Document:

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English Summary of Daniel Caclin’s severance agreement:

These are amounts paid under Mr. Caclin’s Dutch and French contracts, 10% of each of those payments
to be made by Equant N.V. and the other 90% of each of those payments to be made by Equant France,
and include as follows:

	•  	Three months base salary during the 90 day notice period;
	 
	•  	a lump sum payment of EUR 41,250 within 30 days;
	 
	•  	a payment of EUR 250,000 representing payment for the one-year non-compete;
	 
	•  	a termination payment of EUR 929,611;
	 
	•  	immediate vesting of stock options and an ability to exercise outstanding options for up to one year (or such earlier date
if the option matures before that);
	 
	•  	outplacement services or EUR 22,000 in lieu thereof;
	 
	•  	tax preparation services for calendar year 2005;
	 
	•  	mutual non-disparagement provisions.

 

Equant Network Services

Betjeman Place

217 Bath Road

Slough

Berkshire

SL1 4AA

WITHOUT PREJUDICE

SUBJECT TO CONTRACT

Monday, May 23, 2005

Howard Ford

8 Tekels Avenue

Camberley

Surrey

GU15 2LD

Dear Howard,

I am writing to you to set out the offer that Equant Network Services Ltd, your Employing Company
(“the Company”) wishes to make to you as a consequence of termination of both your contracts of
employment by reason of redundancy. It is acknowledged that in making this offer, the Company is
acting on behalf of itself and upon behalf of Equant NV in order to recompense you for the
termination of both your contracts. References to “contract” shall mean both your contracts of
employment and acceptance of this offer will estop you from taking any action in any jurisdiction
in respect of your contract of employment with Equant NV.

For the purpose of this offer, the references to “the Group” mean the Company and all companies,
which are shareholders in the Company, direct or indirect subsidiary companies (as defined in the
Companies Act 1985) and any associated companies in which any such company has a direct or
indirect interest at the Termination Date (as defined below). This Agreement is entered into by
the Company for itself and in trust for Equant NV and each such company with the intention that
each such company will be entitled to enforce it directly against you.

	1.  	Termination

	 
	1.1  	The Company will terminate both your contracts of employment having given you the period of
notice specified in those employment contracts (“the Employment Agreement”). Consequently,
your employment with the Company will come to an end on 6th April 2005 (“the
Termination Date”) when all your entitlements in connection with your employment whether
contractual or informal will cease.

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	1.2  	The Company will issue your P45 made up to the Termination Date and this includes any unused
holiday entitlement.

	 
	2.  	Pre-Conditions of Offer

	 
	2.1  	You must have returned all documents, equipment, information (however it is stored) and
other property belonging to the Group or relating to any of its business, including your
personal computer, mobile telephone and accessories, without you or anyone on your behalf
retaining copies of such documents or extracts from them.

	 
	2.2  	You undertake that you will resign from all directorships held as a consequence of your
employment by the group and will execute all documents, including a power of attorney to
permit Equant to sign such documents on your behalf and do all things needful to effect such
resignation

	 
	2.3  	You undertake that you will transfer (without payment) to the Company (or as the Company may
direct) any qualifying or nominee shares provided to you by it or any third party in any
Group Company

	 
	2.4  	You undertake that you have not and will not copy, transmit or download any business
information, customer list, internal company information, memoranda, correspondence or
software obtained in the course of your employment (however or wherever it may be stored).

	 
	2.5  	You give your formal consent in the form attached hereto for the Company to enter, view and
clear (as appropriate) your e-mailbox or other databases from the Company’s intranet and you
undertake to remove any personal or sensitive information before Termination Date.

	 
	2.6  	You also undertake that you will return your computer and mobile telephone in good condition
(fair wear and tear excepted) no later than 6th April 2005 to the HR Department.

	 
	3.  	Severance Payment

	 
	3.1  	The Company will pay you as follows, without admission of liability and as compensation for
the early termination of your employment;

	 	(i)  	the sum of £1,008,655 to be split as to the equivalent in Euros of £100,344
to be paid in Holland and £903,096 to be paid in the UK. Of the UK portion the first
£30,000 will be paid free from tax, having regard to your obligation to mitigate your
losses. The Company believes that this payment is a non-

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	 	   	contractual payment for loss of employment, that section 403 of the Income
Tax (Earnings & Pensions) Act 2003 applies and it will therefore make payment of
the first £30,000 without deductions of income tax or employee national insurance
contributions.

	 	(ii)  	PPP coverage will be maintained for you and your family until
30th June 2006.

	   	(“together the Severance Payment”)

	 
	   	Except where indicated above, this payment will be less such deductions as the Company
acknowledges that it is by law required to make.

	 	(iii)  	Equant will continue to provide tax adviser assistance costs for the 2005
tax year

	 
	 	(iv)  	Your stock options will vest on the Termination Date and you will be granted
six months from the date of such vesting to exercise any or all such stock options

	   	The net Severance Payment will be paid to you through the payroll system in the normal way
in April 2005 if the Company has received a signed copy of this Agreement with signed
attachments and completed certificate in the form attached to it, provided that all the
conditions in paragraph 2 have been satisfied and the signed copy Agreement with
attachments is received before 17th April 2005 (“Payroll Cutoff Date”).

