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                                                                    EXHIBIT 10.1

[FOCAL LETTERHEAD]

                                 June ___, 2002

Robert C. Taylor, Jr.

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

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

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

Dear Bob:

          This letter agreement (this "Agreement") will confirm the agreement
between you and Focal Communications Corporation, Inc. (together with its direct
and indirect subsidiaries, the "Company"), as follows:

     1.   SEPARATION FROM THE COMPANY

          By signing this Agreement you acknowledge that the termination of your
employment with the Company will be effective on _______, 2002 (the "Separation
Date"). As of the Separation Date, you will no longer be employed by the Company
and will no longer be required to fulfill any of the duties and responsibilities
associated with your position of employment with the Company.

     2.   SEVERANCE ARRANGEMENTS

          In exchange for your execution of this Agreement, including the
Release in paragraph 3 and the additional agreements in paragraph 4, the Company
agrees to the following:

     (a)  For a period of one year commencing on the Separation Date (the
          "Severance Period"), you will receive your salary at the same rate of
          pay as, and on the same schedule as was customary for, your salary in
          effect immediately prior to the Separation Date (I.E., $275,000 per
          annum).

     (b)  During the Severance Period, you will receive the same, if possible,
          or comparable medical benefits to those provided to you by the Company
          immediately prior to the Separation Date.

     (c)  Promptly after the separation date, the Company will pay to you in
          cash the amount of your unused vacation accrued through the Separation
          Date in accordance with the Company's policies.

     (d)  You will continue after the Separation Date to serve on the Company's
          Board of Directors (the "Board") as its Chairman (or, if after the
          date hereof the Board votes to designate another director as Chairman,
          as an outside director), and on such committees, and in such positions
          thereon, as the Board shall from time to time determine, in each case
          until the earliest to occur of your death, resignation,

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          failure to be re-elected by the Company's stockholders, or receipt of
          a request by a majority of the members of the Board (excluding you)
          for your removal (in which case you will promptly resign from the
          Board and all committees thereof). For so long as you serve as a
          member of the Board, you will be entitled to such compensation and
          expense reimbursement arrangements as are generally made available to
          other outside directors serving on the Company's Board, the terms of
          which are described on EXHIBIT A attached hereto.

     (e)  You will be retained by the Company as an outside consultant for a
          one-year term commencing on the Separation Date, subject to renewal by
          the Company for successive six-month terms upon written notice to you
          prior to the end of any such one-year or six-month term, as
          applicable. During the period in which you are retained as a
          consultant:

          (i)    you will provide to the Company and its Chief Executive Officer
                 up to 20 hours per calendar month (or such greater number of
                 hours as is requested by the Company and reasonably agreed to
                 by you) of such consulting and advisory services as the Chief
                 Executive Officer shall from time to time direct, subject to
                 your receipt of reasonable notice concerning the timing for
                 your consulting responsibilities;

          (ii)   you will receive a consulting payment of $5,000 per month,
                 which will cover up to 20 hours of consulting services in each
                 such calendar month; if the number of hours of consulting
                 services provided in any month exceeds 20 hours, such excess
                 hours will be billed and paid at a rate of $250 per hour; hours
                 worked in any particular day will be rounded to the next whole
                 hour and will be recorded and submitted to the Company in good
                 faith by you;

          (iii)  you will receive the same, if possible, or comparable medical
                 benefits to those provided to you by the Company immediately
                 prior to the Separation Date; and

          (iv)   you will be provided use of an executive office at Focal's
                 Chicago headquarters.

          Your service as a consultant will terminate upon your death,
          resignation, or termination by the Board or the Company's Chief
          Executive Officer; PROVIDED that upon any termination by the Board or
          the Company's Chief Executive Officer, you will be entitled to receive
          the consulting payments and continuation of benefits described in
          clauses (ii) and (iii) of the preceding sentence until the end of the
          one-year or six-month term (as applicable) in which such termination
          occurs. Your retention by the Company as a consultant will be as an
          independent contractor, and will not give rise to any employment
          relationship with the Company.

     (f)  For purposes of the Restricted Stock Agreement, dated as of March 25,
          2002, between you and the Company (the "Restricted Stock Agreement"),
          50% of your

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          "Restricted Shares" will become "Vested Restricted Shares" under such
          agreement on the Separation Date. With respect to the remainder of
          your "Restricted Shares" under the Restricted Stock Agreement, such
          shares will vest over the period from January 1, 2003 through January
          1, 2006 in the percentages set forth in the vesting schedule in
          Section 2(a) of the Restricted Stock Agreement; PROVIDED that the
          acceleration of vesting provisions in Sections 2(b) and (c) will be
          terminated and will no longer be of any force or effect; AND PROVIDED
          FURTHER that vesting will cease and no "Restricted Shares" will vest
          under the Restricted Stock Agreement at any time after the date on
          which you cease both your service on the Company's Board pursuant to
          paragraph 2(c) and your service as a consultant pursuant to paragraph
          2(d) above.

     (g)  During the period in which you serve on the Company's Board pursuant
          to paragraph 2(c) and/or as a consultant pursuant to paragraph 2(d)
          above, the Company will (i) provide a DSL line in your home free of
          charge to you; (ii) provide you with an e-mail account hosted on the
          Company's server; and (iii) reimburse you for all reasonable
          out-of-pocket business expenses (including mobile phone charges)
          incurred by you as required in the course of performing your duties
          under this letter agreement, subject to the Company's policies
          regarding reimbursement of such expenses and the Company's
          requirements regarding reporting and documentation of such expenses.

     (h)  Promptly after the Separation Date, the Company will reimburse you for
          all reasonable out-of-pocket fees and expenses of one legal counsel to
          you incurred prior to the date hereof in connection with the review,
          negotiation, and execution of this letter agreement.

     All payments and other arrangements under this Section 2 (the "Severance
Arrangements") will be subject to any applicable withholding obligations of the
Company under applicable laws.

     Such Severance Arrangements will not be paid or become effective until this
agreement becomes effective and enforceable. You understand and agree that you
will not receive the payments and benefits described in this paragraph 2 unless
you execute this Agreement and do not breach this Agreement.

