Document:

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                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT made effective as of the 20th day of March, 2000 (the
"Effective Date") by and between Cooperative Holdings, Inc., a Delaware
corporation with its principal place of business at 412-420 Washington Avenue,
Belleville, New Jersey 07109 (the "Company"), and Louis A. Lombardi, Jr. (the
"Employee").

                                    WITNESSETH:

      WHEREAS, the Company desires to secure the employment of the Employee
in accordance with the provisions of this Agreement; and

      WHEREAS, the Employee desires and is willing to accept employment with the
Company in accordance herewith.

      NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

      1. Term. The Company hereby agrees to employ the Employee and the Employee
hereby agrees to serve the Company pursuant to the terms and conditions of this
Agreement as Chief Operating Officer of the Company, or in a position at least
commensurate therewith in all material respects, for a term commencing on the
Effective Date hereof and expiring on the third anniversary thereof (the
"Initial Term"), provided that the Employee is elected to such office, or a
comparable or higher office, at the annual meeting of the Board of Directors of
the Company (the "Board of Directors") during the Initial Term or any Renewal
Term (as hereinafter defined) of this Agreement. If the Employee shall not be so
elected at any such annual meeting of the Board of Directors, the Employee's
employment hereunder shall forthwith terminate and the Company shall be
obligated to compensate the Employee in accordance with Section 6(a) of this
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Agreement. Upon the expiration of the Initial Term, this Agreement will be
renewed automatically for successive one-year periods (each, a "Renewal Term"),
unless sooner terminated in accordance with the provisions of Section 5 or
unless either party gives written notice of non-renewal at least four (4) months
prior to the date on which the Employee's employment would otherwise end.

      2.    Positions and Duties.

      The Employee's duties hereunder shall be those which shall be prescribed
from time to time by the Board of Directors in accordance with the Bylaws of the
Company and shall include such executive duties, powers and responsibilities as
customarily attend the office of Chief Operating Officer of a company comparable
to the Company. The Employee will hold, in addition to the office of Chief
Operating Officer of the Company, such other executive offices in the Company
and its subsidiaries to which he may be elected, appointed or assigned by the
Board of Directors from time to time and will discharge such executive duties in
connection therewith. During the employment period, the Employee's position
(including status, offices and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned immediately preceding
the Effective Date. The Employee shall devote his full working time, energy and
skill (reasonable absences for vacations and illness excepted), to the business
of the Company as is necessary in order to perform such duties faithfully,
competently and diligently; provided, however, that notwithstanding any
provision in this Agreement to the contrary, the Employee shall not be precluded
from devoting reasonable periods of time required for serving as a member of
boards of companies or organizations which have been approved by the Board of
Directors so long

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as such memberships or activities do not interfere with the performance of the
Employee's duties hereunder.

      3. Compensation. During the term of this Agreement, the Employee shall
receive, for all services rendered to the Company hereunder, the following
(hereinafter referred to as "Compensation"):

            (a) Base Salary. For the term hereof, the Employee shall be paid an
annual base salary equal to One Hundred Sixty-Five Thousand Dollars ($165,000).
The Employee's annual base salary shall be payable in equal installments in
accordance with the Company's general salary payment policies but no less
frequently than monthly. Such base salary shall be reviewed, and any increases
in the amount thereof shall be determined, by the Board of Directors or a
compensation committee formed by the Board of Directors (the "Compensation
Committee") at the end of each calendar year during the term hereof.

            (b) Bonuses. The Employee shall be eligible for an annual
performance bonuses. The amount of such bonus, if any, shall be solely within
the discretion of the Board of Directors or, if formed, the Compensation
Committee thereof and shall be based upon the respective performances of the
Company and the Employee during such year. Such bonus, if any, shall be paid
within sixty (60) days after the end of each fiscal year of the Company. The
Employee shall be eligible for and may receive other bonus compensation. The
amount of such bonuses, if any, shall be solely within the discretion of the
Board of Directors or, if formed, the Compensation Committee thereof.

            (c) Incentive Compensation. The Employee shall be eligible for
awards from the Company's incentive compensation plans, including without
limitation any stock option

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plans, applicable to high level executive officers of the Company or to key
employees of the Company or its subsidiaries, in accordance with the terms
thereof and on a basis commensurate with his position and responsibilities.

            (d) Benefits. The Employee and his "dependents," as that term may be
defined under the applicable benefit plan(s) of the Company, shall be included,
to the extent eligible thereunder, in any and all plans, programs and policies
which provide benefits for employees and their dependents. Such plans, programs
and policies may include health care insurance, long-term disability plans,
supplemental disability insurance, supplemental life insurance, 401(k) plan,
holidays and other similar or comparable benefits made available to the
Company's employees.

            (e) Life Insurance. The Company shall provide the Employee with
Ten Thousand ($10,000) of term life insurance coverage while employed by the
Company.

            (f) Expenses. Subject to and in accordance with the Company's
policies and procedures, the Employee hereby is authorized to incur, and, upon
presentation of itemized accounts, shall be reimbursed by the Company for, any
and all reasonable and necessary business-related expenses, which expenses are
incurred by the Employee on behalf of the Company or any of its subsidiaries.

      4. Absences. The Employee shall be entitled to vacations, absences because
of illness or other incapacity, and such other absences, whether for holiday,
personal time, or for any other purpose, as set forth in the Company's
employment manual or current procedures and policies, as the case may be, as
same may be amended from time-to-time.

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      5. Termination. In addition to the events of termination and expiration of
this Agreement provided for in Section 1 hereof, the Employee's employment
hereunder may be terminated only as follows:

            (a) Without Cause. The Company may terminate the Employee's
employment hereunder without cause only upon action by the Board of Directors,
and upon no less than ninety (90) days prior written notice to the Employee. The
Employee may terminate employment hereunder without cause upon no less than
ninety (90) days prior written notice to the Company.

