<PAGE>

DATED                            25 SEPTEMBER                               1998
--------------------------------------------------------------------------------


                                   APPLIEDNET

                         UNAPPROVED SHARE OPTION SCHEME

          Adopted by the Company on 25 September 1998 and amended by a
          Resolution of the Company in General Meeting on 4 March 1999


                                     [LOGO]



                                 Charles Russell
                              8-10 New Fetter Lane
                                 London EC4A 1RS

                               Ref: TL/MC/27424/1

<PAGE>



                                      INDEX


                          (FOR REFERENCE PURPOSES ONLY)




<TABLE>
<CAPTION>
RULE     HEADING                                              PAGE NUMBER
----     -------                                              -----------

<S>                                                           <C>
1.       DEFINITIONS AND INTERPRETATION                                 1

2.       GRANT OF OPTIONS                                               5

3.       EXERCISE AND LAPSE OF OPTIONS                                  7

4.       TAKEOVERS AND LIQUIDATIONS                                     9

5.       DIVIDENDS REORGANISATION AND VARIATION OF
         SHARE CAPITAL                                                 11

6.       MANNER OF EXERCISE OF OPTIONS                                 11

7.       TAXATION                                                      13

8.       ADMINISTRATION AMENDMENT AND TERMINATION                      13

SCHEDULE 1                                                             15

SCHEDULE 2                                                             17

SCHEDULE 3                                                             18
</TABLE>

<PAGE>

                             RULES OF THE APPLIEDNET

                         UNAPPROVED SHARE OPTION SCHEME


                          Adopted on 25 September 1998


1.       DEFINITIONS AND INTERPRETATION

1.1      In these Rules the following words and expressions shall (except where
         the context otherwise requires) have the following meanings:

         "3i"                           3i Group plc (registered number
                                        1142830);

         "Act"                          the Companies Act 1985;

         "AppliedNet Employees'
         Benefit Trust"                 the employees benefit trust constituted
                                        by a trust deed dated 16 September 1998
                                        and made between the Company and Applied
                                        Network Technology Limited;

         "Appropriate Period"           (i)   if the circumstances in Rule 4.1
                                              apply the period of six months
                                              beginning with the date on which
                                              the person making the offer has
                                              obtained Control of the Company
                                              and any condition subject to which
                                              the offer is made has been
                                              satisfied;

                                        (ii)  if the circumstances in Rule 4.2
                                              apply the period of six months
                                              beginning with the date on which
                                              the Reconstruction Scheme is
                                              sanctioned by the Court;

                                        (iii) if the circumstances in Rule 4.3
                                              apply the period during which the
                                              person remains bound or entitled
                                              to acquire any shares in the
                                              Company;

<PAGE>

         "Auditors"                     the auditors for the time being of the
                                        Company appointed pursuant to section
                                        384 of the Act and acting as experts and
                                        not as arbitrators;

         "Board"                        the Board of directors for the time
                                        being of the Company or a duly appointed
                                        committee thereof at which a quorum is
                                        present such committee to include either
                                        a director nominated by 3i or a majority
                                        of the non executive directors of the
                                        Company for the time being;

         "Company"                      AppliedNet Limited (registered in
                                        England and Wales number 1940849);

         "Control"                      the same meaning as in Section 840 of
                                        the Taxes Act and the expression
                                        "controlled" shall be construed
                                        accordingly;

         "Date of Adoption"             25 September 1998 being the date of
                                        adoption of this Scheme by the Company;

         "Date of Grant"                in relation to any Option means the date
                                        on which the Option was or is to be
                                        granted under the Scheme;

         "Eligible Employee"            (a)  an employee who is a director of a
                                             Participating Company who is
                                             required by his contract of
                                             employment to work for not less
                                             than 25 hours per week (excluding
                                             meal breaks); or

                                        (b)  any other employee of a
                                             Participating Company;

         "Market Value"                 in respect of any Share on any day means
                                        the market value of such a Share as
                                        determined by the Board,

<PAGE>

                                        to the extent practicable, in accordance
                                        with the provisions of part VIII of the
                                        Taxation of Chargeable Gains Act 1992;