     Such Severance Arrangements shall not be considered compensation for
purposes of any employee benefit plan, program, policy or arrangement maintained
or hereafter established by the Company or any of its affiliates. You understand
that the Severance Arrangements made to you represent consideration for signing
this Agreement (including the Release set forth in paragraph 3) and are not
salary, wages or benefits to which you were already entitled. You also
acknowledge and represent that you have already received everything to which you
were entitled by virtue of your employment relationship with the Company.

     3.   RELEASE BY YOU

     (a)  You (for yourself, your heirs, assigns or executors) release and
          forever discharge the Company, any of its affiliates, and its and
          their directors, officers, agents and

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          employees from any and all claims, suits, demands, causes of action,
          contracts, covenants, obligations, debts, costs, expenses, attorneys'
          fees, liabilities of whatever kind or nature in law or equity, by
          statute or otherwise whether now known or unknown, vested or
          contingent, suspected or unsuspected, and whether or not concealed or
          hidden, which have existed or may have existed, or which do exist,
          through the date this letter agreement becomes effective and
          enforceable, ("Claims") of any kind, which relate in any way to your
          employment with the Company or the termination of that employment,
          except for those arising out of the performance of this letter
          agreement, your rights under the employee benefit plans of the Company
          and your rights to accrued, unused vacation and sick leave. Such
          released Claims include, without in any way limiting the generality of
          the foregoing language, any and all allegations, claims, or
          violations, arising under: Title VII or the Civil Rights Act of 1964,
          as amended; the Civil Rights Act of 1991; the Americans with
          Disabilities Act of 1990; the Equal Pay Act of 1963, as amended; the
          Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as
          amended; the Worker Adjustment Retraining and Notification Act, as
          amended; the Employee Retirement Income Security Act of 1974, as
          amended; any applicable Executive Order Programs; the Fair Labor
          Standards Act, as amended; or their state or local counterparts
          (including the Illinois Human Rights Act, as amended); or under any
          other federal, state or local civil or human rights law; or under any
          other local, state, or federal law, regulation or ordinance; or under
          any public policy, contract, or tort, or under common law; or arising
          under any policies, practices, or procedures of the Company; or
          arising out of any contract or agreement with the Company (other than
          under this Agreement); or any claim for wrongful discharge, breach of
          contract, infliction of emotional distress, or defamation; or any
          claim for costs, fees, or other expenses, including attorneys' fees
          incurred in these matters; PROVIDED that such released Claims
          specifically exclude any claims under the Age Discrimination in
          Employment Act of 1967, as amended (including the Older Workers
          Benefit Protection Act).

     (b)  In signing this Release you acknowledge that you intend that it shall
          be effective as a bar to each and every one of the Claims hereinabove
          mentioned or implied. You expressly consent that this Release shall be
          given full force and effect according to each and all of its express
          terms and provisions, including those relating to unknown and
          unsuspected Claims (notwithstanding any state statute that expressly
          limits the effectiveness of a general release of unknown, unsuspected
          and unanticipated Claims), if any, as well as those relating to any
          other Claims hereinabove mentioned or implied. You acknowledge and
          agree that this waiver is an essential and material term of this
          Release and without such waiver the Company would not have made the
          Severance Payments described in paragraph 2. You further agree that in
          the event you bring your own Claim in which you seek damages against
          the Company, or in the event you seek to recover against the Company
          in any Claim brought by a governmental agency on your behalf, this
          release shall serve as a complete defense to such Claims. You further
          agree that you are not aware of any pending charge or complaint of the
          type described in paragraph 3(a) as of the execution of this Release.

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     (c)  In signing this Release, you represent that you have made no
          assignment or transfer of any right, claim, demand, cause of action,
          or other matter covered by paragraph 3(a) above.

     (d)  By signing this letter agreement, you acknowledge that you:

          (1)    have carefully read and fully understand all of the provisions
                 of this letter agreement, and understand that you will be
                 giving up important rights (including, without limitation,
                 rights under the Title VII of the Civil Rights Act of 1964, as
                 amended; the Equal Pay Act of 1963; the Americans with
                 Disabilities Act of 1990; and the Employee Retirement Income
                 Security Act of 1974, as amended);

          (2)    knowingly and voluntarily agree with and consent to all of the
                 terms set forth in this letter agreement, and knowingly and
                 voluntarily agree to be legally bound by this letter agreement;
                 and

          (3)    have been advised and encouraged by the Company to consult with
                 an attorney prior to signing this letter agreement, and you
                 have either done so or, after careful reading and
                 consideration, have chosen not to of your own volition.

     4.   ADDITIONAL AGREEMENTS

          (a)    You agree not to disparage the Company, or its past and present
investors, officers or employees, and to keep all confidential and proprietary
information about the past or present business affairs of the Company
confidential unless a prior written release from the Company is obtained, or as
such disclosure is required under applicable law (in which case you will notify
the Company in writing in advance of such disclosure). The Company agrees that
will not disparage you, will upon your request deliver a positive written
reference regarding you for delivery to any future employer or business
relation, and will consult with you and obtain your reasonable approval in
preparing the initial press release or public statement regarding the
termination of your employment.

          (b)    You agree that you will continue to be bound by the terms of
your Executive Stock Agreement and Employment Agreement, dated as of November
27, 1996 and thereafter amended (your "Employment Agreement") that survive
termination of your employment, specifically Section 4 relating to restrictions
on transfer, Section 5(g) relating to confidentiality, Section 6 relating to
ownership of intellectual property, Section 7 relating to noncompetition and
nonsolicitation, Section 8 relating to notices, and Section 9 relating to
miscellaneous provisions. In addition, notwithstanding anything to the contrary
in Section 7 of the Employment Agreement, you will (without the payment of any
additional consideration other than as set forth in this letter Agreement)
continue to be bound by the terms of such Section 7 during the Severance Period;
PROVIDED that if, prior to the end of the Severance Period, the Board terminates
your service under paragraph 2(d) above as Chairman of the Board, either (i) the
Board will immediately after the date of such termination pay you in a lump sum
all severance amounts remaining to be paid to you under paragraph 2(a) above and
all consulting compensation remaining to be paid to you under paragraph 2(e)
above for the remainder of the

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one-year or six-month consulting term, as applicable, in which such termination
occurs (which lump sum payment will be in full satisfaction of the Company's
obligations under paragraphs 2(a) and 2(e) above; or (ii) if the Board fails or
declines to make such lump sum payment within 14 days after the date of such
termination, then, notwithstanding anything herein to the contrary, you will
thereafter no longer be bound by the terms of Section 7 of your Employment
Agreement and the Company will have no further obligation to make any payments
thereafter to you under paragraphs 2(a) and 2(e) above.