            (b) For Cause, by the Company. The Company may terminate the
Employee's employment hereunder for cause immediately and with prompt notice to
the Employee, which cause shall be determined in good faith solely by the Board
of Directors. "Cause" for termination shall include, but is not limited to, the
following conduct of the Employee:

                  (1) Willful or prolonged absence from work by the Employee
(other than by reason of disability due to physical or mental illness) or
failure, neglect or refusal by the Employee to perform his duties and
responsibilities or to follow the reasonable directions of the Board of
Directors within ten (10) business days after receipt by the Employee of written
notice of such failure;

                  (2) Misconduct by the Employee in connection with his
employment, including but not limited to: misappropriating any funds or property
of the Company; attempting to willfully obtain any personal profit from any
transaction in which the Employee has an interest which is adverse to the
interests of the Company; or any other intentional act or omission which
substantially impairs the Company's ability to conduct its ordinary business in
its usual manner;

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                  (3) The Employee's conviction of, or plea of nolo contendre
to, any crime constituting a felony under the laws of the United States or any
State thereof, or any crime constituting a misdemeanor under any such law
involving moral turpitude;

                  (4) Breach by the Employee of any of the terms of or covenants
contained in this Agreement; or

                  (5) Any other act or omission which subjects the Company or
any of its subsidiaries to substantial public disrespect, scandal or ridicule.

            (c) For Good Reason by Employee. The Employee may terminate his
employment hereunder for good reason immediately and with prompt notice to the
Company. "Good reason" for termination by the Employee shall include, but is not
limited to, the following conduct of the Company:

                  (1) Material breach of any provision of this Agreement by the
Company, which breach shall not have been cured by the Company within thirty
(30) days of receipt of written notice of said breach;

                  (2) Failure to maintain the Employee in a position
commensurate with that referred to in Section 2 of this Agreement; or

                  (3) The assignment to the Employee of any duties inconsistent
with the Employee's position, authority, duties or responsibilities as
contemplated by Section 2 of this Agreement, or any other action by the Company
which results in a diminution of such position, authority, duties or
responsibilities, excluding for this purpose any isolated action not taken in
bad faith and which is promptly remedied by the Company after receipt of notice
thereof given by the Employee.

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      It is understood and agreed that it shall not be "good reason" for
termination by the Employee if in the event of a Change in Control (as
hereinafter defined in Section 7) the Employee is offered a position
commensurate with his position with the Company immediately prior to the Change
in Control with the company, division, subsidiary or business unit whose
business is comprised of the former operations of the Company.

            (d) Death. The period of active employment of the Employee hereunder
shall terminate automatically in the event of his death.

            (e) Disability. In the event that the Employee shall be unable to
perform duties hereunder for a period of one hundred eighty (180) consecutive
calendar days or two hundred and seventy (270) work days within any three
hundred and sixty (360) consecutive calendar days by reason of disability as a
result of illness, accident or other physical or mental incapacity or
disability, the Company may, in its discretion, by giving written notice to the
Employee, terminate the Employee's employment hereunder as long as the Employee
is still disabled on the effective date of such termination.

            (f) Mutual Agreement. This Agreement may be terminated at any time
by mutual agreement of the Employee and the Company.

      6. Compensation in the Event of Termination. In the event that the
Employee's employment pursuant to this Agreement terminates prior to the end of
the term of this Agreement because he is not reelected pursuant to Section 1 or
for a reason provided in Section 5 hereof, the Company shall pay the Employee
compensation as set forth below:

            (a) Employee not Elected by Board of Directors; By Employee for Good
Reason; By Company Without Cause; Death or Disability. In the event that the
Employee's

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employment hereunder is terminated: (i) because the Employee is not elected to
the office of Chief Operating Officer of the Company, or in a position at least
commensurate therewith in all material respects, at any annual meeting of the
Company's Board of Directors during the term of this Agreement, as contemplated
by Section 1 hereof; (ii) by the Employee for good reason pursuant to Section
5(c) hereof; (iii) by the Company without cause; (iv) because of the death of
the Employee; or (v) by the Company pursuant to Section 5(e) hereof, then the
Company shall continue to pay or provide, as applicable, the following
compensation to the Employee:

                  (1)   Monthly base salary as set forth in Section 3(a)
hereof; and

                  (2) Continuing coverage, but only to the extent required by
law, for the Employee and his eligible dependents under all of the Company's
benefit plans, programs and policies in effect as of the date of termination.

                  Such compensation shall continue to be paid or provided, as
applicable, in the same manner as before termination, and for a period of time
ending on the later to occur of (A) the date which is twelve (12) months after
the date of termination or (B) the date upon which the term of this Agreement
would otherwise have expired in accordance with Section 1 hereof.

     (b) By Company For Cause or By Employee Without Good Reason. In the event
that (i) the Company shall terminate the Employee's employment hereunder for
cause pursuant to Section 5(b) hereof or (ii) the Employee shall terminate
employment hereunder without "good reason" as provided in Section 5(c) hereof,
the Company shall not be obligated to pay the Employee any compensation except
for salary and other Compensation which may have been earned and are due and
payable but which have not been paid as of the date of termination.

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      7.    Change of Control.

            (a) The term "Change in Control" as used in this Agreement shall
mean the first to occur of any of the following:

                  (i) the effective date or date of consummation of any
transaction or series of transactions (other than a transaction to which only
the Company and one or more of its subsidiaries are parties) pursuant to which
the Company (1) becomes a subsidiary of another corporation or entity; (2) is
merged or consolidated with or into another corporation or entity; (3) engages
in an exchange of shares with another corporation or an exchange of interests
with another entity; or (4) transfers, sells or otherwise disposes of all or
substantially all of its assets to a single purchaser (other than the Employee)
or a group of purchasers (none of whom is the Employee); provided, however, that
this Subsection shall not be applicable to a transaction or series of
transactions in which a majority of the capital stock of the other corporation,
following such transaction or series of transactions, is owned or controlled by
the holders of a majority of the Company's outstanding capital stock immediately
before such sale, transfer or disposition; or

                  (ii) The date upon which any person (other than the Employee),
group of associated persons acting in concert (none of whom is the Employee), or
corporation or other entity becomes a direct or indirect beneficial owner of
shares of stock of the Company representing an aggregate of more than fifty
percent (50%) of the votes then entitled to be cast at an election of directors
of the Company; or

                  (iii) The date upon which the persons who were members of the
Board of Directors of the Company as of the date hereof (the "Original
Directors") cease to constitute a majority of the Board of Directors; provided,
however, that any new director whose nomination or

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selection has been approved by the affirmative vote of at least three of the
Original Directors then in office shall also be deemed an Original Director.

