Document:

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                                                                     EXHIBIT 4.3

                               OCCAM NETWORKS INC.

                                 1999 STOCK PLAN

                             STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the 1999 Stock Plan
(the "Plan") shall have the same defined meanings in this Stock Option Agreement
("Option Agreement").

I.   NOTICE OF STOCK OPTION GRANT
     ----------------------------

     ((Name))

     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                             ((Grant_No))

     Date of Grant                            ((Grant_Date))

     Vesting Commencement Date                ((VCD))

     Exercise Price per Share                 ((Price_per_Share))

     Total Number of Shares Granted           ((Total_Shares))

     Total Exercise Price                     ((Total_Price))

     Type of Option:                           X   Incentive Stock Option
                                              ---

                                              ____ Non Statutory Stock Option

     Term/Expiration Date:                    ((Exp_Date))

     Exercise and Vesting Schedule:
     -----------------------------

     So long as Optionee is a Service Provider, this Option shall be exercisable
in whole or in part, and shall vest according to the following vesting schedule:

     25% of the Shares subject to the Option shall vest on the one-year
anniversary of the Vesting Commencement Date, and 1/48th of the shares subject
to the Option shall vest each month thereafter, subject to the Optionee
continuing to be a Service Provider on such dates.

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     Termination Period:
     ------------------

     This Option may be exercised, to the extent it is then vested, for three
months after Optionee ceases to be a Service Provider. Upon death or Disability
of the Optionee, this Option may be exercised, to the extent it is then vested,
for 12 months after Optionee ceases to be Service Provider. In no event shall
this Option be exercised later than the Term/Expiration Date as provided above.

II.  AGREEMENT
     ---------

     1. Grant of Option. The Plan Administrator of the Company hereby grants to
        ---------------
the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and 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 as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").

2.   Exercise of Option.
     ------------------

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

        (b) Method of Exercise. This Option shall be 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 with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by 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 the aggregate Exercise
Price.

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

     3. Optionee's Representations. In the event the Shares have not been
        --------------------------
registered under the Securities Act of 1933, as amended (the "Securities Act"),
at the time this Option is exercised, the Optionee shall, if required by the
Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B.
                        ---------

                                      -2-

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     4. Lock-Up Period. Optionee hereby agrees that Optionee shall not offer,
        --------------
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Common Stock (or other securities) of the Company or enter into any swap,
hedging or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of any Common Stock (or other
securities) of the Company held by Optionee (other than those included in the
registration) for a period specified by the representative of the underwriters
of Common Stock (or other securities) of the Company not to exceed 180 days
following the effective date of any registration statement of the Company filed
under the Securities Act.

     Optionee agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, Optionee shall provide,
within ten days of such request, such information as may be required by the
Company or such representative in connection with the completion of any public
offering of the Company's securities pursuant to a registration statement filed
under the Securities Act. The obligations described in this Section shall not
apply to a registration relating solely to employee benefit plans on Form S-1 or
Form S-8 or similar forms that may be promulgated in the future, or a
registration relating solely to a Commission Rule 145 transaction on Form S-4 or
similar forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of such Market
Standoff Period. Any transferee of the Option or shares acquired pursuant to the
Option shall be bound by this Section.

     5. 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:

        (a) cash;

        (b) check;

        (c) consideration received by the Company under a formal cashless
exercise pro gram adopted by the Company in connection with the Plan; or

        (d) 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
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.

     6. Restrictions on Exercise. This Option may not be exercised until such
        ------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

                                      -3-

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     7. 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 Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     8. 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.

     9. Tax Consequences. Set forth below is a brief summary as of the date of
        ----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. 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.

        (a) Exercise of ISO. If this Option qualifies as an ISO, there will be
            ---------------
no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

        (b) Exercise of ISO Following Disability. If the Optionee ceases to be
            ------------------------------------
an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.

        (c) Exercise of Nonstatutory Stock Option. There may be a regular
            -------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
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 Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's 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.

        (d) Disposition of Shares. In the case of an NSO, if Shares are held 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. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the Date of Grant,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the
date of exercise, or (ii) the sale price of the Shares. Different rules may
apply if the Shares are subject to a substantial risk of forfeiture

                                      -4-

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(within the meaning of Section 83) at the time of purchase. Any additional gain
will be taxed as capital gain, short-term depending on the period that the ISO
Shares were held.

          (e)   Notice of Disqualifying Disposition of ISO Shares. If the Option
                -------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee may be subject to income tax
withholding by the Company on the compensation income recognized by the
Optionee. Optionee agrees to make appropriate arrangements with the Company (or
the Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state, local and foreign income and employment tax withholding
requirements applicable to the Option exercise. Optionee acknowledges and agrees
that the Company may refuse to honor the exercise and refuse to deliver Shares
if such withholding amounts are not delivered at the time of exercise.

     10.  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 Option Agreement is governed by the internal substantive laws but
not the choice of law rules of California. In the event that any provision
hereof becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Option Agreement will continue in full
force and effect.

     11.  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 (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING 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 IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

                                      -5-

<PAGE>

     Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

OPTIONEE:                                         OCCAM NETWORKS INC.
______________________________                    ______________________________
(Name)                                            By:
                                                  ______________________________
                                                  Title:

                                       -6-

<PAGE>

                                    EXHIBIT A
                                    ---------

                                 1999 STOCK PLAN

                                 EXERCISE NOTICE

Occam Networks Inc.
77 Robin Hill Road
Santa Barbara, CA 93117
Attention:  President

          1.  Exercise of Option.  Effective as of today, ___________, ____, the
              ------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
________________shares of the Common Stock (the "Shares") of Occam Networks Inc.
under and pursuant to the 1999 Stock Plan (the "Plan") and the Stock Option
Agreement dated(Grant_Date)(the "Option Agreement").

