ---------------------

                                    GOLD & APPEL TRANSFER, S.A.

                                    By: /s/ Walt Anderson
                                        ------------------------
                                    Name: Walt Anderson
                                         -----------------------
                                    Title: Attorney-in-fact
                                           ---------------------

                                    NORTEL NETWORKS INC.

                                    By: /s/ Mitchell L. Stone
                                        ------------------------
                                    Name: Mitchell L. Stone
                                          ----------------------
                                    Title: Director
                                           ---------------------
<PAGE>

                                    WILLIAMS COMMUNICATIONS, INC.

                                    By: Gordon C. Martin, Jr.
                                        ---------------------------
                                    Name: Gordon C. Martin
                                          -------------------------
                                    Title: SVP, Global Network Svcs
                                           ------------------------

          The undersigned agrees to be bound by the changes to Section 1.3 of
the Investor Rights Agreement as provided in this Amendment.

                                    James F. Kenefick
                                    ------------------------------
                                    James F. Kenefick

<PAGE>

                                   Schedule 1
                                   ----------

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
Name                                    Address
<S>                                     <C>
-------------------------------------------------------------------------------
Allied Capital Corporation              1919 Pennsylvania Avenue, N.W. (Third
                                        Floor)
                                        Washington, D.C. 20006
-------------------------------------------------------------------------------
Foundation for the International        C/o: Walter Anderson
Non-Governmental Development of         1023 I Street, NW
Space                                   Washington, DC 20007
-------------------------------------------------------------------------------
Gold & Appel Transfer, S.A.             Omar Hodge Building
                                        Wickhams Cay
                                        Road Town, Tortula
                                        British Virgin Islands
-------------------------------------------------------------------------------
Nortel Networks Inc.                    GSM 991 15 A40
                                        2221 Lakeside Boulevard
                                        Richardson, TX 75082
-------------------------------------------------------------------------------
Williams Communications, Inc.           One Williams Center
                                        Suite 4100
                                        Tulsa, OK 74172
-------------------------------------------------------------------------------
</TABLE><PAGE>

                                                                    Exhibit 4.10

                                    FORM OF
                        NET-TEL LONG-TERM INCENTIVE PLAN

                                   ARTICLE I
                      Purpose of the Plan and Definitions

Section 1.1  Purpose.  The purpose of the NET-tel Long-Term Incentive Plan (the
             -------
"Plan") is to enable employees, officers, directors of, and consultants and
vendors to, NET-tel Communications, Inc., a Delaware corporation (the
"Company"), and its subsidiaries to (i) own shares of stock in the Company, (ii)
participate in the growth in shareholder value of the Company, (iii) have a
mutuality of interest with shareholders of the Company, and (iv) enable the
Company and its subsidiaries to attract, retain and motivate employees,
officers, directors and consultants and vendors of a particular merit.

Section 1.2  Definitions.  For the purposes of the Plan, capitalized terms not
             -----------
otherwise defined herein shall have the meanings set forth below:

"Award" means any Option, SAR, Restricted Stock, Stock granted as a bonus or in
lieu of other awards, other Stock-Based Awards, Tax Bonus or other cash payments
granted to a Participant under the Plan.

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

"Change in Control" means when (i) any "person" as such term is used in Sections
13(d) and 14(d) of the Exchange Act, other than the Company, an affiliate (as
defined in Rule 12b-2 under the Exchange Act) of the Company or any employee
benefit plan of the Company or any Subsidiary (including any trustee of such
plan acting as trustee), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) directly or indirectly of securities of the
Company representing more than 50% of the combined voting power of the Company's
then outstanding securities, (ii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation (including, without
limitation, an entity that as a result of that transaction owns the Company or
all or substantially all of the Company's assets either directly or through one
or more subsidiaries), or (iii) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one or more transactions) all or substantially
all of the Company's assets.
<PAGE>

"Code" means the Internal Revenue Code of l986, as amended from time to time,
and any successor thereto.

"Consultant" means any independent consultant hired to provide consulting,
technical, business, or other professional services to the Company or any
Subsidiary.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Market Value" means the fair market value of the Stock as determined by
the Committee in good faith determined by such methods or procedures (including
over such periods) as shall be established from time to time by the Committee in
good faith and in accordance with applicable law and the best available facts
and circumstances at the time.  Unless otherwise determined by the Committee,
the Fair Market Value of Stock shall mean the closing sales price of Stock on
the relevant date as reported on the stock exchange or market on which the Stock
is primarily traded, or the Fair Market Value is the closing sales price of the
Stock averaged over the 45 preceding days on which such sales were made, as
reported on the stock exchange or market on which the Stock is primarily traded.