	 
	   	The Company reserves the right to pay the Severance Payment in the following payroll run if
the Agreement is received after Payroll Cutoff Date.

	 
	4.  	Legal Costs

	 
	   	Within 14 days of the receipt of a copy of an account addressed to you (but marked payable
by the Company), the Company will make a contribution of up to £250 plus VAT direct to
your solicitors for your reasonable legal fees for advice in connection with the
termination of your employment.

	 
	5.  	Tax and National Insurance

	 
	5.1  	Save for income tax and employee national insurance contributions deducted by the Company
under this Agreement, you will be responsible for all income taxes or employee national
insurance contributions (if any) which may be payable in respect of all payments and
arrangements contained in this Agreement. You agree to

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	 	indemnify the Company and all other companies in the Group and to keep it indemnified
against such taxes and national insurance contributions, interest, charges, penalties and
costs, except that this indemnity will not apply to tax deducted by the Company under the
terms of this Agreement. If an assessment is made on the Company which may require it to
pay further income tax or employee national insurance contributions, the Company will give
you a reasonable opportunity to comment before payment is made.

	6.  	Restrictions

	 
	   	You acknowledge the continuing obligations of Confidentiality and the Protective Covenants
contained in your contracts of employment to survive termination of those contracts and
agree that you will abide strictly by the terms thereof.

	 
	   	You further agree that you will not, for a period of twelve months from the Termination
Date and whether directly or indirectly, approach any employee of any company within the
Equant or FT group with a view to enticing or encouraging them to leave their employment.

	 
	7.  	Secrecy and Statements

	 
	   	The Company and you expressly agree that the terms of this Agreement are strictly
confidential and will not be disclosed, communicated or otherwise made public:

	 	(i)  	by you, except to your immediate family or for the purpose of taking
professional advice in connection with this Agreement or if you are required by law
to do so. In particular you agree not to disclose the terms of this Agreement to any
employee of the Group; and

	 
	 	(ii)  	by the Company, except for the purpose of taking professional advice in
connection with this Agreement or if required by law to do so or in connection with
the proper performance of the Group’s business;

	 
	 	(iii)  	you will not make or publish any adverse, untrue or misleading statement or
comment about the Group or its officers and employees and that you will not represent
yourself as continuing to be employed by or connected with any such company.

	8.  	Reference

	 
	   	The Company agrees that, if requested by you or a prospective employer, it will provide a
reference with regard to your professional abilities and conduct
including a statement that your position within the Company was made redundant

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	   	as a result of restructuring and not as a reflection upon either your character or skills. Any such
request should be made in writing to the HR Department.

	9.  	Warranty

	 
	   	In signing this Agreement you are representing and warranting that

	 	(i)  	you have not already agreed to take employment with or provide consultancy
or similar services to any person, firm, company or to the Company;

	 
	 	(ii)  	you have not committed any material breach of the terms of your employment,
such that the Company would be entitled to dismiss you summarily and without
compensation, and, as at the date of this Agreement, you are not aware of any claims
or causes of action against the Group by any third party of which the Company is not
aware.

	10.  	Full and Final Settlement

	 
	10.1  	Subject to paragraph 10.2, you accept the terms of this Agreement in full and final
settlement of any and all claims of any nature which you have or may have against the
Company, Equant NV and/or any other company in the Group and their respective officers and
employees arising out of or in connection with your contracts of employment and their
termination, or any other matter whether such claims arise under English or any other law.
Both you and the Company acknowledge that it is our express intention, when entering into
this Agreement, that it shall covers any and all such claims, whether known or unknown to
one, other, neither or both of us, and whether or not the factual or legal basis for the
claim is known or could have been known to one, other, neither or both of us. Furthermore
you acknowledge that

	 	(i)  	you have taken independent legal advice from a qualified
solicitor in possession of a current Practising Certificate issued by the Law
Society (your “Adviser”) on the terms and effect of this Agreement; and

	 
	 	(ii)  	that you will be entering into it voluntarily, without
reservation and with the intention that it will be fully binding on you as a
compromise agreement or otherwise; and

	 	(iii)  	that the conditions regarding compromise agreements under
section 203 of the Employment Rights Act 1996, section 77 of the Sex

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	 	   	Discrimination Act 1975, section 72 of the Race Relations Act 1976, section 9
of the Disability Discrimination Act 1995, Regulation 35 of the Working Time
Regulations 1998, section 288 of the Trade Union and Labour Relations
(Consolidation) Act 1992, section 9 of the Part-Time Workers Regulations 2000
and Regulation 41 of the Transnational Information and Consultation of
Employees Regulations 1999 and any similar requirements under Dutch Law
applicable to your contract of employment with Equant NV have been satisfied.

	 
	 	(iv)  	You also warrant the accuracy of paragraph 2 of the attached
Certificate and acknowledge that the Severance Payment includes any statutory
compensation to which you may be entitled and that it would not be just and
equitable for you to receive any further compensation.

