Document:

ex10-18

EXHIBIT 10.18

Amended and Restated

GENERAL DYNAMICS CORPORATION

1997 INCENTIVE COMPENSATION PLAN

	1.	 	Purpose. This plan is an amendment and restatement of the 1988 Incentive
Compensation Plan; it is renamed the “1997 Incentive Compensation Plan”
and is referred to hereinafter as the “Plan.” The purpose of the Plan is
to provide General Dynamics Corporation and its subsidiaries (the
“Company”) with an effective means of attracting, retaining, and
motivating officers and other key employees and to provide them with
incentives to enhance the growth and profitability of the Company.
	 
	2.	 	Eligibility. Any officer or key employee of the Company in an executive,
administrative, professional, scientific, engineering, technical, or
advisory capacity is eligible for an award under the Plan.
	 
	3.	 	Committee. The Plan shall be administered by the Compensation Committee
(the “Committee”) of the Board of Directors of the Company comprised of
two or more members of the Board of Directors, none of whom shall be
employees of the Company. Except as otherwise expressly provided in the
Plan, the Committee shall have full power and authority to interpret and
administer the Plan, to determine the officers and key employees to
receive awards and the amounts and types of the awards, to adopt, amend,
and rescind rules and regulations, and to establish terms and conditions,
not inconsistent with the provisions of the Plan, for the administration
and implementation of the Plan, provided, however, that the Committee may
not, after the date of any award, make any changes that would adversely
affect the rights of a recipient under any award without the consent of
the recipient. The determination of the Committee on these matters shall
be final and conclusive and binding on the Company and all participants.
	 
	 	 	Code Section 162(m) Subcommittee. Notwithstanding the foregoing paragraph,
the Plan shall be administered by a subcommittee of the Committee (the
“Subcommittee”) with respect to persons covered by the deduction limitation
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”). The Subcommittee shall comprise two or more members of the
Committee, all of whom shall be “outside directors” as that term is used in
Code Section 162(m). With respect to such persons subject to Code Section
162(m), the Subcommittee shall have all of the powers, rights, and duties
granted to the Committee under this Plan and each reference to the
“Committee” herein shall be deemed to be a reference to the “Subcommittee.”
	 
	4.	 	Awards. Awards may be made by the Committee in such amounts as it shall
determine in cash, in common stock of the Company (“Common Stock”), in
options to purchase Common Stock of the Corporation (“Stock Options”), or
in shares of Common Stock subject to certain restrictions (“Restricted
Stock”), or any combination thereof. Awards of Stock Options shall be
limited to awards for such number of shares as shall be allocated for that
purpose by the Board of Directors and approved by the shareholders.

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	5.	 	Code Section 162(m) Awards. Awards to persons covered by the deduction
limitation of Code Section 162(m), as described by Code Section 162(m)(3),
shall be subject to the following additional limitations:

	 	a.	 	Adjustments. The Subcommittee shall have no discretion to
increase an award of Stock Options and/or Restricted Stock once
granted, except that adjustments are permitted under Sections 11 and
12 of this Plan to the extent permissible under regulations
interpreting Code Section 162(m).
	 
	 	b.	 	Maximum Awards. Awards of Stock Options and/or Restricted Stock
under the Plan shall be limited as follows:

	 
	 	(1)	 	Awards of Stock Options shall be limited to 500,000
shares awarded to any one individual for any calendar year and
shall be issued at fair market value.
	 
	 	(2)	 	Awards of Restricted Stock shall be limited to 100,000
shares awarded to any one individual for any calendar year.
Notwithstanding the foregoing, Restricted Stock granted under the
Restricted Stock Performance Formula, described below, shall be
limited to an initial grant of 100,000 shares, but shall be
adjusted upwards or downwards in accordance with that formula.

	 
	 	c.	 	Performance Goals. The Subcommittee, in its sole discretion,
shall establish performance goals applicable to awards of Restricted
Stock in such a manner as shall permit payments with respect thereto
to qualify as “performance-based compensation” as described in Code
Section 162(m)(4)(C). Such awards shall be based on attainment of,
over a specified period of individual performance, specified targets
or other parameters relating to one or more of the following business
criteria: market price of Common Stock, earnings per share, net
profits, total shareholder return, return of shareholders’ equity,
cash flow, and cumulative return on net assets employed. In addition,
awards of Restricted Stock may be based on the Restricted Stock
Performance Formula, described below.