"Incentive Stock Option" or "ISO" means any Stock Option granted under this Plan
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

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

"Stock Option" means the right granted to a Participant pursuant to the Plan to
purchase Stock at a specified price during specified times periods. A Stock
Option may be either as ISO or a Non-Qualified Stock Option.

"Participant" means any employee, officer or director of the Company or any
Subsidiary or Consultant or Vendor whom the Committee has selected to
participate in the Plan and to whom an Award is granted pursuant to the Plan.

"Restricted Stock" means Stock granted to a Participant pursuant to this Plan
that is subject to restrictions on transferability and to a substantial risk of
forfeiture.

"Stock" means the common stock, $ .0001 par value, of the Company.

"Stock-Based Award" means a right that may be denominated or payable in, or
valued in whole or in part by reference to the market value of, Stock,
including, but not limited to, any Stock Option, SAR, Restricted Stock, Stock
granted as a bonus or in lieu of cash obligations.

"Stock Appreciation Right" or "SAR" means the right granted to a Participant to
be paid an amount in cash and/or shares of Stock equal to the increase in the
Fair Market Value of Stock from the date such SAR was granted until the date the
SAR was exercised.

                                       2
<PAGE>

"Subsidiary" shall mean any corporation during any period in which it is a
"subsidiary corporation" (as defined in Section 424(f) of the Code) of the
Company, and any other corporation, partnership, joint venture, business trust
or other entity which is, directly or indirectly, controlled by, in control of,
or is commonly controlled with, the Company.

"Tax Bonus" means a payment in cash in the year in which an amount is included
in the gross income of a Participant in respect of an Award of an amount equal
to the federal, foreign, if any, and applicable state and local income and
employment tax liabilities payable by the Participant as a result of (i) the
amount included in gross income in respect of the Award and (ii) the payment of
the amount in clause (i) and the amount in this clause (ii). For purposes of
determining the amount to be paid to the Participant pursuant to the preceding
sentence, the Participant shall be deemed to pay federal, foreign, if any, and
state and local income taxes at the highest marginal rate of  tax imposed upon
ordinary income for the year in which an amount in respect of the Award is
included in gross income, after giving effect to any deductions therefrom or
credits available with respect to the payment of any such taxes.

"Vendor" means any vendor or supplier of goods, including hardware, software,
programming or technical support or other products, to the Company or any
Subsidiary.

Except where otherwise indicated by the Plan context, any masculine terminology
used herein also shall include the feminine and vice versa, and the definition
of any term herein in the singular shall also include the plural and vice versa.

                                  ARTICLE II
                           Administration of the Plan

Section 2.1  Administration of the Plan. The Plan shall be administered by the
             --------------------------
Compensation Committee of the Board ("Committee"), but if at any time no
Committee shall be in office, then the Board shall exercise all of the functions
of the Committee specified in the Plan.

Section 2.2  Authority of the Committee. Subject to the limitations and terms of
             --------------------------
the Plan, the Committee shall have the sole and complete authority to:

     (a)  select from among the employees, officers and directors of, and
          Consultants and Vendors to, the Company and its Subsidiaries, the
          persons to whom Awards may from time to time be granted hereunder;

     (b)  determine whether and to what extent any Award or any combination of
          Awards are to be granted to each Participant hereunder, without any
          obligation to treat any similarly situated Participants in a similar
          manner;

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

     (d)  determine the terms and conditions, not inconsistent with the terms of
          the Plan, of any Award granted hereunder, including, but not limited
          to, the option or exercise price, the vesting schedule and any
          restrictions or limitations, based upon such

                                       3
<PAGE>

          factors as the Committee shall determine, in its sole discretion,
          without any need for uniformity among such Awards or in any Award
          agreements;

     (e)  determine whether and under what circumstances a Stock Option, SAR or
          Stock-Based Award may be exercised and settled in cash or Stock or
          without a payment of cash;

     (f)  determine whether, to what extent and under what circumstances Stock
          and other amounts payable with respect to an Award shall be deferred
          either automatically or at the election of the Participant;

     (g)  amend the terms of any outstanding Award (with the consent of the
          Participant) to reflect terms not otherwise inconsistent with the
          Plan, including amendments concerning vesting acceleration or
          forfeiture waiver regarding any Award or the extension of a
          Participant's right with respect to Awards granted under the Plan as a
          result of termination of employment or service or otherwise, based on
          such factors as the Committee shall determine, in its sole discretion;

     (h)  adopt, alter and repeal such administrative rules, guidelines and
          practices governing the Plan as it shall, from time to time, deem
          advisable;

     (i)  interpret the terms and provisions of the Plan and any Award (and any
          agreements relating thereto) and correct any defect or omission of
          reconcile any inconsistency in the Plan or in any Award granted
          thereunder; and

     (j)  otherwise supervise the administration of the Plan.