	10.2  	Paragraph 10.1 will not apply to

	 	(i)  	your accrued entitlements and options under the Company’s pension scheme as
at the Termination Date; and

	 
	 	(ii)  	any claim for personal injury arising out of any failure by the Company or
any other company in the Group to comply with its obligations under current health
and safety legislation. In respect of this and in signing this Agreement you are
confirming that you are not aware of any such claim.

	10.3  	In signing this Agreement you are representing and warranting that:

	 	(i)  	you have instructed your Adviser to advise you whether you have or may have
any Statutory Claim (as defined in paragraph 10.4) against the Company or any other
company in the Group arising out of or in connection with your employment and its
termination;

	 
	 	(ii)  	you have provided your Adviser with whatever information is in your
possession which your Adviser requires to advise you whether you have or may have any
such Statutory Claim;

	 
	 	(iii)  	your only Statutory Claims or particular complaints are for:

     [Your legal adviser is to complete with details as appropriate];

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	 	(iv)  	your Adviser has advised you that, on the basis of the information available
to your Adviser, you have no other Statutory Claim against the Company, Equant NV or
any other company in the Group.

	10.4  	A Statutory Claim means any claim for or relating to unfair dismissal, a redundancy payment,
equal pay, sex, race or disability discrimination, working time, unauthorised deduction from
wages or for the infringement of any other statutory employment rights which you have or may
have under the Employment Rights Act 1996, the Trade Union and Labour Relations
(Consolidation) Act 1992, the Data Protection Act 1998, the Employment Relations Act 1999, the
Part-Time Workers Regulations 2000 or the Transnational Information and Consultation of
Employees Regulations 1999 or any equivalent legislation applicable to your contract of
employment with Equant NV.

	10.5  	You acknowledge that the Company, Equant NV and the Group are relying on paragraphs 10.1 and
10.3 in deciding to enter into this Agreement. If you breach either of these paragraphs and a
judgment or order is made against any such company, you acknowledge that it will have a claim
against you for damages of not less than the judgment or order plus legal costs.

	11.  	Applicable Law

	 
	   	This Agreement will be construed in accordance with English law and the parties
irrevocably submit to the exclusive jurisdiction of the English courts to settle any
disputes which may arise in connection with this Agreement.

	   	If these proposals are acceptable, would you please confirm your acceptance of the Company’s offer
in full and final settlement by signing and returning the enclosed copy of this letter, the
attached Certificate and the Data Protection Consent and Undertaking to me.

	 
	   	In returning the above documents, you will be confirming that you have complied with the
conditions in paragraph 2. Once signed and received by us, together with the attached Certificate
duly signed and dated, this Agreement will be binding.

	 
	   	Yours sincerely,

	 
	   	Jeannie Brice

Human Resources

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On Copy :

I accept these proposals.

Signed : /s/ Howard Ford

Dated : 21 February 2005

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COMPROMISE AGREEMENT

SOLICITOR’S CERTIFICATE

I hereby certify as follows :

	1.  	I am a solicitor of the Supreme Court of England and Wales holding a current Practising
Certificate.

	 
	2.  	I have advised Howard Ford (“my Client”) on the terms and effect of the Settlement Agreement
dated 4th February 2005 between Equant Integration Services (“the Employing
Company”) and my Client and in particular its effect on my Client’s ability to pursue my
Client’s rights before an Employment Tribunal, including the matters set out in the paragraph
of the Settlement Agreement headed “Full and Final Settlement”.

	 
	3.  	I am not acting (and have not acted) in relation to this matter for the Employing Company or
any associated employer.

	 
	4.  	There is in force a contract of insurance or an indemnity provided for members of a
profession or professional body covering the risk of a claim by my Client in respect of loss
arising in consequence of the advice I have given.

	 
	5.  	I confirm that paragraphs 10.3(i), (iii) and (iv) of the Settlement Agreement are accurate
to the best of my knowledge, information and belief.

SIGNED :

Miss F Tierney

Herrington Carmichael Solicitors

Waters Edge

Riverside Way

Watchmoor Park

Camberley

Surrey

GU15 3YL

Dated: 21 February 2005

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DATA PROTECTION ACT 1998 CONSENT AND UNDERTAKING

     I, Howard Ford, freely give my consent for Equant Network Services Ltd (“the Employing Company”)
to instruct the system administrator controlling any database or e-mail system forming part of the
Equant network which I have used, whether for personal or business purposes, to open, view and
clear (as appropriate) any account in my name.

     I undertake to have removed and/or deleted from the Equant network before the Termination Date any
correspondence or other information, which I consider to be personal or sensitive.

Signed: /s/ Howard Ford

Date: 21 February 2005,

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ENGLISH TRANSLATION.