            (b) If, during the six-month period either immediately preceding or
immediately following a Change in Control, the Employee's employment with the
Company is terminated for any reason other than pursuant to Sections 5(b), (d)
or (e) hereof or a termination without cause by the Employee pursuant to Section
5(a), then, in addition to the amounts payable under Section 6 hereof, the
Company shall pay the Severance Amount (hereinafter defined) within thirty (30)
days of the occurrence of the Change in Control, or, in the event such
termination occurred during the six-month period following the occurrence of the
Change in Control, within thirty (30) days after the effective date of the
Employee's termination. For purposes of this Agreement, Severance Amount shall
mean an amount equal to twelve (12) times the rate of the Employee's monthly
regular compensation as in effect immediately prior to the Employee's
termination or immediately prior to the Change in Control, as applicable.

      8. Effect of Termination. In the event of expiration or early termination
of this Agreement as provided herein, neither the Company nor the Employee shall
have any remaining duties or obligations hereunder except that the Company
shall:

                  (a) Pay the Employee's accrued and unpaid salary and any other
accrued and unpaid benefits under Section 3 hereof;

                  (b) Reimburse the Employee for expenses already incurred in
accordance with Section 3(e) hereof;

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                  (c) To the extent required by law, pay or otherwise provide
for any benefits, payments or continuation or conversion rights in accordance
with the provisions of any benefit plan of which the Employee or any of his
dependents is or was a participant; and

                  (d) Pay the Employee or his beneficiaries any compensation due
pursuant to Sections 6 and 7 hereof, if any.

      9. Non-Competition. The Employee acknowledges that he has gained and will
gain extensive and valuable experience and knowledge in the business conducted
by the Company and has been and will have extensive contacts with its customers.
Accordingly, the Employee covenants and agrees that he shall not compete
directly or indirectly with the Company, either during the term of his
employment or during the twelve (12) month period immediately thereafter and
shall not during such period make public statements in derogation of it. For the
purposes of Sections 9, 10, 11, 12 and 13, the word "Company" shall be deemed to
include subsidiaries, parents and its affiliates. Competing directly or
indirectly shall mean engaging or having a material interest, directly or
indirectly, as owner, employee, officer, director, partner, venturer,
stockholder, capital investor, consultant, agent, principal, advisor or
otherwise, either alone or in association with others, in the operation of an
entity engaged in the business of providing telecommunications services within
thirty (30) miles of the Company's home office or on an Internet Web Site.
Competing directly or indirectly with the Company as used in this Agreement,
shall be deemed not to include an ownership interest as an inactive investor,
which for purposes of this Agreement shall mean the beneficial ownership of less
than five percent (5%) of the outstanding shares of any series or class of
securities of any competitor of the Company, which shares are publicly traded in
the securities markets.

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      10. Non-Solicitation. The Employee acknowledges that he has had and will
have extensive contacts with employees and customers of the Company.
Accordingly, the Employee covenants and agrees that during the term of his
employment and during the twelve (12) month period immediately thereafter he
will not (a) solicit any of the employees of the Company who were employed by
the Company during the time when the Employee was employed, to leave the
Company, (b) interfere with the relationship of the Company with any such
employees or (c) personally target or solicit customers of the Company.

      11. Blue Pencil Provision. The Employee acknowledges that the time periods
and geographic area of restriction imposed by Sections 9 and 10 are fair and
reasonable and are reasonably required for the protection of the Company. If any
part or parts of Sections 9 or 10 shall be held to be unenforceable or invalid,
the remaining parts thereof shall nevertheless continue to be valid and
enforceable as though the invalid portion or portions were not a part hereof. If
any of the provisions of Sections 9 or 10 relating to the periods or geographic
area of restriction shall be deemed to exceed the maximum periods of time or
area which a court of competent jurisdiction would deem enforceable, the times
and area shall, for the purposes of Sections 9 and 10, be deemed to be the
maximum time periods and area which a court of competent jurisdiction would deem
valid and enforceable in any state in which such court of competent jurisdiction
shall be convened.

      12. Confidentiality. The Employee acknowledges that he has had and will
have access to certain information related to the business, operations, future
plans and customers of the Company, the disclosure or use of which could cause
it substantial losses and damages. Accordingly, the Employee covenants that
during the term of his employment with the Company

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and thereafter he will keep confidential all information and documents furnished
to him by or on behalf of the Company and not use the same to his advantage,
except to the extent such information or documents are or thereafter become
lawfully obtainable from other sources or are in the public domain through no
fault on his part or is consented to in writing by the Company. Upon termination
of his employment, the Employee shall return to the Company all records, lists,
files and documents which are in his possession and which relate to the Company.

      13. Right to Injunctive Relief. The Employee agrees and acknowledges that
a violation of the covenants contained in Sections 9, 10, 11 and 12 of this
Agreement will cause irreparable damage to the Company, and that it is and will
be impossible to estimate or determine the damage that will be suffered by it in
the event of a breach by the Employee of any such covenant. Therefore, the
Employee further agrees that in the event of any violation or threatened
violation of such covenants, the Company shall be entitled as a matter of course
to an injunction out of any court of competent jurisdiction restraining such
violation or threatened violation by the Employee, such right to an injunction
to be cumulative and in addition to whatever other remedies the Company may
have.

      14. Representation by the Employee. The Employee hereby represents and
warrants that the execution of this Agreement and the performance of his duties
and obligations hereunder will not breach or be in conflict with any other
agreement to which he is a party or by which he is bound, and that he is not now
subject to any covenant against competition or similar covenant which would
affect the performance of his duties hereunder.

      15. Resolution of Differences Over Breaches of Agreement. Except as
otherwise provided herein, any controversy or claim arising out of, or relating
to, this Agreement, or the

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breach hereof, shall be reviewed in the first instance in accordance with the
Company's internal review procedures, if any, with recourse thereafter--for
temporary or preliminary injunctive relief only--to the courts having
jurisdiction thereof, and if any relief other than injunctive relief is sought,
then to arbitration in Essex County, New Jersey in accordance with the rules of
the American Arbitration Association under its National Rules for the Resolution
of Employment Disputes, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.