          2.  Delivery of Payment. Purchaser herewith delivers to the Company
              -------------------
the full purchase price of the Shares, as set forth in the Option Agreement, and
any and all withholding taxes due in connection with the exercise of the Option.

          3.  Representations of Optionee. Optionee acknowledges that Optionee
              ---------------------------
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 of the Shares (as
              ---------------------
evidenced by the appropriate 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 Shares shall be issued to
the Optionee as soon as practicable after the Option is exercised. No adjustment
shall 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 12 of the Plan.

          5.  Company's Right of First Refusal. Before any Shares held by
              --------------------------------
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").

              (a)  Notice of Proposed Transfer. The Holder of the Shares shall
                   ---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the

<PAGE>

Shares (the "Offered Price"), and the Holder shall offer the Shares at the
Offered Price to the Company or its assignee(s).

          (b)  Exercise of Right of First Refusal. At any time within 30 days
               ----------------------------------
after receipt of the Notice, the Company and/or its assignee(s) may, by giving
written notice to the Holder, elect to purchase all, but not less than all, of
the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

          (c)  Purchase Price. The purchase price ("Purchase Price") for the
               --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

          (d)  Payment. Payment of the Purchase Price shall be made, at the
               -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

          (e)  Holder's Right to Transfer. If all of the Shares proposed in the
               --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

          (f)  Exception for Certain Family Transfers. Anything to the contrary
               --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

          (g)  Termination of Right of First Refusal. The Right of First Refusal
               -------------------------------------
shall terminate as to any Shares upon the earlier of (i) the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or (ii) a Change in
Control in which the successor corporation has equity securities that are
publicly traded.

                                       -2-

<PAGE>

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

     7.   Restrictive Legends and Stop-Transfer Orders.
          --------------------------------------------

          (a) Legends. Optionee understands and agrees that the Company shall
              -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THEREOF OR UNLESS THE SEAL IS
OTHERWISE EXEMPT FROM REGISTRATION. THE ISSUER MAY REQUIRE A WRITTEN OPINION OF
COUNSEL (FROM COUNSEL ACCEPTABLE TO THE ISSUER) SATISFACTORY TO THE ISSUER, TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
SALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER. THIS CERTIFICATE MUST BE
SURRENDERED TO THE ISSUER OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE
SALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF ANY INTEREST IN ANY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE.

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

          (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
              ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) Refusal to Transfer. The Company shall not be required (i) to
              -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice, or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

                                      -3-

<PAGE>

     8.   Successors and Assigns. The Company may assign any of its rights under
          ----------------------
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.

     9.   Interpretation.  Any dispute regarding the interpretation of this
          --------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.

     10.  Governing Law; Severability. This Exercise Notice is governed by the
          ---------------------------
internal substantive laws, but not the choice of law rules, of California. In
the event that any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Exercise
Notice will continue in full force and effect.

     11.  Entire Agreement. The Plan and Option Agreement are incorporated
          ----------------
herein by reference. This Exercise Notice, 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 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.

Submitted by:                      Accepted by:

OPTIONEE:                          OCCAM NETWORKS INC.
_____________________________      ______________________________
((Name))                           By
                                   ______________________________
                                   Its

Address:                           Address:
-------                            -------

_____________________________      77 Robin Hill Road
                                   Santa Barbara, CA 93117
_____________________________      Attention:  President

                                   _______________________________
                                   Date Received

                                      -4-

<PAGE>

                                    EXHIBIT B
                                    ---------

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE            :    ((Name))

COMPANY             :    OCCAM NETWORKS INC.

SECURITY            :    COMMON STOCK

AMOUNT              :

DATE                :

          In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:

          (a)  Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

          (b)  Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.

          (c)  Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities"

<PAGE>

acquired, directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions. Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of the grant of the
Option to the Optionee, the exercise will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, 90
days thereafter (or such longer period as any market stand-off agreement may
require) the Securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including: (1)
the resale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than one year, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d)  Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

     (e)  Optionee understands that the certificate evidencing the Securities
will be imprinted with a legend which prohibits the transfer of the Securities
without the consent of the Commissioner of Corporations of California. Optionee
has read the applicable Commissioner's Rules with respect to such restriction, a
copy of which is attached.

                                          Signature of Optionee:

                                          ____________________________

                                          Date:______________,________

                                      -2-DATED _____________________ 2001

                           AURTHORISZOR INC.       (1)

                           and

                           PAUL AYRES              (2)

                           ___________________________

                           SERVICE AGREEMENT
                           ___________________________

Hammond Suddards Edge
2 Park Lane Leeds LS3 1ES DX 26441 Leeds
Telephone +44 (0)113 284 7000
Fax +44 (0)113 284 7001                              www.hammondsuddardsedge.com
                                                     ---------------------------

Reference KRP

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
<S>      <C>                                                                                                    <C>