EMPLOYMENT AGREEMENT

Between the undersigned:

The company Equant France S.A.,

A corporation (“Société Anonyme”) with a share capital of 6,004,882.75 euros, having its registered
office at 190, avenue de France, 75013 Paris, registered with the Trade and Companies Register of
Paris under number B 410 065 361, and represented by Ms. Barbara Dalibard, duly authorized for the
purpose hereof, (the “Company”);

On the one hand,

And:

Mr. Charles Dehelly, a French citizen, residing at 106, rue Charles Laffitte, 92200 Neuilly-sur
Seine (“Mr. Dehelly”),

On the other hand,

(collectively the “Parties”),

it has been agreed as follows on this 23rd day of December 2004:

ARTICLE 1. STARTING DATE – DURATION – PURPOSE

As from December 24, 2004 (the “Effective Date”), the Company hereby agrees to employ, according to
the conditions specified hereinafter and for an unlimited term, Mr. Dehelly, who accepts the terms
and conditions set forth herein. Subject to confirmation of the following appointments at a duly
convened meeting of shareholders of Equant N.V., as parent company of the Equant group of companies
(including the Company) (collectively the “Equant Group”), Mr. Dehelly shall serve as Chief
Executive Officer of the Equant Group and as the Chairman of the Management Board of Equant N.V.
In that capacity, Mr. Dehelly shall have all the duties and responsibilities pertaining thereto, as
outlined in Sections 14.2, 14.6, 14.8, 14.9, 15.1, 15.7, 17.12 and 19.1 of the Equant N.V.’s
Articles of Association, as they exist as of the date hereof. Mr. Dehelly confirms that he is not
bound by any commitment or by any non-competition clause prohibiting him from working for the
Company or for any of the

 

 

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Equant Group’s companies (i.e., any entity controlled by Equant N.V., where control has the meaning
ascribed to it in Article L-233-3 of the French Code of Commerce).

In his capacity as Chief Executive Officer of the Equant Group, Mr. Dehelly benefits from the
status of Top-level Executive, outside classification, according to the Collective Bargaining
Agreement currently applicable within the Company.

For this purpose, the Company informs Mr. Dehelly that the Collective Bargaining Agreement
currently applicable to the Company’s activity is currently the Telecommunication one. This
reference to the applicable Collective Bargaining Agreement does not constitute an essential
element of this Employment Contract, as expressly acknowledged be the Parties in signing this
Contract.

Mr. Dehelly also benefits from the collective company-wide agreement dated 5 March 2001, which is
currently in force within the Company, it being specified that the reference to this agreement does
not constitute an essential element of this Employment Contract, as expressly acknowledged by the
Parties in signing this Contract.

Mr. Dehelly must inform the Company prior to any change in his personal situation (address, etc.)
which would modify the declarations he made when he was hired.

ARTICLE 2. DUTIES

In his capacity as Managing Director of Equant N.V., Mr. Dehelly works for the Company as well as
for all the other companies of the Equant Group, it being specified that his duties are likely to
evolve in accordance with general adaptation needs and the specific needs of the Company and the
Equant Group.

It is also recalled that these duties are not exhaustive, and the Company reserves the right to
change them as long as these changes are compatible with Mr. Dehelly’s experience and position.

Mr. Dehelly performs his duties under the direct authority of Equant N.V.’s Supervisory Board, and
must regularly inform the Supervisory Board about his activity.

ARTICLE 3. PLACE OF WORK

Mr. Dehelly shall mainly perform his duties at the Equant Group’s office located in Paris.

However, given the nature of his duties, Mr. Dehelly has to make frequent business trips worldwide,
in particular to visit the premises of the various offices, subsidiaries and companies of the
Equant Group, which he agrees to do.

In case, Mr. Dehelly will benefit from the mobility policy in force for Top-level executives of the
Equant Group at such time.

ARTICLE 4. STATUS

Mr. Dehelly is considered a Top-level Executive according to Article L 212-15-1 of the French
Labour Code, with regard to his independence in organizing his timetable, and to the nature of his
duties as shown by the high level of his responsibilities and salary.

 

 

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As a consequence, Mr. Dehelly is not subject to the provisions set by law and the Collective
Bargaining Agreement relating to working time and is paid a fixed global salary exclusively of the
successful completion of the assignments entrusted to him.

ARTICLE 5. PAID HOLIDAYS

Mr. Dehelly will be entitled to paid holidays in force within the Company and, if applicable any
additional holidays provided be the applicable Collective Bargaining Agreement and by the
collective company-wide agreement.

Entitlement to holidays and holiday pay shall be subject to the rules in force within the Company.

Mr. Dehelly must take his holidays in accordance with the requirements of the Company and the
Equant Group as in effect form time to time.

ARTICLE 6. COMPENSATION

In exchange for his services, Mr. Dehelly’s global gross annual salary will be five hundred ninety
thousand euros (€590,000), payable in twelve equal monthly installments.

Upon the recommendation of the Compensation Committee that has been set up within Equant N.V.’s
Supervisory Board, this salary shall be reviewed each year. This review shall not, under any
circumstances, give rise to a reduction in Mr. Dehelly’s global gross annual salary.

ARTICLE 7. SEMI-ANNUAL BONUS

In addition to his global annual salary (Article 6), Equant shall provide Mr. Dehelly with the
opportunity to receive semi-annual bonuses during each fiscal year starting in 2005 based on six
month bonus cycles, the amount of which is determined each period be the extent to which the
Company and the Equant Group meet the performance goals (the “Performance Goals”) and by the bonus
range established by the Compensation Committee for each bonus cycle.