      16. Waiver. The waiver by a party hereto of any breach by the other party
hereto of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party hereto.

      17. Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company, and the Company shall be
obligated to require any successor to expressly assume its obligations
hereunder. This Agreement shall inure to the benefit of and be enforceable by
the Employee or his legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees. The Employee may not
assign any of his duties, responsibilities, obligations or positions hereunder
to any person and any such purported assignment by him shall be void and of no
force and effect.

      18. Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if personally delivered or when
sent by first class certified or registered mail, postage prepaid, return
receipt requested--in the case of the Employee, to his residence address as set
forth below, and in the case of the Company, to the address of its principal
place of business as set forth below, in care of the Board of Directors--or to
such other

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person or at such other address with respect to each party as such party shall
notify the other in writing.

      19.   Construction of Agreement.

            (a) Governing Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the internal laws of the
State of New Jersey without reference to its principles regarding conflicts of
law.

            (b) Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

            (c) Headings. The descriptive headings of the several paragraphs of
this Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement.

      20. Entire Agreement. This Agreement contains the entire agreement of the
parties concerning the Employee's employment and all promises, representations,
understandings, arrangements and prior agreements, including without limitation
all offer letters and side letters, on such subject are merged herein and
superseded hereby. The provisions of this Agreement may not be amended,
modified, repealed, waived, extended or discharged except by an agreement in
writing signed by the party against whom enforcement of any amendment,
modification, repeal, waiver, extension or discharge is sought. No person acting
other than pursuant to a resolution of the Board of Directors shall have
authority on behalf of the Company to agree to amend, modify, repeal, waive,
extend or discharge any provision of this Agreement or anything in reference

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thereto or to exercise any of the Company's rights to terminate or to fail to
extend this Agreement.

      21. Survival of Certain Provisions. Sections 6 and 7 hereof shall survive
termination of this Agreement and shall continue to be effective so long as the
Employee is employed by the Company in any capacity.

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      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and attested by its duly authorized officers, and the Employee has set his hand,
all as of the day and year first above written.

ATTEST:                             COOPERATIVE HOLDINGS, INC.

/s/ Jay Brzezanski                  By: /s/ Louis A. Lombardi, Sr.
__________________________             _____________________________
Jay Brzezanski, Secretary                 Louis A. Lombardi, Sr.
                                          Chief Executive Officer and President

                                    Address: 412-420 Washington Avenue
                                             Belleville, New Jersey 07109

WITNESS:                            EMPLOYEE

/s/ Dawn Androsky                   /s/ Louis A. Lombardi, Jr.
__________________________          _______________________________
                                    Louis A. Lombardi, Jr.

                                    Address: 2 White Oak Ridge Road
                                             Lincroft, New Jersey  07738

                                       17<PAGE>   1
                                                                    Exhibit 10.6

                           COOPERATIVE HOLDINGS, INC.

                                 2000 STOCK PLAN

         1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Non-Employee
Directors (as hereinafter defined in Section 4(b) and Consultants (sometimes
referred to herein as "Participants") of the Company and its Parent and
Subsidiaries and to promote the success of the Company's business.

         2. CERTAIN DEFINITIONS. As used herein, the following definitions shall
apply:

         (a) "Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock Options,
Nonstatutory Stock Options, Restricted Stock Awards and Stock Awards.

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

         (c) "Code" means the Internal Revenue Code of 1986, as amended,
including any successor law thereto.

         (d) "Committee" means any Committee appointed by the Board of Directors
in accordance with Section 4 of the Plan.

         (e) "Common Stock" means the Common Stock, $0.01 par value, of the
Company.

         (f) "Company" means Cooperative Holdings, Inc., a Delaware corporation.

         (g) "Consultant" means any person, including an advisor, who is engaged
by the Company or any Parent or Subsidiary to render services and is compensated
for such services, and any Non-Employee Director of the Company whether
compensated for such services or not.

         (h) "Continuous Status as an Employee, Consultant or Director" means
the absence of any interruption or termination of the employment, consultant or
director relationship with the Company, its Parent or any Subsidiary. Continuous
Status as an Employee, Consultant or Director shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Board, provided that such leave is for a period
of not more than ninety (90) days, unless reemployment or reengagement upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
transfers between locations of the Company or between the Company, its Parent,
Subsidiaries or its successor.

         (i) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
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         (j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         (k) "Fair Market Value" means: (i) if the Common Stock is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the Fair Market Value on any given date shall be the average
of the highest bid and lowest asked prices of the Common Stock reported for such
date or, if no bid and asked prices were reported for such date, for the last
day preceding such date for which such prices were reported; or (ii) if the
Common Stock is admitted to trading on a United States securities exchange or
the NASDAQ National Market System, the Fair Market Value on any date shall be
the closing price reported for the Common Stock on such exchange or system for
such date or, if no sales were reported for such date, for the last day
preceding such date for which a sale was reported; (iii) notwithstanding the
foregoing, the Fair Market Value of the Common Stock on the effective date of
the Company's Initial Public Offering shall be the offering price to the public
of the Common Stock on such date; and (iv) in the absence of an established
market for the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Plan Administrator.

         (l) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

         (m) "Initial Public Offering" means the first underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of the Common Stock to the
public.

         (n) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.

         (o) "Option" means a stock option granted pursuant to the Plan.

         (p) "Optioned Stock" means the Common Stock subject to an Option.

         (q) "Optionee" means an Employee, Consultant or Non-Employee Director
who receives an Option.

         (r) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

         (s) "Plan" means this 2000 Stock Plan.

         (t) "Plan Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

         (u) "Restricted Stock" means shares of Common Stock acquired pursuant
to a Restricted Stock Award under Section 12 below.

         (v) "Restricted Stock Award" means any Award granted pursuant to
Section 12 of the Plan.

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         (w) "Share" means a share of the Common Stock, as may be adjusted from
time to time in accordance with Section 15 of the Plan.

         (x) "Stock Award" means any award granted pursuant to Section 13 of the
Plan.