1        INTERPRETATION...........................................................................................1
2        APPOINTMENT..............................................................................................2
3        TERM/NOTICE..............................................................................................2
4        DUTIES/POWERS/LOCATIONS..................................................................................2
5        OBLIGATIONS..............................................................................................3
6        INFORMATION..............................................................................................4
7        REMUNERATION.............................................................................................4
8        EXPENSES.................................................................................................4
9        COMPANY CAR..............................................................................................5
10       OTHER BENEFITS...........................................................................................5
11       HOLIDAYS.................................................................................................5
12       SECRETS AND CONFIDENTIAL INFORMATION.....................................................................5
13       COMPANY PROPERTY.........................................................................................6
14       INTELLECTUAL PROPERTY....................................................................................7
15       GROUNDS FOR TERMINATION..................................................................................8
16       ABSENCE/SICKNESS/MEDICAL EXAMINATION.....................................................................9
17       PROVISIONS AFTER TERMINATION............................................................................10
18       APPLICATION OF RESTRICTIONS.............................................................................11
19       DIRECTORSHIP............................................................................................12
20       DATA PROTECTION.........................................................................................12
21       NOTICES.................................................................................................12
22       SCHEDULE................................................................................................12
23       OTHER AGREEMENTS........................................................................................13
24       CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999............................................................13
25       ENFORCEMENT OF RIGHTS...................................................................................13
26       APPLICABLE LAW..........................................................................................13
SCHEDULE 1.......................................................................................................14

</TABLE>

                                       i

<PAGE>

DATE OF SERVICE AGREEMENT                                                   2001

PARTIES

(1)  AUTHORISZOR  INC Windsor  House,  Cornwall  Road,  Harrogate,  HG1 2PW (the
     "Company")

(2)  PAUL AYRES of Fiat 1, Camperdown  House, Alma Road,  Windsor,  SL4 3HQ (the
     "Executive")

IT IS AGREED THAT:

1    INTERPRETATION

     In this agreement the following  words and phrases shall have the following
     meanings:

     "Board"                          means the board  of directors for the time
                                      being of the Company or any duly appointed
                                      committee of such board.

     "Business                        Hours" means the hours  between 9:00am and
                                      5:30pm Monday to Friday (excluding Bank or
                                      other Public Holidays in England) and such
                                      further time as shall be necessary for the
                                      proper performance by the Executive of his
                                      duties under this Agreement.

     "ERA"                            means the Employment Rights Act 1996.

     "FS Act"                         means that Financial Services Act 1986 and
                                      every statutory  modification or re-enact-
                                      ment of  such Act  for the  time being  in
                                      force.

     "Group"                          means the-Company and any subsidiaries of-
                                      the Company  (as defined in Section 736 of
                                      the Companies-Act 1985) and the expression

                                      "Members of the  Group" and  "Group" shall
                                      be construed accordingly.

     "Non-Statutory Holidays"         means any holiday  to which the  Executive
                                      is entitled other than Statutory Holidays.

                                       1

<PAGE>

     "Shareholders"                   Means  the   shareholders   of  the  share
                                      capital in the Company.

     "Starting Date"                  means the date hereof.

     "WTR"                            means the Working Time Regulations 1998.

1.1  A reference to a statute or statutory provision will (where the context -so
     admits and unless otherwise expressly provided) include a reference to that
     statute or provision as from time to time amended, consolidated,  extended,
     modified  or  re-enacted   (whether  before  or  after  the  date  of  this
     Agreement).

2    APPOINTMENT

     The Company  will employ the  Executive  and the  Executive  will serve the
     Company in the  capacity of Chief  Executive  Officer as from the  Starting
     Date upon the terms and conditions set out in this  Agreement,  but for the
     avoidance  of  doubt  the  Executive's   employment  with  the  Company  is
     continuous from 9 October 2000.

3    TERM/NOTICE

3.1  The  Executive's  employment  under  this  agreement  will  subject  to any
     termination in accordance with the terms of this agreement, continue unless
     and until it is terminated by:

     (a)  The Company given to the Executive 12 months prior written notice;

     (b)  The Executive given to the Company 12 months prior written notice;

3.2  The Executive's normal retirement age is 65- and the Executive's employment
     will automatically terminate without notice on the last day of the month in
     which he attains that age.

3.3  For the purposes of Part II of the ERA, the Executive hereby authorises the
     Company  to deduct  from his pay any sums  which he may owe to the  Company
     including, without limitation, any overpayments or loans made to him.

4    DUTIES/POWERS/LOCATIONS

4.1  The  Executive  will  undertake  such  duties and  exercise  such powers in
     relation to the  Company and any member of its Group and their  business as
     the Board will from time to time specify or direct,  or as otherwise agreed
     between the Company and the. Executive.

4.2  The  Executive's  usual place of work will be at the registered  office (or
     such other address as may be the Company's  registered  office from time to
     time) but the Executive may be required to travel in the United  Kingdom or
     overseas as he may determine from time to time should the need arise in the
     performance of his duties under this Agreement.

                                       2

<PAGE>

4.3  Once notice to terminate the  Executive's  employment has been given by the
     Company or by the  Executive  pursuant  to clause  3.1 or if the  Executive
     seeks to  resign  without  notice  or by giving  shorter  notice  than that
     required by clause 3.1, for a period to be determined  by the Company,  the
     Company:

     (a)  will be under no  obligation to vest in or assign to the Executive any
          powers or duties or to provide any work for the Executive; and

     (b)  may prohibit contact between the Executive and clients or suppliers of
          the Company; and

     (c)  may exclude the Executive from any premises of the Company.

