Document:

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                                                                    EXHIBIT 10.3

                            TURNSTONE SYSTEMS, INC.

                                 2000 STOCK PLAN

      1. Purposes of the Plan. The purposes of this 2000 Stock Plan are:

            -     to attract and retain the best available personnel for
                  positions of substantial responsibility,

            -     to provide additional incentive to Employees, Directors and
                  Consultants, and

            -     to promote the success of the Company's business.

            Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

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

            (a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

            (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

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

            (d) "Cause" means (i) any act of personal dishonesty taken by the
Optionee in connection with his responsibilities as an Employee which is
intended to result in personal enrichment of the Optionee, (ii) the Optionee's
conviction of a felony, (iii) any act by the Optionee that constitutes
misconduct, and (iv) continued violations by the Optionee of the Optionee's
obligations to the Company.

            (e) "Code" means the Internal Revenue Code of 1986, as amended.

            (f) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

            (g) "Common Stock" means the common stock of the Company.

            (h) "Company" means Turnstone Systems, Inc., a Delaware corporation.

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            (i) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

            (j) "Director" means a member of the Board.

            (k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

            (l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

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

            (n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                     (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                     (ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

                     (iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

            (o) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

            (p) "Inside Director" means a Director who is an Employee.

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            (q) "IPO Effective Date" means the date upon which the Securities
and Exchange Commission declares the initial public offering of the Company's
Common Stock as effective.

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

            (s) "Notice of Grant" means a written or electronic notice
evidencing certain times and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.

            (t) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

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

            (v) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

            (w) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

            (x) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.

            (y) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

            (z) "Outside Director" means a Director who is not an Employee and
who is not the "beneficial owner" (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended), directly or indirectly, of securities of the
Company representing 1% or more of the total voting power represented by the
Company's outstanding voting securities on the date of any grant hereunder.

            (aa) "Plan" means this 2000 Stock Option Plan, as amended and
restated.

            (bb) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.

            (cc) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

            (dd) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

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            (ee) "Section 16(b) " means Section 16(b) of the Exchange Act.

            (ff)  "Service Provider" means an Employee, Director or Consultant.

            (gg) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.

            (hh) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

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

      3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 5,000,000 Shares, plus the Shares available for future
issuance under the Turnstone Systems, Inc. 1998 Stock Plan (the "1998 Stock
Plan") as of the effective date of this Plan and any Shares returned to the 1998
Stock Plan. The number of Shares reserved for issuance under the Plan shall
increase annually on the first day of the Company's fiscal year beginning in
2000 by an amount of Shares equal to the lesser of (i) 5,000,000 Shares, (ii) 6%
of the outstanding Shares on such date or (iii) an amount determined by the
Board. The Shares may be authorized, but unissued, or reacquired Common Stock.

            If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.

      4. Administration of the Plan.

            (a) Procedure.

                     (i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.

                     (ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

                     (iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

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                     (iv) Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.

            (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

                     (i) to determine the Fair Market Value;

                     (ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;

                     (iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;

                     (iv) to approve forms of agreement for use under the Plan;

                     (v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

                     (vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;

                     (vii) to institute an Option Exchange Program;

                     (viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

                     (ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

                     (x) to modify or amend each Option or Stock Purchase Right
(subject to Section 16(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;

                     (xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be

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withheld. The Fair Market Value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined. All
elections by an Optionee to have Shares withheld for this purpose shall be made
in such form and under such conditions as the Administrator may deem necessary
or advisable;

                     (xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

                     (xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.

            (c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.

      5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

      6. Limitations.

            (a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

            (b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without Cause.

            (c) The following limitations shall apply to grants of Options:

                     (i) No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 1,000,000 Shares.

                     (ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
2,000,000 Shares, which shall not count against the limit, set forth in
subsection (i) above.

                     (iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.

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                     (iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 14), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

      7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 16 of the Plan.

      8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

      9. Option Exercise Price and Consideration.

            (a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                     (i) In the case of an Incentive Stock Option

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

                        (B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

                     (ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                     (iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.

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            (b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

            (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

                     (i) cash;

                     (ii) check;

                     (iii) promissory note;

                     (iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

                     (v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

                     (vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

                     (vii) any combination of the foregoing methods of payment;
or

                     (viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.

      10. Exercise of Option.

            (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

                An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate

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entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 14 of the Plan.

                  Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

            (b) Termination of Relationship as a Service Provider. Subject to
Section 14, if an Optionee ceases to be a Service Provider (but not in the event
of an Optionee's change of status from Employee to Consultant (in which case an
Employee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status) or
from Consultant to Employee), such Optionee may, but only within such period of
time as is specified in the Option Agreement (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for three (3)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

            (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may, but only
within twelve (12) months from the date of such termination (and in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that the Option is
vested on the date of termination. If, on the date of termination, the Optionee
is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so

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exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

            (e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

      11. Stock Purchase Rights.

            (a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

            (b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

            (c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

            (d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

      12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

      13. Formula Option Grants to Outside Directors. Outside Directors shall be
granted Options each year in accordance with the following provisions:

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            (a) All Options granted pursuant to this Section shall be
Nonstatutory Stock Options and, except as otherwise provided herein, shall be
subject to the other terms and conditions of the Plan.

            (b) Except as provided in subsection (d) below, each person who
first becomes an Outside Director on or after the IPO Effective Date, whether
through election by the stockholders of the Company or appointment by the Board
to fill a vacancy shall be automatically granted an Option to purchase up to
30,000 Shares (the "First Option"), as determined by the Board in its sole and
absolute discretion, on the date he or she first becomes an Outside Director;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.

            (c) Except as provided in subsection (d) below, each Outside
Director shall be automatically granted an Option to purchase up to 10,000
Shares (a "Subsequent Option") following each annual meeting of the stockholders
of the Company occurring after the end of the Company's fiscal year 2000, if
immediately after such meeting, he or she shall continue to serve on the Board
and shall have served on the Board for at least the preceding six (6) months.

            (d) Notwithstanding the provisions of subsections (b) and (c)
hereof, any exercise of an Option granted before the Company has obtained
stockholder approval of the Plan in accordance with Section 20 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 20 hereof.

            (e) The terms of each First Option granted pursuant to this Section
shall be as follows:

                     (i) the term of the Option shall be ten (10) years.

                     (ii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.

                     (iii) the Option shall vest and become exercisable in three
(3) equal annual installments on each of the first three anniversaries of its
date of grant; provided that the Outside Director shall continue to serve on the
Board on such dates.

            (f) The terms of each Subsequent Option granted pursuant to this
Section shall be as follows:

                     (i) the term of the Option shall be ten (10) years.

                     (ii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.

                     (iii) the Option shall vest and become exercisable on the
first anniversary of the date that all stock options have vested that were
granted to the Outside Director by the Company before the Option; provided,
however, that the Option shall in all events vest and become

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exercisable on the last day of its ten-year term; provided, further, that in
each case the Outside Director shall continue to serve on the Board on such
date.

      14. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.

            (c) Merger or Asset Sale.

                     (i) General. Subject to subsections (ii) and (iii) below,
in the event of a merger of the Company with or into another corporation, or the
sale of substantially all of the assets of the Company (a "Merger"), each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation (the "Successor Corporation"). In the
event that the Successor Corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock

                                      -12-
<PAGE>   13
Purchase Right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a Merger, the Administrator shall notify the
Optionee in writing or electronically that the Option or Stock Purchase Right
shall be fully vested and exercisable for a period of fifteen (15) days from the
date of such notice, and the Option or Stock Purchase Right shall terminate upon
the expiration of such period. For the purposes of this Section 14(c), the
Option or Stock Purchase Right shall be considered assumed if, following the
Merger, the option or right confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the Merger, the consideration (whether stock, cash, or
other securities or property) received in the Merger by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Merger is not solely common stock of the
Successor Corporation or its Parent, the Administrator may, with the consent of
the Successor Corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
Successor Corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Merger.

                     (ii) Employee and Consultant Options.

                        (A) General. In the event of a Merger in which the
stockholders immediately prior to the Merger hold less than 50% of the
outstanding voting equity securities of the Successor Corporation immediately
after such Merger (a "Change of Control Merger"), then (i) the vesting of each
outstanding Option and Stock Purchase Right shall be deemed vested to the extent
each such outstanding Option and Stock Purchase Right would have been vested on
the date twelve (12) months following the effectiveness of the Change of Control
Merger and (ii) each outstanding Option and Stock Purchase Right held by an
Employee or Consultant (and granted to such person in such capacity) shall be
assumed or an equivalent option or right substituted by the Successor
Corporation. In the event that the Successor Corporation refuses to assume or
substitute for the Option or Stock Purchase Right, the Employee or Consultant
shall, as set forth in subsection (i) above, fully vest in and have the right to
exercise such Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which the Employee or Consultant would not otherwise be
vested or exercisable.