         "Option"                       a right to acquire Shares granted (or to
                                        be granted) in accordance with these
                                        Rules and where the context so requires
                                        shall include New Options granted as
                                        consideration for the release of Old
                                        Options in accordance with Rule 4;

         "Option Holder"                any person who has been granted an
                                        Option or where the context requires a
                                        person becoming entitled to an Option in
                                        consequence of the death of an Option
                                        Holder;

         "Option Period"                in respect of an Option the exercise of
                                        which is subject to Performance
                                        Conditions the period between the Date
                                        of Grant and the first date on which the
                                        Option becomes exercisable in accordance
                                        with the Performance Conditions set by
                                        the Board pursuant to Rule 2.5;

         "Participating Company"        the Company and any other company of
                                        which the Company has Control and which
                                        is for the time being authorised by the
                                        Board with the consent of the Trustee to
                                        participate in this Scheme;

         "Performance Conditions"       any conditions imposed by the Trustee in
                                        consultation with the Board in respect
                                        of an Option pursuant to Rule 2.5;

         "Purchase Price"               the price at which each Share subject to
                                        an Option may be acquired on the
                                        exercise of that Option as determined by
                                        the Trustee in consultation with the
                                        Board but being (subject to Rules 4.4
                                        and 5) not lower than the

<PAGE>

                                        nominal value of a Share;

         "Record Date"                  in relation to the transfer of a Share
                                        following the exercise of an Option the
                                        date on which the Share is registered
                                        against the name of the Option Holder in
                                        the Company's register of members in
                                        respect of the Shares;

         "Rules"                        the rules of the Scheme as set out
                                        herein and as amended from time to time;

         "Scheme"                       the employees' share scheme constituted
                                        and governed by these Rules as from time
                                        to time amended;

         "Share"                        an Ordinary Share of 10p in the capital
                                        of the Company;

         "Subsisting Option"            an Option to the extent that it has not
                                        been exercised, lapsed or cancelled;

         "Tax Liability"                any liability of the Trustee, the
                                        Company or any company which Controls or
                                        is under the Control of the Company to
                                        account for any income tax National
                                        Insurance contributions or other tax
                                        arising in relation to the grant,
                                        exercise or other dealing with or in
                                        relation to an Option;

         "Taxes Act"                    the Income and Corporation Taxes Act
                                        1988;

         "Trustee"                      Applied Network Technology Limited
                                        (Company number 3364454) as the sole
                                        trustee of the AppliedNet Employees'
                                        Benefit Trust or the trustee or trustees
                                        or the AppliedNet Employees' Benefit
                                        Trust from time to time.

<PAGE>

1.2      Any reference in these Rules to any provision of any Act of Parliament
         or any subordinate legislation made pursuant to any Act of Parliament
         shall be deemed to be a reference to such Act of Parliament or
         subordinate legislation as amended modified or re-enacted (whether
         before or after the date hereof).

1.3      In these Rules words incorporating the masculine gender only include
         the feminine and neuter genders and words incorporating the singular
         number only include the plural and vice versa.

1.4      Rule headings are for ease of reference only and do not affect the
         construction or interpretation of these Rules.

1.5      References to writing shall include typewriting printing lithography
         photography and facsimile messages and other modes of reproducing words
         in a legible and non-transitory form.

2.       GRANT OF OPTIONS

2.1      Subject to the limitations and conditions hereinafter contained and
         unless prohibited by law the Board may at any time, in its absolute
         discretion, decided whether or not to request the Trustee to exercise
         its discretion to grant without consideration Options to any number of
         Eligible Employees and if the Board so decides, it shall recommend in
         writing to the Trustee the Eligible Employees to whom the Trustee
         should grant Options, the number of Shares over which options should be
         granted, the Purchase Price and any conditions which should apply to
         the Options provided that:

         2.1.1    no director or employee shall be entitled as of right to the
                  grant of an Option; and

         2.1.2    no Option may be granted under this Scheme after the tenth
                  anniversary of the Date of Adoption.

2.2      Immediately after the Board has made a recommendation to the Trustee
         pursuant to Rule 2.1 the Trustee shall decide whether or not to
         exercise its discretion to grant options to the relevant eligible
         employees and if it decides to exercise its discretion to grant the
         options the options shall be granted in accordance with these Rules.