PROVIDED ALWAYS that salary,  any bonus and all other contractual  benefits will
continue to be payable or provided by the Company  after  exercise of its rights
pursuant to (a),  (b) and/or (c) of this  clause  4.3.  This clause 4.3 will not
affect the general right of the Company to suspend for good cause nor affect the
rights and  obligations  of the  parties  prior to the service of such notice or
purported resignation.

4.4  For the avoidance of doubt if the Company exercises its rights under clause
     (a), (b) and/or (c) of this clause 4.3, the Executive acknowledges that the
     implied  term of trust and  confidence  and duty of good  faith owed by the
     Executive to the Company will continue to apply.

5    OBLIGATIONS

5.1  Subject to the  provisions  of clause 5.3,  the  Executive  will during the
     continuance of this Agreement, unless prevented by ill-health or accident:

     (a)  devote  the whole of his time,  skill,  ability  and-attention  during
          Business Hours to the business of the Company and the-Group;

     (b)  in all respects  conform to and comply with the  reasonable and lawful
          directions and regulations given and made by the Board;

     (c)  will  faithfully  serve the  Company  and the Group and use his utmost
          endeavours to promote its interests.

5.2  The Executive will not during the continuance of this Agreement without the
     previous  consent in writing of the  majority  of the  Shareholders  either
     solely,  or jointly with any other  person,  firm or company,  whether as a
     director, manager, employee, agent or consultant for any other person, firm
     or  company  either  directly  or  indirectly  carry on or be engaged in or
     interested  (whether as  shareholder or otherwise) in any business which is
     wholly or partly in competition with any business carried on by the Company
     or provide any services to any third party PROVIDED THAT nothing  contained
     in this  Agreement  will either  preclude  the  Executive  from holding any
     shares or loan capital (not exceeding  three per cent of the shares or loan
     capital of the class  concerned  for the time

                                       3

<PAGE>

     being  issued) in any company  whose shares or loan capital of the class or
     classes so held are quoted on any recognised investment exchange throughout
     the  world or which  have  been  admitted  to  trading  on the  Alternative
     Investment  Market of the London Stock Exchange or any overseas  equivalent
     thereof, (unless the Board otherwise reasonably requires on the ground that
     such company carries on a business competitive with that of the Company and
     such  holding by the  Executive  would be  detrimental  to the  Company) or
     preclude the Executive from investing (with the same 3% limit) in the units
     of any unit trust or  business  expansion  or similar  fund whose units are
     quoted on any recognised  investment exchange throughout the world or which
     have been admitted to trading on the Alternative  Investment  Market of the
     London Stock Exchange or any overseas  equivalent thereof (unless the Board
     otherwise  reasonably  requires  on the  grounds  that such  holding by the
     Executive would be detrimental to the Company).

5.3  The Company and the  Executive  hereby  confirm that for the purpose of WTR
     (which  provide  (save for certain  exceptions)  that average  working time
     should not exceed 48 hours for each 7 day  period) the  Executive  shall be
     regarded as having autonomous decision taking powers.

6    INFORMATION

     The Executive will at all times upon reasonable  written notice give to the
     Shareholders  (in  writing if so  requested)  all  information,  advice and
     explanations  as it may  reasonably  require  in  connection  with  matters
     relating to his employment  under this Agreement or in connection  with the
     business of the Company and the Group.

7    REMUNERATION

7.1  The Executive will be entitled by way of remuneration for his services to a
     salary of  (pound)300,000  per annum.  Such salary shall accrue from day to
     day and shall be paid monthly in arrears on or before the end of each month
     by direct payment into the Executive's bank account.

7.2  The  Executive's  basic  salary  shall  be  reviewed  by  the  Compensation
     Committee.

8    EXPENSES

     The Executive will make such journeys on the business of the Company as may
     be reasonably  required of him in the proper  performance of his duties set
     out in this Agreement. All reasonable travelling (including mileage), hotel
     and other expenses properly incurred by him, and supported by receipts,  in
     the  performance of his business duties under this Agreement will be repaid
     to him by the Company.

                                       4

<PAGE>

9    COMPANY CAR

     The Company  shall pay the  Executive a taxable car allowance of (pound)900
     per month,  which shall be  sufficient  to enable the  Executive to lease a
     motor car of a type  that the  Board  shall  consider  appropriate  for the
     Executive  having regard to the capacity in which he is employed for use in
     the performance of his duties.

10   OTHER BENEFITS

     The Company shall provide to the  Executive,  benefits at a level the board
     reasonably  determines as  commensurate  to the position of the  Executive,
     having regard to the capacity in which he is employed.  This will include a
     contribution of 7.5% into the  Executive's  personal  pension scheme,  BUPA
     Health  Insurance for the  Executive/  spouse/dependant  children under 21,
     death in service benefit of four times current salary, and Permanent Health
     Insurance  of up to 75% of the  Executive's  annual  current  salary at the
     time, subject to a 13 week qualifying period.

11   HOLIDAYS

11.1 The  Company's  holiday  year  runs  from 1  January  to 31  December.  The
     Executive  will in addition  to bank and public  holidays be entitled to 25
     days holiday in any holiday year. Holidays shall accrue on a pro rata basis
     throughout  each  holiday  year.  Holidays  are to be taken at such time or
     times as may be agreed with the Board. Any holiday  entitlement not used in
     any holiday  year  cannot,  without the  express  consent of the Board,  be
     carried forward to the next holiday year.