	6.	 	Restricted Stock Performance Formula. Awards of Restricted Stock may be
granted pursuant to the formula described in this section, referred to
herein as the “Restricted Stock Performance Formula.” The Committee shall
make an initial grant of shares of Restricted Stock (the “Initial Grant”).
At the end of a specified performance period (determined by the
Committee), the number of shares in the Initial Grant shall be increased
or decreased based on the increase or decrease in the value of the Common
Stock over the performance period.
	 
	 	 	The increase or decrease described in the preceding paragraph shall be
determined in the following manner:

		
	 	At the end of each performance period, the fair market value (as
defined in Section 7 below) of the Common Stock is compared to the fair
market value per share on the grant date. That difference is
multiplied by the number of shares of Restricted Stock to be earned at
the end of each performance period and the resulting product is divided
by the fair market value at the end of the performance period. The
number of shares of Common Stock so determined is added to (in the case
of a higher fair market value) or subtracted from (in the case of a
lower fair market value) the number of shares of Restricted Stock to be
earned at that time. Once the number of

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	 	shares of Restricted Stock has been adjusted, restrictions will
continue to be imposed for a period of time.

	7.	 	Common Stock. In the case of awards in Common Stock, the number of
shares shall be determined by dividing the amount of the award by the
average between the highest and lowest quoted selling prices of the
Company’s Common Stock on the New York Stock Exchange on the date of the
award. The average is referred to throughout this Plan as the “fair
market value.”
	 
	8.	 	Dividend Equivalents and Interest.

	 	a.	 	Dividends. If any award in Common Stock or Restricted Stock is
to be paid on a deferred basis, the recipient may be entitled, on
terms and conditions to be established, to receive a payment of, or
credit equivalent to, any dividend payable with respect to the number
of shares of Common Stock or Restricted Stock which, as of the record
date for the dividend, has been awarded or made payable to the
recipient but not delivered.
	 
	 	b.	 	Interest. If any award in cash is to be paid on a deferred
basis, the recipient may be entitled, on terms and conditions to be
established, to be paid interest on the unpaid amount.

	9.	 	Restricted Stock Awards. Restricted Stock represents awards made in
Common Stock in which the shares granted may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated except upon
passage of time, or upon satisfaction of other conditions, or both, in
every case as provided by the Committee in its sole discretion. The
recipient of an award of Restricted Stock shall be entitled to vote the
shares awarded and to the payment of dividend equivalents on the shares
from the date the award of shares is made; and, in addition, all Special
Distributions (as defined in Section 11 hereof) thereon shall be credited
to an account similar to the Account described in Section 11. The
recipient of an award of Restricted Stock shall have a nonforfeitable
interest in amounts credited to such account in proportion to the lapse of
restrictions on the Restricted Stock to which such amounts relate. For
example, when restrictions lapse on fifty percent (50%) of the Restricted
Stock granted in an award, the holder of such Restricted Stock shall have
a nonforfeitable interest in fifty percent (50%) of the amount credited to
his account which is attributable to such Restricted Stock. The holder of
Restricted Stock shall receive a payment in cash of any amount in his
account as soon as practicable after the lapse of restrictions relating
thereto. With respect to Restricted Stock awards granted after May 3,
2001, shares underlying Restricted Stock awards shall become
nonforfeitable no sooner than three (3) years from the original grant date
(other than shares granted pursuant to a performance adjustment), except
that the Committee or Subcommittee, as the case may be, shall have the
discretion to reduce such three (3) year period or impose a shorter period
(i) for the occurrence of any event described in Section 12, (ii) for any
corporate divestiture or acquisition, or (iii) in the case of any special
agreement, award or situation with respect to any individual executive.
	 
	10.	 	Stock Option Awards.

	 	a.	 	Available Shares. Shares available for awards of Stock Options
under the Plan at the effective date of the restatement of the Plan
shall be available for awards of Stock Options under the Plan. Shares
available for awards of Stock Options may be authorized but unissued
shares or may be treasury shares. If any option awarded under the
Plan or any predecessor plan shall expire, terminate, or be canceled
for any reason without having been exercised in full, the
corresponding

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	 	 	 	number of unpurchased shares which were reserved for issuance upon
exercise thereof shall again be available for the purposes of the Plan.
	 
