Document:

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                              SECOND AMENDMENT TO
                                CREDIT AGREEMENT
                                   EXECUTION

                             FLAG ATLANTIC LIMITED
                      SECOND AMENDMENT TO CREDIT AGREEMENT

      This SECOND AMENDMENT dated as of November 16, 2000 (the "Second
Amend-ment") to the CREDIT AGREEMENT dated as of October 8, 1999, as amended on
December 14, 1999 (such agreement as amended, supplemented or otherwise modified
to the date hereof, the "Credit Agreement") (this "Second Amendment") is entered
into by and among FLAG ATLANTIC LIMITED, a company organized and existing under
the laws of Bermuda (the "Company"), the Lenders party thereto, BARCLAYS
CAPITAL, as lead arranger, WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK
BRANCH, as syndication agent, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES, as documentation agent and BARCLAYS BANK PLC as administrative agent
for the Lenders and as security agent for the Secured Parties (in such
capacities, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.

      RECITALS WHEREAS, Company and Lenders are parties to the Credit Agreement,
pursuant to which Lenders have extended certain credit facilities to Company;

      WHEREAS, FLAG Atlantic Holdings Limited ("FLAG Atlantic Holdings") desires
to purchase from GTS TransAtlantic Holdings, Ltd. ("GTS") the 50% of the Company
it does not already own;

      WHEREAS, in order to effectuate the acquisition by FLAG Atlantic Holdings
of the 50% of the Company owned by GTS, Company and Lenders desire to amend the
Credit Agreement as set forth herein.

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

SECTION 1. AMENDMENTS TO CREDIT AGREEMENT

      1.1 Amendments to Article I Section 1.1 is hereby amended by deleting the
definitions of "Change in Control" and "Sponsor" in their entirety and
substituting therefor the following:

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                              SECOND AMENDMENT TO
                                CREDIT AGREEMENT

      2. "Change in Control" shall mean and shall be deemed to have occurred if
FLAG Telecom Holdings Limited shall cease to directly or indirectly own at least
50% of the issued and outstanding voting stock of the Company; provided,
however, that no "Change in Control" shall be deemed to occur if a successor or
transferee of any of the foregoing stock is a person (or whose (direct or
indirect) 100% parent is a person) whose debt is rated at least "investment
grade" by S&P and Moody's (or, if rated by one only of S&P and Moody's, by such
rating agency) or as a result of any transaction entered into in accordance with
Section 6.7 or 6.8. "Sponsors" or "Sponsor" shall mean FLAG Atlantic Holdings;
provided that, solely for the purposes of the definition of "Sponsor Pre-Sale
Capacity Commitments," and terms and provisions with respect thereto, "Sponsor"
shall mean each of FLAG Atlantic Holdings and GTS TransAtlantic Holdings. 1.2
Amendments to Article VI A. Section 6.4 is hereby amended by inserting the words
"(other than GTS TransAtlantic Holdings)" after the words "provided, further,
that the Company shall cause each Sponsor" in the seventh to last line of such
Section. B. Clause (ii) of Section 6.30 is hereby amended by inserting the words
"(other than GTS TransAtlantic Holdings)" after the words "acquired by a
Sponsor" in the second line of such clause . C. Clause (iii) of Section 6.30 is
hereby amended by inserting the words "(excluding GTS TransAtlantic Holdings)"
after the words "other than Sponsor" in the third line of such clause.

      SECTION 2. CONSENT The Lenders hereby consent to either, or a combination,
of the following:

      (i) the amendment or assignment of Project Documents solely for the
purposes of the assumption by FLAG Atlantic Holdings or any of its Affiliates of
the rights and obligations of GTS or its relevant Affiliate under such Project
Documents or (ii) the termination of Project Documents (other than Capacity
Sales Agreements), provided that FLAG Atlantic Holdings enters into,
simultaneously with such termination, agreements on substantially identical
terms, and no less favorable to Lenders, to such terminated Project Documents.
This consent shall not be provided, or continue to be provided, unless each
Sponsor Pre-Sale Capacity Commitment shall remain in full force and effect
notwithstanding any amendment to the Credit Agreement effected pursuant to this
Second Amendment. Any revisions to Capacity Sales Agreements entered into by GTS
pursuant to Sponsor Pre-Sale Capacity Commitments shall be reasonably
satisfactory to the Administrative Agent.