Section 2.3  Finality of Decisions by the Committee.  All decisions made by the
             --------------------------------------
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company, any Subsidiary, shareholders and
Participants.  In exercising, or declining to exercise, any grant of authority
or discretion hereunder, the Committee may consider or ignore such factors or
circumstances and may accord such weight to such factors and circumstances as
the Committee alone and in its sole judgment deems appropriate and without
regard to the affect such exercise, or declining to exercise such grant of
authority or discretion, would have upon the affected Participant, any other
Participant, any employee, the Company, any Subsidiary, any shareholder or any
other person.

                                  ARTICLE III
                           Stock Subject to the Plan

Section 3.1  Stock Subject to the Plan.  The aggregate number of shares of Stock
             -------------------------
available for the grant of Awards under the Plan from time to time shall equal
1,699,000 shares of Stock.

                                       4
<PAGE>

No Award may be granted if the number of shares to which such Award relates,
when added to the number of shares previously issued under the Plan and the
number of shares which may then be acquired pursuant to other outstanding,
unexercised Awards, exceeds the number of shares of Stock then available for
issuance pursuant to the Plan.  If any shares of Stock subject to an Award are
forfeited or such Award is settled in cash or otherwise terminates for any
reason whatsoever without an actual distribution of shares of Stock to the
Participant, any shares of Stock counted against the number of shares of Stock
available for issuance pursuant to the Plan with respect to such Award shall, to
the extent of any such forfeiture, settlement, or termination, again be
available for Awards under the Plan; provided, however, that the Committee may
adopt procedures for the counting of shares of Stock relating to any Award to
ensure appropriate counting, avoid double counting, and provide for adjustments
in any case in which the number of shares of Stock actually distributed differs
from the number of shares previously counted in connection with such Award.

Section 3.2  Adjustments.  If any change is made to the Stock, whether by reason
             -----------
of merger, consolidation, reorganization, recapitalization, stock dividend,
stock-split, combination of shares, or exchange of shares or any other change in
capital structure made without the receipt of consideration such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable (including by eliminating any fractional shares),
adjust any or all of (i) the number and kind of shares of Stock which may
thereafter be issued in connection with Awards and the maximum amount of Awards,
(ii) the number and kind of shares of Stock issuable in respect of outstanding
Awards, (iii) the aggregate number and kind of shares of Stock available under
the Plan, (iv) the exercise price, grant price, or purchase price relating to
any Award or, if deemed appropriate, make provision for a cash payment with
respect to any outstanding Award; provided, however, in each case, that no
adjustment shall be made which would cause the Plan to violate Section 422(b)(1)
of the Code with respect to ISOs.

                                  ARTICLE IV
                               Awards and Grants

Section 4.1  Eligibility.  Employees and officers of the Company or any
             -----------
Subsidiary, members of the Board, Consultants, and Vendors who are responsible
for, or contribute to, the management, growth and/or profitability of the
Company shall be eligible to be granted Awards under the Plan.

Section 4.2  Awards Under the Plan.  The Committee shall have the authority to
             ---------------------
grant Awards pursuant to the terms of the Plan. The Committee may impose on any
Award or the exercise thereof, at the date of grant or thereafter (subject to
Section 9.2), such additional terms and

                                       5
<PAGE>

conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant; provided, however, that the
Committee shall retain full power to accelerate or waive any such additional
term or condition it may have previously imposed. All Awards shall be evidenced
by an Award agreement in such form as the Committee may from time to time
approve.