         (y) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

         (z) "Termination for Cause" shall include, but not be limited to, a
finding by the Board of the Participant's: (i) performance of duties in an
incompetent manner; (ii) commission of any act of fraud, insubordination,
misappropriation or personal dishonesty relating to or involving the Company in
any material way; (iii) gross negligence; (iv) violation of any express
direction of the Company or any material violation of any rule, regulation,
policy or plan established by the Company from time to time regarding the
conduct of its employees or its business, if such violation is not remedied by
the Participant within thirty (30) days of receiving notice of such violation
from the Company; (v) violation of any obligation of Participant's relationship
or Continuous Status as an Employee, Consultant or Director with the Company
that is demonstrably willful and deliberate on the Participant's part and is not
remedied by the Participant within thirty (30) days after receiving notice of
such violation from the Company; (vi) disclosure or use of confidential
information of the Company, other than as required in the performance of the
Participant's duties; (vii) actions that are clearly contrary to the best
interest of the Company; (viii) conviction of a crime constituting a felony or
any other crime involving moral turpitude, or no conviction, but the substantial
weight of credible evidence indicates that the Participant has committed such a
crime; or (ix) the Participant's use of alcohol or any unlawful controlled
substance to an extent that it interferes with the performance of the
Participant's duties.

         3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 15
of the Plan, the initial maximum number of shares of Common Stock that may be
issued under the Plan shall be 3,540,000; provided, however, that the maximum
number of shares available under the Plan shall automatically be increased to an
amount equal to fifteen percent (15%) of the shares of Common Stock outstanding
on any December 31, beginning on December 31, 2000; and provided, further, that
the foregoing formula shall never result in a decrease in the maximum number of
shares of Common Stock available for issuance under the Plan. For purposes of
the foregoing limitation, the shares of Common Stock underlying any Awards which
are forfeited, canceled, reacquired by the Company, satisfied without the
issuance of Common Stock or otherwise terminated (other than by exercise) shall
be added back to the number of shares of Common Stock available for issuance
under the Plan. Notwithstanding the foregoing: (a) no more than 3,540,000 shares
shall be available for the award of Incentive Stock Options; and (b) on and
after the date that the Plan is subject to Section 162(m) of the Code, Options
with respect to no more than 300,000 shares of Common Stock may be granted to
any one individual Participant during any one (1) calendar year period. Common
Stock to be issued under the Plan may be either authorized and unissued shares
or shares held in treasury by the Company.

         4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by: (a)
the full Board; or (b) a committee of the Board comprised of two or more
"Non-Employee Directors" within the

                                      -3-
<PAGE>   4
meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act. Subject to the
provisions of the Plan, the Plan Administrator is authorized to:

                  (i)      construe the Plan and any Award under the Plan;

                  (ii)     select the directors, officers, Employees and
                           Consultants of the Company, its Parent and its
                           Subsidiaries to whom Awards may be granted;

                  (iii)    determine the number of shares of Common Stock to be
                           covered by any Award;

                  (iv)     determine and modify from time to time the terms and
                           conditions, including restrictions, of any Award and
                           to approve the form of written instrument evidencing
                           Awards;

                  (v)      accelerate at any time the exercisability or vesting
                           of all or any portion of any Award and/or to include
                           provisions in Awards providing for such acceleration;

                  (vi)     impose limitations on Awards, including limitations
                           on transfer and repurchase provisions;

                  (vii)    extend the exercise period within which Options may
                           be exercised; and

                  (viii)   determine at any time whether, to what extent, and
                           under what circumstances Common Stock and other
                           amounts payable with respect to an Award shall be
                           deferred either automatically or at the election of
                           the Participant and whether and to what extent the
                           Company shall pay or credit amounts constituting
                           interest (at rates determined by the Plan
                           Administrator) or dividends or deemed dividends on
                           such deferrals.

         The determination of the Plan Administrator on any such matters shall
be conclusive.

         5. DELEGATION OF AUTHORITY TO GRANT AWARDS. The Plan Administrator, in
its discretion, may delegate to the Chief Executive Officer of the Company all
or part of the Plan Administrator's authority and duties with respect to
granting Awards to individuals who are not subject to the reporting provisions
of Section 16 of the Act or "covered employees" within the meaning of Section
162(m) of the Code. The Plan Administrator may revoke or amend the terms of such
a delegation at any time, but such revocation shall not invalidate prior actions
of the Chief Executive Officer that were consistent with the terms of the Plan.

         6. ELIGIBILITY.

                  (a) Directors, officers, Employees and Consultants of the
Company, its Parent or its Subsidiaries who, in the opinion of the Plan
Administrator, are mainly responsible for the continued growth and development
and future financial success of the business shall be eligible to participate in
the Plan.

                                      -4-
<PAGE>   5
                  (b) The Plan shall not confer upon any Participant any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

         7. STOCK OPTIONS.

                  (a) Options granted pursuant to the Plan may be either Options
which are Incentive Stock Options or Nonstatutory Stock Options. Incentive Stock
Options and Nonstatutory Stock Options shall be granted separately hereunder.
The Plan Administrator, shall determine whether and to what extent Options shall
be granted under the Plan and whether such Options granted shall be Incentive
Stock Options or Nonstatutory Stock Options; provided, however, that: (i)
Incentive Stock Options may be granted only to Employees of the Company, its
Parent or any Subsidiary; and (ii) no Incentive Stock Option may be granted
following the tenth (10th) anniversary of the effective date of the Plan. The
provisions of the Plan and any Option Agreement pursuant to which Incentive
Stock Options shall be issued shall be construed in a manner consistent with
Section 422 of the Code (or any successor provision) and rules and regulations
promulgated thereunder.

                  (b) To the extent that Options designated as Incentive Stock
Options (under all plans of the Company or any Parent or Subsidiary) become
exercisable by a Participant for the first time during any calendar year for
Common Stock having a Fair Market Value greater than One Hundred Thousand
Dollars ($100,000), the portion of such Options which exceeds such amount shall
be treated as Nonstatutory Stock Options. For purposes of this Section 7,
Options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of Common Stock
shall be determined as of the time the Option with respect to such Common Stock
is granted. If the Code is amended to provide for a different limitation from
that set forth in this Section 7, such different limitation shall be deemed
incorporated herein effective as of the amendment date and with respect to such
Options as required or permitted by such amendment to the Code. If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section 7, the Participant
may designate which portion of such Option the participant is exercising. In the
absence of such designation, the Participant shall be deemed to have exercised
the Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion shall be issued upon the exercise of the Option.