SECOND AMENDMENT TO CREDIT AGREEMENT

      3 The Lenders hereby consent to the release by the Administrative Agent of
all their rights, title, claim and interest in or under (i) solely with respect
to GTS, the Shareholder Pledge Agreement effective on the transfer to FLAG
Atlantic Holdings of all the shares representing GTS' interest in the Company,
(ii) the Equity Contribution Agreement, dated October 8, 1999, between the
Administrative Agent and GTS, and (iii) the Limited Guarantee Agreement (GTS).

      SECTION 3. CONDITIONS TO EFFECTIVENESS Sections 1 and 2 of this Second
Amendment shall become effective only upon the satisfaction of all of the
following conditions precedent (the date of satisfaction of such conditions
being referred to herein as the "Second Amendment Effective Date"):

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A. execution. The Company, Majority Lenders and the Administrative Agent shall
have executed this Second Amendment.

B. Certain Documents. On or before the Second Amendment Effective Date, the
Company or its Affiliates, as the case may be, shall deliver or cause to be
delivered to Lenders (or to Administrative Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel):

      (i) one or more favorable written opinions of in-house counsel to the
      Company with respect to due authorization, execution and validity of the
      Pledge Supplement (as defined in 3.D. below), dated as of the Second
      Amendment Effective Date and in form and substance reasonably satisfactory
      to the Administrative Agent and their counsel and as to such other matters
      as Administrative Agent acting on behalf of Lenders may reasonably
      request; and

      (ii) one or more favorable written opinions in respect of the share pledge
      described in 3.D. below of (y) Morgan, Lewis & Bockius LLP, special U.S.
      counsel for the Company and (z) Appleby Spurling & Kempe, special Bermudan
      counsel to the Company, in each case as of the Second Amendment Effective
      Date and in form and substance reasonably satisfactory to the
      Administrative Agent and their counsel as to such matters as
      Administrative Agent acting on behalf of Lenders may reasonably request.

C. Representations and Warranties; Performance of Agreements. Company shall have
delivered to Administrative Agent an Officer's Certificate, in form and
substance satisfactory to Administrative Agent, to the effect that (i) the
representations and warranties contained in Section 4 of this Second Amendment
are true, correct and complete in all material respects on and as of the Second
Amendment Effective Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in
all material respects on and as of such earlier date, and (ii) Company shall
have performed in all material respects all agreements and satisfied all
conditions which this Second Amendment provides shall be performed or satisfied
by Company on or before.

SECOND AMENDMENT TO CREDIT AGREEMENT 4 the Second Amendment Effective Date,
except as otherwise disclosed to and agreed to in writing by Administrative
Agent.

D. Share Pledge. FLAG Atlantic Holdings shall deliver a supplement (the "Pledge
Supplement") to the Shareholder Pledge Agreement whereby it shall pledge to the
Administrative Agent on behalf of the Lenders the shares representing the 50% of
the Company it is acquiring from GTS immediately upon the acquisition of such
shares.

E. Other Documents. Administrative Agent and Lenders shall have received such
other

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documents and information regarding the Company, the Financing Documents and the
documents contemplated by Section 3.B. above as Administrative Agent may
reasonably request.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF COMPANY

In order to induce Lenders to enter into this Second Amendment and to amend the
Credit Agreement in the manner provided herein, the Company represents and
warrants to each Lender that the following statements are true, correct and
complete in all material respects:

A. Corporate Power and Authority. The Company has all requisite corporate power
and authority to enter into this Second Amendment and to carry out the
transactions contemplated by, and perform its obligations under the Credit
Agreement, as amended by this Second Amendment, and the other Financing
Documents.

B. Authorization of Agreements. The execution and delivery of this Second
Amendment and the performance of the Credit Agreement, as amended by this Second
Amendment, and the other Financing Documents have been duly authorized by all
necessary corporate or partnership (as applicable) action on the part of the
Company.