11.2 On termination of the Executive's  employment,  the Executive's entitlement
     to accrued  holiday pay will be directly in proportion  to the  Executive's
     service during the holiday year in which the termination  took place. If on
     termination of employment the Executive has taken holidays in excess of his
     accrued  entitlement  the  Company  will be  entitled  to deduct  from sums
     payable to the  Executive pay in respect of each holiday taken in excess of
     the Executive's accrued entitlement.

12   SECRETS AND CONFIDENTIAL INFORMATION

12.1 The  Executive   acknowledges  that  the  business  of  the  Company  is  a
     specialised  and  competitive  business  and that  during the course of his
     employment  with the  Company he will have  access to and have an  intimate
     knowledge of the Group's trade secrets and confidential  information  which
     confidential  information  shall be taken to include all  information  made
     available to the Company by third parties subject to any express or implied
     duty to keep the same confidential. The Executive further acknowledges that
     the  disclosure of any trade  secrets or  confidential  information  to any
     actual or potential  competitors of the Company would place the Company and
     Group at a serious  competitive  disadvantage  and would do serious damage,
     financial and/or otherwise to its,

12.2 For the purposes of clause 12.1  "confidential  information"  shall include
     but not limited to the following (whether recorded in writing,  on computer
     disc or in any other manner):

                                       5

<PAGE>

     internal  management  accounts;   customer  data,  investment  and  pricing
     policies;   product  performance  data;   documents  disclosing  names  and
     addresses of customers  and  suppliers of the Company;  the-person  at such
     customer  or  supplier to contact;  the  requirements  of such  customer or
     supplier; discounts offered by the Group; computer passwords.

12.3 By reason of clauses  12.1 and 12.2,  the  Executive  agrees  that  without
     prejudice  to any other duty  implied by law or equity he will not  without
     the prior written  consent of the Company (such consent to be withheld only
     so far as may be reasonably  necessary to protect the  legitimate  business
     interests of the Group)  during his  employment  or at any time  thereafter
     communicate  or disclose to any person,  firm or company or use for his own
     purposes any of the trade secrets or confidential  information  relating to
     the Group and/or its customers and relating to the Company for whom he then
     works  and/or its or their  customers in any manner  whatsoever  save as is
     reasonably  necessary  for the promotion of the business of the Company and
     the Group.

12.4 The  restrictions  contained in clauses 12.1,  12.2 and 12.3 shall cease to
     apply to confidential information and trade secrets which:

     (a)  have come in to the public  domain  otherwise  than as a result of any
          breach of this Agreement by the Executive; or

     (b)  the  Executive  is obliged to disclose as a result of a court order or
          governmental or other regulatory requirement.

12.5 The  Executive  will not other than with the  approval of the Board make or
     issue any press,  radio or television  statement,  or publish or submit for
     publication  any letter or article  relating  directly or indirectly to the
     business or affairs of the Company,  other than in the  ordinary  course of
     performing his duties.

12.6 The  termination of this Agreement or of the employment  under it shall not
     operate to  terminate  the  provisions  of this  clause  which,  after such
     termination,  shall  remain in full  force and  effect  and  binding on the
     Executive.

13   COMPANY PROPERTY

     The Executive  will promptly  whenever  requested by the Company and in any
     event upon the termination of this Agreement (for whatsoever cause) deliver
     up  to  the  Company  or  its  authorised  representative  all  statistics,
     documents,  records  or  papers  which are in his  possession  or under his
     control or which subsequently come into his possession or under his control
     and relate in any way to the  property,  business or affairs of the Company
     and Group and no copies  shall be  retained by him and he shall at the same
     time deliver up to the Company or its authorised  representative  all other
     property of the Company and Group in his possession or under his control or
     which  subsequently  comes into his  possession  or under his  control.

                                       6

<PAGE>

14   INTELLECTUAL PROPERTY

14.1 Inventions

     (a)  If at any time during this appointment the Executive (whether alone or
          with any other person or persons) makes any invention, relating to the
          business of the Company,  the Executive will promptly  disclose to the
          Company  full  details  of such  invention  to enable  the  Company to
          determine whether it is a Company Invention.

     (b)  In this context "Company Invention" means" any improvement,  invention
          or discovery made by the Executive  which,  applying the provisions of
          Section 39 Patents Acts 1977 in the determination of ownership, is, as
          between the parties, the property of the Company or the Group.

     (c)  If the invention is a Company  Invention,  the Executive  acknowledges
          that it is owned  by the  party  determined  by the  provision  of S39
          aforesaid  and  agrees  not to take any steps  inconsistent  with that
          ownership.  At the request  and  expense of the Company the  Executive
          will do all things  reasonably  necessary or  reasonably  desirable to
          enable the  Company,  or its  nominee,  to obtain  the  benefit of the
          Company  Invention and to secure patent or other  appropriate forms of
          protection for it throughout the world.

     (d)  If the invention is not a Company  Invention,  the Company shall treat
          all  information  disclosed to it by the Executive  pursuant to clause
          14.1(a)  as  confidential  information  which is the  property  of the
          Executive.

     (e)  Decisions  as  to  the  patenting  and  exploitation  of  any  Company
          Invention will be in the sole discretion of the Company.

     (f)  The Executive  irrevocably  appoints the Company to be his Attorney in
          his  name  and  on his  behalf  to  execute,  sign  and  do  all  such
          instruments  or things and generally to use the  Executive's  name for
          the purpose of giving to the Company or its  nominees the full benefit
          of the  provisions of Clause 14.1 and a certificate  in writing signed
          by any two Directors of the Company,  that any instrument or act falls
          within the authority  hereby  conferred,  will be conclusive  evidence
          that such is the case so far as any third party is concerned.