	 	b.	 	Type of Options. Options shall be in the form of incentive stock
options, non-statutory stock options, or both, as the Committee may
determine. The term “incentive stock option” means any option, or
portion thereof, awarded under the Plan which meets the applicable
requirements of Section 422 of the Internal Revenue Code, as it may be
amended from time to time. The term “non-statutory stock option”
means any option, or portion thereof, awarded under the Plan which
does not qualify as an incentive stock option.
	 
	 	c.	 	Incentive Stock Option Limitation. For incentive stock options
granted under the Plan, the aggregate fair market value (determined as
of the date the option is awarded) of the number of whole shares with
respect to which incentive stock options are exercisable for the first
time by any employee during any calendar year under all plans of the
Company shall not exceed $100,000.
	 
	 	d.	 	Purchase Price. The purchase price of the Common Stock under
each option shall be determined by the Committee, but shall not be
less than 100 percent of the fair market value of the Common Stock on
the date of the award of the option.
	 
	 	e.	 	Terms and Conditions. The Committee shall, in its discretion,
establish (i) the term of each option, which in the case of incentive
stock options shall not be more than ten years, (ii) the terms and
conditions upon which and the times when each option shall be
exercised, and (iii) the terms and conditions under which options may
be exercised after termination of employment for any reason for
periods not to exceed three years after termination of employment but
not beyond the term established above.
	 
	 	f.	 	Purchase by Cash or Stock. The purchase price of shares
purchased upon the exercise of any stock option shall be paid (i) in
full in cash, or (ii) in whole or in part (in combination with cash)
in full shares of Common Stock owned by the optionee and valued at its
fair market value on the date of exercise, all pursuant to procedures
approved by the Committee.
	 
	 	g.	 	Transferability. Options shall not be transferable. During the
lifetime of the person to whom an option has been awarded, it may be
exercisable only by such person or one acting in his stead or in a
representative capacity. Upon or after the death of the person to
whom an option is awarded, an option may be exercised by the
optionee’s legatee or legatees under his last will, or by the option
holder’s personal representative or distributee’s executive,
administrator, or personal representative or designee in accordance
with the terms of the option.

	11.	 	Adjustments for Special Distributions. The Committee shall have the
authority to change all Stock Options granted under this Plan to adjust
equitably the purchase price thereof to reflect a special distribution to
shareholders or other extraordinary corporate action involving
distributions or payments to shareholders (collectively referred to as
“Special Distributions”). In the event of any Special Distribution, the
Committee may, to the extent that it determines in its judgment that the
adjustment of the purchase price of Stock Options does not fully reflect
such Special Distribution, increase the number of shares of Common Stock
covered by such Stock Options or cause to be created a Special
Distribution account (the “Account”) in the name of each individual to
whom Stock Options have been granted hereunder (sometimes herein referred
to as a “Grantee”) to which shall be

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	 	 	credited an amount determined by the Committee, or, in the case of non-cash
Special Distributions, make appropriate comparable adjustments for or
payments to or for the benefit of the Grantee.
	 
	 	 	Amounts credited to the Account in accordance with the preceding rules
shall be credited with interest, accrued monthly, at an annual rate equal
to the higher of Moody’s Corporate Bond Yield Average or the prime rate in
effect from time to time, and such interest shall be credited in accordance
with rules to be established by the Committee. Notwithstanding the
foregoing, at no time shall the Committee permit the amount credited to the
Grantee’s Account to exceed ninety percent (90%) of the purchase price of
the Grantee’s outstanding Stock Options to which such amount relates. To
the extent that any credit would cause the Account to exceed that
limitation, such excess shall be distributed to the Grantee in cash.
	 
	 	 	Amounts credited to the Grantee’s Account shall be paid to the Grantee or,
if the Grantee is deceased, his or her beneficiary at the time that the
options to which it relates are exercised or expire, whichever occurs
first.
	 
	 	 	The Account shall for all purposes be deemed to be an unfunded promise to
pay money in the future in certain specified circumstances. As to amounts
credited to the Account, a Grantee shall have no rights greater than the
rights of a general unsecured creditor of the Company, and amounts credited
to the Grantee’s Account shall not be assignable or transferable other than
by will or the laws of descent and distribution, and such amounts shall not
be subject to the claims of the Grantee’s creditors.
	 
	12.	 	Adjustments and Reorganizations. The Committee may make such adjustments
to awards granted under the Plan (including the terms, exercise price, and
otherwise) as it deems appropriate in the event of changes that impact the
Company, the Company’s share price, or share status.
	 