                        (B) Employee and Consultant Options Following Assumption
or Substitution. Following an assumption or substitution in connection with a
Merger or Change of Control Merger, if an Employee or Consultant's status as an
Employee (or employee) or Consultant (or consultant) of the Successor
Corporation, as applicable, is terminated by the Successor Corporation as a
result of an involuntary termination (other than for Cause) within twelve months
following the Merger, the Optionee shall fully vest in and have the right to
exercise Optionee's Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which Optionee would not otherwise be vested or
exercisable. Thereafter, the Option or Stock Purchase Right shall remain
exercisable in accordance with Section 10.

                                      -13-
<PAGE>   14

                     (iii) Outside Director Options. In the event of a Change of
Control Merger, each outstanding Option and Stock Purchase Right held by an
Outside Director (and granted to such person in such capacity) shall fully vest
as to all of the Optioned Stock, including Shares as to which the Outside
Director would not otherwise be vested or exercisable. If an Option or Stock
Purchase Right becomes fully vested and exercisable as provided in this
paragraph, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period.

      15. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

      16. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

            (b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

            (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

      17. Conditions Upon Issuance of Shares.

            (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

            (b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

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

                                      -14-
<PAGE>   15

liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

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

      20. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -15-
<PAGE>   16
                            TURNSTONE SYSTEMS, INC.

                                 2000 STOCK PLAN

                             STOCK OPTION AGREEMENT

      Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I.    NOTICE OF STOCK OPTION GRANT

      [Optionee's Name and Address]

      You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

      Grant Number                  ______________________________

      Date of Grant                 ______________________________

      Vesting Commencement Date     ______________________________

      Exercise Price per Share      $_____________________________

      Total Number of Shares Granted______________________________

      Total Exercise Price          $_____________________________

      Type of Option:               ___  Incentive Stock Option

                                    ___  Nonstatutory Stock Option

      Term/Expiration Date:         10 years from the Date of Grant

      Vesting Schedule:

      Subject to accelerated vesting as set forth in the Plan, this Option may
be exercised, in whole or in part, in accordance with the following schedule:

      25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter, provided that on such dates the Optionee remains in
Continuous status as a Service Provider on such dates.

      Termination Period:

      This Option may be exercised for three months after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
<PAGE>   17
II.   AGREEMENT

      A.    Grant of Option.

            The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.

            If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

      B.    Exercise of Option.

            (a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

            (b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Stock Plan Administrator of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by such aggregate Exercise Price.

                  No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.

      C.    Method of Payment.

            Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

             1. cash; or

             2. check; or

             3. consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or

                                      -2-
<PAGE>   18
             4. surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or

             5. a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement; or

            6. such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

      D.    Non-Transferability of Option.

            This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

      E.    Term of Option.

            This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.

      F.    Tax Consequences.

            Some of the federal tax consequences relating to this Option, as of
the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

      G.    Exercising the Option.

             1. Nonstatutory Stock Option. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to
withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

             2. Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may

                                      -3-
<PAGE>   19
subject the Optionee to alternative minimum tax in the year of exercise. In the
event that the Optionee ceases to be an Employee but remains a Service Provider,
any Incentive Stock Option of the Optionee that remains unexercised shall cease
to qualify as an Incentive Stock Option and will be treated for tax purposes as
a Nonstatutory Stock Option on the date three (3) months and one (1) day
following such change of status.

             3. Disposition of Shares.

                  (a) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

                  (b) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.

                  (c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

      H.    Entire Agreement; Governing Law.

            The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.

      I.    NO GUARANTEE OF CONTINUED SERVICE.

      OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES
AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH

                                      -4-
<PAGE>   20
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS
A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE:                                 TURNSTONE SYSTEMS, INC.

------------------------------------      --------------------------------------
Signature                                 By

------------------------------------      --------------------------------------
Print Name                                Title

------------------------------------
Residence Address

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

                                      -5-
<PAGE>   21
                                CONSENT OF SPOUSE

      The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

                                          --------------------------------------
                                          Spouse of Optionee

<PAGE>   22
                                    EXHIBIT A

                             TURNSTONE SYSTEMS, INC.

                             2000 STOCK OPTION PLAN

                                 EXERCISE NOTICE

Turnstone Systems, Inc.
274 Ferguson Drive
Mountain View, CA  94043

Attention:  Corporate Secretary

      1. Exercise of Option. Effective as of today, ________________, 2000,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Turnstone Systems, Inc. (the "Company")
under and pursuant to the Turnstone Systems, Inc. 2000 Stock Plan (the "Plan")
and the Stock Option Agreement dated, _____ (the "Option Agreement"). The
purchase price for the Shares shall be $_____, as required by the Option
Agreement.

      2. Delivery of Payment.  Purchaser herewith delivers to the Company the
full purchase price for the Shares.

      3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

      4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.

      5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

<PAGE>   23
      6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.

Submitted by:                             Accepted by:

PURCHASER:                                TURNSTONE SYSTEMS, INC.

------------------------------------      --------------------------------------
Signature                                 By

------------------------------------      --------------------------------------
Print Name                                Its

Address:                                  Address:

------------------------------------      Turnstone Systems, Inc.
                                          274 Ferguson Drive
------------------------------------      Mountain View, CA  94043

                                          --------------------------------------
                                          Date Received

                                      -2-<PAGE>   1

                                                                    EXHIBIT 10.8

                                                                 Agreement No. 1

                             ARISTASOFT CORPORATION

                         APPLICATION SERVICES AGREEMENT

This APPLICATION SERVICES AGREEMENT ("Agreement") is made effective as of
December 23rd, 1999 ("Effective Date"), by and between AristaSoft Corporation
("AristaSoft"), a California corporation, having its principal place of business
at 1300 Charleston Road, Mountain View, CA 94043 and Turnstone Systems, Inc.
("Customer"), a Delaware corporation, having its principal place of business at
274 Ferguson Drive, Mountain View, CA 94043. The terms of this Agreement shall
apply to all services provided by AristaSoft under this Agreement.

1. DEFINITIONS

        1.1 "Charter Customer" means Customer is part of the initial set of
AristaSoft customers. Charter Customers have access to special terms and
conditions not available to all customers. The special terms include, but are
not limited to, pricing and protection clause described in this Agreement and
its attached Schedules.

        1.2 "Derivative Works" means a modification of an existing work
protected by a copyright in the name of AristaSoft or a licensor of the
Software, but excluding any Customer Data (as defined hereinafter) or reports
that are created by the Customer using the Software. For the purpose of this
Agreement, Software shall be deemed to include any Derivative Works of the
Software.

        1.3 "Designates" means those Customers' customers, suppliers, vendors,
benefits providers and other such external parties whose access to the Software
is necessary to effect Customer's business purposes for which Software is
provided.

        1.4 "Documentation" means the guides and manuals for use of the
Software. Documentation is provided in whatever form is generally available to
users of the Software.

        1.5 "Servers" means the host-processing computer hardware servers that
are customized, installed, managed, maintained and supported by AristaSoft.

        1.6 "Software" shall mean the computer software, as specified in
Schedule A and including any other Server software used by AristaSoft to provide
the Service, in object code form owned or distributed by AristaSoft for which
Customer is granted access pursuant to this Agreement, and the media,
Documentation, Upgrades and Updates thereof.

        1.7 "Update" shall mean a subsequent release of the Software containing
minor corrections, bug fixes, and other modifications that do not meet the
definition of Upgrades and are generally made available for the Software without
additional charge. Update shall not include any release, option or future
product that AristaSoft provides and prices separately.

        1.8 "Upgrade" shall mean modifications which provide new or improved
features, functionality, or performance for the Software and are priced
separately by the owner of the Software.

        1.9 "User," as further specified in Schedule A shall mean an individual
authorized by Customer to access the Software, regardless of whether the
individual is actively using the Software at any given time.

2. ARISTASOFT APPLICATION SERVICES

        2.1 AristaSoft offers an information processing service that is
delivered over a private dedicated network and the Internet to its Customers,
giving them access to the Software hosted on AristaSoft's Servers to support the
customers' internal business information processing activities.