2.3      An Option shall be granted by a resolution of the Trustee.

2.4      An Option Holder may, within a period of twenty one days immediately
         following the Date of Grant renounce by notice in writing to the
         Trustee his Option in respect of all or any part of the Shares subject
         of the Option.

<PAGE>

2.5      An Option may be granted so that its exercise in subject to such
         objective conditions ("Performance Conditions") (not inconsistent with
         the provisions of the Scheme) as the Trustee in consultation with the
         Board may in its absolute discretion think fit provided that any:

         2.5.1    such conditions shall not be inconsistent with the provisions
                  of the Scheme and may be waived or amended if an event occurs
                  which causes the Trustee in consultation with the Board to
                  consider that such Performance Conditions could not fairly or
                  reasonably be met, provided that any amended conditions should
                  be neither more difficult nor easier to satisfy than the
                  original Performance Conditions were intended to be at the
                  time of their imposition; and

         2.5.2    such conditions shall extend over such period determined by
                  the Trustee in consultation with the Board at the time of the
                  grant of the relevant options.

2.6      The Trustee in consultation with the Board may in its absolute
         discretion impose conditions on the grant of an Option restricting the
         number of Shares in respect of which an Option may be exercised on any
         one occasion.

2.7      As soon as reasonably practicable after Options have been granted the
         Trustee shall issue an Option certificate substantially in the form set
         out in Schedule 2 in respect of each Option which shall specify:

         2.7.1    the number of Shares comprised in the Option;

         2.7.2    the Date of Grant;

         2.7.3    the Purchase Price;

         2.7.4    details of any Performance Conditions; and

         2.7.5    the last date upon which notice to exercise the Option may be
                  given, being not later than the day immediately preceding the
                  tenth anniversary of the Date of Grant.

2.8      An Option shall be personal to the Option Holder and may not be
         transferred, assigned, charged, pledged or otherwise disposed of or
         dealt with. Any purported transfer, assignment, charge, pledge or other
         disposal or dealing with the Option shall cause the Option to lapse
         forthwith and each Option certificate shall carry a statement to this
         effect;

<PAGE>

2.9      No Option may be granted on any date if the number of Shares to be
         issued on its exercise in full, when aggregated with the number of:

                  (a)      Shares issued on the exercise of, or remaining
                           capable of being issued on the exercise of,
                           Subsisting Options granted under the Scheme during
                           the period of 10 years ending on that date; and

                  (b)      Shares issued on the exercise of, or remaining
                           capable of being issued, during the period of 10
                           years ending on that date by virtue of options or
                           other rights granted under any other employees' share
                           scheme (as defined in section 743 of the Act) adopted
                           by the Company

         would exceed 6.82 per cent of the number of Shares in issue on that
         date without the prior written consent of 3i and this rule shall only
         apply if and so long as 3i beneficially own any issued equity share
         capital of the Company.

3.       EXERCISE AND LAPSE OF OPTIONS

3.1      Subject to this Rule 3 and Rules 4 and 6 an Option may be exercised at
         any time on or after the third anniversary and before the tenth
         anniversary of its Date of Grant. An Option shall not be exercisable on
         or after the tenth anniversary of its Date of Grant under any
         circumstances whatsoever and every Subsisting Option shall lapse on the
         tenth anniversary of its Date of Grant.

3.2      The right to exercise an Option shall terminate immediately upon the
         Option Holder ceasing to be an Eligible Employee except where Rules 3.3
         or 3.4 apply.

3.3      Where an Option Holder dies his personal representatives may exercise
         any unexercised Options held by him within 12 months of the date of
         death.

3.4      Where an Option Holder ceases to be an Eligible Employee by reason of:

         3.4.1    injury or disability;

         3.4.2    redundancy;

         3.4.3    retirement;

         3.4.4    the company by which the Option Holder is employed ceasing to
                  be a Participating Company;

<PAGE>

         3.4.5    the transfer of the business in which the Option Holder is
                  employed to a person other than a Participating Company; or

         3.4.6    any other circumstances the Trustee, in consultation with the
                  Board, may determine not later than 30 days after the Option
                  Holder ceases to be an employee

         any Subsisting Option may be exercised no later than 6 months after the
         date of such cessation.