                                       7

<PAGE>

14.2 Copyright and Design Rights

     (a)  All designs  copyright works database rights and  neighbouring  rights
          originated,  conceived,  written or made by the Executive either alone
          or with others (except only those works originated, conceived, written
          or made by him  wholly  outside  his normal  working  hours and wholly
          unconnected  with  his  appointment)  belong  to the  Company  and the
          Executive   acknowledges  that  it  is  so  owned  and  will  not  act
          inconsistently with that ownership.

     (b)  To the extent that the same do not accrue to the Company by  operation
          of law the  Executive  hereby  assigns to the Company by way of future
          assignment all copyright,  design rights, designs, database rights and
          other proprietary  rights if any for the full terms thereof throughout
          the world  (together with the right to apply for  registration  of the
          same) in respect of all such rights originated,  conceived, written or
          made by the Executive (except only those works originated,  conceived,
          written or made by the  Executive  wholly  outside his normal  working
          hours and wholly  unconnected with his appointment)  during the period
          of his employment hereunder.

     (c)  The Executive hereby irrevocably and unconditionally  waives in favour
          of the  Company  any  and all  moral  rights  conferred  on him by the
          Copyright,  Designs  and  Patents  Act  1988  for any  work  in  which
          copyright or design rights are vested in the Company whether by Clause
          14.2 or otherwise.

     (d)  The  Executive  will at the  request and expense of the Company do all
          things  reasonably  necessary or reasonably  desirable to substantiate
          the rights of the Company under Clause 14.2.

15   GROUNDS FOR TERMINATION

15.1 The Company may at any time by notice in writing to the Executive determine
     this Agreement  forthwith without payment of any  compensation,  damages or
     remuneration for subsequent  periods payable by virtue of Common Law or any
     statute  in any  of  the  following  circumstances,  that  is to say if the
     Executive:

     (a)  is adjudicated bankrupt;

     (b)  becomes of unsound  mind,  or becomes a patient for any purpose of any
          statute relating to mental health;

     (c)  is guilty of any  serious  breach or  non-observance  of any  material
          provisions  (whether  express or  implied)  of this  Agreement  or the
          reasonable  and lawful  directions  of the Board,  or is guilty of any
          continued  or  successive  breaches or  non-observance  of any of such
          provisions or  directions in spite of written  warning to the contrary
          by the Board;

     (d)  is convicted of any criminal  offence  (other than a motoring  offence
          for which no  custodial  sentence is made upon him) or carries out any
          action or neglects to carry

                                       8

<PAGE>

          out any action which may seriously damage the interests of the Company
          or  breaches  any  material  provision  of the  Companies  Act 1985 or
          similar  legislation  or any  regulations  made  thereunder  which may
          result in any material penalties being imposed on him or any Directors
          of the Company or which might be in breach of any undertaking given to
          the London Stock Exchange on behalf of the Company;

     (e)  is  disqualified  by law from acting as a Director,  provided leave of
          the court has not been  obtained  to allow him to continue to act as a
          Director.

15.2 The Company may also  terminate the employment of the Executive by not less
     than six months'  prior  notice  given at any time while the  Executive  is
     incapacitated  by ill-health or accident from  performing  his duties under
     this  Agreement  and he has been so  incapacitated  for a period or periods
     aggregating  six calendar months in the preceding  twelve months.  Provided
     that the Company  shall  withdraw any such notice if during the currency of
     the notice the Executive returns to full-time duties and provides a medical
     practitioner's  certificate  satisfactory  to the Managing  Director to the
     effect that he has fully recovered his health and that no recurrence of his
     illness or incapacity can  reasonably be anticipated  and this is confirmed
     by a qualified doctor appointed by the Company.

15.3 Any  delay  or  forbearance  by the  Company  in  exercising  any  right of
     termination hereunder shall not constitute. a waiver of such right.

16   ABSENCE/SICKNESS/MEDICAL EXAMINATION

16.1 If the  Executive  is  unable  to  attend  to his  duties  as a  result  of
     incapacity,  he will, if so. required,  furnish the Board-with  evidence of
     such  incapacity  and he will  be  entitled  in any  continuous  period  of
     52-weeks to 12 weeks (whether  consecutive  or in aggregate)  sick leave at
     the rate of salary set out in clause  16.2  together  with all  contractual
     benefits.

16.2 The amount of salary payable under clause 16.1 will be the full salary rate
     less the amount of any sickness or- other  benefits  which the Executive is
     entitled to claim during that period of absence under any Social  Security,
     National  Insurance  or  other  legislation  for the time  being in  force.
     Further any salary paid to the Executive during such period of absence will
     be deemed to  include  any  statutory  sick pay to which the  Executive  is
     entitled.

16.3 If the  Executive  is  incapacitated  as a  result  of any  act,  omission,
     negligence or breach of statutory duty of a third party in respect of which
     damages are or may be recoverable  the Executive will forthwith  notify the
     Company of that fact and of any claim,  compromise,  settlement or judgment
     made or awarded in  connection  therewith  and will give to the Company all
     such particulars of these matters that the Company may reasonably require .
     and the Executive  will be required by the Company to refund to the Company
     such sum  totalling  the lesser of the amount  recovered  by him under such
     claim,  compromise,  settlement  or  judgment  less  any  costs  in  or  in
     connection  with or under 'such claim,  compromise,  settlement or judgment
     borne by the Executive and the  remuneration  paid to

                                       9

<PAGE>

     him by way of salary  over and above  statutory  sick pay in respect of the
     period of Incapacity.