     5.   CONFIDENTIALITY OF THIS LETTER AGREEMENT

          The contents of this letter agreement, including but not limited to
its financial terms, are strictly confidential. By signing this agreement you
agree and represent that you will maintain the confidential nature of the
agreement, except (a) to legal counsel, tax and financial planners, and
immediate family who agree to keep it confidential; (b) as otherwise required by
law, in which case you shall notify the Company in writing in advance of
disclosure; and (c) as necessary to enforce this letter agreement.

          The Company agrees that it will keep the contents of this letter
agreement confidential, except (a) to its executive staff and governing bodies,
as necessary or appropriate, and to its outside counsel and auditors; (b) as
otherwise required by law; and (c) as necessary to enforce this letter
agreement.

     6.   NO TRANSFER OR ASSIGNMENT

          You and the Company agree that no interest or right you have or any of
your beneficiaries has to receive payment or to receive benefits under this
Agreement shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind, except
as required by law. Nor may such interest or right to receive payment or
distribution be taken, voluntarily or involuntarily, for the satisfaction of the
obligations or debts of, or other claims against you or your beneficiary,
including for alimony, except to the extent required by law.

     7.   NO ADMISSIONS

          This letter agreement shall not be construed as an admission of any
wrongdoing either by the Company, its affiliates, or its and their directors,
officers, agents and employees.

     8.   NO OTHER AGREEMENT

          This letter agreement contains the entire agreement between you and
the Company. No part of this letter agreement may be changed except in writing,
executed by both you and the Company

     9.   GOVERNING LAW

          This letter agreement shall be interpreted in accordance with the laws
of the State of Illinois. Whenever possible, each provision of this letter
agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision shall be held to be

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prohibited or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating or
affecting the remainder of such provision or any of the remaining provisions of
this letter agreement.

     10.  COUNTERPARTS

          This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same Agreement.

     11.  Conflicting Terms

          The terms of this agreement shall be read consistently with the terms
of other agreements between you and the Company; if terms of this Separation
Agreement are deemed to be inconsistent with or conflict with the terms of other
agreements between you and the Company, the terms of this agreement shall
control.

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          Please indicate your agreement by signing this letter and returning it
to us on or before _______, 2002.

                                               Very truly yours,

                                               FOCAL COMMUNICATIONS
                                               CORPORATION, INC.

                                               By:
                                                      --------------------------
                                               Name:
                                                      --------------------------
                                               Title:
                                                      --------------------------

Accepted and Agreed this _____ day of
________, 2002:

By:
      -------------------------------
      Robert C. Taylor, Jr.

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                                    EXHIBIT A
                           TO LETTER AGREEMENT BETWEEN
                              ROBERT C. TAYLOR, JR.
                      AND FOCAL COMMUNICATIONS CORPORATION
                               DATED JUNE 19, 2002

(a) Cash payment of $25,000 per year, payable in quarterly installments during
your term of service.

(b) Cash payment of $1,500 for each board meeting that you attend in person.

(c) Cash payment of $1,000 for each substantive committee meeting that you
attend in person.

(d) Initial grant of options to acquire 30,000 shares of Focal common stock,
with an exercise price equal to the fair market value of a share of Focal common
stock as of today, which options will vest 25% today and 25% on each of the
first 3 anniversaries of today that occur during your term of service.

(e) An additional grant of options on each anniversary of the date hereof that
occurs during your term of service, which will:

     (i) be exercisable for a number of shares of Focal common stock equal to
     the result obtained by dividing (x) $120,000 minus the total cash payments
     received by you under paragraphs (a) through (c) during the 12-month period
     preceding the date of grant, by (y) the fair market value of a share of
     Focal common stock on the date of grant;

     (ii) have an exercise price equal to the fair market value of a share of
     Focal common stock on the date of grant; and

     (iii) vest 33 1/3% on each of the first 3 anniversaries of the date of
     grant that occur during your term of service.

(f) Reimbursement of your reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors and committees thereof.

The terms of the arrangements summarized above would be set forth in detail in
an outside Director Option Agreement between you and the Company.

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                                                                    EXHIBIT 10.2

                         EXECUTIVE EMPLOYMENT AGREEMENT

          THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of
June 17, 2002, between Focal Communications Corporation, a Delaware corporation
(the "Company"), and Kathy Perone ("Executive").

          In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:

          1.   EMPLOYMENT. The Company will employ Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth in this Agreement, for the period beginning on June 17,
2002 (the "START DATE") and ending as provided in Section 5 hereof (the
"EMPLOYMENT PERIOD").

          2.   POSITION AND DUTIES.

          (a)  During the Employment Period, Executive will serve as the
President and Chief Executive Officer of the Company, and Executive will render
such administrative, financial and other executive and managerial services to
the Company and its Subsidiaries which are consistent with Executive's position
as the Company's Board of Directors (the "BOARD") may from time to time direct.

          (b)  During the Employment Period, Executive will report to the Board
and will devote her best efforts and her full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company; PROVIDED that
Executive shall be permitted to serve on the advisory boards or boards of
directors of other businesses or charitable entities, so long as such service
does not interfere with her performance of her duties to the Company under this
Agreement, and so long as she periodically informs the Board of such
commitments. Executive will perform her duties, responsibilities and functions
to the best of her abilities in a diligent, trustworthy, professional and
efficient manner and will comply with the Company's and its Subsidiaries'
policies and procedures in all material respects.

          (c)  For purposes of this Agreement, "SUBSIDIARIES" will mean any
corporation or other entity of which the securities or other ownership interests
having the voting power to elect a majority of the board of directors or other
governing body are, at the time of determination, owned by the Company, directly
or through one of more Subsidiaries.