        2.2 Subject to the terms and conditions of this Agreement, AristaSoft
will provide to Customer the following services (collectively the "Services"):

                i. AristaSoft will provide Customer with remote access to
Servers controlled by AristaSoft on which AristaSoft hosts the Software which
shall be specifically listed in Schedule A - Service Order Form.

                ii. AristaSoft will provide Customer with certain hardware,
software, and customer support

<PAGE>   2

services for the Software (the "Support Services") which shall be specifically
listed in Schedule B - Software Access and Support Services Schedule.

                iii. AristaSoft will provide Customer with consulting services
associated to the implementation of the Software and the on-going integration
and operation of the Software with Customer's business processes which shall be
provided in accordance with Schedule C - Consulting Services Schedule.

        2.3 Access. AristaSoft will provide Customer with the ability to
remotely access the Software hosted on the Servers, as of the date that
installation and implementation is completed (the "Initial Access Date"). Such
access shall be provided on a twenty-four hours-a-day, seven days-a-week basis,
except during scheduled and unscheduled maintenance downtime. AristaSoft will
use best efforts to perform any scheduled downtime outside of normal business
hours. Notwithstanding the foregoing, Customer will be able to remotely access
the Software for not less than 99% of the scheduled available time, with the
exception of telecommunication company service problems, software defects, any
problems caused by Customer, and any other forces beyond the immediate control
of AristaSoft.

        2.4 Network Equipment. AristaSoft will provide network hardware and
software to be used on Customer's premises to access the Software hosted by
AristaSoft (the "Equipment"). AristaSoft retains exclusive and complete
ownership of the Equipment including all rights, title and interest thereto.
Customer shall provide to AristaSoft reasonable electronic and physical access
to the Equipment. Customer is responsible for the physical security of the
Equipment and will carry both general liability and property casualty insurance
policies in amounts sufficient for the replacement of the Equipment. Relocation
of the Equipment outside the continental United States is prohibited. Relocation
of the Equipment within the continental United States is permitted upon sixty
(60) days prior written notice to AristaSoft. Customer will be required to
provide space, power, and physical security on Customer's own file servers and
personal computers to support various aspects of AristaSoft hosting. AristaSoft
will determine the exact configuration and amount of space.

3. ACCESS TO SOFTWARE

        3.1 Pursuant to the terms and conditions herein, including those in any
attached Schedules, AristaSoft grants to Customer, its Users, and its
Designates, a non-exclusive, non-transferable right to access and use the
Software as described in Schedule A, in accordance with the associated
Documentation, solely in connection with Customer's business operations. The
foregoing license is only granted for the duration of the Term set forth in
Schedule A.

        3.2 Access exclusions. Except as expressly authorized herein, Customer
shall not:

                i. Authorize or permit Designates to access the Software other
than in connection with Customer's internal data processing operations.

                ii. Copy, except for backup purposes, assign, relicense or
sublicense the Software or the use of the Software; or

                iii. Reverse engineer, reverse compile or reverse assemble the
Software.

        3.3 AristaSoft or its licensors shall retain all title, copyright and
other proprietary rights in the Software and Derivative Works. Customer does not
acquire any implied rights to the Software or the Derivative Works.

        3.4 Data and Documents Resulting from the Software. Customer shall be
free to use any customer data, such as customer data in databases or reports,
that are used in connection with, or created as a by-product of, the Software
("Customer Data"). Customer retains all right, title and interest to Customer
Data except as to preexisting portions of the Software included in the Customer
Data.

4. CUSTOMER'S OBLIGATIONS

        4.1 Customer shall fulfill its obligations as specified in Schedules B
and C or as may be supplemented or modified according to the guidelines set
forth in Schedules A, B, or C and mutually agreed to by the parties hereto.

5. CONFIDENTIALITY

        5.1 Confidential Information. Each party acknowledges that it will have
access to certain confidential information of the other party ("Confidential
Information") including the Software, the terms and pricing under this
Agreement, and all materials or information clearly identified as confidential.
Each party agrees that during the Term,

                                      -2-
<PAGE>   3

and for two (2) years after the expiration or termination of this Agreement, (a)
it will hold the Confidential Information of the other party in confidence with
at least the same level of care as it uses for its own confidential information
of the same nature, but not less than a reasonable level of care; (b) it will
not use it, for its own account or the account of any third party, except as
expressly permitted by this Agreement, (c) unless required by law, it will not
disclose it to any third party, except that party's attorneys, accountants and
other advisors as reasonably necessary.

        5.2 Confidentiality of Customer Data. AristaSoft will treat with utmost
confidentiality the Customer Data and documents resulting from the Software,
according to Section 3.4. The Customer Data is the sole and exclusive property
of the Customer, and AristaSoft will not have any rights, title or interest to
Customer Data. Should AristaSoft require access to the Customer Data in order to
fulfill its own duties under this Agreement, Customer will permit such access,
as reasonable under the circumstances, to specifically identified AristaSoft
personnel. As a precondition for access by such personnel, each must first agree
in writing to maintain the confidentiality of any Customer Data to which they
are exposed no less stringently than as required by this Agreement. Should
AristaSoft be required to give access to Customer Data to any of its
subcontractors, vendors, Software licensors or any other third party in order to
fulfill AristaSoft's own duties under this Agreement, Customer will permit such
access, as reasonable under the circumstances, to specifically identified third
parties. As a precondition for access by such third party, each must first agree
in writing to maintain the confidentiality of any Customer Data to which they
are exposed no less stringently than as required by this Agreement. AristaSoft
will not use any information of the Customer in any manner except as necessary
to fulfill its obligations under this Agreement.

        5.3 Exceptions. Information will not be deemed Confidential Information
hereunder if such information: (i) is known to the receiving party prior to
receipt from the disclosing party directly or indirectly from a source other
than one having an obligation of confidentiality to the disclosing party; (ii)
becomes known (independently of disclosure by the disclosing party) to the
receiving party directly or indirectly from a source other than one having an
obligation of confidentiality to the disclosing party; (iii) becomes publicly
known or otherwise ceases to be secret or confidential, except through a breach
of this Agreement by the receiving party; or (iv) is independently developed by
the receiving party.

6. FEES AND BILLING

        6.1 Customer will pay all fees incurred pursuant to Schedules A and C.

        6.2 Unless otherwise specified in either Schedules A or C, AristaSoft
will invoice Customer monthly, one month in advance of actual service delivery.
All invoices are due and payable in full within 30 days of date of invoice.
Application access fees will begin to accrue on the Initial Access Date. Any
increases in fees due to additional Users, or any other adjustments in fees,
will be reflected in subsequent invoices. Any invoice not paid within 15 days of
the due date will be deemed late, and will accrue late charges as of the date
due. Late charges shall be at a rate of 1 1/2% per month, or the maximum rate
allowed under law, whichever is lower, from the date such payment was due until
the date paid.

        6.3 Customer shall be responsible for all sales taxes, use taxes and any
other similar taxes and charges of any kind imposed by any federal, state or
local governmental entity on the transactions contemplated by this Agreement,
excluding only U.S. taxes based solely upon AristaSoft's income. When AristaSoft
has the legal obligation to pay or collect such taxes, the appropriate amount
shall be invoiced to and paid by Customer unless Customer provides AristaSoft
with a valid tax exemption certificate authorized by the appropriate taxing
authority.

7. WARRANTIES AND REMEDIES

        7.1 AristaSoft warrants that: (a) it has rights to the Software to the
extent required to grant Customer the rights granted herein; (b) it otherwise
has the full right and authority to enter into this Agreement; (c) it has full
right and authority to make any representations in Schedules A or B referring to
the licensor of the Software.

        7.2 Software. AristaSoft warrants that during the term of this
Agreement: (a) the Software will perform in accordance with the published
product specifications in effect from time to time; (b) the Software will
continue to function after January 1, 2000 in the same manner as they functioned
on December 31, 1999; and (c) the Documentation produced by AristaSoft,
including manuals and training materials, are accurate and correct in all
material respects.

                                      -3-
<PAGE>   4

AristaSoft will correct any material nonconformance to the most current version
of the Software at no additional cost to the Customer. Customer shall notify
AristaSoft of such nonconformance in reasonably sufficient detail to allow
AristaSoft, or its business partners, to duplicate the nonconformity.

        7.3 PRODUCTS COVERED UNDER THIS AGREEMENT MAY CONTAIN OR BE DERIVED FROM
SOFTWARE PROVIDED BY THIRD PARTIES UNDER LICENSE TO ARISTASOFT. Customer shall
have the benefit of any warranties retaining thereto that are available to
AristaSoft, provided however, that Customer's remedy for breach of any such
warranty shall be solely against AristaSoft.

        7.4 The warranties given herein only apply during the Term of this
Agreement, as provided in Schedule A.

        7.5 Services. AristaSoft represents and warrants that the Services shall
be performed in a professional and workmanlike manner in accordance with
applicable professional standards consistent with industry practices.