These Performance Goals shall be established by the Compensation Committee prior to each period
with respect to which the bonus relates.

The Compensation Committee shall in its discretion determine the extent to which these Performance
Goals are or are not in any cycle.

The amount of the bonus shall depend upon the achievement of the Performance Goals and the bonus
range established by the Compensation Committee for each bonus cycle. The “target bonus”, i.e. the
amount of the bonus granted if the goals are reached at 100%, will amount to 50% of Mr. Dehelly’s
gross base salary for the six-month bonus cycle, and could reach up to 66% thereof if the target is
exceeded. In the event the Performance Goals are not met or are exceeded, the Compensation
Committee shall determine the amount of the bonus, if any, to which Mr. Dehelly is entitled in
respect of such six-month performance cycle and shall recommend such bonus amount to the
Supervisory Board for its approval.

For the calculation of the bonus as defined in this Article, the “gross base salary” means the
gross base salary paid during the 6-month tax period for which the Performance Goals are set,
excluding exceptional bonuses and benefits in kind.

 

 

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This semi-annual bonus will be paid every six months according to the terms and conditions in force
for all Top-level executives belonging to the same professional category as Mr. Dehelly.

ARTICLE 8. PROFESSIONAL EXPENSES

All reasonable professional expenses incurred by Mr. Dehelly in the performance of his duties will
be reimbursed upon presentation by Mr. Dehelly of supporting documents.

These expenses will be reimbursed pursuant to the regulations in force within the Company and the
Equant Group in this area.

ARTICLE 9. COMPANY CAR

The Company will provide Mr. Dehelly with a company car pursuant to the practices in force within
the Company (or the financial allowance in lieu thereof, as specified by the Compensation
Committee), which he is authorized to use for the personal purposes.

ARTICLE 10. TELECOMMUNICATION MEANS

The Company will provide Mr. Dehelly with all the telecommunication means necessary to perform his
duties, which he is authorized to use for personal purposes.

ARTICLE 11. EMPLOYEE BENEFITS

Mr. Dehelly will benefit from the provident scheme, medical insurance scheme, retirement scheme and
other benefit schemes and perquisites created for the benefit of senior executive employees of the
Company, as amended from time to time, including but not limited to financial and tax consulting
services to the same extent such benefits are provided to similar situated executives. Mr. Dehelly
will also benefit from a standard French unemployment fund for corporate managers and an annual
medical health control.

ARTICLE 12. PROFESSIONAL OBLIGATIONS

12.1. Exclusivity

For the entire duration of his duties within the Company, Mr. Dehelly undertakes to not carry out,
directly or indirectly at any time, except with the prior and express written authorization of the
Supervisory Board, any activity of any nature whatsoever, in his own name or in the name of any
person or company whatsoever, which would be likely to hinder or compromise the performance of his
own activity or which could compete directly or indirectly with the activity and products of the
Company or of any other company belonging to the Equant Group.

Mr. Dehelly is therefore prohibited, for the duration of his employment at the Company, from
advising, assisting or collaborating in any way with any other entities in any capacity whatsoever
(employee, independent contracting party or otherwise), as well as from financing, promoting or
investing in the activity or capital of this entity.

 

 

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12.2. Confidentiality and secrecy

For the entire duration of his employment at the Company and at any time after his termination for
any reason whatsoever, Mr. Dehelly is prohibited from using or disclosing to third parties,
directly or indirectly and for any reason whatsoever, any confidential acts or information he could
have learned about in the course of his employment, except with the prior and express written
authorisation of the management bodies of the Equant Group.

Mr. Dehelly thus undertakes not to disclose any information or documents relating to the
activities, operations, transactions, finances of the Company or other Equant Group companies as
well as those relating to their know-how, inventions, techniques, formulas, projects, concepts,
without this list being considered as exhaustive.

This undertaking also applies to all information relating to relationships with clients, prospects
and suppliers of the Company or the Equant Group companies’ ones.

These obligations of exclusivity (12.1) and confidentiality (12.2) are considered to be essential
conditions of this Employment Contract.

12.3. Non-competition clause

In his capacity as Managing Director of Equant N.V., Mr. Dehelly receives all the strategic
information relating to the Equant Group. As the Equant Group is in a very competitive market, it
is the justified interest of the Company to enter into this non-competition clause.

Consequently, it has been agreed between the Parties that, in the event of the termination of this
contract for whatever reason, Mr. Dehelly is expressly prohibited from directly carrying out an
activity, in any capacity whatsoever, in any company or activity likely to compete with the Company
and the Equant Group.

For the application of this clause, the major national telecommunication operators and the main
direct competitor companies of the Company and the Equant Group at the date of termination of this
employment contract are considered as competitors. These companies are, for example (but not
exclusively), Infonet, AT&T, MCI, Sprint, British Telecom, Colt, Cable & Wireless, Vanco, Deutsche
Telekom, Cegetel, 9Telecom, and Completel and any of those companies’ successors, successor
divisions, entities or businesses that are in direct competition with the companies of the Equant
Group. For the avoidance of doubt the telecommunication equipment manufacturers (such as Alcatel,
Cisco, Lucent, Nortel) are not considered as competitors.