          3.   COMPENSATION AND BENEFITS.

          (a)  During the Employment Period, Executive's base salary will be
$325,000 per annum (increasing on each anniversary of the Start Date to 105% of
the prior year's base salary), or such higher rate as the Board may determine
from time to time (as adjusted from time to time, the "BASE SALARY"), which
salary shall be payable by the Company in regular installments in accordance
with the Company's general payroll practices (in effect from time to time).

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          (b)  At the end of each calendar year during the Employment Period,
the Board may, in its sole discretion, award a bonus to Executive of up to 100%
of Executive's Base Salary in effect on December 31st of such year (or, in the
case of calendar year 2002, of up to $189,583), the amount of which bonus will
be determined by the Board in its sole discretion based on Executive's
achievement of performance objectives agreed to by Executive and the Board at
the beginning of each such year (or, in the case of calendar year 2002,
performance objectives agreed to by Executive and the Board prior to the Start
Date) and such other factors as the Board deems appropriate.

          (c)  On the Start Date, Executive will be entitled to receive a grant
of options ("OPTIONS") to acquire 600,000 shares of the Company's common stock
(as such number of shares is proportionally adjusted for any stock split, stock
dividend, reverse stock split, combination of shares, or other recapitalization
affecting the Company's common stock occurring after the date hereof and prior
to the issuance of such options). In connection with such grant of options, the
Company and Executive will enter into a Non-Qualified Stock Option Agreement in
form and substance substantially as set forth in EXHIBIT B attached hereto.

          (d)  On each anniversary of the Start Date occurring during the
Employment Period, the Board may, in its sole discretion, award Executive a
grant of up to 100,000 Options (as such number is proportionally adjusted for
any stock split, stock dividend, reverse stock split, combination of shares, or
other recapitalization affecting the Company's common stock occurring after the
date hereof and prior to the issuance of such Options), the number of which
Options will be determined by the Board in its sole discretion based on
Executive's achievement of performance objectives agreed to by Executive and the
Board at the beginning of each calendar year and such other factors as the Board
deems appropriate. In connection with any such grant, the Company and Executive
will enter into a Non-Qualified Stock Option Agreement in form and substance
substantially as set forth in EXHIBIT C attached hereto, with such changes
thereto as are mutually agreed to the Board and Executive.

          (e)  During the Employment Period, Executive will be entitled to
participate in all of the Company's employee benefit programs for which senior
executive employees of the Company and its Subsidiaries are generally eligible;
PROVIDED that Executive will be entitled to five (5) weeks of paid vacation each
calendar year in accordance with the Company's policies, which if not taken
during any year may not be carried forward to any subsequent calendar year and
no compensation shall be payable in lieu thereof (except as expressly provided
in Section 5).

          (f)  During the Employment Period, the Company will reimburse
Executive for each of the following (without duplication):

               (i)    all reasonable out-of-pocket travel and other business
     expenses incurred by her as required in the course of performing her duties
     and responsibilities under this Agreement, which expenses will be
     reimbursed in a manner consistent with the Company's policies in effect
     from time to time with respect to travel, entertainment and other business
     expenses, and subject to the Company's requirements with respect to
     reporting and documentation of such expenses;

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               (ii)   all reasonable out-of-pocket expenses incurred by her in
     commuting between her permanent homes in New Jersey and Florida, on the one
     hand, and the Company's offices in Chicago or such other locations to which
     Executive is required to travel, on the other hand, up to four roundtrips
     per calendar month (unless otherwise approved by the Board), but not
     including any personal travel such as travel between her permanent homes),
     which expenses will be reimbursed in a manner consistent with the Company's
     policies in effect from time to time with respect to travel, entertainment
     and other business expenses, and subject to the Company's requirements with
     respect to reporting and documentation of such expenses;

               (iii)  for so long as Executive serves as a director on the
     Board, all reasonable out-of-pocket business expenses incurred by her in
     connection with attending meetings of the Board, subject to the Company's
     requirements with respect to reporting and documentation of such expenses;

               (iv)   to the extent such services are not provided by the
     Company, all reasonable fees and disbursements for one legal counsel to
     Executive incurred in complying with periodic reporting or filing
     requirements under applicable securities laws arising out of (A)
     Executive's position with the Company, (B) compensation by the Company, or
     (C) ownership of the Company's securities; and

               (v)    all reasonable fees and disbursements for one legal
     counsel to Executive incurred on or prior to the date hereof in negotiating
     and documenting her employment arrangement with the Company.

Executive agrees that she will work in good faith with the Company to manage her
reimbursable expenses in a cost- and tax-efficient manner.

          (g)  During the Employment Period, the Company will provide Executive
with the use and occupancy of an apartment in Chicago leased by the Company.

          (h)  To the extent any portion of the benefit provided under
paragraphs 3(f)(ii), 3(f)(v), or 3(g) is properly included as taxable income
under the Internal Revenue Code of 1986, as amended (the "CODE"), the Company
shall, in addition to providing such benefits, pay to Executive prior to April
10 of the year following the year such benefits are provided an amount equal to
the result from dividing (i) the Tax Cost (as defined below) of such benefits BY
(ii) one MINUS the highest combined federal and state tax rates actually
applicable to Executive for the taxable year in which such reimbursement is
received (taking into account the federal deduction for state taxes paid and the
character of income recognized by Executive). For purposes of this Agreement,
the "Tax Cost" of any benefits provided under paragraphs 3(f)(ii), 3(f)(v), or
3(g) will mean the product obtained by multiplying (x) the amount of gross
income includable as a result of such benefits TIMES (y) the highest combined
federal and state tax rates actually applicable to Executive for the taxable
year in which such benefits are provided (taking into account the federal
deduction for state taxes paid and the character of income recognized by
Executive by reason of such benefits).

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          (i)  During the Employment Period, the Company will maintain directors
and officers indemnity insurance in amount and coverage reasonably satisfactory
to Executive (it being understood that the Company's existing insurance is
satisfactory to Executive); and the Company's certificate of incorporation and
bylaws will provide for indemnification and exculpation of directors and
officers to the fullest extent permitted under applicable law.

