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Advisory Agreement W/stock Option

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ADVISORY AGREEMENT
WITH STOCK OPTION


Advisory Agreement with Stock Option made this 7th day of September 1988 by and between ALC Communications Corporation, a Delaware corporation with principal offices at 30300 Telegraph Road, Suite 350, Birmingham, Michigan 48010 ("ALC") and Grumman Hill Associates, Inc., 264 Riverside Avenue, Westport, Connecticut 06880 ("Grumman Hill").


WHEREAS, the Board of Directors of ALC intends to call upon the services of Grumman Hill from time to time relating to the corporate affairs of ALC; and


WHEREAS, Grumman Hill desires to provide the aforementioned services to ALC on the terms hereinafter set forth.


NOW THEREFORE, in consideration of the mutual promises and agreements hereinafter set forth, the parties agree as follows:


1. Duties. During the term of the Advisory Agreement, Grumman Hill may be called upon to perform such advisory services with respect to the management, operations and business development activities of ALC and its wholly-owned subsidiary, Allnet Communication Services, Inc., an Illinois corporation ("Allnet") as shall be requested from time to time by the Board of Directors of ALC or Allnet. Such advisory services shall be provided at times convenient to the parties.


When rendering advisory services pursuant to this Advisory Agreement, Grumman Hill shall not be deemed to be an agent of either ALC or Allnet (nor shall any Grumman Hill employees be deemed to be an employee of either ALC or Allnet) or to have any power or authority to bind either ALC or Allnet, but shall rather be deemed an independent contractor acting solely for the account of Grumman Hill. The advisory services performed by any individual associated with Grumman Hill shall be in addition to and not a part of any duties and services rendered by such individual as a Director of either ALC or Allnet. Any compensation or reimbursement of expenses which such individual might receive by virtue of such individual's position as a Director or Officer of either ALC or Allnet shall be in addition to, and not in lieu of, the compensation and reimbursement of expenses to be paid to Grumman Hill pursuant to this Advisory Agreement. Notwithstanding anything to the contrary herein, Richard D. Irwin, Director of ALC and Allnet, hereby expressly waives compensation for his services as Chairman of the Board of ALC and Director of ALC and Allnet for the duration of this Advisory Agreement. 2 Page two Advisory Agreement


2. Compensation and Expenses. As compensation for the advisory services rendered hereunder, ALC hereby agrees to pay Grumman Hill $100,000 per annum and to grant a stock option in ALC's common stock. The monetary compensation shall be paid in quarterly installments in arrears commencing November 30, 1988 or in such other manner as may be mutually agreed. The stock option shall be in accordance with the terms of Section 3. herein.


ALC hereby agrees (upon submission of reasonable documentation) to reimburse Grumman Hill for any reasonable and necessary out-of-pocket expenses incurred by Grumman Hill in connection with the performance of Grumman Hill's advisory services under this Advisory Agreement.


3. Stock Option. Effective on the date hereof, ALC hereby grants to Grumman Hill a nontransferable option (other than to a successor or assign in its entirety of Grumman Hill) to purchase, at a price of $2.25 per share, a number of shares of the ALC common stock equal to the sum of (i) 340,325 shares (equal to approximately 2.5% of the total number of such shares now issued and outstanding) plus (ii) a number of shares equal to 2.5% of ALC's common stock issuable upon conversion of all shares of ALC's Class B and Class C Preferred Stock that are issued and outstanding as of December 31, 1988. Grumman Hill shall be entitled to exercise the option granted herein to the extent of 68,065 shares of ALC common stock subject therto on and after the date hereof, and as of September 8, 1989, 1990, 1991 and 1992, respectively, Grumman Hill shall be entitled to exercise such option to the extent of an additional 25% of the remainder of such stock. Notwithstanding anything to the contrary herein, upon any purport
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