Mr. Dehelly is also not entitled to hold more than 5% of a competing company’s shares or to hold
financial interests amounting to more than 5% of the profits of a competing company or a company
likely to become a competitor.

The competition prohibition will apply starting from the day following Mr. Dehelly’s last active
working day and will last one (1) year.

Given the Company and the Equant Group’s activities and the setting-up of their operations across
the globe, this prohibition will apply worldwide, save for the following territories:

the Asian, African and Pacific countries (including Australia and New-Zealand) as well as the
Middle East countries.

In the event of a breach of the non-competition obligation, the severance payments provided in
accordance with this contract or with the Guarantee Agreement will no longer be owed by

 

 

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the Company and Mr. Dehelly will also have to reimburse all sums already received for this purpose
to the Company.

Furthermore, in the event of a breach of the non-competition obligation, Mr. Dehelly will
automatically have to pay the Company an indemnity which cannot be less than a sum equal to six (6)
times his average gross monthly salary, calculated on the average monthly salary received over the
last twelve (12) months prior to the termination date of his employment contract.

For a period equal to the duration of this clause, the Company also reserves the right to claim for
compensation for any damages actually sustained due to direct involvement of Mr. Dehelly in the
competing activity, and to have this competing activity ceased.

12.4. Non solicitation

For a period of twenty-four (24) months following the date of termination of this employment
contract for any reason whatsoever, Mr. Dehelly undertakes not to, in his own name or on behalf of
any other entity, individually or collectively, solicit, manipulate or attempt to lure away any
person who to his knowledge was at the date of the termination of his employment contract a
consultant or employee of the Company or any other Equant Group company, except with the prior and
express written authorisation of the management bodies of the Equant Group.

Furthermore, Mr. Dehelly is prohibited, for the same period and except with the prior and express
written authorisation of the management bodies of the Equant Group, from directly or indirectly
soliciting the clients of the Company or the Equant Group with whom he had contact over the
12-month period prior to his departure from the Company for any directly competing activity.

ARTICLE 13. RESTITUTION

Upon the termination of this employment contract for any reason whatsoever, Mr. Dehelly undertakes
to return to the Company all documents, books, materials, records, correspondence, codes, computer
software, computer specifications, papers and information in any media whatsoever and wherever they
may be kept, relating to the business of the Company or any other company of the Equant Group.

Mr. Dehelly also undertakes to return any computer disks on which information relating to the
business is stored and any keys, credit cards and other property including the company car
belonging to the Company or any other entity related to it, which are in his possession. Within ten
(10) days following the termination of his employment with the Equant Group, Mr. Dehelly will
provide to the Company a written representation that he has complied with the provisions of this
Article 13.

ARTICLE 14. TERMINATION

Each party shall have the right to terminate this employment contract by giving three-months
notice, provided that, the Company may at any time during the three month notice period elect to
terminate Mr. Dehelly’s employment during the notice period and pay him his salary then in effect
and provide him with medical benefits for the remainder of the notice period, in

 

 

- 7 -

satisfaction of any applicable statutory notice requirements. However, this three-month notice
period is not required in the event of a dismissal for serious misconduct (“faute grave”) or gross
misconduct (“faute lourde”).

If at any time on or after the Effective Date the Company terminates Mr. Dehelly’s employment
without Cause or Mr. Dehelly terminates his employment for Good Reason, as such terms are defined
in the Guarantee Agreement, Mr. Dehelly shall be entitled, subject to Mr. Dehelly’s execution of a
release in the form provided to Mr. Dehelly by the Company, to receive the amounts set forth in the
Guarantee Agreement as soon as practicable after the effective date of such release, on the terms
and conditions set forth in the Guarantee Agreement.

ARTICLE 15. APPLICABLE LAW

This employment contract shall be governed by French law.

The French Courts will be the only competent jurisdiction with regard to the performance,
interpretation and termination of this Employment Contract.

Executed in Paris

As of this 23rd December 2004..

In two originals

	 	 	 
	/s/ Barbara Dalibard

	 	/s/ Charles Dehelly
	For the Company1

	 	Mr. Charles Dehelly1
	Ms. Barbara Dalibard
	 	 

	1	 	Signature preceded by the handwritten words
“Read and approved”, each page being previously initialled.

 

 

Executed Copy

EMPLOYMENT AGREEMENT

The undersigned:

1. EQUANT N.V., established at Heathrowstraat 10, 1043 CH Amsterdam, the Netherlands, represented
by Ms. Barbara Dalibard, its Chairman of the Supervisory Board, hereinafter “the Company”;

and

2. Mr. Charles Dehelly residing at 106, rue Charles Laffitte, 92200 Neuilly-sur Seine, France
hereinafter “the Managing Director”;

Whereas:

• The Managing Director is also an employee of Equant France S.A. established at 190 avenue de
France, 75013 Paris in France and in connection with such employment, the Managing Director entered
into an Employment Contract dated as of December 23, 2004 with Equant France S.A. (the “Equant
France S.A. Employment Agreement”).