        7.6 Limitation of Performance Warranties. These warranties are subject
to Customer fulfilling its obligations under the terms of this Agreement as
described in Schedules A and B. THESE WARRANTIES DO NOT APPLY TO ANY ARISTASOFT
PRODUCTS OR SERVICES THAT EXPRESSLY EXCLUDE THIS WARRANTY (AS DESCRIBED IN THE
SPECIFICATION SHEETS FOR SUCH PRODUCTS AND SERVICES).

        7.7 Disclaimers. EXCEPT FOR THE EXPRESS WARRANTIES SET OUT IN THIS
SECTION 7, THE SOFTWARE AND SERVICES ARE PROVIDED ON AN "AS IS" BASIS, AND
CUSTOMER'S USE OF THE SOFTWARE AND SERVICES IS AT ITS OWN RISK. ARISTASOFT AND
ITS LICENSORS DO NOT MAKE ANY OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT AND TITLE, AND ANY WARRANTIES ARISING FROM A COURSE OF
DEALING, USAGE, OR TRADE PRACTICE.

8. LIMITATIONS OF LIABILITY

        8.1 In no event shall either party be liable for any consequential,
exemplary, indirect, special or incidental damages, or damages for loss of
profits, revenue, data or use, incurred by either party or any third party,
whether in an action in contract or tort, even if the other party has been
advised of the possibility of such damages.

        8.2 Maximum Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT ARISTASOFT'S MAXIMUM AGGREGATE LIABILITY TO CUSTOMER RELATED TO, OR IN
CONNECTION WITH, THIS AGREEMENT WILL BE LIMITED TO THE TOTAL AMOUNT PAID BY
CUSTOMER TO ARISTASOFT HEREUNDER FOR THE [***] PERIOD, AND IF SUCH DAMAGES
RESULT FROM CUSTOMER'S USE OF A SPECIFIC SERVICE, SUCH LIABILITY SHALL BE
LIMITED TO FEES PAID FOR THE SERVICE GIVING RISE TO THE LIABILITY. CUSTOMER'S
MAXIMUM AGGREGATE LIABILITY TO ARISTASOFT RELATED TO, OR IN CONNECTION WITH,
THIS AGREEMENT SHALL BE LIMITED TO THE TOTAL AMOUNT PAID TO ARISTASOFT HEREUNDER
FOR THE [***] PERIOD.

        8.3 The provisions of this Agreement allocate the rights between
Aristasoft and Customer. Aristasoft's pricing reflects this allocation of risk
and the limitation of liability specified herein.

9. INDEMNIFICATION

        9.1 Indemnification of Customer. AristaSoft will indemnify, defend and
hold harmless Customer, its employees, officers, directors, and agents, from and
against any and all costs, liabilities, losses, and expenses (including, but not
limited to, reasonable attorneys' fees) (collectively, "Losses"): (i) resulting
from any claim, suit, action, or proceeding (each, an "Action") brought against
Customer alleging the infringement of any third party trade secret, U.S.
copyright, or registered trademark resulting from the provision of the Services
pursuant to this Agreement; (ii) any damage arising from the breach of
AristaSoft's representations and warranties in this Agreement; (iii) any damage
or destruction to the Customer Data caused in whole or in part by AristaSoft; or
(iv) any other damage arising out of AristaSoft's acts or failure

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                                      -4-
<PAGE>   5

to act provided that: (1) Customer notifies AristaSoft in writing within thirty
(30) days of receiving notice of such Action; (2) AristaSoft has sole control of
the defense and all related settlement negotiations; and (3) Customer provides
AristaSoft with the assistance, information and authority necessary to perform
its obligations under this Section. AristaSoft shall reimburse Customer for
reasonable out-of-pocket expenses incurred by Customer in providing such
assistance. AristaSoft may not settle or compromise any claim in a manner which
requires Customer to assume liability or pay money or which subjects Customer to
injunctive relief without Customer's express written consent. AristaSoft shall
have no liability for any claim of infringement based on use of a superseded or
altered release of Software and Services if the infringement would have been
avoided by the use of a current unaltered release of the Software and Services
that AristaSoft provides to Customer.

        9.2 If the Software is held, or is reasonably believed by AristaSoft, to
infringe the intellectual property rights of a third party, AristaSoft shall
have the option, at its expense, to (a) modify the Software to be noninfringing;
(b) obtain for Customer a license to continue using the Software; or (c)
terminate the license for the infringing Software.

        9.3 Indemnification of AristaSoft. Customer will indemnify, defend and
hold AristaSoft harmless from and against any and all Losses resulting from or
arising out of any Action brought by a third party against AristaSoft alleging:
(i) defamation, libel, slander, obscenity, pornography, or violation of the
rights of privacy or publicity; (iii) spamming, or any other offensive,
harassing or illegal conduct; (iv) any damage or destruction to the Customer
Data or the equipment of AristaSoft caused in whole or in part by Customer or
Customer's Designees; (v) any other damage arising from the breach of Customer's
representation and warranties in this Agreement, or from Customer's acts or
failure to act provided that (1) AristaSoft notifies Customer in writing within
thirty (30) days of the claim; (2) Customer has sole control over the defenses
and all related settlement negotiations; and (3) AristaSoft provides Customer
with the assistance, information and authority necessary to perform its
obligations under this Section 9.3. Customer shall reimburse AristaSoft's
reasonable out-of-pocket expenses incurred in providing such assistance.

10. TERM AND TERMINATION

        10.1 Term. This Agreement will be effective for three (3) years after
the Effective Date (the "Initial Term"), unless otherwise specified for relevant
services in Schedule A. This Agreement will automatically renew for additional
terms of one (1) year unless otherwise specified in, or terminated pursuant to,
the applicable Schedule A.

        10.2 Direct License Conversion. At the end of the Initial Term, Customer
may choose to directly license the Software from AristaSoft's licensor rather
than renew this Agreement and applicable Schedules. In such case, Customer must
provide AristaSoft with written notice of this choice not later than four (4)
months prior to expiration of the Initial Term. AristaSoft shall provide
Customer with consulting services, at a reasonable cost mutually agreed by both
parties, sufficient to accomplish Customer's transition to a direct license of
the Software, including operational start-up of the necessary hardware
components.

        10.3 Termination for Convenience. Customer may terminate this Agreement
for convenience as specified for relevant services in Schedules A through C. All
application access fees, if any, for the remaining period of the contract under
this Agreement will be due and may be paid [***] payment in the same amount that
would be due if this Agreement were not terminated. [***]. Notwithstanding the
foregoing, Customer's payment obligations for [***] fees shall not include any
[***] that otherwise would be due if this Agreement were not terminated. All
other payment obligations for relevant services as specified in this Agreement
will be due immediately.

        10.4 Termination for Cause. Either party may terminate this Agreement
if: (i) the other party breaches any material term or condition of this
Agreement and fails to cure such breach within ninety (90) days after receipt of
written notice of the same, except in the case of failure to pay fees, which
must be cured within ten (10) days after receipt of written notice from
AristaSoft; provided, however, that Customer [***], in which case no breach
shall occur until [***]; (ii) the other party becomes the subject of a voluntary
petition in bankruptcy or any voluntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors if

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                                      -5-
<PAGE>   6

such petition or proceeding is not dismissed within sixty (60) days of filing.

        10.5 Termination for Failure to Meet Software Access Performance
Standards. If AristaSoft fails to meet the Software Access Performance Standards
described in Schedule B for any three (3) consecutive months or any four (4)
months during a one (1) year period, Customer may terminate this Agreement and
all attached Schedules pursuant to Section 10.4, or substitute for this
Agreement and all attached Schedules a direct license with AristaSoft's licensor
of the Software. In the latter event, AristaSoft shall provide Customer with
consulting services, [***], sufficient to accomplish Customer's transition to a
direct license of the Software [***]. Pricing of the direct license shall be
pursuant to Section 10 of Schedule A.

        10.6 Termination Upon Change of Control. In the event that AristaSoft is
acquired, is not the surviving entity in a merger, or sells the assets relevant
to this Agreement and the attached Schedules, Customer may terminate this
Agreement and all attached Schedules pursuant to Section 10.4, or substitute for
this Agreement and all attached Schedules a direct license with AristaSoft's
licensor of the Software. In the latter event, AristaSoft's successor shall
provide Customer with consulting services, [***], sufficient to accomplish
Customer's transition to a direct license of the Software [***]. Pricing of the
direct license shall be pursuant to Section 10 of Schedule A.