C. No Conflict. The execution and delivery by the Company of this Second
Amendment and the performance by the Company of the Credit Agreement, as amended
by this Second Amendment, and the other Financing Documents do not and will not
(i) violate (A) any provision of any law, statute, rule or regulation, or of the
certificate or articles of incorporation or partnership agreement, other
constitutive documents or by-laws of the Company or any of its Subsidiaries, (B)
any applicable order of any court or any rule, regulation or order of any
Governmental Authority or (C) any provision of any indenture, certificate of
designation for preferred stock, agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default under
any such indenture, certificate of designation for preferred stock, agreement or
other instrument, where any such conflict, violation, breach or default referred
to in clause (i) or (ii) of this Section 4.C., individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of the Company (other than any Liens created under any of the Financing
Documents in favor of Administrative Agent on behalf of Lenders), or (iv)
require any approval of stockholders or partners.

SECOND AMENDMENT TO CREDIT AGREEMENT or any approval or consent of any Person
under any contractual obligation of the Company, except for such approvals or
consents which will be obtained on or before the Second Amendment Effective
Date.

D. Governmental Consents. No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or will be
required in connection with the execution and delivery by the Company of this
Second Amendment and the performance by Company of the Credit Agreement, as
amended by this Second Amendment, and the other Financing Documents, except for
such actions, consents and approvals the failure to obtain or make which could
not reasonably be expected to result in a Material Adverse Effect or which have
been obtained and are in full force and effect.

E. Binding Obligation. This Second Amendment and the Credit Agreement, as
amended by this Second Amendment, have been duly executed and delivered by the
Company and each constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally and
except as enforceability may be limited by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

F. Incorporation of Representations and Warranties From Credit Agreement. The
representations and warranties contained in Article III of the Credit Agreement,
as amended by this Second Amendment, are true, correct and complete in all
material respects on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date. For the avoidance of doubt, for purposes of Section 3.32 of
the Credit Agreement, as amended by this Second Amendment, reference to the
"Sponsor" therein shall be deemed to be reference to FLAG Atlantic Holdings
only.

G. Absence of Default. No event has occurred and is continuing or will result
from the consummation of the transactions contemplated by this Second Amendment
that would constitute an Event of Default or a Default.

<PAGE>

H. Adverse Change. There has not been, as of the date hereof, any material
adverse change in the financial condition, results of operations, businesses,
operations or properties of the Company and its Subsidiaries, taken as a whole,
or of the Company on an individual basis, since October 8, 1999.

SECTION 5. FURTHER ASSURANCES The Company agrees that from time to time, at the
expense of Company, it will execute and deliver such further agreements,
documents and instruments (including, without limitation, financing statements
and amendments to financing statements specifying each item of the Collateral
and the serial number therefor) and take such further action as may be requested
by the Administrative Agent to carry out the terms and provisions and purposes
of this Second Amendment, the Credit Agreement, as amended by this Second
Amendment, and the other Financing Documents, to evidence the Obligations and to
create, preserve, maintain and perfect the Liens of the Administra-tive Agent
for the benefit of itself and the Lenders in and to the Collateral and the
required priority of such Liens.

SECTION 6. ACKNOWLEDGMENT AND CONSENT Each of FLAG Atlantic Holdings, FLAG
Atlantic USA Limited, FLAG Atlantic UK Limited and FLAG Atlantic France SARL has
(i) guarantied the Obligations and (ii) created Liens in favor of Lenders on
certain Collateral to secure its obligations under the Subsidiary Guarantee
Agreements. FLAG Atlantic Holdings, FLAG Atlantic USA Limited, FLAG Atlantic UK
Limited and FLAG Atlantic France SARL are collectively referred to herein as the
"Credit Support Parties", and the Subsidiary Guarantee Agreements and the
Security Agreements are collectively referred to herein as the "Credit Support
Documents". Each Credit Support Party hereby acknowledges that it has reviewed
the terms and provisions of the Credit Agreement and this Second Amendment and
consents to the amendment of the Credit Agreement effected pursuant to this
Second Amendment. Each Credit Support Party hereby confirms that each Credit
Support Document to which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guarantee or secure, as the case may be, to
the fullest extent possible in accordance with the Credit Support Documents the
payment and performance of all "Obligations" under each of the Subsidiary
Guarantee Agreements and Security Agreements, as the case may be (in each case
as such terms are defined in the applicable Credit Support Document), including
without limitation the payment and performance of all such "Obligations" under
each of the Subsidiary Guarantee Agreements and Security Agreements, as the case
may be, in respect of the Obligations of the Company now or hereafter existing
under or in respect of the Credit Agreement, as amended by this Second
Amendment, and hereby pledges and assigns to the Administrative Agent, and
grants to the Administrative Agent a continuing lien on and security interest in
and to all Collateral as collateral security for the prompt payment and
performance in full