• The Managing Director is also party to a Guarantee Agreement dated as of December 23, 2004 with
the Company and Equant France S.A. (the “Guarantee Agreement”).

Declare and have agreed as follows:

	1.  	DATE OF COMMENCEMENT OF EMPLOYMENT AND POSITION
	 
	1.1.  	The Managing Director shall enter into an employment agreement with the Company in the
position of managing director (in Dutch: “statutair directeur”), effective as of December 24,
2004 (the “Effective Date”), it being understood that such appointment shall be subject to the
confirmation of the Company’s shareholders at a duly convened meeting thereof.
	 
	1.2.  	The Managing Director’s place of employment will be the office of the Company in Amsterdam.
The Company will be entitled to change the place of employment after consultation with the
Chairman of the Supervisory Board.
	 
	1.3.  	The Managing Director shall fulfill all obligations vested in him by law, laid down in the
articles of association of the Company and in instructions determined or to be determined in a
management regulation.
	 
	1.4.  	The Managing Director is obliged to do or to refrain from doing all that managing directors
in similar positions should do or should refrain from doing. The Managing Director shall fully
devote himself, his time and his energy to promoting the interest of the Company.
	 
	1.5.  	If the Managing Director is a member of the Supervisory Board of another company within the
same group (in Dutch: “q.q. commissariaat”), he will pay the income 

 

 

- 2 -

	  	derived therefrom to the
Company, unless the Company decides otherwise. The Managing Director will not suffer any tax
disadvantage.
	 
	2.  	DURATION OF THE AGREEMENT AND NOTICE OF TERMINATION
	 
	2.1.  	This agreement is entered into for an indefinite period.
	 
	2.2.  	This agreement shall terminate in any event, without notice being required, on the first day
of the month following the date on which the Managing Director reaches the age of 65, unless
the Managing Director’s pension scheme provides for a different date.
	 
	2.3.  	The agreement may be terminated by either party with due observance of the statutory notice
period.
	 
	2.4.  	The Managing Director shall perform his duties under this agreement on a part-time basis,
during approximately 4 hours a week.
	 
	2.5.  	At the termination of this agreement the Managing Director shall resign from the Supervisory
Board position(s) held by him as referred to in article 1.5 of this agreement.
	 
	2.6.  	This Agreement will terminate automatically upon the termination of the Managing Director’s
employment with Equant France S.A.
	 
	3.  	SALARY
	 
	3.1.  	The Managing Director’s salary shall amount to sixty thousand euros (€ 60,000) gross per
year, which shall be paid in twelve equal instalments at the end of each month (the “Base
Salary”). This amount includes any amount to which the Managing Director shall be entitled as
payment as holiday allowance.
	 
	3.2.  	With respect to all payments to the Managing Director, the Company will make the usual
withholdings for wage tax and social security premiums.
	 
	4.  	BONUS
	 
	4.1.  	The Company shall provide the Managing Director with the opportunity to earn semi-annual cash
bonuses for each fiscal year based on six-month performance cycles (each such semi-annual cash
bonus, the “Bonus”). The Bonus shall be based upon the Company’s achievement of reasonable
performance goals (the “Performance Goals”) established by the Compensation Committee for each
bonus cycle prior to each period with respect to which the Bonus relates. The Compensation
Committee shall in its discretion determine the extent to which these
Performance Goals are or are not met in any cycle. The target bonus (the “Target Bonus”)
for each cycle shall be equal to 50% of the Managing Director’s Base Salary

 

 

- 3 -

	   	for that
cycle, and could reach up to 66% thereof if the Performance Goals is exceeded.
	 
	5.  	EXPENSES
	 
	5.1.  	To the extent the Company has given prior approval for such expenses, the Company shall
reimburse all reasonable expenses incurred by the Managing Director in the performance of his
duties upon submission of all the relevant invoices and vouchers.
	 
	6.  	HOLIDAYS
	 
	6.1.  	The Managing Director shall be entitled to 2 working days vacation per year. In taking
vacation, the Managing Director shall duly observe the interests of the Company.
	 
	7.  	SICKNESS
	 
	7.1.  	In the event of sickness as defined in article 7:629 of the Civil Code, the Managing Director
shall notify the Company as soon as possible, but nevertheless before 10:00 o’clock at the
latest on the first day of sickness. The Managing Director shall observe the Company’s policy
pertaining to sickness, as determined by the Company from time to time.
	 
	7.2.  	In the event of sickness, the Company shall pay to the Managing Director from the first day
of sickness 100% of his salary as defined in article 3.1 up to a maximum of 52 weeks as from
the first day of sickness. The above applies, however, only if and to the extent that pursuant
to the requirements of article 7:629, sub 3 through 7 and 9 of the Civil Code, the Company is
under the obligation to continue to pay the salary in accordance with article 7:629, sub 1 of
the Civil Code.
	 