16.4 Where the  Executive  is absent from his duties for any reason  relating to
     the  incapacity the Executive will be required to undergo at the request of
     the  Company  and at the  Company's  expense  a  medical  examination  by a
     qualified  doctor appointed by the Company and will supply the Company with
     a copy of any medical report received following such examination. Where the
     Executive  simultaneously  obtains any medical report,  the Executive shall
     supply the Company  with a copy of the same at the request of the  Company,
     subject to statutory provisions from time to time in force.

17   PROVISIONS AFTER TERMINATION

17.1 The  Executive  will not  without  the prior  written  consent of the Board
     (which will not be  unreasonably  withheld) for a period of 12 months after
     the termination of his employment under this Agreement:

     (a)  either on his own account or jointly  with or as agent for any person,
          firm  or  company,  directly  or  indirectly,  (whether  as  director,
          proprietor,  partner,  employee,  consultant,  or howsoever otherwise)
          carry on or be engaged  concerned  or  interested  in the carrying on,
          within  the  UK of any  business  which  is in  competition  with  the
          Company,  or any  Member of the Group  for  which  the  Executive  has
          performed substantial executive services,  during the period of twelve
          months prior to the termination of his employment hereunder,

     (b)  either on his own account or jointly  with or as agent for any person,
          firm or company, (whether as director, proprietor,  partner, employee,
          consultant,  or howsoever  otherwise)  whether  directly or indirectly
          canvass or solicit  or entice the custom of (in  relation  to goods or
          services which are provided by the Company, or any Member of the Group
          for which the Executive has performed  substantial executive services,
          during the period of twelve  months  prior to the  termination  of his
          employment  hereunder and in competition  with the Company) any person
          or  persons  who at the  date of the  termination  of the  Executive's
          employment hereunder is a customer of the Company or any Member of the
          Group or any person or persons;  who were negotiating with the Company
          or any  Member of the Group  with whom the  Executive  has had  direct
          contact  or  dealings  during  the last 12  months  of his  employment
          hereunder;

     (c)  either on his own account or jointly  with or as agent for any person,
          firm or company (whether as director,  proprietor,  partner, employee,
          consultant or howsoever otherwise) whether directly or indirectly deal
          with (in  relation  to goods or  services  which are  provided  by the
          Company,  or any  Member of the Group  for  which  the  Executive  has
          performed substantial executive services,  during the period of twelve
          months prior to the  termination  of his  employment  hereunder and in
          competition with the Company) any person or persons who at the date of
          the termination of the Executive's  employment hereunder is a customer
          of the  Company,  or any Member of the Group or any person or persons,
          who were

                                       10

<PAGE>

          negotiating  with the Company or any Member of the Group and with whom
          the  Executive has had direct  contact or dealings  during the last 12
          months of his employment hereunder;

     (d)  whether directly or indirectly  interfere or seek to interfere or take
          such steps as may interfere  with the  continuance  of supplies to the
          Company  or any  Member of the Group  (or the terms  relating  to such
          supplies)  from any  suppliers  who  have  been  supplying  components
          materials  or  services to the Company or any Member of the Group with
          whom the  Executive has dealt at any time during the last 12 months of
          his employment hereunder,

     (e)  whether directly or indirectly  either on his own account or on behalf
          of any other  person,  firm or  company,  entice,  induce,  solicit or
          encourage any employee or consultant who is employed by the Company or
          any  Member of the  Group on the date the  Executive's  employment  is
          terminated,  in the  capacity  of  director  or who  works  in  Sales,
          Technical Research, Managerial or Executive capacity and with whom the
          Executive  has had direct  contact or  dealings  in the twelve  months
          prior to that date to leave the Company's employment.

17.2 Notwithstanding  the terms of clause  17.1 in the  event  that the  Company
     invokes the  provisions  of clause 4.4 of this  Agreement the length of the
     restricted  period  set out in  clause  17.1  will be set off  against  and
     thereby  reduced by the length of the period during which the provisions of
     clause 4.4 are in operation.

17.3 The  Executive  hereby  agrees  that  he will  not at any  time  after  the
     termination of this Agreement either  personally or by his agent,  directly
     or  indirectly  represent  himself  as being in any way  connected  with or
     interested in the business of the Company.

18   APPLICATION OF RESTRICTIONS

     It is hereby agreed and declared that each of the restrictions contained in
     clause 17 of this Agreement will be read and construed independently of the
     others and that all such  restrictions  are  considered  reasonable  by the
     parties to this  Agreement  but, in the event that any such  restriction is
     found or held to be void in  circumstances  where it would be valid if some
     part of it were  deleted or the period,  scope or  distance of  application
     reduced  the parties to this  Agreement  agree that such  restriction  will
     apply  with  such  modification  as may be  necessary  to make it valid and
     effective  and that any such  modification  will not affect the validity of
     any other restriction contained in this Agreement.

                                       11

<PAGE>

19   DIRECTORSHIP

19.1 The  Executive  will as term of this  Agreement  remain a  director  of the
     Company and will,  if so  required,  become a director of any member of the
     Group and  remain in such  capacity  without  any  additional  remuneration
     provided  always that if in the  reasonable  opinion of the  Executive  his
     position as a director is likely to result in personal  liability  he shall
     be at  liberty  to resign  from such  office  on giving  reasonable  notice
     without thereby being in breach of Clause 2.