<PAGE>

when due of the "Obligations" under each of the Subsidiary Guarantee Agreements
and Security Agreements to which it is a party (whether at stated maturity, by
acceleration or otherwise). Each Credit Support Party acknowledges and agrees
that any of the Credit Support Documents to which it is a party or otherwise
bound shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of this Second Amendment. Each Credit Support
Party represents and warrants that all representations and warranties of such
Credit Support Party contained in the Credit Agreement, this Second Amendment
and the Credit Support Documents to which it is a party or otherwise bound are
true, correct and complete in all material respects on and as of the date hereof
to the same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier date, in
which case they were true, correct andcomplete in all material respects on and
as of such earlier date. The representation and warranty in the immediately
preceding sentence shall also be given as of the Second Amendment Effective
Date. Each Credit Support Party acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Second Amendment, such Credit
Support Party is not required by the terms of the Credit Agreement or any other
Financing Document to consent to the amendments to the Credit Agreement effected
pursuant to this Second Amendment and (ii) nothing in the Credit Agreement, this
Second Amendment or any other Financing Document shall be deemed to require the
consent of such Credit Support Party to any future amendments to the Credit
Agreement.

SECTION 7. MISCELLANEOUS A. Reference to and Effect on the Credit Agreement and
the Other Loan Documents. (i) On and after the Second Amendment Effective Date,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit Agreement,
and each reference in the other Financing Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended by
this Second Amendment. (ii) Except as specifically amended by this Second
Amendment, the Credit Agreement and the other Financing Documents shall remain
in full force and effect and are hereby ratified and confirmed. (iii) The
execution, delivery and performance of this Second Amendment shall not, except
as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of any Agent or Lender under
the Credit

<PAGE>

Agreement or any of the other Financing Documents.

B. Headings. Section and Subsection headings in this Second Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Second Amendment for any other purpose or be given any substantive
effect.

C. Applicable Law. THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES..SECOND AMENDMENT TO
CREDIT AGREEMENT

D. COUNTERPARTS. This Second Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. [Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

COMPANY: FLAG ATLANTIC LIMITED
By:
Name:
Title:
By:
Name:
Title:
CREDIT SUPPORT PARTIES: FLAG ATLANTIC HOLDINGS LIMITED
By:
Name:
Title: FLAG ATLANTIC USA LIMITED
By:
Name:
Title:
FLAG ATLANTIC UK LIMTED

<PAGE>

By:
Name:
Title: FLAG ATLANTIC FRANCE SARL
By:
Name:
Title:
LENDERS AND AGENTS: BARCLAYS BANK PLC,
as the Administrative Agent
By:
Name:
Title: BARCLAYS BANK PLC, as the Lead Arranger and a Lender
By:
Name:
Title:.SECOND AMENDMENT TO CREDIT AGREEMENT
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
as Documentation Agent and Lender
By:
Name:
Title:
By:
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as Syndication Agent and Lender
By:
Name:
Title:
AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD.
By:
Name:
Title:
BANK OF SCOTLAND
By:

<PAGE>

Name:
Title:  CITY NATIONAL BANK
By:
Name:
Title:  CREDIT LYONNAIS
By:
Name:
Title:  DG BANK
By:
Name:
Title:
ERSTE BANK DER OESTERRIECHISCHEN SPARKASSEN AG
By:
Name:
Title: GULF INTERNATIONAL BANK B.S.C.
By:
Name:
Title:
HYPOVEREINSBANK
By:
Name:
Title: 13 IKB DEUTSCHE INDUSTRIEBANK AG C/O STRUCTURED FINANCE
By:
Name:
Title: KBC FINANCE IRELAND
By:
Name:

<PAGE>

Title: LANDESBANK HESSAN-THURINGEN GIROZENTRALE
By:
Name:
Title:  LANDESBANK SACHEN GIROZENTRALE
By:
Name:
Title:  MITSUBISHI TRUST & BANKING CORP.
By:
Name:
Title: NIB CAPITAL BANK
By:
Name:
Title: RABOBANK INTERNATIONAL
By:
Name:
Title:  RAIFFEISEN ZENTRALBANK OSTERREICH AKTIENGESELLSCHAFT
By:
Name:
Title: SOCIETE GENERALE
By:
Name:
Title: SUMITOMO BANK LIMITED
By:
Name:
Title:  THE ROYAL BANK OF SCOTLAND PLC
By:
Name:
Title:<PAGE>

                         UNITED HEALTHCARE CORPORATION

                             1998 BROAD-BASED STOCK
                                 INCENTIVE PLAN

1. PURPOSE OF PLAN.

This Plan shall be known as the "United HealthCare Corporation 1998
Broad-Based Stock Incentive Plan" (the "Plan").  The purpose of the Plan is
to aid in maintaining and developing personnel capable of contributing to the
future success of United HealthCare Corporation, a Minnesota corporation (the
"Company"), to offer such personnel additional incentives to put forth
maximum efforts for the success of the business, and to afford them an
opportunity to acquire a proprietary interest in the Company through stock
options and other awards as provided herein. The Plan is intended to be a
"broadly-based plan" within the meaning of the New York Stock Exchange
Shareholder Approval Policy. Options granted under this Plan are NOT intended
to be incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Other awards granted
under this Plan shall be in the form of stock appreciation rights ("SARs"),
restricted stock awards or performance awards as hereinafter described.

2. STOCK SUBJECT TO PLAN.

Subject to adjustment as provided in Section 14 hereof and the provisions of
this Section 2, the stock to be subject to options or other awards under the
Plan shall be the Company's authorized shares of common stock, par value $.01
per share (the "Common Shares"). The Common Shares may be either authorized
but unissued shares, or issued shares which have been reacquired by the
Company. Subject to adjustment as provided in Section 14 hereof, the number
of Common Shares as to which options may be granted or awards may be issued
hereunder shall be 5,781,349 Common Shares (the "Initial Common Shares").
Each fiscal quarter 0.75% of the number of Common Shares which were issued
and outstanding as of the end of the fiscal quarter immediately preceding the
then-current fiscal quarter shall be added to the number of Initial Common
Shares that were available for grant in any preceding fiscal quarter but were
not otherwise granted. If grants or awards lapse, expire, terminate or are
canceled prior to the issuance of Common Shares, or if Common Shares are
reacquired by the Company pursuant to this Plan in connection with payment of
the exercise price of options or awards or satisfaction of tax obligations,
such Common Shares will be available for new grants or awards.

3. ADMINISTRATION OF PLAN.

(a) ADMINISTRATION OF PLAN BY COMMITTEE. The Plan shall be administered by a
committee (the "Committee") of two or more directors of the Company, none of
whom shall be officers or employees of the Company and all of whom shall be
"Non-Employee Directors" with respect to the Plan within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any successor rule. The members of the Committee shall be appointed
by and serve at the pleasure of the Board of Directors.

(b) AUTHORITY OF COMMITTEE. Subject to the express provisions of the Plan, the
Committee shall have the plenary authority and discretion to: (i) determine the
purchase price of the Common Shares covered by each option, (ii) determine the
employees to whom and the time or times at which options and awards shall be
granted and the number of shares to be subject to each, (iii) determine the form
of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares or a combination thereof, (iv)
determine the terms of exercise of each option and award, (v) accelerate or
defer the time at which all or any part of an option or award may be exercised,
(vi) amend or modify the terms of any option or award with the consent of the
holder of the optionee or grantee, (vii) interpret the Plan, (viii) prescribe,
amend and rescind rules and regulations relating to the Plan, (ix) determine the
terms and provisions of each option or award agreement under the Plan (any of
which agreements need not be identical), (x) delegate such of its authority
granted herein as it deems is in the best interests of the Company, and (xi)
make all other determinations necessary or advisable for the administration of
the Plan, subject to the exclusive authority of the Board of Directors under
Section 16 herein to amend or terminate the Plan. The Committee's determinations
on the foregoing matters, unless otherwise disapproved by the Board of Directors
of the Company, shall be final and conclusive; provided, however, that the
Committee's determinations with respect to the matters set forth in clauses (ii)
and (iii) above, unless delegated as provided in subsection 3(C) below, shall be
final and conclusive without any right of disapproval by the Board of Directors
of the Company.