	 	 	In the event of any merger, reorganization, consolidation, change of
control, recapitalization, separation, liquidation, stock dividend, stock
split, extraordinary dividend, spin-off, split-up, rights offering, share
combination, or other change in the corporate structure of the Company
affecting the Common Stock, the number and kind of shares that may be
delivered under the Plan shall be subject to such equitable adjustment as
the Committee, in its sole discretion, may deem appropriate. The
determination of the Committee on these matters shall be final and
conclusive and binding on the Company and all participants. Except as
otherwise provided by the Committee, all authorized shares, share
limitations, and awards under the Plan shall be proportionately adjusted to
account for any increase or decrease in the number of issued shares of
Common Stock resulting from any stock split, stock dividend, reverse stock
split, or any similar reorganization or event.
	 
	 	 	In the preceding paragraph, “change of control” means any of the following
events:

	 	a.	 	An acquisition (other than directly from the Company) of any
voting securities of the Company by any person who previously was the
beneficial owner of less than ten percent of the combined voting power
of the Company’s outstanding voting securities and who immediately
after such acquisition is the beneficial owner of 30 percent or more
of the combined voting power of the Company’s then outstanding voting
securities; provided that, in determining whether a change of control
has occurred, voting securities which are acquired by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by the
Company or any subsidiary of the Company, (ii) the Company or any
subsidiary of the Company, or (iii) any person in connection with a
Non-

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	 	 	 	Control Transaction (as hereinafter defined), will not constitute an
acquisition which results in a change of control;
	 
	 	b.	 	Approval by stockholders of the Company of:

	 
	 	(1)	 	a merger, consolidation, or reorganization involving the
Company, unless:

	 
	 	(A)	 	the stockholders of the Company
immediately before such merger, consolidation, or
reorganization will own, directly or indirectly,
immediately following such merger, consolidation, or
reorganization, at least 51 percent of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger, consolidation, or
reorganization (the “Surviving Company”) in substantially
the same proportion as their ownership of the voting
securities of the Company immediately before such merger,
consolidation, or reorganization; and
	 
	 	(B)	 	the individuals who were members of the
Board immediately prior to the execution of the agreement
providing for such merger, consolidation, or
reorganization constitute a majority of the members of
the Board of Directors of the Surviving Company; and
	 
	 	(C)	 	no person (other than the Company, any
subsidiary of the Company, any employee benefit plan (or
any trust forming a part thereof) maintained by the
Company, the Surviving Company, any subsidiary of the
Surviving Company, or any person who, immediately prior
to such merger, consolidation, or reorganization, was the
beneficial owner of 20 percent or more of the then
outstanding voting securities of the Company) is the
beneficial owner of 20 percent or more of the combined
voting power of the Surviving Company’s then outstanding
voting securities;
	 
	 	(D)	 	a transaction described in clauses (A)
through (C) above is referred to herein as a “Non-Control
Transaction;”
	 

	 	(2)	 	the complete liquidation or dissolution of the Company;
or
	 
	 	(3)	 	an agreement for sale or other disposition of all or
substantially all of the assets of the Company to any person
(other than a transfer to a subsidiary of the Company).

	 
	 	c.	 	Notwithstanding the foregoing, a change of control will not be
deemed to occur solely because any person (a “Subject Person”)
acquires beneficial ownership of more than the permitted amount of the
outstanding voting securities of the Company as a result of the
acquisition of voting securities by the Company which, by reducing the
number of voting securities outstanding, increases the proportional
number of shares beneficially owned by the Subject Person, provided
that if a change of control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by the
Company, and after such share acquisition by the Company, the Subject
Person becomes the beneficial owner of any additional voting
securities which increases the percentage of the then outstanding
voting securities

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	 	 	 	beneficially owned by the Subject Person, then a change of control will
be deemed to have occurred.

	13.	 	Tax Withholding. The Company shall have the right to (i) make deductions
from any settlement of an award under the Plan, including the delivery or
vesting of shares, or require shares or cash or both be withheld from any
award, in each case in an amount sufficient to satisfy withholding of any
federal, state, or local taxes required by law, or (ii) take such other
action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding may be satisfied, and may permit shares of Common Stock
(rounded up to the next whole number) to be used to satisfy required tax
withholding based on the fair market value of any such shares of Common
Stock, as of the appropriate time of each award.
	 