Section 4.3  Maximum Amounts of Awards.  The aggregate number of shares of Stock
             -------------------------
that may be granted to any one individual in any calendar year as Awards under
the Plan shall not exceed [600,000] shares, as such number shall be adjusted
pursuant to Section 3.2 hereof. In addition, the maximum number of shares of
Stock that shall be available for Awards as ISOs under the Plan shall not exceed
1,699,000 shares of Stock, the maximum number of shares of Stock that shall be
available for Awards as Restricted Stock under the Plan shall not exceed
1,699,000 shares of Stock, the maximum number of shares of Stock that shall be
available for Awards as SARs under the Plan shall not exceed 1,699,000 shares of
Stock and the maximum number of shares of Stock that shall be available for
Awards as Stock-Based Awards under the Plan shall not exceed 1,699,000 shares of
Stock, in each case as such number shall be adjusted pursuant to Section 3.2
hereof.

                                   ARTICLE V
                                 Stock Options

Section 5.1  Awards of Stock Options.  Stock Options may be granted alone, in
             -----------------------
addition to, or in tandem with other Awards granted under the Plan. Stock
Options granted under the Plan may be Incentive Stock Options or Non-Qualified
Stock Options; provided, however, that only persons who are officers or key
employees of the Company or any "subsidiary corporation" (as defined in Section
424(f) of the Code) of the Company may be granted Stock Options which are
intended to constitute ISOs.

Section 5.2  Option Terms.  Stock Options granted under the Plan shall be
             ------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem appropriate:

     (a)  Option Price.  The option price per share of Stock purchasable under
          ------------
          any Stock Option shall be determined by the Committee at the time of
          grant but shall be not less than 100% of the Fair Market Value of such
          Stock at the time such Stock Option is granted.

     (b)  Option Term. The term of each Stock Option shall be fixed by the
          -----------
          Committee, but no Stock Option shall be exercisable more than ten
          years after the date the Stock Option is granted.  No Option may be
          exercised by any person after expiration of the term of the Option.

     (c)  Exercisability.   Stock Options shall be exercisable at such time or
          --------------
          times and subject to such terms and conditions upon exercisability as
          shall be determined by the Committee at or after grant.

     (d)  Method of Exercise.  Stock Options which are exercisable may be
          ------------------
          exercised in whole or in part at any time and from time to time during
          the option period by

                                       6
<PAGE>

          giving written notice of exercise to the Company specifying the number
          of whole shares to be purchased. Such notice shall be accompanied by
          payment in full of the purchase price in cash, or the Committee, in
          its sole discretion, may permit payment with in other forms (including
          promissory notes) or over such periods or may accept payment in full
          or in part in the form of Stock (with our without requiring such Stock
          to have been owned by the Participant for a minimum period) at Fair
          Market Value as of the date the Option is exercised, all as specified
          by the Committee. No shares of Stock shall be issued until full
          payment of the exercise price has been made. A Participant shall not
          have any rights to dividends or other rights of a shareholder with
          respect to shares subject to the Option until such time as Stock is
          issued.

     (e)  Incentive Stock Options.  The terms of any Option granted under the
          -----------------------
          Plan as an ISO shall comply in all respects with the provisions of
          Section 422 of the Code, including, but not limited to, the
          requirements applicable to ISOs granted to 10% shareholders.

                                  ARTICLE VI
                           Stock Appreciation Rights

Section 6.1  Grant and Exercise of Stock Appreciation Rights.  Stock
             -----------------------------------------------
Appreciation Rights may be granted alone, in addition to, or in tandem with
other Awards granted under the Plan. The exercise price of each Stock
Appreciation Right shall not be less than the Fair Market Value of a share of
Stock as of the date of grant of such Stock Appreciation Right.

Section 6.2  Terms and Conditions.  The Committee shall determine the time or
             --------------------
times at which an SAR may be exercised in whole or in part, the method of
exercise, the method of settlement, the form of consideration payable in
settlement, the method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not any SAR shall be in tandem with any
other Award, and any other terms and conditions of any SAR.

                                  ARTICLE VII
                                Restricted Stock

Section 7.1  Awards of Restricted Stock.  Shares of Restricted Stock may be
             --------------------------
granted alone, in addition to, or in tandem with other Awards issued under the
Plan. The Committee shall determine the time or times at which grants of
Restricted Stock will be made, the number of shares of Stock to be awarded, the
price (if any) to be paid by the recipient of Restricted Stock, the time or
times within which such Restricted Stock may be subject to forfeiture, and all
other conditions relating to the Restricted Stock.