3.5      Save where Rules 3.3, 3.4 or 4 apply the exercise of any Option shall
         be conditional upon the relevant applicable Performance Conditions (if
         any) having been fulfilled to the satisfaction of
         the Trustee.

3.6      Where the exercise of any options is subject to the satisfaction of
         Performance Conditions the Trustee shall notify each relevant Option
         Holder in writing as soon as reasonably practicable after the expiry of
         the Option Period as to whether or not the Performance Conditions have
         been satisfied.

3.7      An Option shall lapse upon the earliest occurrence of any of the
         following events insofar as it has not been exercised:

         3.7.1    the tenth anniversary of the Date of Grant;

         3.7.2    immediately upon the Option Holder ceasing to be an Eligible
                  Employee except where Rules 3.3 or 3.4 apply provided that
                  where the Trustee makes no determination under Rule 3.4.6 the
                  Option shall be deemed to have lapsed upon the Option Holder
                  ceasing to be an Eligible Employee, but where a determination
                  is made, thereby allowing the Option to be exercised, Rule
                  3.7.4 shall apply;

         3.7.3    the first anniversary of the Option Holder's death;

         3.7.4    the expiry of 6 months from the date on which an Option Holder
                  ceases to be an Eligible Employee for one of the reasons
                  specified in Rule 3.4;

         3.7.5    the earliest date upon which the Option is expressed to lapse
                  under Rule 4;

         3.7.6    the date of an event specified in Rule 2.8; or

         3.7.7    the Option Holder being adjudicated bankrupt.

<PAGE>

4.       TAKEOVERS AND LIQUIDATIONS

4.1      If any person obtains Control of the Company as a result of making a
         general offer:

         4.1.1    to acquire the whole of the issued ordinary share capital of
                  the Company which is made on a condition such that if it is
                  satisfied the person making the offer will have Control of the
                  Company; or

         4.1.2    to acquire all the shares in the Company which are of the same
                  class as the Shares

         then subject to the remaining provisions of this Rule 4 any Subsisting
         Option may be exercised within the Appropriate Period and to the extent
         that it has not been exercised by the end of the Appropriate Period the
         Option shall lapse immediately upon the end of the Appropriate Period.

4.2      In the event that notice is given to the shareholders of the Company of
         a resolution to approve (subject to sanction by the Court) a compromise
         or arrangement proposed for the purposes of or in connection with a
         scheme for the reconstruction of the Company or its amalgamation with
         any other company or companies pursuant to Section 425 of the Act ("the
         Reconstruction Scheme") then any Option Holder may serve notice to
         exercise his Subsisting Options at any time during the Appropriate
         Period and to the extent that an Option has not been exercised by the
         end of the Appropriate Period it shall lapse immediately upon the end
         of the Appropriate Period.

4.3      If any person becomes bound or entitled to acquire Shares in the
         Company under Sections 428 to 430F of the Act then any Subsisting
         Option may be exercised at any time during the Appropriate Period and
         to the extent that it has not been exercised by the end of the
         Appropriate Period the Option shall lapse immediately upon the end of
         the Appropriate Period.

4.4      If as a result of the events specified in Rules 4.1 or 4.2 a company
         has obtained Control of the Company or if a company has become bound or
         entitled as mentioned in Rule 4.3 the Board shall seek the agreement of
         that other company ("the Acquiring Company") or a company which has
         Control over the Acquiring Company and if such agreement is obtained
         each unexercised Option ("Old Option") may within the Appropriate
         Period applicable to the relevant Rule be released in consideration of
         the grant of a new Option ("New Option") which satisfies the following
         conditions:

<PAGE>

         4.4.1    it is a right to acquire such number of such shares as has on
                  acquisition of the New Option an aggregate Market Value equal
                  to the aggregate Market Value of the Shares subject to the Old
                  Option on its disposal;

         4.4.2    it has a purchase or, as appropriate, subscription price per
                  share such that the aggregate price payable on complete
                  exercise equals the aggregate price which would have been
                  payable on complete exercise of the Old Option; and

         4.4.3    it is otherwise identical in terms to the Old Option.