(c) GRANTS TO CERTAIN OFFICERS AND DIRECTORS. The Chief Executive Officer of
the Company shall, have the authority, as granted by the Committee pursuant
to clause (x) of the preceding subsection to grant, pursuant to the Plan,
options or other awards to eligible persons who are not considered by the
Company as its officers or directors for purposes of Section 16 of the
Exchange Act. The Chief Executive Officer of the Company shall provide
information as to any grants made pursuant to this subsection to the
Committee at its next meeting.

(d) ACTION OF THE COMMITTEE. The Committee shall select one of its members as
its Chairperson and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and signed by all of
the members of the Committee shall be fully effective as if it had been made by
a majority vote at a meeting duly called and held. The grant of an option or
award shall be effective only if a written agreement or certificate shall have
been duly executed and delivered by and on behalf of the Company following such
grant. The Committee may appoint a secretary and may make such rules and
regulations for the conduct of its business as it shall deem advisable.

4. ELIGIBILITY; GRANTING OF OPTIONS AND AWARDS.

(a) GENERALLY. Subject to the provisions of Section 4(b) below, all full-time
and part-time employees of, and consultants and independent contractors to, the
Company or its subsidiaries shall be eligible to receive options and awards
under this Plan.

<PAGE>

(b) GRANTS OF OPTIONS AND AWARDS. In determining the persons to whom options
and awards shall be granted and the number of shares subject to each, the
Committee may take into account any factors as the Committee in its discretion
shall deem relevant. A person who has been granted an option or award under this
Plan may be granted additional options or awards under the Plan if the Committee
shall so determine

(c) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in any agreement thereunder
shall confer on any employee any right to continue in the employ of the Company
or any of its subsidiaries or affect in any way the right of the Company or any
of its subsidiaries to terminate his or her employment at any time.

5. PRICE.

The Committee shall determine the option price for options and awards. For
purposes of the preceding sentence and for all other valuation purposes under
the Plan, the fair market value of the Common Shares shall be as reasonably
determined by the Committee, but shall not be less than the closing price of
the stock on the date for which fair market value is being determined, as
reported on any national securities exchange on which the Common Shares are
then traded. If on the date of grant of any option or award hereunder the
Common Shares are not traded on an established securities market, the
Committee shall make a good faith attempt to satisfy the requirements of this
Section 5 and in connection therewith shall take such action as it deems
necessary or advisable.

6. TERM.

Each option and award and all rights and obligations thereunder shall expire on
the date determined by the Committee and specified in the option or award
agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan. Notwithstanding the
foregoing, the term of options granted under the Plan may not extend more than
fifteen (15) years from the date of grant of such option.

7. EXERCISE OF OPTION OR AWARD.

(a) VESTING. The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in
installments and upon the occurrence of certain events, such as termination of
employment for any reason, and at such times during the term of the option or
award as the Committee may determine and specify in the option or award
agreement.

(b) COMPLIANCE WITH SECURITIES LAWS. The exercise of any option or award granted
hereunder shall be effective only at such time as the sale of Common Shares
pursuant to such exercise will not violate any state or federal securities or
other laws.

(c) NOTICE OF EXERCISE; PAYMENT OF EXERCISE PRICE. An optionee or grantee
electing to exercise an option or award shall give written notice to the
Company of such election and of the number of shares subject to such
exercise. The Company will verify the appropriateness of the election and
determine the compensation and related withholding tax amounts. The exercise
amount and applicable taxes must be tendered by the employee prior to the
issuance of shares pursuant to the exercise. Payment shall be made to the
Company in cash (including wire transfer, bank check, certified check,
personal check, or money order), or, at the discretion of the Committee and
as specified by the Committee, by delivering either (i) stock certificates
for Common Shares already owned by the optionee or grantee having a fair
market value as of such date equal to the full purchase price of the shares,
together with any applicable withholding taxes, or (ii) a combination of cash
and such shares; provided, however, that an optionee shall not be entitled to
tender Common Shares pursuant to successive, substantially simultaneous
exercises of options granted under this or any other stock option plan of the
Company. The fair market value of such tendered shares shall be determined as
provided in Section 5 herein. Until such person has been issued the shares
subject to such exercise, he or she shall possess no rights as a shareholder
with respect to such shares.