          (j)  The Company may withhold from any amounts payable under this
Agreement all federal, state, or other taxes and withholding amounts as the
Company is required to withhold under applicable law.

          (k)  The Company shall, if requested by Executive, allow and assist
Executive in establishing a 10(b)-5-1 plan for purposes of sales of securities
of the Company by Executive, and, to the extent such services are not provided
by the Company, all reasonable fees and disbursements for one legal counsel to
Executive incurred in connection with establishing such plan will be treated as
incurred pursuant to Section 3(f)(iv).

          4.   BOARD MEMBERSHIP. With respect to all regular elections of
directors during the Employment Period, the Company shall nominate, and use its
reasonable efforts to cause the election of, Executive to serve as a member of
the Board. For so long as Executive serves on the Board, Executive shall be
appointed by the Board to serve on all committees (other than the compensation
committee) with authority over the Company's budget or any component thereof,
including any capital spending committees, and shall be entitled to attend all
meetings (other than customary meetings in executive session that are not
meetings of the Board within the meaning of Section 141 of the Delaware General
Corporation Law) of any committee of the Board (other than the compensation
committee). Upon the termination or expiration of the Employment Period,
Executive shall resign as a director of the Company and its Subsidiaries, as the
case may be, and from each committee of the Board.

          5.   TERM.

          (a)  The Employment Period shall continue from the Start Date until
the earliest to occur of Executive's resignation, death, Disability (as defined
below), or termination by the Company. The Company may terminate Executive's
employment at any time with or without Cause (as defined below), and Executive
may terminate her employment at any time with or without Good Reason (as defined
below) upon giving written notice of her resignation to the Company at least 60
days prior to the date of such termination.

          (b)  If Executive's employment is terminated due to Executive's death,
the Company will pay to Executive's estate Executive's Base Salary (together
with all unused vacation benefits for the year of termination accrued) through
the date of termination.

          (c)  If Executive's employment is terminated due to Executive's
Disability, Executive will be entitled to receive her Base Salary (together with
all unused vacation benefits for the year of termination accrued) through the
date of termination, and Executive will be entitled to such benefits as are
available under the Company's long-term disability insurance plans as in effect
on the date of termination. Executive will be "DISABLED" only if, as a result of

                                       -4-
<Page>

her incapacity due to physical or mental illness, she is considered disabled
under the Company's long-term disability insurance plans referred to in the
preceding sentence.

          (d)  If Executive's employment is terminated due to Executive's
resignation (other than for Good Reason) or a termination by the Company for
Cause, Executive will be entitled to receive her Base Salary (together with all
unused vacation benefits for the year of termination accrued) through the date
of such termination.

          (e)  If Executive's employment is terminated due to Executive's
resignation for Good Reason or a termination by the Company (other than for
Cause), then Executive will be entitled to receive:

               (i)    her Base Salary (together with all unused vacation
     benefits for the year of termination accrued) through the date of
     termination;

               (ii)   a lump-sum cash payment within 30 days after the date of
     such termination equal to the sum of (x) 100% of her annual Base Salary in
     effect on the date of termination PLUS (y) 100% of any bonus actually paid
     to Executive pursuant to Section 3(b) in respect of the calendar year-end
     most recently preceding the date of termination; PROVIDED that in the case
     of any termination during calendar 2002 the payment under this clause (ii)
     would be $0, and in the case of any termination during calendar year 2003
     the payment under this clause (ii) would be an amount equal to $341,250
     multiplied by a fraction, the numerator of which is the amount of any bonus
     actually paid to Executive pursuant to Section 3(b) in respect of the end
     of calendar year 2002, and the denominator of which is $189,583; and

               (iii)  a continuation through the one-year anniversary of the
     date of termination of her participation in the Company's health and other
     insurance benefit programs for which senior executive employee's are
     generally eligible (unless at any time during such one-year period
     Executive obtains other employment with substantially comparable health and
     other insurance benefits)

PROVIDED that, with respect to clauses (ii) and (iii), Executive will be
entitled to receive such amounts if and only if Executive has executed and
delivered to the Company the General Release substantially in form and substance
as set forth in EXHIBIT A attached hereto and only so long as Executive has not
breached the provisions of paragraphs 6, 7 and 8 hereof.

          (f)  Except as otherwise expressly provided herein, all of Executive's
rights to salary, bonuses, employee benefits and other compensation hereunder
which would have accrued or become payable after the termination or expiration
of the Employment Period shall cease upon such termination or expiration, other
than those expressly required under applicable law (such as COBRA).

          (g)  For purposes of this Agreement, "CAUSE" shall mean Executive's
(i) commission of a felony, (ii) commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company or any of
its Subsidiaries or any of their

                                       -5-
<Page>

customers or suppliers, (iii) reporting to work under the influence of alcohol
or illegal drugs, the use of illegal drugs (whether or not at the workplace) or
other repeated conduct causing the Company or any of its Subsidiaries
substantial public disgrace or disrepute or economic harm, (iv) continued and
repeated refusal or failure (other than by reason of Disability) to perform her
duties as reasonably directed by the Board, (v) gross negligence or willful
misconduct that is materially detrimental to the Company or any of its
Subsidiaries, or (vi) any other material breach of this Agreement; PROVIDED that
in the case of (iii) through (iv) or (vi) above, Executive shall have received
written notice from the Board of the acts purportedly constituting "Cause" and
shall have failed to cure such acts within 30 days following receipt of such
notice; AND PROVIDED FURTHER that a termination for "Cause" shall occur only
upon the vote of a majority of the members of the Board (other than Executive)
at a meeting of which Executive has been notified and offered the opportunity to
appear before the Board and address the acts purportedly giving rise to such
"Cause."