         The New Option shall for all other purposes of this Scheme be treated
         as having been acquired at the same time as the Old Option in
         consideration of the release of which it is granted and where any New
         Options are granted pursuant to this Rule 4.4 Rules 3, 4, 5, 6 and 8
         and all definitions in Rule 1 appropriate those Rules shall in relation
         to the New Options be construed as if references to the Company and to
         the Shares were references to the company whose share capital includes
         shares over which the New Option has been granted and to the shares in
         that company but references to a Participating Company shall continue
         to be construed as if references to the Company were references to
         AppliedNet Limited. Where in accordance with this Rule 4.4 Old Options
         are released and New Options granted the New Options shall not be
         exercisable in accordance with Rules 4.1, 4.2 and 4.3 above by virtue
         of the event by reason of which the New Options were granted.

4.5      In the event that notice is given to the shareholders of the Company of
         a resolution to be proposed for the voluntary winding up of the Company
         any Option Holder may serve notice to exercise, his Subsisting Options
         at any time up to the passing of the resolution provided that any such
         notice to exercise shall only be effective if the resolution is passed.
         If such resolution is duly passed all Options shall, to the extent that
         they have not been exercised, lapse.

4.6      For the purposes of this Rule 4 other than Rule 4.4 a person shall be
         deemed to have obtained Control of a Company if he and others acting in
         concert with him have together obtained Control of it.

4.7      The exercise of an Option pursuant to the preceding provisions of this
         Rule 4 shall be subject to the provisions of Rule 6 below.

<PAGE>

5.       DIVIDENDS REORGANISATION AND VARIATION OF SHARE CAPITAL

         5.1      Any dividend (including a scrip dividend) received in respect
                  of a Share in respect of which an Option is exercised before
                  the Record Date applicable to that Share shall belong to the
                  Trustee who shall be entitled to deal with the dividend
                  (including a scrip dividend) as it thinks fit.

         5.2      If before a Record Date applicable to a Share the Company
                  grants to the holders of the Shares the right to acquire new
                  Shares the Trustee may decide in its absolute discretion
                  whether to take up or sell or allow to lapse all or some of
                  the rights and to the extent that the Trustee decides to sell
                  the rights any proceeds from sale shall belong to the Trustee
                  who shall be entitled to deal with them as it thinks fit.

         5.3      The Trustee may at its discretion hold (a) any Shares acquired
                  under a scrip dividend referred to in Rule 6.1, (b) any new
                  Share acquired pursuant to rights referred to in Rule 6.2 and
                  (c) any new Shares allotted to holders of Shares by the
                  Company by way of capitalisation as part of the holding of
                  Shares the subject of options subject to the Rules, mutatis
                  mutandis as if the same were Shares subject to options and
                  without prejudice to the generality of the foregoing subject
                  to the same conditions as to the exercise of options as the
                  Shares the subject of options to which those Shares relate.

         5.4      In the event of any variation in the share capital of the
                  Company by way of consolidation sub-division or reduction of
                  capital or otherwise by the Company the number of Shares
                  subject to any Option and the Purchase Price for each of those
                  Shares shall be adjusted by the Trustee after consulting with
                  the Board subject to written confirmation by the Auditors that
                  in their opinion such adjustment is fair and reasonable
                  provided that:

                  5.4.1    the aggregate amount payable on the exercise of an
                           Option in full is not increased; and

                  5.4.2    the Purchase Price for a Share is not reduced below
                           its nominal value.

6.       MANNER OF EXERCISE OF OPTIONS

6.1      Subject to the provisions of Rule 3 and this Rule 6 an Option may be
         exercised at any time in whole or in part but not unless the Trustee

<PAGE>

         otherwise permits in respect of less than 10 per cent of the Shares the
         subject of the Option unless such smaller percentage represents all the
         remaining Shares under the Option by the Option Holder or (as the case
         may be) his personal representatives giving a notice of exercise to the
         Trustee substantially in the form set out in Schedule 3 accompanied by
         the appropriate payment and the relevant Option certificate and shall
         be effective on the date of its receipt by the Trustee ("exercise
         date") provided that wherever relevant the Performance Conditions shall
         first have been fulfilled to the satisfaction of the Trustee.