	14.	 	Expenses. The expenses of administering the Plan shall be borne by the
Company.
	 
	15.	 	Amendments. The Board of Directors of the Company shall have complete
power and authority to amend the Plan, provided that the Board of
Directors shall not, without shareholder approval, adopt any amendment
which would (a) increase the number of shares for which options may be
awarded under the Plan, (b) modify the class of employees eligible to
receive awards, (c) extend the period during which incentive stock options
may be awarded, or (d) materially increase the benefits of employees
receiving awards under the Plan. No amendment to the Plan may, without
the consent of the individual to whom the award shall theretofore have
been awarded, adversely affect the rights of an individual under the
award.
	 
	16.	 	Effective Date of the Plan. The Plan shall become effective on its
adoption by the Board of Directors of the Company on February 5, 1997,
subject to approval at the 1997 Annual Meeting of Shareholders.
	 
	17.	 	Termination. The Board of Directors of the Company may terminate the
Plan or any part thereof at any time, provided that no termination may,
without the consent of the individual to whom any award shall theretofore
have been made, adversely affect the rights of an individual under the
award.
	 
	18.	 	Other Actions. Nothing contained in the Plan shall be deemed to preclude
other compensation plans which may be in effect from time to time or be
construed to limit the authority of the Company to exercise its corporate
rights and powers, including, but not by way of limitation, the right of
the Company (a) to award options for proper corporate purposes otherwise
than under the Plan to an employee or other person, firm, corporation, or
association, or (b) to award options to, or assume the option of, any
person in connection with the acquisition, by purchase, lease, merger,
consolidation, or otherwise, of the business and assets (in whole or in
part) of any person, firm, corporation, or association.

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                                                                    EXHIBIT 4.16

                                     FULLNET
                              COMMUNICATIONS, INC.
                            (an Oklahoma corporation)

                         2001 EXCHANGE WARRANT AGREEMENT

                                  May 31, 2001

-------------------

-------------------

-------------------

Dear ___________________:

         FullNet Communications, Inc., an Oklahoma corporation (the "Company"),
agrees to issue to you warrants (the "Warrants") to purchase the number of
shares of common stock, par value $0.00001 per share (the "Common Stock"), of
the Company set forth herein, subject to the terms and conditions contained
herein.

         1. ISSUANCE OF WARRANTS; EXERCISE PRICE. The Warrants, which shall be
certificated in the form attached hereto as EXHIBIT "A," (each, a "2001 Exchange
Warrant Certificate") shall be issued to you concurrently with the cancellation
of the Company's 11% Convertible Promissory Note payable to you in the amount of
___________________ (the "Note"). The Warrants shall provide that you, or such
other holder or holders of the Warrants to whom transfer is authorized in
accordance with the terms of this Agreement, shall have the right to purchase an
aggregate of ___________________ shares of Common Stock for an exercise price
equal to $2.00 per share (the "Exercise Price").

         2. EXERCISE OF WARRANTS. At any time and from time to time after the
date hereof and expiring on the fifth anniversary of the date of this Agreement
at 5:00 p.m., Central Standard Time, Warrants may be exercised as to all or any
portion of the whole number of shares of Common Stock covered by the Warrants by
the holder thereof by surrender of the Warrants, accompanied by a subscription
for shares to be purchased in the form attached to each 2001 Exchange Warrant
Certificate and by payment to the Company as set forth in the 2001 Exchange
Warrant Certificate in the amount required for purchase of the shares as to
which the Warrant is being exercised, delivered to the Company at its principal
office at 201 Robert S. Kerr Avenue, Suite 210, Oklahoma City, Oklahoma 73102,
Attention: President. Upon the exercise of a Warrant, in whole or in part, the
Company will, within ten (10) days thereafter, at its expense (including the
payment by the Company of any applicable issue or transfer taxes), cause to be
issued in the name of and delivered to the holder a certificate or certificates
for the number of fully paid and non-assessable shares of Common Stock to which
such holder is entitled upon exercise of the Warrant. In the event such holder
is entitled to a fractional share, in lieu thereof, such holder shall be paid a
cash amount equal to such fraction, multiplied by the Current Value (as
hereafter defined) of one full share of Common Stock on the date of exercise.
Certificates for shares of Common Stock issuable by reason of the exercise of
the Warrant or Warrants shall be dated and shall be effective as the date of the
surrendering of the certificates for the shares so purchased. In the event a
Warrant is exercised, as to less than the aggregate amount of all shares of
Common Stock issuable upon exercise of all Warrants held by such person, the
Company shall issue a new Warrant to the holder of the Warrant so exercised
covering the aggregate number of shares of Common Stock as to which Warrants
remain unexercised.