Section 7.2  Restrictions and Conditions.  The shares of Restricted Stock
             ---------------------------
awarded pursuant to the Plan shall be subject to such restrictions and
conditions and shall be forfeitable to the

                                       7
<PAGE>

Company upon termination of employment during the applicable restricted periods
as shall be established by the Committee. During such restricted period, the
Participant shall not be permitted to sell, transfer, pledge, assign or
otherwise encumber the shares of Restricted Stock awarded under the Plan. Within
these limits, the Committee, in its sole discretion, may provide for the lapse
of such restrictions separately or in combination at such times, under such
circumstances, or otherwise, and may accelerate or waive such restrictions in
whole or in part, based on service, performance and/or such other factors or
criteria as the Committee may determine, in its sole discretion.

Section 7.3  Status as Shareholder.  Except as provided herein or in the
             ---------------------
agreement evidencing the Award, the Participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a shareholder of the Company,
including the right to vote the shares, and the right to receive any cash
dividends. The Committee, in its sole discretion, as determined at the time of
Award, may permit or require the payment of cash dividends to be deferred and,
if the Committee so determines, reinvested in additional Restricted Stock to the
extent shares are available under Section 3.1 hereof.

Section 7.4  Certificates for Stock.  Restricted Stock granted under the Plan
             ----------------------
may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, such certificates may bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted Stock.
If and when the restriction period expires without a prior forfeiture of such
Restricted Stock, the certificates for such shares shall be delivered to the
Participant.

                                 ARTICLE VIII
                               Change in Control

Section 8.1  Impact of Change in Control.  In the event of a Change in Control
             ---------------------------
any Stock Appreciation Rights, or Stock Options awarded under the Plan not
previously exercisable and vested shall become fully vested and exercisable, any
restrictions applicable to any Restricted Stock shall lapse and any shares of
Stock otherwise outstanding under any other Stock-Based Awards which are not
vested or subject to restrictions or limitations shall be deemed fully vested
and such restrictions or limitations shall lapse.

                                  ARTICLE IX
                        Amendments and Term of the Plan

Section 9.1  Amendments and Termination of The Plan.  The Board may amend,
             --------------------------------------
alter, suspend or discontinue the Plan at any time and from time to time, but no
amendment, alteration, or discontinuation shall be made which would materially
and adversely impair the rights of a Participant under any Award therefore
granted.

                                       8
<PAGE>

Section 9.2  Amendments of Awards.  The Committee may amend the terms of any
             --------------------
Award therefore granted and any agreement relating thereto, whether
prospectively or retroactively, but no such amendment shall materially and
adversely impair the rights of any Participant without the Participant's
consent.

Section 9.3  Term of the Plan.  No Award under the Plan shall be granted
             ----------------
pursuant to the Plan on or after the tenth anniversary of the date the Plan is
adopted by the Board, but Awards granted prior to such tenth anniversary shall
be unaffected and may continue to be exercised after that date.

                                   ARTICLE X
                         Other Awards and Other Terms

Section 10.1  Vesting.  In the event the Committee does not establish at the
              -------
time of grant of an Award a specific period with respect to the vesting of any
Stock Option or SAR or the period for the lapse of restrictions on Restricted
Stock, such Stock Option or SAR shall vest, or the restrictions applicable to
Restricted Stock shall lapse, in accordance with the following schedule:

<TABLE>
<CAPTION>
-----------------------------------------------------------------
 Anniversary of Date of Grant   Percentage of Vesting or Lapse of
                                          Restrictions
-----------------------------------------------------------------
<S>                             <C>
          0 to 12 Months                       0%
-----------------------------------------------------------------
             12 Months                        25%
-----------------------------------------------------------------
             18 Months                      37.5%
-----------------------------------------------------------------
             24 Months                        50%
-----------------------------------------------------------------
             30 Months                      62.5%
-----------------------------------------------------------------
             36 Months                        75%
-----------------------------------------------------------------
             42 Months                      87.5%
-----------------------------------------------------------------
             48 Months                       100%
-----------------------------------------------------------------
</TABLE>

Section 10.2  Loan Provisions.  The Committee, subject at all times to laws and
              ---------------
regulations and other binding obligations or provisions applicable to the
Company, may require the Company or any Subsidiary to make, guarantee, or
arrange for a loan or loans to a Participant with respect to the exercise of any
Option or other payment in connection with any Award, including the payment by a
Participant of any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee shall have
full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and the conditions, if any, under which
the loan or loans may be forgiven.