         8. TERM OF PLAN. The Plan shall become effective on March 21, 2000,
provided the Plan has been previously adopted by the Board and approved by
the stockholders of the Company as described in Section 22 hereof. The Plan
shall remain in effect until terminated under Section 18 hereof.

         9. TERM OF OPTIONS. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement. In the
case of an Option granted to an Optionee who, at the

                                      -5-
<PAGE>   6
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

         10. OPTION EXERCISE PRICE AND CONSIDERATION.

                  (a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:

                           (i) In the case of an Incentive Stock Option

                                    A. granted to an Employee who, at the time
         of the grant of such Incentive Stock Option, owns stock representing
         more than ten percent (10%) of the voting power of all classes of stock
         of the Company or any Parent or Subsidiary, the per Share exercise
         price shall be no less than one hundred ten percent (110%) of the Fair
         Market Value per Share on the date of grant.

                                    B. granted to any Employee, the per Share
         exercise price shall be no less than one hundred percent (100%) of the
         Fair Market Value per Share on the date of grant.

                           (ii) In the case of a Nonstatutory Stock Option
         granted to any person, the per Share exercise price shall be no less
         than eighty-five percent (85%) of the Fair Market Value per Share on
         the date of grant.

                  (b) The Option exercise price of each share purchased pursuant
to an Option shall be paid in full at the time of each exercise of the Option in
the discretion of the Plan Administrator, through any combination of the
foregoing methods of payment: (i) in cash; (ii) by check; (iii) by cash
equivalent; (iv) by delivering to the Company a notice of exercise with an
irrevocable direction to a broker-dealer registered under the Exchange Act to
sell a sufficient portion of the shares and deliver the sale proceeds directly
to the Company to pay the exercise price (provided any brokerage sales
commissions are paid by the Optionee); or (v) in the discretion of the Plan
Administrator, through the delivery to the Company of previously-owned shares of
Common Stock having an aggregate Fair Market Value equal to the Option exercise
price of the shares being purchased pursuant to the exercise of the Option;
provided, however, that shares of Common Stock delivered in payment of the
exercise price must have been held by the Participant for at least six (6)
months in order to be utilized to pay the exercise price.

         11. EXERCISE OF OPTION.

                  (a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Plan Administrator, including performance
criteria with respect to the Company and/or the Optionee, and as shall be
permissible under the terms of the Plan.

                                      -6-
<PAGE>   7
                           An Option may not be exercised for a fraction of a
Share.

                           An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company through a method of payment allowable under Section
10(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 15 of the Plan.

                  (b) Termination of Employment. Except as set forth below, in
the event of termination of an Optionee's Continuous Status as an Employee,
Consultant or Director with the Company (as the case may be), such Optionee may,
but only within ninety (90) days (or such other period of time as is determined
by the Board, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option and not exceeding ninety (90)
days) after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

                  (c) Disability of Optionee. Notwithstanding the provisions of
Section 11(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee, Consultant or Director (as the case may be) as a result
of his or her total and permanent disability (as defined in Section 22(e)(3) of
the Code), Optionee may, but only within twelve (12) months from the date of
such termination (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise the Option to the
extent the Optionee was otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.

                  (d)      Death of Optionee.

                           (i) In the event of the death of an Optionee during
the term of Optionee's Continuous Status as an Employee, Consultant or Director
with the Company (as the case may be), the Option may be exercised, at any time
within twelve (12) months following the date of death (but in no event later
than the expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the date of death, or
if the Option is not exercised by the Optionee's estate or by a

                                      -7-
<PAGE>   8
person who acquired the right to exercise the Option by bequest or inheritance
to the extent so entitled within the time specified herein, the Option shall
terminate.

                           (ii) In the event of the death of an Optionee within
thirty (30) days after the termination of Optionee's Continuous Status as an
Employee, Consultant or Director with the Company (as the case may be) pursuant
to Section 11(b) above, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Optionee was entitled to
exercise the Option at the date of death. To the extent that Optionee was not
entitled to exercise the Option at the date of death, or if the Option is not
exercised by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance to the extent so entitled within
the time specified herein, the Option shall terminate.

                  (e) Termination for Cause or Post-Termination Relationship
with Competing Business. Notwithstanding the provisions of Section 11(b) above,
in the event of Termination for Cause of an Optionee's Continuous Status as an
Employee, Consultant or Director with the Company (as the case may be) or in the
event that such Optionee within the Option term becomes an employee, consultant
or director of a Competing Business (as defined herein), any Option held by the
Optionee, whether vested or unvested, shall forthwith terminate. In addition to
the immediate forfeiture of all Options upon the occurrence of the events
specified in the preceding sentence, Optionee shall automatically forfeit all
Shares underlying any exercised portion of an Option for which the Company has
not yet delivered the share certificates, upon refund by the Company of the
exercise price paid by the Optionee for such Shares. For purposes of this Plan,
the term "Competing Business" shall mean any person, corporation or other entity
engaged in the business of: (i) providing local and long distance
telecommunications services, calling cards, private line services, switched
digital services, digital subscriber line services, internet access,
audioconferencing, cellular service and videoconferencing; or (ii) selling or
attempting to sell any product or service which is the same as or similar to
products or services sold by the Company within the last year prior to
termination of such Participant's employment, consulting relationship or
director status, as the case may be, hereunder.

         12. RESTRICTED STOCK AWARDS.

                  (a) The Plan Administrator may grant Restricted Stock Awards
to any officer, Employee or Consultant of the Company, its Parent and its
Subsidiaries. A Restricted Stock Award entitles the recipient to acquire shares
of Common Stock subject to such restrictions and conditions as the Plan
Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.

                  (b) Upon execution of a written instrument setting forth the
Restricted Stock Award and paying any applicable purchase price, a Participant
shall have the rights of a stockholder with respect to the Common Stock subject
to the Restricted Stock Award, including, but not limited to, the right to vote
and receive dividends with respect thereto; provided,

                                      -8-
<PAGE>   9
however, that shares of Common Stock subject to Restricted Stock Awards that
have not vested shall be subject to the restrictions on transferability
described in Section 12(d) below. Unless the Plan Administrator shall otherwise
determine, certificates evidencing the Restricted Stock shall remain in the
possession of the Company until such Restricted Stock is vested as provided in
Section 12(c) below.