          (h)  For purposes of this Agreement, a termination by Executive for
"GOOD REASON" will mean Executive's voluntary resignation after any of the
following: (i) a demotion of Executive from the position of Chief Executive
Officer without her consent, (ii) a substantial reduction in Executive's
authority and responsibilities as Chief Executive Officer without her consent,
(iii) a reduction in Executive's Base Salary required under Section 3(a), or in
the maximum bonus for which Executive may be eligible under Section 3(b),
without her consent, (iv) a relocation of Executive's principal place of
business more than 35 miles from the greater Chicago metropolitan area without
her consent, or (v) any material breach of this Agreement, including any Option
Agreement executed pursuant to this Agreement by the Company; PROVIDED that no
such occurrence shall constitute the basis for a termination with "Good Reason"
unless Executive notifies the Company in writing within 90 days of such
occurrence that Executive considers such occurrence to be the basis for a
termination with "Good Reason" and the Company fails to cure such occurrence
within 30 days following receipt of such notice.

          6.   CONFIDENTIAL INFORMATION.

          (a)  Executive acknowledges that the information, observations and
data (including trade secrets) obtained by her while employed by the Company and
its Subsidiaries concerning the business or affairs of the Company or any
Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the Company or such
Subsidiary. Therefore, Executive agrees that she shall not disclose to any
unauthorized person or use for her own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the Confidential Information becomes generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination or expiration of the Employment
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) embodying or relating to the
Confidential Information, Work Product (as defined below) or the business of the
Company or its Subsidiaries which she may then possess or have under her
control; PROVIDED that the Company shall provide Executive with reasonable
access during normal business hours to all such materials to the extent
reasonably required with respect to any dispute or matter with respect to which
Executive may

                                       -6-
<Page>

have personal liability, and all such materials made available to Executive
shall continue to be subject to the confidentiality provisions set forth in this
Section 6.

          (b)  Executive shall be prohibited from using or disclosing any
confidential information or trade secrets that Executive may have learned
through any prior employment. If at any time during this employment with the
Company or any Subsidiary, Executive believes she is being asked to engage in
work that will, or will be likely to, jeopardize any confidentiality or other
obligations Executive may have to former employers, Executive shall immediately
advise the Board so that Executive's duties can be modified appropriately.

          (c)  Executive represents and warrants to the Company that Executive
took nothing with her which belonged to any former employer when Executive left
her prior position and that Executive has nothing that contains any information
which belongs to any former employer. If at any time Executive discovers this is
incorrect, Executive shall promptly return any such materials to Executive's
former employer. The Company does not want any such materials, and Executive
shall not be permitted to use or refer to any such materials in the performance
of Executive's duties hereunder.

          7.   INTELLECTUAL PROPERTY, INVENTIONS AND PATENTS. Executive
acknowledges that all discoveries, concepts, ideas, inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports,
patent applications, copyrightable work and mask work (whether or not including
any confidential information) and all registrations or applications related
thereto, all other proprietary information and all similar or related
information (whether or not patentable) which relate to the Company's or any of
its Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive (whether above or jointly with others) while employed by the
Company and its Subsidiaries, whether before or after the date of this Agreement
("WORK PRODUCT"), belong to the Company or such Subsidiary. Executive shall
promptly disclose such Work Product to the Board and, at the Company's expense,
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).

          In accordance with Section 2872 of the Illinois Employee Patent Act,
Ill. Rev. Stat. Chap. 140, Section 301 ET SEQ. (1983), Executive is hereby
advised that this paragraph 7 regarding the Company's and its Subsidiaries'
ownership of Work Product does not apply to any invention for which no
equipment, supplies, facilities or trade secret information of the Company or
any Subsidiary was used and which was developed entirely on Executive's own
time, unless (i) the invention relates to the business of the Company or any
Subsidiary or to the Company's or any Subsidiaries' actual or demonstrably
anticipated research or development or (ii) the invention results from any work
performed by Executive for the Company or any Subsidiary.

          8.   NON-COMPETE, NON-SOLICITATION.

          (a)  Executive acknowledges and agrees with the Company that in the
course of her employment with the Company she will become familiar with the
Company's trade secrets

                                       -7-
<Page>

and with other confidential and proprietary information concerning the Company
and its Subsidiaries, that Executive's services to the Company and its
Subsidiaries are special and unique in nature and of an extraordinary value to
the Company, and that the Company would be irreparably damaged if Executive were
to provide similar services to any Person competing with the Company or any of
its Subsidiaries or engaged in similar business.

          (b)  Therefore, in order to induce the Company to hire Executive and
enter into this Agreement, and in further consideration of Executive's
compensation under employment arrangements with the Company, Executive covenants
and agrees that during the Employment Period and (so long as the Company pays to
Executive all amounts and provides such benefits as are owed to her under the
terms of this Agreement) for one (1) year thereafter (the "NONCOMPETE PERIOD"),
she shall not directly or indirectly, either for herself or for any other
Person, participate in any business or enterprise that engages or proposes to
engage in the provision or sale of local exchange telecommunications services
within the United States.

          (c)  For purposes hereof, "PERSON" means any individual, partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization, or governmental entity, department,
agency, or political subdivision.

          (d)  For purposes hereof, "participate in" will including, without
limitation, having any direct or indirect interest in any Person, whether as a
sole proprietor, owner, stockholder, partner, member, joint venturer, creditor,
or otherwise, or rendering any direct or indirect service or assistance to any
Person (whether as a director, officer, manager, supervisor, employee, agent,
consultant, or otherwise), other than passive ownership of not more than 2% of
the outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.

          (e)  During the Noncompete Period, Executive shall not directly or
indirectly through another Person (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the period from six
months' prior to the termination of the Employment Period until six months'
after the termination of the Employment Period, or (iii) induce or attempt to
induce any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary (including, without limitation, making any negative or
disparaging statements or communications regarding the Company or its
Subsidiaries).

          9.   ENFORCEMENT. If, at the time of enforcement of Section 6, 7 or 8
of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area. Because
Executive's services are unique and because Executive has access to Confidential

                                       -8-
<Page>

Information and Work Product, the parties hereto agree that money damages would
not be an adequate remedy for any breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, the Company or its
successors or assigns, in addition to other rights and remedies existing in
their favor, shall be entitled to specific performance and/or injunctive or
other equitable relief from a court of competent jurisdiction in order to
enforce, or prevent any violations of, the provisions hereof (without posting a
bond or other security). In addition, in the event of an alleged breach or
violation by Executive of Section 8, the Noncompete Period shall be tolled until
such breach or violation has been duly cured. Executive acknowledges that the
restrictions contained in Section 8 are reasonable and that she has reviewed the
provisions of this Agreement with her legal counsel.