8. ALTERNATIVE STOCK APPRECIATION RIGHTS.

(a) GRANT. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a SAR evidenced
by an agreement in such form as the Committee shall from time to time
approve. Any such SAR may be subject to restrictions on the exercise thereof
as may be set forth in the agreement representing such SAR, which agreement
shall comply with and be subject to the following terms and conditions and
any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan.

(b) EXERCISE. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests be paid to him or her in cash and what
portion, if any, is to be paid in Common Shares of the Company. The Committee
promptly shall cause to be paid to such holder the SAR exercise amount, less any
applicable withholding taxes, either in cash, in Common Shares of the Company,
or in any combination of cash and shares as the Committee may determine. Such
determination may be either in accordance with the request made by the holder of
the SAR or in the sole and absolute discretion of the Committee. The SAR
exercise amount is the excess of the fair market value of one share of the
Company's Common Shares on the date of exercise over the per share exercise
price in respect of which the SAR was granted, multiplied by the number of
shares as to which the SAR is exercised. For the purposes, hereof, the fair
market value of the Common Shares shall be determined as provided in

<PAGE>

Section 5 herein.

9. RESTRICTED STOCK AWARDS.

The Committee may grant awards of Common Shares subject to forfeiture and
transfer restrictions. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:

(a) GRANT OF RESTRICTED STOCK AWARDS. Each restricted stock award made under the
Plan shall be for such number of Common Shares as shall be determined by the
Committee and set forth in the agreement containing the terms of such restricted
stock award. Such agreement shall set forth a period of time during which the
grantee must remain in the continuous employment of the Company in order for the
forfeiture and transfer restrictions to lapse. If the Committee so determines,
the restrictions may lapse during such restricted period in installments with
respect to specified portions of the shares covered by the restricted stock
award. The agreement may also, in the discretion of the Committee, set forth
performance or other conditions that will subject the Common Shares to
forfeiture and transfer restrictions. The Committee may, at its discretion,
waive all or any part of the restrictions applicable to any or all outstanding
restricted stock awards.

(b) DELIVERY OF COMMON SHARES AND RESTRICTIONS. At the time of a restricted
stock award, a certificate representing the number of Common Shares awarded
thereunder shall be registered in the name of the grantee. Such certificate
shall be held by the Company or any custodian appointed by the Company for the
account of the grantee subject to the terms and conditions of the Plan, and
shall bear such a legend setting forth the restrictions imposed thereon as the
Committee, in its discretion, may determine. The grantee shall have all rights
of a shareholder with respect to the Common Shares, including the right to
receive dividends and the right to vote such shares, subject to the following
restrictions: (i) the grantee shall not be entitled to delivery of the stock
certificate until the expiration of the restricted period and the fulfillment of
any other restrictive conditions set forth in the restricted stock agreement
with respect to such Common Shares; (ii) none of the Common Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of during such restricted period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined by the
Committee, all of the shares shall be forfeited and all rights of the grantee to
such shares shall terminate, without further obligation on the part of the
Company, unless the grantee remains in the continuous employment of the Company
for the entire restricted period in relation to which such Common Shares were
granted and unless any other restrictive conditions relating to the restricted
stock award are met. Any Common Shares, any other securities of the Company and
any other property (except for cash dividends) distributed with respect to the
Common Shares subject to restricted stock awards shall be subject to the same
restrictions, terms and conditions as such restricted Common Shares.

(c) TERMINATION OF RESTRICTIONS. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto.
Upon payment by the grantee to the Company of any withholding tax required to be
paid, a stock certificate for the appropriate number of Common Shares, free of
the restrictions and the restricted stock legend, shall be delivered to the
grantee or his or her beneficiary or estate, as the case may be.

10. PERFORMANCE AWARDS.

The Committee is further authorized to grant performance awards. Subject to
the terms of this Plan and any applicable award agreement, a performance
award granted under the Plan (i) may be denominated or payable in cash,
Common Shares (including, without limitation, restricted stock), other
securities, other awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee, in its
discretion, and payable to, or exercisable by, the holder of the performance
awards, in whole or in part, upon achievement of such performance goals
during such performance periods as the Committee, in its discretion, shall
establish. Subject to the terms of this Plan and any applicable award
agreement, the Committee shall determine the performance goals to be achieved
during any performance period, the length of any performance period, the
amount of any performance award granted, and the amount of any payment or
transfer to be made by the grantee and by the Company under any performance
award.