19.2 In the event of the Executive  holding  office as a director of the Company
     and/or any Member of the Group at the date of his ceasing to be an employee
     of the  Company  (for any  reason  whatsoever)  he shall  forthwith,  if so
     required by the Board, resign such directorship(s) without any compensation
     whatever,  but without  prejudice to any right of  compensation  under this
     Agreement or any other right of the Executive.

19.3 The Executive hereby  irrevocably  appoints any Director for the time being
     of the Company as his lawful attorney in his name and on his behalf to sign
     and execute a letter of resignation for the purpose of carrying into effect
     the provisions of sub-clause 19.1 only.

19.4 The  Company  agrees to put in place  appropriate  directors  and  officers
     liability insurance and pay any premium due under such insurance, on behalf
     of the Executive.

20   DATA PROTECTION

     The  Executive  acknowledges  that the  Company  will hold the  information
     contained  within this  Agreement on his personal  file.  The  Executive is
     entitled under statute to have access to this file and to other information
     the Company holds about him pursuant to his employment  hereunder  (whether
     in  computerised  or manual  record form)  subject to certain  restrictions
     imposed by law.

21   NOTICES

     Any notice under this Agreement must be given in writing by either party to
     the  other  and  may be  delivered  or sent by  first-class  pre-paid  post
     addressed,  in the case of the Company, to its registered office and in the
     case of the Executive,  to his address last known to the Company.  Any such
     notice will, in the case of delivery,  be deemed to have been served at the
     time  of  delivery  and,  in the  case of  posting,  on the  expiration  of
     forty-eight hours after it has been posted by first class mail.

22   SCHEDULE

     The  provisions  set out in Schedule 1 to this Agreement will apply to this
     Agreement  for the  purposes  of ERA but may from time to time be varied by
     mutual Agreement or replaced.  Any such written  amendments or replacements
     will be evidenced by the initials of the  Executive and a Director or other
     officer duly authorised on behalf of the Company.

                                       12

<PAGE>

23   OTHER AGREEMENTS

     The  Executive  acknowledges  and warrants  that there are no agreements or
     arrangements  whether written,  oral or implied between the Company and the
     Executive  relating to the  employment  of the  Executive  other than those
     expressly set out in this Agreement, which expressly supersede all previous
     arrangements  between the Company and the Executive as to the employment of
     the Executive  and that he is not entering into this  Agreement in reliance
     upon any representation not expressly set out in this Agreement.

24   CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

     This  agreement  does  not  confer  rights  on the  Executive's  spouse  or
     dependants or any third party under the Contracts  (Rights of Third Parties
     Act 1999.

25   ENFORCEMENT OF RIGHTS

25.1 The Company and the Group hereby  agrees that any breach of this  Agreement
     by the Company  and/or the Group will entitle the  Executive to enforce his
     rights under this Agreement against the Company and/or the Group.

25.2 The  Executive  hereby  agrees  that any  breach of this  Agreement  by the
     Executive will entitle the Company and/or the Group to enforce their rights
     under this Agreement against the Executive.

26   APPLICABLE LAW

     The  validity,  construction  and  performance  of  this  contract  will be
     governed by English Law.

AS WITNESS  whereof these presents have been duly executed as a deed the day and
year first above written.

                                       13
<PAGE>

                                   SCHEDULE I

So far as not already taken into account, the following particulars are provided
to supplement  the  information  given in the body of this Agreement in order to
comply with the  requirement's  of ERA to give written  particulars of terms and
conditions of employment.

     (a)  The Executive's employment with the Company began on 9 October 2000.

     (b)  No  Employment  with  a  previous  employer  counts  as  part  of  the
          Executive's continuous employment with the Company.

     (c)  All holidays will be on full pay.

     (d)  There are no normal hours of work  applicable  to the  Executive.  The
          Executive  is required to work such hours as the needs of the business
          dictate.  This may include  working in the  evenings at weekends or on
          Bank, Public or statutory holidays.

     (e)  if the  Executive  has any grievance  relating to his  employment,  it
          should be raised and referred in writing to the Board.

     (f)  There are no formal  disciplinary  rules  applicable to the Executive.
          Any matters of  discipline  will be considered  and  determined by the
          Board. Any appeal against any disciplinary decision taken by the Board
          should be made to the Chairman of the Board.

     (g)  There is not in force a contracting out certificate  under the Pension
          Schemes Act 1993 in respect of the Executive's employment.

     (h)  There are no Collective Agreements which directly affect the terms and
          conditions of the Executive's employment.

     (i)  The Executive is not required to work outside the United Kingdom for a
          consecutive period in excess of one month and accordingly there are no
          particulars in this regard relevant to his employment.

                                       14
<PAGE>

SIGNED and delivered as a deed by
 AUTHORISZOR INC. acting by two
 directors or by one director and the
 secretary:

 Director
 Signature       :
 Name            :

Director/Secretary
 Signature       :
 Name            :

SIGNED and delivered as a DEED by
AUTHORISZOR HOLDINGS acting by
two directors or by one director
and the secretary:

Director
Signature        :
Name             :

Director/Secretary
Signature         :
Name              :

SIGNED as a deed, and delivered when
Dated, in presence of:

Witness

Signature         :
Name              :
Occupation        :
Address           :

                                       15

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