          10.  EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which she is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that she has consulted
with independent legal counsel regarding her rights and obligations under this
Agreement and that she fully understands the terms and conditions contained
herein. As a inducement to the Company to enter into this Agreement, Executive
acknowledges and agrees that no provision contained herein shall entitle her to
remain in the employment of the Company or any of its Subsidiaries or affect the
right of the Company to terminate her employment at any time and for any reason.

          11.  MISCELLANEOUS.

          (a)  SURVIVAL. Sections 6 through 11 shall survive and continue in
full force in accordance with their terms notwithstanding the expiration or
termination of the Employment Period.

          (b)  NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by reputable overnight
courier service or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:

          Notices to Executive:

               Kathleen A. Perone
               13054 Sandwedge Court
               Jacksonville, FL 32224

          Notices to the Company:

                                       -9-
<Page>

               Focal Communications Corporation
               200 North LaSalle Street, Suite 1100
               Chicago, IL 60601
               Attention: General Counsel
               Telephone: 312-895-8400
               Fax:  312-895-4229

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.

          (c)  SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

          (d)  COMPLETE AGREEMENT. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.

          (e)  NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.

          (f)  COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

          (g)  SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
her rights or delegate her duties or obligations hereunder without the prior
written consent of the Company.

          (h)  CHOICE OF LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Illinois, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.

                                      -10-
<Page>

          (i)  AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company (as
approved by the Board) and Executive, and no course of conduct or course of
dealing or failure or delay by any party hereto in enforcing or exercising any
of the provisions of this Agreement (including, without limitation, the
Company's right to terminate the Employment Period for Cause) shall affect the
validity, binding effect or enforceability of this Agreement or be deemed to be
an implied waiver of any provision of this Agreement.

          (j)  INSURANCE. The Company may, at its discretion, apply for and
procure in its own name and for its own benefit life and/or disability insurance
on Executive in any amount or amounts considered available. Executive agrees to
cooperate in any medical or other examination, supply any information and
execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance. Executive hereby
represents that she has no reason to believe that her life is not insurable at
rates now prevailing for healthy men of her age.

          (k)  EXECUTIVE'S COOPERATION. During the Employment and thereafter,
Executive shall cooperate with the Company and its Subsidiaries in any internal
investigation or administrative, regulatory or judicial proceeding as reasonably
requested by the Company (including, without limitation, Executive being
available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company's request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the
Company all pertinent information and turning over to the Company all relevant
documents which are or may come into Executive's possession, all at times and on
schedules that are reasonably consistent with Executive's other permitted
activities and commitments). In the event the Company requires Executive's
cooperation in accordance with this paragraph, the Company shall reimburse
Executive for her reasonable out-of-pocket expenses incurred in connection
therewith (including travel, lodging, meals, and reasonable legal expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses)

          (l)  MANDATORY ARBITRATION. Except as otherwise expressly provided
herein with respect to the availability of equitable remedies, all claims,
disputes, controversies or other matters in question arising under or relating
to this Agreement (collectively, "Disputes") will, if unable to be resolved
within 10 days of preliminary negotiation between Executive and the Company, be
resolved through binding arbitration in accordance with the commercial
arbitration rules and practices of the American Arbitration Association. Such
arbitration will be in New York, New York, or such other place as is mutually
agreeable to Executive and the Company. The cost of each arbitration proceeding,
including without limitation the arbitrator's compensation and expenses, hearing
room charges, court reporter transcript charges, reasonable attorney fees and
expenses, etc., will be allocated among the parties by the arbitrator based upon
the relative merits of the positions of the parties to such Dispute in such
arbitration. The parties hereto agree that, subject to the provisions herein
with respect to the availability of equitable remedies, mandatory arbitration
under this Section 11(l) will be the sole and exclusive remedy for resolving and
remedying all Disputes hereunder.

                                      -11-
<Page>

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -12-
<Page>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                    FOCAL COMMUNICATIONS CORPORATION

                                    By:
                                           -------------------------------------
                                    Name:
                                           -------------------------------------
                                    Title:
                                           -------------------------------------

                                    EXECUTIVE

                                    --------------------------------------------
                                    Kathy Perone

<Page>

                                                                       EXHIBIT A

                                 GENERAL RELEASE

     I, Kathy Perone, in consideration of and subject to the performance by
Focal Communications Corporation, a Delaware corporation (together with its
subsidiaries, the "Company"), of its material obligations under the Employment
Agreement, dated as of June 17, 2002 (the "AGREEMENT"), do hereby release and
forever discharge as of the date hereof the Company and all present and former
directors, officers, agents, representatives, employees, successors and assigns
of the Company and its direct or indirect owners (collectively, the "RELEASED
PARTIES") to the extent provided below.

1.   I understand that any payments or benefits paid or granted to me under
     paragraph 5(b) of the Agreement represent, in part, consideration for
     signing this General Release and are not salary, wages or benefits to which
     I was already entitled. I understand and agree that I will not receive the
     payments and benefits specified in paragraph 5(b) of the Agreement unless I
     execute this General Release and do not revoke this General Release within
     the time period permitted hereafter or breach this General Release.

2.   Except as provided in paragraph 4 below, I knowingly and voluntarily
     release and forever discharge the Company and the other Released Parties
     from any and all claims, controversies, actions, causes of action,
     cross-claims, counter-claims, demands, debts, compensatory damages,
     liquidated damages, punitive or exemplary damages, other damages, claims
     for costs and attorneys' fees, or liabilities of any nature whatsoever in
     law and in equity, both past and present (through the date of this General
     Release) and whether known or unknown, suspected, or claimed against the
     Company or any of the Released Parties which I, my spouse, or any of my
     heirs, executors, administrators or assigns, may have, which arise out of
     or are connected with my employment with, or my separation from, the
     Company (including, but not limited to, any allegation, claim or violation,
     arising under: Title VII of the Civil Rights Act of 1964, as amended; the
     Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967,
     as amended (including the Older Workers Benefit Protection Act); the Equal
     Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990;
     the Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as
     amended; the Worker Adjustment Retraining and Notification Act; the
     Employee Retirement Income Security Act of 1974; any applicable Executive
     Order Programs; the Fair Labor Standards Act; or their state or local
     counterparts; or under any other federal, state or local civil or human
     rights law, or under any other local, state, or federal law, regulation or
     ordinance; or under any public policy, contract or tort, or under common
     law; or arising under any policies, practices or procedures of the Company;
     or any claim for wrongful discharge, breach of contract, infliction of
     emotional distress, defamation; or any claim for costs, fees, or other
     expenses, including attorneys' fees incurred in these matters) (all of the
     foregoing collectively referred to herein as the "CLAIMS").