                  (c) The Plan Administrator at the time of grant shall specify
the date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which Restricted Stock shall become vested,
subject to such further rights of the Company or its assigns as may be specified
in the instrument evidencing the Restricted Stock Award. If the grantee or the
Company, as the case may be, fails to achieve the designated goals or the
grantee's relationship with the Company is terminated prior to the expiration of
the vesting period, the grantee shall forfeit all shares of Common Stock subject
to the Restricted Stock Award which have not then vested.

                  (d) Unvested Restricted Stock may not be sold, assigned
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award.

         13. STOCK AWARDS. The Plan Administrator may, in its sole discretion,
grant (or sell at a purchase price determined by the Plan Administrator) a Stock
Award to any officer, Employee or Consultant of the Company, its Parent or its
Subsidiaries, pursuant to which such individual may receive shares of Common
Stock free of any vesting restrictions (a "Stock Award") under the Plan. Stock
Awards may be granted or sold as described in the preceding sentence in respect
of past services or other valid consideration, or in lieu of any cash
compensation due to such individual.

         14. WITHHOLDING TAX OBLIGATIONS.

                  (a) Whenever Shares are to be issued under the Plan, the
Company shall have the right to require the Participant to remit to the Company
an amount sufficient to satisfy applicable federal, state and local tax
withholding requirements prior to the delivery of any certificate for Shares;
provided, however, that in the case of a Participant who receives an Award of
Shares under the Plan which is not fully vested, the Participant shall remit
such amount on the first business day following the Tax Date. The "Tax Date" for
purposes of this Section 14 shall be the date on which the amount of tax to be
withheld is determined. If a Participant makes a disposition of shares acquired
upon the exercise of an Incentive Stock Option within either two (2) years after
the Option was granted or one (1) year after its exercise by the Participant,
the Participant shall promptly notify the Company and the Company shall have the
right to require the Participant to pay to the Company an amount sufficient to
satisfy federal, state and local tax withholding requirements.

                  (b) A Participant who is obligated to pay the Company an
amount required to be withheld under applicable tax withholding requirements may
pay such amount: (i) in cash; (ii) in the discretion of the Plan Administrator,
through the delivery to the Company of previously-owned shares of Common Stock
having an aggregate Fair Market Value on the Tax

                                      -9-
<PAGE>   10
Date equal to the tax obligation, provided that the previously owned shares
delivered in satisfaction of the withholding obligations must have been held by
the Participant for at least six (6) months; or (iii) in the discretion of the
Plan Administrator, through a combination of the procedures set forth in
subsections (i) and (ii) of this Section 14(b).

                  (c) A Participant who is obligated to pay to the Company an
amount required to be withheld under applicable tax withholding requirements in
connection with either the exercise of a Nonstatutory Stock Option, the receipt
of a Restricted Stock Award or Stock Award under the Plan may, in the discretion
of the Plan Administrator, elect to satisfy this withholding obligation, in
whole or in part, by requesting that the Company withhold shares of stock
otherwise issued to the Participant having a Fair Market Value on the Tax Date
equal to the amount of the tax required to be withheld; provided, however, that
shares may be withheld by the Company only if such withheld shares have vested.
Any fractional amount shall be paid to the Company by the Participant in cash or
shall be withheld from the Participant's next regular paycheck.

                  (d) An election by a Participant to have shares of stock
withheld to satisfy federal, state and local tax withholding requirements
pursuant to Section 14(c) must be in writing and delivered to the Company prior
to the Tax Date.

         15. ADJUSTMENT OF NUMBER AND PRICE OF SHARES.

                  Any other provision of the Plan notwithstanding:

                  (a) If, through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of Common Stock are
increased or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, the
Plan Administrator shall make an appropriate or proportionate adjustment in: (i)
the number of Options that can be granted to any one individual Participant;
(ii) the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan; and (iii) the price for each share subject to
any then outstanding Options under the Plan, without changing the aggregate
exercise price (i.e., the exercise price multiplied by the number of shares) as
to which such Options remain exercisable; and (iv) the maximum number of shares
that may be issued under the Plan, the maximum number of shares that are
available for the award of Incentive Stock Options and the maximum number of
shares that may be granted to any one individual Participant during any one (1)
calendar year period, each as set forth in Section 3 hereof. The adjustment by
the Plan Administrator shall be final, binding and conclusive.

                  (b) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall authorize the issuance or assumption of an Option
or Options in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the

                                      -10-
<PAGE>   11
Plan Administrator may grant an Option or Options upon such terms and conditions
as it may deem appropriate for the purpose of assumption of the old Option, or
substitution of a new Option for the old Option, in conformity with the
provisions of Code Section 424(a) and the rules and regulations thereunder, as
they may be amended from time to time.

                  (c) No adjustment or substitution provided for in this Section
15 shall require the Company to issue or to sell a fractional share under any
Option Agreement or share award agreement and the total adjustment or
substitution with respect to each Option and share award agreement shall be
limited accordingly.

                  (d) In the case of the dissolution or liquidation of the
Company, the Plan and all Awards granted hereunder shall terminate. In the event
of such proposed termination, each Participant shall be notified of such
termination and shall be permitted to exercise for a period of at least fifteen
(15) days prior to the date of such termination all Options held by such
Participant which are then exercisable.

