E-mail Server Solution

I have a client who needs an e-mail and scheduling server solution. They are a small buisness and can’t afford Exchange. They have 5 people in their office. They have a dsl connection to the internet and e-mail through their web hosting company. They would like to send e-mails to each other and scheduling through Outlook within their office, and of course send e-mails out through their web host to the internet. I need a server that can connect to the web host POP3 accounts, send and recieve with them, as well as circulate internal e-mails and scheduling through outlook. Is there a program which has these basic functions without paying the high price for Exchange?