        10.7 Effect of Termination. Upon the effective date of expiration or
termination of this Agreement, subject to Section 10 of Schedule A, AristaSoft
will cease providing the Services. Immediately thereafter AristaSoft will
provide: (i) Customer with electronic copies from the full backup of the most
recent Customer Data and instructions, so that Customer may restore the data
into an AristaSoft similar server hardware environment; (ii) the necessary
customization of the Software provided that Customer has agreed to pay a special
termination fee, in an amount to be mutually agreed to; and (iii) the
specifications for the hardware and software environment that would be necessary
for Customer to restore and operate the Software and Customer Data. Within
thirty (30) days after such expiration or termination, but not before the
expiration of any additional period pursuant to Section 10 of Schedule A: (i)
each party agrees to return or destroy all Confidential Information of the other
party in its possession at the time of expiration or termination and will not
make or retain any copies of such Confidential Information except as required to
comply with any applicable legal or accounting record keeping requirement; and
(ii) Customer will return any Equipment provided hereunder and that is located
within its premises or under its control. Termination of this Agreement or any
License shall not limit either party from pursuing other remedies available to
it, including injunctive relief, nor shall such termination relieve Customer's
obligation to pay all fees that have accrued or are otherwise owed by Customer
under any Schedule A or C. Subject to Section 10 of Schedule A, Customer shall
cease access to the Software, and certify to AristaSoft within one month after
expiration or termination that Customer has destroyed or has returned to
AristaSoft all copies of the Software, if any. This requirement applies to
copies in all forms, partial and complete, in all types of media and computer
memory, and whether or not modified or merged into other materials.

        10.8 Survival. The following provisions will survive any expiration or
termination of the Agreement: Sections 5, 7, 8, 9, 10, and 11.

11. MISCELLANEOUS PROVISIONS

        11.1 Marketing Programs:

                i. Joint Press Release. Customer agrees to participate with
AristaSoft in a joint press release ("Press Release"). The Press Release will be
issued on a mutually agreed upon date or the first business day following the
ninetieth (90th) day after the Effective Date, whichever is earlier. Customer
and AristaSoft must both approve the Press Release in advance, such approval not
to be unreasonably delayed or withheld.

                ii. Customer Success Story. Subject to its satisfaction with the
Services, Customer agrees to be the subject of a AristaSoft "Customer Success
Story", although any such material released to the public or press by AristaSoft
which mentions or discusses Customer is subject to Customer's prior approval,
which shall not be unreasonably delayed or withheld. AristaSoft may write a
collateral piece discussing Customer's business and use of Services and its
impact on Customer's business. The Customer Success Story will be delivered to
Customer for review on a mutually agreed upon date, not to exceed ninety (90)
days after the Effective Date.

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                                      -6-
<PAGE>   7

                iii. Customer Reference. Subject to its own resource constraints
and satisfaction with the Services provided by AristaSoft hereunder, Customer
consents to AristaSoft identifying it as a reference for AristaSoft customer
prospects' inquiries and press inquiries. It is understood that this will be a
controlled effort and will be managed to ensure minimum impact on Customer. The
objective focuses on Customer discussing its use of AristaSoft service in
addition to the positive experiences and support provided in the working
relationship with AristaSoft. Customer's obligation under this provision is
entirely voluntary, and the parties agree that Customer's refusal to perform
under this provision shall not constitute a breach of this Agreement

                iv. Customer Acknowledgement: Customer agrees that AristaSoft
can disclose Customer as a customer of AristaSoft.

        11.2 Force Majeure. Except for the obligation to pay money, neither
party will be liable for any failure or delay in its performance under this
Agreement due to any cause beyond its reasonable control, including acts of God,
earthquake, flood, war, embargo, riot, sabotage, labor shortage or dispute,
governmental act or failure of the Internet, provided that the delayed party:
(a) gives the other party prompt notice of such cause, and (b) uses reasonable
commercial efforts to correct promptly such failure or delay in performance. If
the interruption exceeds thirty (30) days, either party may terminate this
Agreement without any liability to the other party for such termination.

        11.3 Government Regulations. Customer will not export, re-export,
transfer, or make available, whether directly or indirectly, any regulated item
or information to anyone outside the United States in connection with this
Agreement without first complying with all export control laws and regulations
which may be imposed by the United States Government and any country or
organization of nations within whose jurisdiction Customer operates or does
business.

        11.4 Non-Solicitation. During the term of this Agreement, and for one
year after the termination or expiration of this Agreement in accordance with
its terms, each party will not directly or indirectly, solicit, or attempt to
solicit, for employment any persons employed by the other party in the
performance or supervision of the Services for the other party during such
period.

        11.5 Governing Law. This Agreement is made under, and will be governed
by and construed in accordance with, the laws of the State of California (except
that body of law controlling conflicts of law) and specifically excluding from
application to this Agreement that law known as the United Nations Convention on
the International Sale of Goods.

        11.6 Arbitration. Any dispute relating to the terms, interpretation or
performance of this Agreement (other than claims for preliminary injunctive
relief or other pre-judgment remedies) will be resolved at the request of either
party through binding arbitration. Arbitration will be conducted in Santa Clara
County, California, under the rules and procedures of the Judicial Arbitration
and Mediation Society ("JAMS"). The parties will request that JAMS appoint a
single arbitrator possessing knowledge of online services agreements; however,
the arbitration will proceed even if such a person is unavailable.

        11.7 Severability. If a tribunal of competent jurisdiction holds any
provision of this Agreement to be contrary to the law, the remaining provisions
of this Agreement will remain in full force and effect, and the illegal
provision will be replaced with a legal provision that incorporates the original
intent of the parties.

        11.8 Waiver. The waiver of any breach or default of this Agreement will
not constitute a waiver of any subsequent breach or default, and will not act to
amend or negate the rights of the waiving party.

        11.9 Assignment. Neither party may assign its rights or delegate its
duties under this Agreement either in whole or in part without the prior written
consent of the other party, except as part of a corporate reorganization,
consolidation, merger, or sale of substantially all of its assets. Any attempted
assignment or delegation without such consent will be void. This Agreement will
bind and inure to the benefit of each party's successors and permitted assigns.

        11.10 Notices. Any notice or communication required or permitted to be
given hereunder may be delivered by hand, deposited with an overnight courier,
or mailed by registered or certified mail, return receipt requested, postage
prepaid, in each case to the address of the receiving party indicated on the
signature page hereof, or at such other address as may hereafter be furnished in
writing by either party hereto to the other. Such notice will be deemed to have
been given as of the date it is delivered, mailed or sent, whichever is earlier.
To expedite communications, each party agrees to treat

                                      -7-
<PAGE>   8

documents faxed or e-mailed as original documents; nevertheless, each party may
require the other to exchange original signed documents.

        11.11 Relationship of Parties. AristaSoft and Customer are independent
contractors and this Agreement will not establish any relationship of
partnership, joint venture, employment, franchise or agency between AristaSoft
and Customer. Neither AristaSoft nor Customer will have the power to bind the
other or incur obligations on the other's behalf without the other's prior
written consent, except as otherwise expressly provided herein.

        11.12 Entire Agreement; Counterparts. This Agreement, including these
general terms and conditions, the Schedules and exhibits thereto, and all other
documents incorporated herein by reference, constitutes the complete and
exclusive agreement between the parties with respect to the subject matter
hereof, and supersedes and replaces any and all prior or contemporaneous
discussions, negotiations, understandings and agreements, written and oral,
regarding such subject matter. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.

        11.13 Attachments. The following documents are attached hereto as
Schedules, and are incorporated by reference in their entirety:

         - Schedule-A (Application Services Order Form)

         - Schedule-B (Software Access and Support Services Schedule)

         - Schedule-C (Consulting Services Schedule)

        11.14 IMPORTANT-THIS ARISTASOFT SERVICE AGREEMENT IS A LEGAL AGREEMENT
BETWEEN CUSTOMER AND ARISTASOFT CORPORATION FOR THE ARISTASOFT SERVICES
IDENTIFIED ABOVE, INCLUDING THOSE SET FORTH IN RELATED SCHEDULES. BY USING THESE
SERVICES YOU AGREE TO BE BOUND BY THE TERMS OF THIS AGREEMENT EFFECTIVE AS OF
THE DATE FIRST ABOVE WRITTEN. IF YOU DO NOT AGREE TO THE TERMS OF THIS
AGREEMENT, PROMPTLY RETURN THE UNUSED MATERIAL RELATED TO THE SERVICES TO
ARISTASOFT CORPORATION.