                                       9
<PAGE>

Section 10.3  Form of Payment.  Subject to the terms of the Plan and any
              ---------------
applicable agreement relating to Awards, payments or transfers to be made by the
Company or a Subsidiary upon the grant or exercise of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards, or other property (and may be made in a single
payment or transfer, in installments, or on a deferred basis), in each case
determined in accordance with rules adopted by, and at the discretion of, the
Committee. (Such payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installments or deferred
payments.) The Committee, in its discretion, may accelerate any payment or
transfer upon a change in control as defined by the Committee. The Committee may
also authorize payment upon the exercise of a Stock Option by net issuance or
other cashless exercise methods.

Section 10.4  Bonus Stock and Awards in Lieu of Cash Obligations.  The Committee
              --------------------------------------------------
is authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company or Subsidiary obligations to pay cash or deliver other property
under other plans or compensatory arrangements; provided that, in the case of
Participants subject to Section 16 of the Exchange Act, such cash amounts are
determined under such other plans in a manner that complies with applicable
requirements of Rule 16b-3 so that the acquisition of Stock or Awards hereunder
shall be exempt from Section 16(b) liability. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the Committee.

Section 10.5  Other Stock-Based Awards.  The Committee is authorized, subject to
              ------------------------
limitations under applicable law, to grant to Participants such other Stock-
Based Awards in addition to those provided in Articles V, VI, and VII and
Section 10.4 hereof, as deemed by the Committee to be consistent with the
purposes of the Plan. The Committee shall determine the terms and conditions of
such Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 10.5 shall be purchased for such consideration
and paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Stock, other Awards, or other property, as the
Committee shall determine.

Section 10.6  Cash Payments.  The Committee is authorized, subject to
              -------------
limitations under applicable law, to grant to Participants Tax Bonuses and other
cash payments, whether awarded separately or as a supplement to any Stock-Based
Award. The Committee shall determine the terms and conditions of such Awards.

Section 10.7  Limits on Transferability; Beneficiaries.  No Award or other right
              ----------------------------------------
or interest of a Participant under the Plan shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participants to, any party, other than the Company or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Awards and rights shall
be exercisable during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative. Notwithstanding the foregoing, the
Committee may, in its discretion, provide that Awards or other rights or
interests of a Participant granted pursuant to the Plan (other than an ISO) be
transferable, without consideration, to such persons as may be permitted by the
Committee. The Committee may attach to such transferability feature such terms
and conditions

                                       10
<PAGE>

as it deems advisable. In addition, a Participant may, in the manner established
by the Committee, designate a beneficiary (which may be a person or a trust) to
exercise the rights of the Participant, and to receive any distribution, with
respect to any Award upon the death of the Participant. A beneficiary, guardian,
legal representative or other person claiming any rights under the Plan from or
through any Participant shall be subject to all terms and conditions of the Plan
and any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional restrictions deemed necessary
or appropriate by the Committee.

                                  ARTICLE XI
                              General Provisions

Section 11.1  Other Arrangements.  Nothing contained in this Plan shall prevent
              ------------------
the Board from adopting other or additional compensation arrangements (subject
to shareholder approval if such approval is required), and such arrangements may
be either generally applicable or applicable only in specific cases.

Section 11.2  No Employment Rights.  The adoption of the Plan shall not confer
              --------------------
upon any Participant any right to continued employment or other relationship
with the Company or any of its Subsidiaries.

Section 11.3  Tax Withholding.  No later than the date as of which an amount
              ---------------
first becomes includible in the gross income of the Participant for federal
income tax purposes with respect to any Award under the Plan, a Participant who
is an officer or employee of the Company or a Subsidiary shall pay to the
Company or a Subsidiary or make arrangements satisfactory to the Committee
regarding the payment of any federal, state or local income or employment taxes
required in the judgment of the Company to be withheld with respect to such
amount. The Committee, in its discretion, may permit such required withholding
obligations to be settled with Stock, including Stock that is part of the Award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or the making of such
arrangements, and the Company to the extent permitted by law shall have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.

Section 11.4  Governing Law.  The validity, construction and effect of the Plan
              -------------
and any agreement hereunder shall be determined in accordance with the laws of
the State of Delaware and applicable federal law.

                                  ARTICLE XII
                    Effective Date; Approval by Shareholders

Section 12.1  Effective Date.  The Plan shall become effective when adopted by
              --------------
the Board.

                                       11
<PAGE>

Section 12.2  Approval by Shareholders.  The Plan is subject to the approval of
              ------------------------
the shareholders of the Company at the Company's 2000 annual meeting of its
shareholders, and to the extent that Awards are granted under the Plan prior to
its approval by shareholders, such Awards shall be contingent upon such approval
of the Plan by the shareholders of the Company.

                                       12

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