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<PAGE>   2

         For purposes of this section, Current Value is defined (i) in the case
for which a public market exists for the Common Stock at the time of such
exercise, the average of the daily closing prices of the Common Stock for twenty
(20) consecutive business days commencing thirty (30) business days before the
date of exercise, and (ii) in the case no public market exists at the time of
such exercise, at the Appraised Value. For the purposes of this Agreement,
"Appraised Value" is the value determined in accordance with the following
procedures. For a period of five (5) days after the date of an event (a
"Valuation Event") requiring determination of Current Value at a time when no
public market exists for the Common Stock (the "Negotiation Period"), each party
to this Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or property at issue, as of the date of the
Valuation Event, which will be the fair market value of such securities or
property, without premium for control or discount for minority interests,
illiquidity or restrictions on transfer. In the event that the parties are
unable to agree upon the Appraised Value of such securities or other property by
the end of the Negotiation Period, then the Appraised Value of such securities
or property will be determined for purposes of this Agreement by a recognized
appraisal or investment banking firm mutually agreeable to the holders of the
Warrants and the Company (the "Appraiser"). If the holders of the Warrants and
the Company cannot agree on an Appraiser within two (2) business days after the
end of the Negotiation Period, the Company, on the one hand, and the holders of
the Warrants, on the other hand, will each select an Appraiser within ten (10)
business days after the end of the Negotiation Period and those two (2)
Appraisers will select ten (10) days after the end of the Negotiation Period an
independent Appraiser to determine the fair market value of such securities or
property, without premium for control or discount for minority interests. Such
independent Appraiser will be directed to determine fair market value of such
securities as soon as practicable, but in no event later than thirty (30) days
from the date of its selection. The determination by an Appraiser of the fair
market value will be conclusive and binding on all parities to this Agreement.
Appraised Value of each share of Common stock at a time when (i) the Company is
not a reporting company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be calculated by
determining the Appraised Value of the entire Company taken as a whole and
dividing that value by the number of shares of Common Stock then outstanding,
without premium for control or discount for minority interests, illiquidity or
restrictions on transfer. The costs of the Appraiser will be borne by the
Company. In no event will the Appraised Value of the Common Stock be less than
the per share consideration received or receivable with respect to the Common
Stock or securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.

         3. REGISTRATION RIGHTS.

                  (a) Registration Rights. The Company will register the shares
         of Common Stock underlying the Warrants (the "Warrant Shares") by
         filing a registration statement (the "Registration Statement") with the
         Securities and Exchange Commission as soon as practicable. The Company
         shall register its securities under the Securities Act of 1933, as
         amended (the "Securities Act") or any successor to such form in a
         manner that will, upon being declared effective, constitute a "shelf"
         registration for purposes of Rule 415 under the Securities Act,
         pursuant to which the Warrant Shares may be sold from time to time and
         in such amounts as the holder(s) thereof may hereafter determine, all
         in a manner consistent with all applicable provisions of the Securities
         Act; provided, however, if at the time the Company intends to file the
         Registration Statement, the Company has formulated plans to file within
         60 days thereof another registration statement covering the sale of any
         of its securities in a public offering under the Securities Act, no
         registration of the Warrant Shares shall be initiated under this
         Section 3(a)

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<PAGE>   3

         until 90 days after the effective date of such registration statement
         unless the Company is no longer proceeding diligently to secure the
         effectiveness of such registration statement; provided that the Company
         shall provide the Warrant holder(s) the right to participate in such
         public offering pursuant to, and subject to, Section 3(b). The Company
         will use its best efforts to have the Registration Statement declared
         effective. At its expense, the Company will keep such registration
         effective for a period of one hundred eighty (180) days or until the
         holder or holders have completed the distribution described in the
         registration statement relating thereto, whichever first occurs; and
         furnish such number of prospectuses and other documents incident
         thereto as a holder from time to time may reasonably request.