Accepted and Agreed:

CUSTOMER                                    ARISTASOFT

By:                                         By:
   --------------------------------            ---------------------------------

Print Name:                                 Print Name:
           ------------------------                    -------------------------

Title:                                      Title:
      -----------------------------               ------------------------------

Date:                                       Date:
     ------------------------------              -------------------------------

                                      -8-
<PAGE>   9

                                   SCHEDULE A

                         APPLICATION SERVICES ORDER FORM

This Schedule A, Application Services Order Form, is attached to, and governed
by, the terms and conditions as set forth in the AristaSoft Corporation
Application Services Agreement No. 1, dated December 23rd, 1999 (the
"Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings used in the Agreement.

                                    SOFTWARE

AristaSoft will provide Customer with remote access to Servers controlled by
AristaSoft on which AristaSoft hosts the following Software:

<TABLE>
<CAPTION>
   VENDOR             SOFTWARE PRODUCT        SOFTWARE APPLICATION
   ------             ----------------        --------------------
<S>                   <C>                     <C>
J.D. Edwards          OneWorld                Foundation
J.D. Edwards          OneWorld                Financial
J.D. Edwards          OneWorld                Logistics/Distribution
J.D. Edwards          OneWorld                Manufacturing
</TABLE>

                             APPLICATION ACCESS FEES

The application access fees for the Software listed in this schedule will be
calculated as per the following fees:

<TABLE>
<CAPTION>
 TYPE OF USER            FEE PER USER PER MONTH
 ------------            ----------------------
<S>                    <C>
Named User             [***]
Moderate User          [***]
Inquiry User           [***]
</TABLE>

1. MINIMUM USERS FOR SOFTWARE.

<TABLE>
<CAPTION>
<S>                                     <C>         <C>
   Number of Minimum Named Users        [***]       [***]
   Number of Minimum Moderate Users     [***]       [***]
   Number of Minimum Inquiry Users      [***]       [***]

   TOTAL MINIMUM USERS                  [***]
   TOTAL MINIMUM MONTHLY FEE            [***]
</TABLE>

2. TERM.

        The term of this Schedule is three (3) years, which shall commence on
the Initial Access Date, as defined in Section 2.3 of the Agreement.

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<PAGE>   10

3. ADDITIONAL USER FEES.

        The monthly fee for the minimum Users up to the amount set forth in
Section 1 shall be fixed for the term of this Schedule. Customer may add
additional Users at any time during the term of this Schedule. Monthly fees for
additional Users shall be based on the category of the User (Named, Moderate, or
Inquiry Users as defined below) at the above rates. Customer will use its best
efforts to notify AristaSoft of any changes in the number of Users, (increase or
decrease) 30 days prior to such change. Notwithstanding the foregoing,
AristaSoft will add Users within one business day of written notification by
Customer and delete Users within four (4) hours of written notification from
Customer.

4. USER DEFINITIONS.

        -  A "Named User" shall mean a User of the Software to whom a "user id"
           has been assigned.

        -  A "Moderate User" is a User authorized to use the Software only to
           complete the following tasks: time entry, address book, calendar
           approvals, approvals and processing of procurement and sales orders,
           work order approval and entry, and job completion and job status
           functions.

        -  An "Inquiry User" is a User accessing the Software for inquiry and
           information retrieval purposes only.

        AristaSoft will tailor application restrictions for individual Users at
Customer's written request.

5. NETWORK & INFRASTRUCTURE SET-UP FEE.

        AristaSoft will perform network and infrastructure set-up at the premise
of Customer's principal place of business. Additional Customer premises may
receive the Services at a charge of [***] for the complete delivery,
installation, and configuration of Equipment, provided that such additional
premises are within the greater San Francisco Bay area. This charge includes
installation of communications lines and associated termination and local
hardware and software. Customer must provide AristaSoft no less than sixty (60)
days notice before the desired installation date. AristaSoft will invoice
Customer for this fee upon completion of installation, including successful
testing and Customer acceptance of Services to be provided.

6. TELECOMMUNICATIONS USAGE COSTS.

        AristaSoft will be responsible for the initial telecommunications
connection and recurring telecommunications costs for usage of the communication
line. AristaSoft is responsible for the telecommunications provider relationship
and maintenance of the line. AristaSoft will include a backup communication line
to mitigate line outage problems.

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<PAGE>   11

7. SERVERS.

        AristaSoft will be responsible for providing Servers to host the
Software. The Servers will be provisioned, installed, managed, backed-up,
maintained, and controlled by AristaSoft to ensure proper and adequate operation
of the Software.

8. SOFTWARE MANAGEMENT.

        AristaSoft will be responsible for managing the Software hosted on the
Servers. Software management will include but is not limited to Software
administration, Software security, Software performance tuning, network
administration, and Software maintenance.

9. DATA CENTER FACILITY.

        AristaSoft will be responsible for locating the Servers in a Data Center
facility that provides proper and adequate environment for operation of the
Servers including but not limited to capabilities such uninterrupted power
supply, back-up power systems, access to alternate power grid, redundant fire
suppression system, 24-hour physical security systems with automatic
surveillance and intrusion detection, and electronic firewall protection against
unauthorized electronic access.

10. CHARTER CUSTOMER PROTECTION.

        a. UNINTERRUPTED SERVICE PROTECTION

        AristaSoft will ensure an additional [***] of uninterrupted Services for
Customer in the event that either AristaSoft discontinues providing the Services
or Customer terminates the Service Agreement and associated Schedules pursuant
to Sections 10.3, 10.4, 10.5, or 10.6 ("Charter Customer Protection"). The
Charter Customer Protection will consist of:

        1.     Continuation of access to Software

               a. [***]
               b. [***]
               c. [***]
               d. [***]
               e. [***]

        2.     Porting of Customer Data to environment specified by Customer

               a. [***]
               b. [***]

        AristaSoft will provide Customer with written certification of such
agreements from its key suppliers not later than sixty (60) days after the
Effective Date of the Agreement.

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<PAGE>   12

        b. TRIAL ACCEPTANCE PERIOD

        Customer shall have [***] after the Initial Access Date in which to
assess, in its sole discretion, Software Access Performance and the quality of
AristaSoft's Support Services (the "Trial Acceptance Period"). At any time
during the Trial Acceptance Period, Customer may provide AristaSoft with written
notice of termination of the Agreement and all attached Schedules, which shall
be treated as a termination pursuant to Section 10.5 of the Agreement, and
Customer shall be entitled to the remedies provided by that Section.

        c. DIRECT LICENSE OPTION

        Customer will have the option to directly license the Software listed in
this Schedule from AristaSoft's licensor [***] if: a) Customer discontinues the
Services for any reason during the [***] acceptance period outlined above; or b)
AristaSoft discontinues the Services for any reason, including a bankruptcy or
reorganization but excluding Customer's material breach of the Agreement, during
the term of this Schedule. For purposes of this provision, [***].

Accepted and Agreed:

CUSTOMER                                    ARISTASOFT

By:                                         By:
   --------------------------------            ---------------------------------

Print Name:                                 Print Name:
           ------------------------                    -------------------------

Title:                                      Title:
      -----------------------------               ------------------------------

Date:                                       Date:
     ------------------------------              -------------------------------

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                                      -4-
<PAGE>   13

                                   SCHEDULE B

                  SOFTWARE ACCESS AND SUPPORT SERVICES SCHEDULE

        This Schedule B, Software Access and Support Services Schedule, is
attached to, and governed by, the terms and conditions as set forth in the
AristaSoft Corporation Application Services Agreement No. 1, dated December
23rd, 1999 (the "Agreement"). Capitalized terms not otherwise defined herein
shall have the meanings used in the Agreement.

1. SOFTWARE ACCESS.

        1.1 Access. Subject to the terms and conditions of this Schedule, and
for as long as Customer is granted access per this Agreement, AristaSoft grants
Customer non-exclusive, non-transferable rights to access and use the Software
solely for Customer's own internal business processing operations; and solely by
the number of authorized users of the Software identified in Schedule A to the
Agreement and any additional User added by Customer during the term of this
Agreement.

        1.2 Restrictions. During the term of this Agreement, Customer will not:
(i) disassemble, reverse engineer, decompile, or otherwise attempt to derive
source code from the Software; modify, adapt, create derivative works based
upon, or translate the Software; (ii) copy, install or use the Software on any
of its computer systems, servers, or networks; (iii) transfer, lease, loan,
resell for profit, distribute or otherwise grant any rights in the Software in
any form to any other party, including commercial time-sharing, rental, or
service bureau use.