                  (e) In the case of: (i) a merger, reorganization or
consolidation in which the Company is acquired by another person or entity
(other than a holding company formed by the Company); (ii) the sale of all or
substantially all of the assets of the Company to an unrelated person or entity
which is not an "affiliate" (as defined in Rule 144 of the Securities Act of
1933, as amended) of the Company; or (iii) the sale of all of the capital stock
of the Company to an unrelated person or entity which is not an "affiliate" of
the Company (in each case, a "Fundamental Transaction"), all Options shall be
assumed or equivalent options shall be substituted by such successor corporation
or a parent or subsidiary of such successor corporation. For the purposes of
this paragraph, the Options shall be considered assumed if, following the
Fundamental Transaction, the Options confer the right to purchase, for each
Share subject to the Options immediately prior to the Fundamental Transaction,
the consideration (whether stock, cash, or other securities or property)
received in the Fundamental Transaction by holders of Common Stock for each
Share held on the effective date of the Fundamental Transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Fundamental Transaction was not solely common
stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation and the Participant, provide for the
consideration to be received upon the exercise of the Options, for each Share
subject to the Options, to be solely common stock of the successor corporation
or its Parent equal in Fair Market Value to the per share consideration received
by holders of Common Stock in the Fundamental Transaction.

                  In the event that such successor corporation does not agree to
assume the Options or to substitute equivalent options, the Board shall provide
for each Optionee to have the right to exercise all Options then held by such
Optionee, including Options which would not otherwise be exercisable. In such
event, the Board shall notify each Optionee that such Options shall be fully
exercisable for a period of fifteen (15) days from the date of receipt of such
notice, and that such Options will terminate upon the expiration of such period.

                                      -11-
<PAGE>   12
                  Notwithstanding anything in the Plan to the contrary, the
acceleration of exercisability in this Section shall not occur in the event that
such acceleration would, in the opinion of the Company's independent auditors,
make the Fundamental Transaction ineligible for pooling of interests accounting
treatment and the Company intends to use such treatment with respect to such
transaction. The Board shall obtain a written statement from the Company's
independent auditors with respect to the effect of accelerated exercisability of
outstanding Options prior to providing any Optionee with the notice contemplated
by this Section.

                  (f) In the event that the Company shall be merged or
consolidated with another corporation or entity, other than with a corporation
or entity which is an "affiliate" of the Company, under the terms of which
holders of capital stock of the Company will receive upon consummation thereof a
cash payment for each share of capital stock of the Company surrendered pursuant
to such transaction (the "Cash Purchase Price"), the Board may provide that all
outstanding options shall terminate upon consummation of such transaction and
each Optionee shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (i) the Cash Purchase Price multiplied by the number of
shares of Capital Stock of the Company subject to outstanding options held by
such optionee exceeds (ii) the aggregate exercise price of such options.

         16. NONTRANSFERABILITY. A Participant's rights under the Plan,
including the right to any shares or amounts payable may not be assigned,
pledged, or otherwise transferred except, in the event of a Participant's death,
to the Participant's designated beneficiary or, in the absence of such a
designation, by will or by the laws of descent and distribution; provided,
however, that the Plan Administrator may, in its discretion, at the time of
grant of a Nonstatutory Stock Option or by amendment of an Option Agreement for
an Incentive Stock Option or a Nonstatutory Stock Option, provide that Options
granted to or held by a Participant may be transferred, in whole or in part, to
one or more transferees and exercised by any such transferee, provided further
that: (a) any such transfer must be without consideration; (b) each transferee
must be a member of such Participant's "immediate family" (as defined below) or
a trust, family limited partnership or other estate planning vehicle established
for the exclusive benefit of one or more members of the Participant's immediate
family; and (c) such transfer is specifically approved by the Plan Administrator
following the receipt of a written request for approval of the transfer; and
provided further that any Incentive Stock Option which is amended to permit
transfers during the lifetime of the Participant shall, upon the effectiveness
of such amendment, be treated thereafter as a Nonstatutory Stock Option. In the
event an Option is transferred as contemplated in this Section, such transfer
shall become effective when approved by the Plan Administrator and such Option
may not be subsequently transferred by the transferee other than by will or the
laws of descent and distribution. Any transferred Option shall continue to be
governed by and subject to the terms and conditions of this Plan and the
relevant Option Agreement, and the transferee shall be entitled to the same
rights as the Participant as if no transfer had taken place. As used in this
Section, "immediate family" shall mean, with respect to any person, any spouse,
child, stepchild or grandchild, and shall include relationships arising from
legal adoption.

         17. TERMINATION - CERTAIN FORFEITURES. Notwithstanding any other
provision of the Plan to the contrary, a Participant shall have no right to
exercise any Option or vest or receive

                                      -12-
<PAGE>   13
payment of any Restricted Stock Award or Stock Award if: (a) the Participant is
Terminated for Cause; or (b) if following the Participant's termination from the
Company and prior to the Company's delivery of the shares of Common Stock
underlying an Award, the Participant becomes an officer or director of, a
consultant to or employed by a Competing Business. Furthermore, notwithstanding
any other provision of the Plan to the contrary, in the event that a Participant
receives or is entitled to the delivery or vesting of Common Stock pursuant to
an Award during the twelve (12) month period prior to the Participant's
termination from the Company or during the twelve (12) months following the
Participant's termination from the Company, the Company, in its sole discretion,
may require the Participant to return or forfeit the cash and/or Common Stock
received with respect to such award (or its economic value as of (i) the date of
the exercise of Options; (ii) the date immediately following the end of the
Restricted Period for Restricted Stock Awards; or (iii) the date of grant with
respect to Stock Awards, as the case may be) in the event that the Participant
becomes an officer or director of, a consultant to or employed by a Competing
Business within eighteen (18) months of such Participant's termination from the
Company. The Company's right to require forfeiture under this Section 17 must be
exercised within ninety (90) days after the discovery of an occurrence
triggering the Plan Administrator's right to require forfeiture but in no event
later than twenty-four (24) months after the Participant's termination from the
Company.

         18. AMENDMENT AND TERMINATION OF THE PLAN.

                  (a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.

                  (b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

         19. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to any Award under the Plan unless the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

                  The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of

                                      -13-
<PAGE>   14
the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained. As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned relevant provisions of law.

         20. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

         21. AGREEMENTS. Options and Restricted Stock Awards shall be evidenced
by written agreements in such form as the Board shall approve from time to time.

         22. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the degree and manner required under applicable state and federal law.

         23. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all stockholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key employees whose duties in connection with the Company assure their access
to equivalent information.

         24. GOVERNING LAW. This Plan and the Stock Option Agreements executed
pursuant hereto shall be governed by and construed in accordance with the laws
of the State of Delaware without regard to its choice of law provisions.

                                    * * * * *

                                      -14-

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