6.2      The Trustee shall or shall procure that the Board shall as soon as
         reasonably practicable after the exercise date send to the Option
         Holder concerned a deed of adherence to the extent required to be
         executed pursuant to clause 8.2 of the Subscription Agreement dated 6
         December 1995 relating to the Company (formerly known as Applied
         Network Technology Limited) and made between Coinshire Limited and
         Others (1), James MacFarlane and Another (2), Michael Brooke (3) and
         the Company and the Option Holder shall execute and return such deed of
         adherence to the Trustee within 14 days on its receipt.

6.3      No Option shall be capable of being quoted or dealt in on any stock
         exchange.

6.4      Subject to Rule 7.3 Shares shall be transferred by the Trustee pursuant
         to a notice of exercise within 42 days of the exercise date or if later
         within 21 days of the date on which the Trustee receives a duly
         executed deed, referred to in Rule 6.2.

6.5      When an Option is exercised only in part the balance shall remain
         exercisable on the same terms as originally applied to the whole Option
         and a new Option certificate representing the balance shall be issued
         by the Trustee as soon as possible after the partial exercise.

6.6      It shall be a condition of participation in the Scheme that in the
         event of an Option Holder ceasing to be an Eligible Employee (for
         whatever reason) he shall not be entitled to any compensation
         whatsoever by reason of any termination or alteration of rights or
         expectations under the Scheme whether such compensation is claimed by
         way of damages for wrongful dismissal or breach of contract or for loss
         of office or otherwise howsoever. Participation in this Scheme by an
         Option Holder is a matter entirely separate from any pension right or
         entitlement he may have and from his terms or conditions of employment
         and participation in this Scheme shall in no respects whatever affect
         in any way an Option Holder's pension rights or entitlement or terms or
         conditions of employment.

<PAGE>

7.       TAXATION

7.1      If a Tax Liability arises in respect of an Option the Company shall be
         entitled to deduct (and if appropriate pay to the Trustee) to the
         extent permitted by law such amount(s) from any payment due to be made
         by the Company or any company which controls or is controlled by the
         Company to or in respect of the Option Holder in respect of that Option
         during the same calendar month or other relevant period in which the
         event occurs or in any subsequent calendar month or such relevant
         period in order to satisfy and discharge the Tax Liability whether or
         not such payment is of an income or capital nature.

7.2      If and to the extent the Tax Liability referred to in Rule 7.1 is of
         income tax which exceeds the amount from which deductions in respect
         thereof can be made in any one period referred to in Rule 7.1 in
         respect of the Option Holder concerned, that Option Holder shall pay or
         reimburse the Company or the appropriate company which controls or is
         controlled by the Company or as appropriate the Trustee for the amount
         of the excess on demand or within such period as may be specified in
         any written notice given by the Company or as appropriate the Trustee.

7.3      Where a Tax Liability arises in respect of the exercise of an Option,
         the Trustee may, without prejudice to Rule 7.1, by written notice to
         the Option Holder concerned nominate as his bare trustee any person
         (including the Trustee) (the "Bare Trustee") to sell such number of
         Shares to be transferred upon the exercise of the Option as may be
         required in order to discharge the Tax Liability and any other
         liability (including costs) connected with the said sale and the Bare
         Trustee shall pay an amount equal to the Tax Liability to the Company
         or as appropriate the Trustee and otherwise discharge any other said
         liability to the extent that the net proceeds from the said sale
         permit.

8.       ADMINISTRATION AMENDMENT AND TERMINATION

8.1      The Scheme shall be administered by the Trustee in consultation with
         the Board whose decision on all disputes shall be final.