        1.3 Ownership. The right to access the Software is not a license sale
and does not convey any rights of ownership in or to the Software. AristaSoft is
not granting Customer any rights whatsoever in the Software source code. All
right, title, and interest in the Software and any Updates, Upgrades or
modifications thereof, or in any ideas, know-how, and programs developed by
AristaSoft or its licensor during the term of the Agreement will remain the
property of AristaSoft or its licensor. All right, title, and interest in
Customer Data will remain the property of Customer

2. DESIGNATED CONTACTS.

        2.1 AristaSoft Contacts. AristaSoft will designate one primary and one
alternate contact per functional area of the Software (for example: Financial,
Distribution/Logistics, Manufacturing) for Customer to communicate with for
customer support service.

3. SUPPORT SERVICES.

        3.1 Software Management Services. AristaSoft will locate the Servers
where the Software is hosted in a Data Center. AristaSoft will provide
performance analysis and tuning services, hardware preventative maintenance, and
regular back-up services. With respect to the Software, AristaSoft will be
responsible for installing and configuring the Software on AristaSoft's Servers.
AristaSoft will answer technical questions by Customer concerning application
functionality of the Software within the scope of this Schedule.

<PAGE>   14

        3.2 Backup Operations. AristaSoft will perform an incremental backup of
its Servers, including Customer Data, on a daily basis and full backup on a
weekly basis. Backup tapes will be stored off-site at a physically secure
location. Customer Data will be archived every six (6) months and available
online for up to eighteen (18) months. AristaSoft will verify its backup
capabilities every six months by restoring the system and Customer Data onto a
duplicate Server.

        3.3 Physical Security. AristaSoft's Data Center is located in a facility
physically secure against unauthorized entry. Only select AristaSoft employees
have access to the Data Center, and Customer access requires an authorized
AristaSoft escort.

        3.4 Electronic Security. AristaSoft's Data Center includes an electronic
"firewall" to prevent unauthorized electronic access. Authorized electronic
access is limited to specific AristaSoft employees.

        3.5 Security Audits. AristaSoft's physical and electronic security
measures will be subject to semi-annual audit by an independent contractor.
AristaSoft will disclose the audit results and corrective actions plan, if any,
to Customer, and will implement reasonable corrective measures recommended by
such results.

        3.6 Upgrades. Upgrades and Updates may be made available to Customer
only when they are made available to AristaSoft by AristaSoft's third party
licensor per the agreement between AristaSoft and its licensor. AristaSoft will
install Upgrades and Updates into live operations once they have been certified
by AristaSoft as being operations-worthy. AristaSoft and Customer will
collaborate concerning the impact of Upgrades and Updates on Customer's business
processes. AristaSoft will make a range of implementation dates for Upgrades
available to Customer, and Customer agrees to implement within a mutually agreed
timeframe.

        3.7 System Maintenance. AristaSoft will implement regularly scheduled
maintenance, application "bug" fixes, software patches, etc. during 12:00 a.m.
to 6:00 a.m. Pacific Time. AristaSoft will report maintenance activities will be
reported to Customer via e-mail in advance. However, unless necessary to ensure
functioning of the Software , no changes to the processing environment or
network will be made during the last week and the first two weeks of every
calendar quarter.

        3.8 Change Support. AristaSoft will provide one hour per month per Named
User as "Change Support" for on-going changes after the Initial Access Date.
These hours expire on a quarterly basis if unutilized. Customer may request
additional hours and these will be charged for on a time and material basis. The
Change Support hours cannot be used to add new modules or build interfaces with
external subsystems, but can be used towards making reasonable incremental
changes over the initial set-up, including: adding new reports, modifying
existing reports, extracting data, modifying existing business process, or
adding new business processes.

                                      -2-
<PAGE>   15

        3.9 Customer Support.

                (a) During the term of this Agreement, AristaSoft will provide
support personnel that will be available during AristaSoft Business Days, and
via the communication methods defined below.

                (b) AristaSoft Business Days. Except for designated holidays and
critical and priority events as described below, standard support hours are
Monday through Friday, 8:00 a.m. to 5:00 p.m., Pacific Time.

                (c) Communication Methods. Customer can communicate with
AristaSoft's service team by phone at 1-800-787-0100 or 1-650-318-9888 or e-mail
at customer.support@aristasoft.com. AristaSoft will inform Customer in writing
of any changes to this number or of additional communication methods.

                (d) Customer Support Services. AristaSoft will provide support
on the use of the Software. Support is provided for the Software only as it is
configured by AristaSoft, and not in any other form, or configuration.
AristaSoft will provide Customer with the following Customer Support Services:

<TABLE>
<S>                           <C>
  Customer Support Calls      Unlimited number of calls for the first 3 months
                              after Initial Access Date 5 calls per Named User
                              per month after Initial Access Date Unlimited
                              calls for a designated Customer contact.

  User Meetings               None

  Conference Calls            Once every calendar quarter

  Site Visits                 Once every six months

  Service Usage Reports       Once per month via e-mail
                              Reports will include information on User access,
                              system uptime, backup, average response time, and
                              customer support call reports
</TABLE>

Adverse Events. AristaSoft will respond to reported adverse events according to
the following protocols mutually defined by Customer and AristaSoft.:

<TABLE>
<CAPTION>
   SEVERITY                     DEFINITION                              RESPONSE TIME
   --------                     ----------                              -------------
<S>             <C>                                          <C>
Critical        Access to the Software is not available to   Corrective actions will commence
                any of Customer's users, including due to    immediately, 24 hours per day, 7
                telecommunications outages/problems.         days per week, with the objective
                                                             to resume availability within 8
                                                             hours.

Priority        Access to the Software is available, but     Actions will commence within 4
                a specific function, field, or business      hours, 24 hours per day, 7 days
                process is not functioning or producing      per week, with the objective to
                desired results.                             resume full functionality within
                                                             48 hours.
</TABLE>

                                      -3-
<PAGE>   16

<TABLE>
<CAPTION>
   SEVERITY                     DEFINITION                              RESPONSE TIME
   --------                     ----------                              -------------
<S>             <C>                                          <C>
Standard        A problem or question that does not          AristaSoft will seek to
                require immediate attention for              address/solve the problem within
                clarification or guidance on how to use      1 week, on a first come, first
                the documentation or online help screens.    served basis.
</TABLE>

                (e) Customer and AristaSoft agree to review and update the
Customer Support Services described in this Section during the first year of
Service since the Initial Access Date to reflect any required changes. Any
changes will be mutually agreed by both parties.

        3.10 Management and Classification of Software Errors. AristaSoft will
promptly report all reproducible errors experienced by Customer, which have been
reported to AristaSoft by the Customer, to the applicable licensor of the
Software. AristaSoft agrees to use all commercially reasonable efforts to
document and report Software errors to the applicable licensor of the Software
for resolution. AristaSoft agrees to cooperate with Customer in seeking
resolution of such errors.

        3.11 Customer Service Disputes. If, not later than one (1) week of
reporting a customer service issue or an adverse event to AristaSoft, Customer
is unhappy with the outcome or AristaSoft's progress toward an outcome, a
three-stage process is available for escalating customer service issues and
resolution of application events.

                (i) If, for any reason Customer decides a customer service issue
or application event is not being properly addressed, Customer must bring the
issue to the attention of the Manager, Customer Support. The Manager, Customer
Support will thereafter be responsible for tracking and overseeing resolution of
the reported issue or event until Customer is satisfied with the outcome.

                (ii) If, for any reason Customer still is not satisfied that the
customer service issue or application event is being properly addressed,
Customer may request that the matter be brought to the attention of the
Director, Customer Support. At this point, the Director, Customer Support must
respond to the issue and track and oversee resolution of the reported issue or
event until Customer is satisfied with the outcome.

                (iii) If the matter remains unresolved, Director, Support will
report it to Vice President, Customer Support. The Vice President, Customer
Support will ensure that the issue is resolved to Customer's satisfaction and
report all such issues to the President and Chief Executive Officer of
AristaSoft.

4. CUSTOMER RESPONSIBILITIES.

        4.1 Customer's responsibilities shall be to:

                (a) Provide to AristaSoft all applicable information regarding
any Software performance issue, to enable AristaSoft to duplicate the
circumstances indicating a reported Software defect or error;

                                      -4-
<PAGE>   17

                (b) Provide best efforts to cooperate with AristaSoft with
respect to testing, isolating, identifying, documenting, and in any other
actions necessary to resolve any Software issues and errors;

                (c) Appoint a single person as an AristaSoft Contact who shall
be the primary information technology support contact for AristaSoft and
internal Customer users with regard to Customer information technology issues. A
secondary contact will be appointed as an alternate for times when the primary
contact is unavailable for urgent issues. Customer information technology issues
include, but are not limited to, hardware, software, desktop setup, network and
all other technical issues that affect operation of the Software; and

                (d) Notify AristaSoft of any of Customer's network changes that
may impact user connectivity one week prior to implementation of such changes.