                  (b) Piggyback Registration Rights. At any time following the
         date hereof, whenever the Company proposes to register any Common Stock
         for its own or the account of others under the Securities Act for a
         public offering, other than (i) any shelf registration of shares to be
         used as consideration for acquisitions of additional businesses by the
         Company and (ii) registrations relating to employee benefit plans, the
         Company shall give each Warrant holder prompt written notice of its
         intent to do so. Upon the written request of any Warrant holder given
         within 15 business days after receipt of such notice, the Company shall
         cause to be included in such registration all Warrant Securities
         (including any shares of Common Stock issued as a dividend or other
         distribution with respect to, or in exchange for, or in replacement of
         such Warrant Securities) which any Warrant holder requests; provided,
         however, if the Company is advised in writing in good faith by any
         managing underwriter of an underwritten offering of the securities
         being offered pursuant to any registration statement under this Section
         3(b) that the number of shares to be sold by persons other than the
         Company is greater than the number of such shares which can be offered
         without adversely affecting the offering, the Company may reduce pro
         rata the number of shares offered for the accounts of such persons
         (based upon the number of shares held by such person) to a number
         deemed satisfactory by such managing underwriter.

                  (c) Lock-up Agreement. In consideration for the Company's
         agreeing to its obligations under this Section 3, each Warrant holder
         agrees that, effective upon the request of the underwriters managing
         the Company's initial public offering, such holder shall be obligated,
         so long as all executive officers and directors of the Company are
         bound by a comparable obligation, not to sell, make any short sale of,
         loan, grant any option for the purchase of, or otherwise dispose of any
         shares of Common Stock underlying the Warrants (other than those
         included in the registration) without the prior written consent of such
         underwriters, for such period of time (not to exceed one hundred eighty
         (180) days) from the effective date of such initial public offering as
         the underwriters may specify.

         4. SPECIFIC PERFORMANCE. The Company stipulates that remedies at law,
in money damages, available to the holder of a Warrant, or of a holder of Common
Stock issued pursuant to exercise of a Warrant, in the event of any default or
threatened default by the Company in the performance of or compliance with any
of the terms of this Agreement are not and will not be adequate. Therefore, the
Company agrees that the terms of this Agreement may be specifically enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

         5. SUCCESSORS AND ASSIGNS; BINDING EFFECT. This Agreement shall be
binding upon and insure to the benefit of you and the Company and their
respective successors and permitted assigns.

                                   Page 3 of 5
<PAGE>   4

         6. NOTICES. Any notice hereunder shall be given by registered or
certified mail, if to the Company, at its principal office, and, if to the
holders, to the respective addresses shown in the Warrant ledger of the Company,
provided that any holder may at any time on three (3) days' written notice to
the Company designate or substitute another address where notice is to be given.
Notice shall be deemed given and received after a certified or registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.

         7. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Agreement.

         8. ASSIGNMENT; REPLACEMENT OF WARRANTS. If the Warrant or Warrants are
assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor. The Warrants will not be
transferred, sold, or otherwise hypothecated by you or any other person and the
Warrants will be nontransferable, except to (i) one or more persons, each of
which on the date of transfer is an officer, shareholder, or employee of you;
(ii) a partnership or partnerships, the partners of which are you and one or
more persons, each of whom on the date of transfer is an officer of you; (iii) a
successor to you in merger or consolidation; (iv) a purchaser of all or
substantially all of your assets; or (v) a person that receives a Warrant upon
death of a holder pursuant to will, trust, or the laws of intestate succession.

         9. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oklahoma without giving effect to the
principles of choice of laws thereof.

         10. DEFINITION. All references to the word "you" in this Agreement
shall be deemed to apply with equal effect to any persons or entities to whom
Warrants have been transferred in accordance with the terms hereof, and, where
appropriate, to any persons or entities holding shares of Common Stock issuable
upon exercise of Warrants.

         11. HEADINGS. The headings herein are for purposes of reference only
and shall not limit or otherwise affect the meaning of any of the provisions
hereof.

         12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it will not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof. Each counterpart will be
deemed an original, but all counterparts together will constitute one and the
same instrument. The parties agree that a facsimile of this Agreement signed by
the parties will constitute an agreement in accordance with the terms hereof as
if all of the parties had executed an original of this Agreement.

                                   Page 4 of 5
<PAGE>   5

                                    Very truly yours,

                                    FULLNET COMMUNICATIONS, INC.

                                    By:
                                       -----------------------------------------
                                       Timothy J. Kilkenny, President and CEO

ACCEPTED AS OF THE _____ DAY OF ________________, 2001

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