3.   I represent that I have made no assignment or transfer of any right, claim,
     demand, cause of action, or other matter covered by paragraph 2 above.

                                      ExA-1
<Page>

4.   I agree that this General Release does not waive or release any rights or
     claims that I may have under the Age Discrimination in Employment Act of
     1967 which arise after the date I execute this General Release. I
     acknowledge and agree that my separation from employment with the Company
     in compliance with the terms of the Agreement shall not serve as the basis
     for any claim or action (including, without limitation, any claim under the
     Age Discrimination in Employment Act of 1967).

5.   In signing this General Release, I acknowledge and intend that it shall be
     effective as a bar to each and every one of the Claims hereinabove
     mentioned or implied. I expressly consent that this General Release shall
     be given full force and effect according to each and all of its express
     terms and provisions, including those relating to unknown and unsuspected
     Claims (notwithstanding any state statute that expressly limits the
     effectiveness of a general release of unknown, unsuspected and
     unanticipated Claims), if any, as well as those relating to any other
     Claims hereinabove mentioned or implied. I acknowledge and agree that this
     waiver is an essential and material term of this General Release and that
     without such waiver the Company would not have agreed to the terms of the
     Agreement. I further agree that in the event I should bring a Claim seeking
     damages against the Company, or in the event I should seek to recover
     against the Company in any Claim brought by a governmental agency on my
     behalf, this General Release shall serve as a complete defense to such
     Claims. I further agree that (a) I am not aware of any pending charge or
     complaint of the type described in paragraph 2 as of the execution of this
     General Release, and (b) if any such pending charge or complaint of which I
     am not presently aware is or becomes in existence, I will upon becoming
     aware of such charge or complaint use all reasonably diligent efforts to
     cause such charge or complaint to be dismissed or terminated.

6.   I agree that neither this General Release, nor the furnishing of the
     consideration for this General Release, shall be deemed or construed at any
     time to be an admission by the Company, any Released Party or myself of any
     improper or unlawful conduct.

7.   I agree that if I violate this General Release by bringing any Claim
     against the Company or any other Released Parties, I will pay all costs and
     expenses of defending against the suit incurred by the Released Parties,
     including reasonable attorneys' fees and expenses.

8.   I agree that this General Release is confidential and agree not to disclose
     any information regarding the terms of this General Release, except to my
     immediate family and any tax, legal or other counsel I have consulted
     regarding the meaning or effect hereof or as required by law, and I will
     instruct each of the foregoing not to disclose the same to anyone.

9.   Any non-disclosure provision in this General Release does not prohibit or
     restrict me (or my attorney) from responding to any inquiry about this
     General Release or its underlying facts and circumstances by the Securities
     and Exchange Commission (SEC), the National Association of Securities
     Dealers, Inc. (NASD), any other self-regulatory organization or
     governmental entity.

                                      ExA-2
<Page>

10.  I agree to reasonably cooperate with the Company in any internal
     investigation or administrative, regulatory, or judicial proceeding. I
     understand and agree that my cooperation may include, but not be limited
     to, making myself available to the Company upon reasonable notice for
     interviews and factual investigations; appearing at the Company's request
     to give testimony without requiring service of a subpoena or other legal
     process; volunteering to the Company pertinent information; and turning
     over to the Company all relevant documents which are or may come into my
     possession all at times and on schedules that are reasonably consistent
     with my other permitted activities and commitments. I understand that in
     the event the Company asks for my cooperation in accordance with this
     provision, the Company will reimburse me solely for my reasonable
     out-of-pocket expenses incurred in connection therewith (including travel,
     lodging, meals, and reasonable legal expenses, subject to the Company's
     requirements with respect to reporting and documentation of such expenses).

11.  Notwithstanding anything in this General Release to the contrary, this
     General Release shall not relinquish, diminish, or in any way affect any
     rights or claims arising out of any breach by the Company or by any
     Released Party of the Agreement.

12.  Whenever possible, each provision of this General Release shall be
     interpreted in, such manner as to be effective and valid under applicable
     law, but if any provision of this General Release is held to be invalid,
     illegal or unenforceable in any respect under any applicable law or rule in
     any jurisdiction, such invalidity, illegality or unenforceability shall not
     affect any other provision or any other jurisdiction, but this General
     Release shall be reformed, construed and enforced in such jurisdiction as
     if such invalid, illegal or unenforceable provision had never been
     contained herein.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

(a)  I HAVE READ IT CAREFULLY;

(b)  I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT
     RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION
     IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF
     1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH
     DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
     OF 1974, AS AMENDED;

(c)  I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

(d)  I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I
     HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT
     TO DO SO OF MY OWN VOLITION;

(e)  I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE
     SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____

                                      ExA-3
<Page>

     TO CONSIDER IT AND THE CHANGES MADE SINCE THE _______________ __, _____
     VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED
     21-DAY PERIOD;

(f)  THE CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER ARE
     NOT MATERIAL OR WERE MADE AT MY REQUEST.

(g)  I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO
     REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
     UNTIL THE REVOCATION PERIOD HAS EXPIRED;

(h)  I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE
     ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

(i)  I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
     WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN
     AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

DATE:
      --------------                       -------------------------------------

                                      ExA-4
<Page>

                                                                       EXHIBIT B

                         INITIAL STOCK OPTION AGREEMENT

See attached.

                                      ExB-1
<Page>

                                                                       EXHIBIT C

                      REPLENISHMENT STOCK OPTION AGREEMENT

See attached.

                                      ExC-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}]]