                (e) Assist AristaSoft to ensure that access to the Software is
granted only to Users who are properly trained on the use of the Software

                (f) Assist AristaSoft to ensure that access to the Software and
Servers is granted only to Users who are authorized to see the applicable
Customer Data, as specified in the Software, Server and Customer Data minimum
security requirements guidelines published by AristaSoft from time to time.

                (g) Provide to Users the necessary personal computer hardware
and software required to access the Software, as specified in the minimum
requirements guidelines published by AristaSoft from time to time.

5. SOFTWARE ACCESS PERFORMANCE STANDARDS.

        5.1 Performance Standards. During the Trial Acceptance Period (as
defined in Schedule A), AristaSoft and Customer will mutually agree on the
Software Access Performance Standards for AristaSoft's Services provided
hereunder. Such criteria will be reduced to writing and attached as a
replacement Exhibit 1 to this Schedule. Preliminary standards are attached
hereto as Exhibit B-1.

                (a) If AristaSoft and Customer are unable to reach agreement on
the Software Access Performance Standards prior to the end of the Trial
Acceptance Period, Customer may terminate this entire Agreement and all
Schedules with AristaSoft pursuant to Section 10.5 of the Service Agreement and
the remedies provided therein.

6. WARRANTY AND DISCLAIMER.

        6.1 Warranty. AristaSoft warrants to Customer that:

                (a) it has the right and authority to enter into and to grant
the rights described in this Schedule and it will perform its obligations
hereunder in a professional and workmanlike manner by employees with the
requisite education, training, and skills to perform such obligations;

                                      -5-
<PAGE>   18

                (b) the Software shall function substantially in accordance with
its specifications in the Documentation;

                (c) any hardware provided by AristaSoft which malfunctions
during the term of this Agreement or any renewal thereof, shall be promptly
repaired or replaced by AristaSoft at no cost to Customer; and

                (d) Customer shall have the benefit of any warranties from the
Software licensor that are available to AristaSoft, provided however, that
Customer's remedy for breach of any such warranty shall be solely against that
licensor.

        6.2 Disclaimer. AristaSoft specifically does not warrant that the
Software will meet all of Customer's requirements, that the access to the
Software and the Servers will be uninterrupted or error-free, that patches or
workarounds will be provided, or that errors will be corrected in Updates,
according to this Schedule, or in every case.

        6.3 ARISTASOFT SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

7. SURVIVAL OF TERMS.

        7.1 Section 6 will survive termination or expiration of the Agreement
and this Schedule for any reason.

Accepted and Agreed:

CUSTOMER                                    ARISTASOFT

By:                                         By:
   --------------------------------            ---------------------------------

Print Name:                                 Print Name:
           ------------------------                    -------------------------

Title:                                      Title:
      -----------------------------               ------------------------------

Date:                                       Date:
     ------------------------------              -------------------------------

                                      -6-
<PAGE>   19

                                   EXHIBIT B-1

                Preliminary Software Access Performance Standards

ACCESS

AristaSoft will provide Customer with the ability to remotely access the
Software hosted on the Servers, as of Initial Access Date. Such access shall be
provided on a twenty-four hours-a-day, seven days-a-week basis, except during
scheduled and unscheduled maintenance downtime. AristaSoft will use best efforts
to perform any scheduled downtime outside of normal business hours.
Notwithstanding the foregoing, Customer will be able to remotely access the
Software for not less than 99% of the scheduled available time, with the
exception of telecommunication company service problems, software defects, any
problems caused by Customer, and any other forces beyond the immediate control
of AristaSoft.

RESPONSE TIME

AristaSoft will provide Customer with a telecommunication lines from the
Customer premises to the Servers that hosts the software. Such communication
lines shall be provided such that the aggregate round-trip latency will not
exceed one (1) second in normal operation.

SERVER CAPACITY

AristaSoft will provide Customer with Servers to host the Software. Such Server
shall be controlled to deliver sufficient capacity to satisfy Customer's
requirements including but not limited to processing, memory and storage
capacity.

<PAGE>   20

                                   SCHEDULE C

                          Consulting Services Schedule

This Schedule C, Consulting Services Schedule, is attached to, and governed by,
the terms and conditions as set forth in the AristaSoft Corporation Application
Services Agreement No. 1, dated December 23rd, 1999 (the "Agreement").
Capitalized terms not otherwise defined herein shall have the meanings used in
the Agreement.

1. SCOPE OF SERVICES.

        1.1 Services. AristaSoft will provide the consulting services (the
"Consulting Services") described in the Statement of Work attached hereto, as
amended from time to time by written, mutual agreement of the parties. Should
Customer desire to change the Consulting Services, or obtain additional
services, Customer will submit the proposed modification in writing to
AristaSoft. AristaSoft may, at its sole option, elect to perform the
modifications and/or additional services and the parties will execute a revised
Statement of Work setting forth the modified Consulting Services to be
performed.

        1.2 Manner of Performance.

                (a) AristaSoft will retain the sole and exclusive right to
control or direct the manner or means by which the Consulting Services are
performed and may subcontract or assign any or all of its obligations and rights
under this Schedule. AristaSoft will inform Customer of any third party who
requires access to Customer Data, and will ensure that confidentiality of
Customer Data is maintained as specified in Section 5.2 of the Agreement.

                (b) Unless otherwise agreed, the Consulting Services shall be
performed during AristaSoft's normal business hours.

                (c) AristaSoft shall use reasonable commercial efforts to
provide the Consulting Services in accordance with any dates or delivery
schedule that may be set forth in the Statement of Work.

        1.3 Statement of Work. Any Statement of Work that is provided under this
Schedule shall be (1) made in writing; (2) reference this Schedule; and (3) be
executed by authorized representatives of both Customer and AristaSoft.

2. CUSTOMER'S DUTIES AND RESPONSIBILITIES.

        2.1 Data and Information. Customer will make available in a timely
manner at no charge to AristaSoft all technical data, computer facilities,
programs, files, documentation, test data, sample output, or other information
and resources required by AristaSoft for the performance of the Services.
Customer will be responsible for, and assumes the risk of any problems resulting
from, the content, accuracy, completeness and consistency of all such data,
materials and information supplied by Customer.

                                      -8-
<PAGE>   21

        2.2 Equipment. Customer shall provide, at no charge to AristaSoft,
office space, services and equipment (such as copiers, fax machines and modems)
as AristaSoft reasonably requires to perform the Services.

3. SERVICES CONTACT.

        3.1 Each party will appoint in writing an employee or agent of such
party to act as the "Consulting Contact" for all communication between the
parties related to the Consulting Services. The Consulting Contact will monitor
the status of the Consulting Services and schedule regular meetings with both
technical and management personnel of each party to review the status of the
Consulting Services. Either party may change its Consulting Contact upon written
notice to the other.

4. LIMITED WARRANTY.

        AristaSoft warrants that it will perform its obligations hereunder in a
professional and workmanlike manner. Except as set forth in the preceding
sentence, ALL SERVICES PROVIDED PURSUANT TO THIS SCHEDULE ARE PROVIDED "AS IS",
AND ARISTASOFT DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE REGARDING OR RELATING TO ANY MATERIALS OR SERVICES FURNISHED OR
PROVIDED TO CUSTOMER UNDER THIS SCHEDULE. ARISTASOFT SPECIFICALLY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO SAID MATERIALS AND SERVICES, AND WITH RESPECT TO THE USE OF ANY OF
THE FOREGOING.

5. NON-SOLICITATION.

        5.1 Both parties acknowledge and agree that the employees and
consultants of each are a valuable asset to each party, respectively, and are
difficult to replace. Accordingly, each of AristaSoft and Customer agrees that,
for a period of one (1) year after the completion of the Consulting Services,
neither party will solicit the employment, as an employee, independent
contractor, or consultant, of any employee or consultant of either party.

                                      -2-
<PAGE>   22

6. TERM.

        6.1 This Schedule will take effect on the date of signing and will
remain in effect, unless earlier terminated in accordance with the Service
Agreement or any Schedule attached thereto, until all of the Consulting Services
have been completed. The specific pricing for each Statement of Work referencing
this Schedule C will be contained therein.

Accepted and Agreed:

CUSTOMER                                    ARISTASOFT

By:                                         By:
   --------------------------------            ---------------------------------

Print Name:                                 Print Name:
           ------------------------                    -------------------------

Title:                                      Title:
      -----------------------------               ------------------------------

Date:                                       Date:
     ------------------------------              -------------------------------

                                      -3-

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