11. INCOME TAX WITHHOLDING AND TAX BONUSES.

(a) INCOME TAX WITHHOLDING. In order to comply with all applicable federal,
state or local income tax laws or regulations, the Company may take such action
as it deems appropriate to ensure that all applicable federal, state or local
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee prior to his or her receipt of Common
Shares pursuant to the exercise of an option or the satisfaction of the
conditions of any other award. In order to assist an optionee or grantee in
paying all federal and state taxes to be withheld or collected upon exercise of
an option or award, the Committee may, in its absolute discretion, permit the
optionee or grantee to satisfy such tax obligation by (i) electing to have the
Company withhold a portion of the Common Shares otherwise to be delivered upon
exercise of such option or award with a fair market value, determined in
accordance with Section 5 herein, equal to such taxes or (ii) delivering to the
Company Common Shares other than the shares issuable upon exercise of such
option or award with a fair market value, determined in accordance with Section
5, equal to such taxes. The election must be made on or before the date that the
amount of tax to be withheld is

<PAGE>

determined.

(b) TAX BONUSES. The Committee shall have the authority, at the time of grant of
an option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee but shall not exceed one hundred percent (100%) of the excess of
the fair market value of the shares received upon exercise of an option or award
over the price paid therefor. The Committee shall have full authority in its
absolute discretion to determine the amount of any such tax bonus and the terms
and conditions affecting the vesting and payment thereof.

12. ADDITIONAL RESTRICTIONS.

The Committee shall have full and complete authority to determine whether all or
any part of the Common Shares of the Company acquired upon exercise of any of
the options or awards granted under the Plan shall be subject to restrictions on
the transferability thereof or any other restrictions affecting in any manner
the optionee's or grantee's rights with respect thereto, but any such
restriction shall be contained in the agreement relating to such options or
awards.

13. NONTRANSFERABILITY.

No option or award granted under the Plan shall be transferable by an optionee
or grantee, otherwise than by will or the laws of descent or distribution.
Except as otherwise provided in an option or award agreement, during the
lifetime of an optionee or grantee, the option or award shall be exercisable
only by such optionee or grantee. The Committee shall have the authority to
waive the provisions of this Section with respect to any grant of options under
the Plan subject to such terms, conditions or limitations as they may, in their
discretion impose.

14. DILUTION OR OTHER ADJUSTMENTS.

If there shall be any change in the Common Shares through merger, consolidation,
reorganization, recapitalization, dividend in the form of stock (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options and awards shall be made by the
Committee. In the event of any such changes, adjustments shall include, where
appropriate, changes in the aggregate number of shares subject to the Plan, the
number of shares and the price per share subject to outstanding options and
awards and the amount payable upon exercise of outstanding awards, in order to
prevent dilution or enlargement of option or award rights.

15. AMENDMENT OR DISCONTINUANCE OF PLAN.

<PAGE>

The Board of Directors may amend or discontinue the Plan at any time. The
Committee, or the Company's Chief Executive Officer as authorized hereunder or
by the Committee, may grant options and awards for the number of shares
authorized by Section 2 herein without further amendment to the Plan increasing
the number of shares authorized for distribution. The Board of Directors shall
not alter or impair any option or award theretofore granted under the Plan
without the consent of the holder of the option or award.

16. TIME OF GRANTING.

Nothing contained in the Plan or in any resolution adopted or to be adopted by
the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee the Chief Executive Officer or the Board of Directors
(other than the execution and delivery of an option or award agreement), shall
constitute the granting of an option or award hereunder.

17. EFFECTIVE DATE AND TERMINATION OF PLAN.

(a) EFFECTIVE DATE OF PLAN. The Board of Directors approved the Plan on May 13,
1998, which shall be the effective date of the Plan.

(b) TERMINATION OF PLAN. Unless the Plan shall have been discontinued as
provided in Section 15 hereof, the Plan shall terminate on May 13, 2008. No
option or award may be granted after such termination, but termination of the
Plan shall not, without the consent of the optionee or grantee, alter or impair
any rights or obligations under any option or award theretofore granted.

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