8.2      The Board may with the consent of the Trustee from time to time make
         amendments to these Rules provided that:

         8.2.1    no amendment may detrimentally affect an Option Holder as
                  regards any Subsisting Option held by him on the date of the
                  amendment being made except with the consent in writing of
                  such Option Holders who, assuming they exercise their Options
                  in full, would thereby become entitled to not less than three
                  quarters in nominal amount of all the Shares which would fall
                  to be allotted upon exercise in full of all Subsisting
                  Options; and

<PAGE>

         8.2.2    except with the prior sanction of the Company in general
                  meeting no such modification or variation shall extend the
                  class of person eligible for the grant of Options or alter to
                  the advantage of Option Holders (present or future) Rules 2.1,
                  2.5, 5 or the definitions of "Eligible Employee",
                  "Participating Company" or "Purchase Price" except for minor
                  amendments to benefit the administration of the Scheme, to
                  comply with or take account of any proposed or existing
                  legislation or law or to obtain or maintain favourable tax,
                  exchange control or regulatory treatment for Option Holders
                  (present or future) or for any Participating Company;

         8.2.3    except with the approval of 3i, no amendment shall be made to
                  the material advantage of Option Holders (present or future);

         8.2.4    written notice of any alteration made in accordance with this
                  Rule 8.2 shall be given to all Option Holders.

8.3      The cost of establishing and operating the Scheme shall be borne by the
         Participating Companies in such proportions as the Board shall
         determine.

8.4      The Company in general meeting or the Board with the consent of the
         Trustee may at any time resolve to terminate this Scheme in which event
         no further Options shall be granted but the provisions of this Scheme
         shall continue in force in relation to Subsisting Options.

8.5      Any notice to be given pursuant to the terms of these Rules must be
         given in writing to the party due to receive such notice at (in the
         case of the Company or the Trustee) its registered office from time to
         time or (in the case of an individual) his address as notified to the
         Company or the Trustee from time to time. Notice must be delivered
         personally or sent by first class pre-paid recorded delivery or
         registered post (air mail if overseas) or by facsimile transmission and
         shall be deemed to be given in the case of delivery on delivery and in
         the case of posting (in the absence of evidence of earlier receipt)
         within 48 hours after posting (6 days if sent by air mail) and in the
         case of facsimile transmission on completion of transmission.

8.6      For the avoidance of doubt, the Rules do not create any contractual
         relationship between the Company and the Trustee or limit the Trustee's
         discretion.

<PAGE>

                                   SCHEDULE 1

                                 LETTER OF GRANT

                             [TRUSTEE'S LETTERHEAD]


                                                              Date
To:      Employee




Dear [EMPLOYEE'S NAME]


THE APPLIEDNET UNAPPROVED SHARE OPTION SCHEME
("THE SCHEME")


1        The Trustee of the AppliedNet Employees' Benefit Trust has granted you
         an option over [ ] Ordinary shares ("Shares") in the capital of
         AppliedNet Limited ("the Company") under and subject to the rules of
         the Scheme ("the Option") which was approved and adopted by a written
         resolution of the shareholders of the Company on 25 September 1998. A
         copy of the rules of the Scheme is enclosed herewith.

2        The Purchase price per Share payable on the exercise of the Option is [
         ]p. This Purchase price is subject to adjustment under Rule 5 of the
         Scheme if the Company's share capital is altered or re-organised, in
         specified ways.

3        An Option certificate for your option is enclosed herewith.

4        Under the rules of the Scheme ("the rules"), except in certain
         circumstances the Option may not be exercised earlier than three years
         from the Date of Grant.

[5       The Option may not be exercised unless the Performance Conditions
         attached to this letter have been fulfilled to the satisfaction of the
         Board except in certain circumstances permitted by the rules.]

6        Please note that under Rule 6.2 you will be required to execute the
         deed of adherence referred to there when you exercise the option.

7        You may renounce the Option in whole or in part by signing (in the
         presence of a witness) and returning this letter together with the
         enclosed

<PAGE>

         Option certificate to me before [date 21 days after the Date of Grant].
         If you wish to keep your option you do not need to take any further
         action.


Yours faithfully,



 ...................
TRUSTEE

[NOTE:    Any applicable Performance Conditions must be attached to this letter]


                                  RENUNCIATION


I [NAME OF EMPLOYEE] hereby renounce the Option [in whole]/[in respect of
Shares]. I am returning with this letter the certificate in respect of the
Option referred to above.



SIGNED as a DEED by
[NAME]
in the presence of:


Signature:

Name:

Address:


Occupation:

<PAGE>

                                   SCHEDULE 2

                       APPLIED NETWORK TECHNOLOGY LIMITED

                           OPTION CERTIFICATE NUMBER:



                      INCORPORATED UNDER THE COMPANIES ACTS

              REGISTERED IN ENGLAND AND WALES UNDER NUMBER 3364454

                 TOTAL NUMBER OF ORDINARY SHARES OF 10p EACH IN
                               APPLIEDNET LIMITED

                            INCLUDED IN THIS OPTION              (NUMBER)



This is to certify that (NAME) was granted an Option on the       day of
to purchase        Ordinary Shares of 10p each in the capital of AppliedNet
Limited ("Shares") at a Price of      per Share giving an aggregate Purchase
Price of  ?  upon the terms of the AppliedNet Unapproved Share Option Scheme
("the Scheme"). The Option may be exercised only at the times and in the
circumstances and manner permitted by the rules of the Scheme and cannot be
transferred, assigned, charged, pledged or otherwise disposed of or dealt with.
Any purported transfer, assignment, charge, pledge or other disposal or dealing
with shall cause the Option to lapse forthwith.

THE COMMON SEAL of
APPLIED NETWORK
TECHNOLOGY LIMITED
was affixed to this deed
in the presence of:

                                    Director

                                    Secretary


Date .........................

NOTE:

(1)      A form of exercise of the Option is printed overleaf. This certificate
         must be surrendered on the exercise, in whole or in part, of the
         Option.

(2)      The number and/or description of shares covered by this Option and/or
         the Purchase Price may be varied in accordance with the Rules of the
         Scheme.

(3)      Notice to exercise this Option must be given by [DATE NO LATER THAN THE
         DAY BEFORE THE TENTH ANNIVERSARY OF THE DATE OF GRANT].

[(4)     The right to exercise this Option shall be subject to the due
         satisfaction of the Performance Conditions specified on the attached
         sheet.]

<PAGE>

                                   SCHEDULE 3

                                FORM OF EXERCISE

                (TO BE PRINTED ON REVERSE OF OPTION CERTIFICATE)
                 PLEASE READ THE NOTES AT THE FOOT OF THIS FORM
                         CAREFULLY BEFORE COMPLETING IT


                                FORM OF EXERCISE

The Trustee
Applied Network Technology Limited

I, the undersigned, having become entitled so to do hereby exercise the Option
referred to overleaf in respect of       Shares comprised in the Option upon the
terms of the AppliedNet Unapproved Share Option Scheme and agree to accept the
Shares to be transferred pursuant to this Form of Exercise subject to and in
accordance with the Memorandum and Articles of Association of AppliedNet Limited
and hereby request you to place my name on the Register of Members in respect
thereof.

I enclose a remittance for  ?    being the aggregate Purchase Price payable for
the Shares in respect of which the Option is now exercised at the Purchase Price
per Share specified overleaf.

If applicable, I hereby request you to despatch a balance certificate for the
Option to purchase for any Shares included in the Option referred to overleaf
and not exercised on this occasion, by post at my risk to the address mentioned
below.


SIGNATURE .....................................

SURNAME ......................................

FORENAME(S) .................................

ADDRESS .......................................

 ...................................................

Note:

(1)      Although the Option referred to overleaf is personal to the holder
         named overleaf it may be exercised by his personal representative(s) if
         he dies while it is still capable of exercise provided the personal
         representative(s) does/do so before the expiration of twelve months
         from the date of the holder's death or ten years from the date of its
         grant (if sooner). If there are more than one, each of the personal
         representatives must sign this form.

(2)      Options must be exercised in respect of whole numbers of Shares. Please
         indicate the number of Shares you wish to purchase on this occasion
         which must not exceed the number of Shares comprised in the Option. In
         any event you will be deemed to have exercised your rights in respect
         of that whole number of Shares which can be acquired with the moneys
         represented by your remittance.

(3)      The remittance should be for an amount equal to the aggregate Purchase
         Price, being the Purchase Price per Share shown overleaf, multiplied by
         the number of Shares applied for.