	7.3.  	The Managing Director shall not be entitled to the salary payment referred to in paragraph 2
of this article, if and to the extent that in correction with his sickness, he can validly
claim damages from a third party on account of loss of salary and if and to the extent that
the payments by the Company set forth in paragraph 2 of this article exceed the minimum
obligation referred to in article 7:629 sub 1 of the Civil Code. In this event, the Company
shall satisfy payment solely by means of an advanced payment on the compensation to be
received from the third party and upon assignment by the Managing Director of his rights to
damages vis-à-vis the third party concerned up to the total amount of advanced payments made.
The advanced payments shall be set-off by the Company if the compensation is paid or, as the
case may be, in proportion thereto.
	 
	8.  	PENSION
	 
	8.1.  	The Managing Director shall not participate in the pension scheme of the Company.

 

 

- 4 -

	9.  	CONFIDENTIALITY
	 
	9.1.  	The Managing Director shall throughout the duration of this agreement and after this
agreement has been terminated for whatever reason, refrain from disclosing in any manner to
any individual (including other personnel of the Company or of other companies affiliated with
the Company unless such personnel must be informed in connection with their work activities
for the Company) any information of a confidential nature concerning the Company or other
companies affiliated with the Company, which has become known to the Managing Director as a
result of his employment with the Company and of which the Managing Director knows or should
have known to be of a confidential nature.
	 
	9.2.  	If the Managing Director breaches the obligations pursuant to paragraph 1 of this article,
the Managing Director shall contrary to article 7:650, sub 3, 4 and 5 of the Civil Code,
without any notice of default being required, pay to the Company for each breach thereof, a
penalty amounting to € 5,000. Alternatively, the Company will be entitled to claim full
damages.
	 
	10.  	DOCUMENTS
	 
	10.1.  	The Managing Director shall not have nor keep in his possession any documents and/or
correspondence and/or data carriers and/or copies thereof in any manner whatsoever, which
belong to the Company or to other companies affiliated with the Company and which have been
made available to the Managing Director as a result of his employment, except insofar as and
for as long as necessary for the performance of his work for the Company. In any event the
Managing Director will be obliged to return to the Company immediately, without necessitating
the need for any request to be made in this regard, any and all such documents and/or
correspondence and/or data carriers and/or copies thereof at termination of this agreement or
on suspension of the Managing Director from active duty for whatever reason.
	 
	11.  	TERMINATION
	 
	11.1.  	If any time on or after the Effective Date the Company terminates the Managing Directors
employment without Cause or the Managing Director terminates his employment for Good Reason
(as those terms are defined in the Guarantee Agreement), the Managing Director shall be
entitled, subject to the Managing Directors execution of a release in the form provided to the
Managing Director by the Company, to receive the amounts set forth in the Guarantee Agreement
as soon as practicable after the effective date of such release.
	 
	12.  	NON-COMPETITION
	 
	12.1.  	The Managing Director shall throughout the duration of this agreement and for a period of 1
year after termination hereof, not be engaged or involved in any manner, directly or
indirectly, whether for the account of the Managing Director or for the

 

 

- 5 -

	   	account of others, in
any enterprise which conducts activities in a field similar to or otherwise competes with that
of the Company or any of its subsidiaries or affiliated companies nor act as intermediary in
whatever manner directly . This obligation applies solely to any work activities or
involvement of the Managing Director within the territory of the European Union.
	 
	12.2.  	The Managing Director remains under the obligation to adhere to the non-competition clause
referred to in paragraph 1 of this article with respect to the Company, if the Company of the
Managing Director or a part thereof is transferred by the Company to a third party within the
meaning of article 7:662 and onwards of the Civil Code and this agreement terminates before or
at the time of such transfer, while in the event of continuation of the employment agreement
the Managing Director would have entered the employment of the acquirer by operation of law.
	 
	12.3.  	In the event the Managing Director breaches the obligations as expressed in paragraph 1 of
this article, the Company will be entitled to claim full damages as further set forth in
Article 12.3 of the French Employment Contract which is included herein by way of reference.
	 
	13.  	NON-SOLICITATION OF EMPLOYEES
	 
	13.1.  	For a period of two years following termination of the Managing Directors employment with
the Company for any reason, the Managing Director shall not, without the prior written consent
of the Company, directly or indirectly solicit for the purpose of taking away any person who
is an employee of the Company or any of its subsidiaries or affiliated companies.
	 
	14.  	AMENDMENTS
	 
	14.1.  	Amendments to this agreement may only be agreed upon in writing and with regard to the
Company, solely when the competent body of the Company has taken a decision to that effect.
	 
	15.  	APPLICABLE LAW, NO CAO
	 
	15.1.  	This agreement is governed by the laws of the Netherlands.
	 
	15.2.  	No Collective Labour Agreement (in Dutch: “CAO”) is applicable to this agreement.

 

 

- 6 -

In witness whereof, this amended and restated agreement has been signed and executed in duplicate
as of this December 23, 2004, the date on which the Equant Supervisory Board approved the terms of
this Employment Agreement.

	 	 	 
	/s/ Barbara Dalibard

	 	/s/ Charles Dehelly
	 
	 	 
	The Company

	 	The Managing Director
	Ms. Barbara Dalibard

	 	Mr. Charles Dehelly
	Chairman of the Supervisory Board
	 	 

 

 

ENGLISH TRANSLATION

AMENDMENT TO CONTRACT OF EMPLOYMENT

BETWEEN THE UNDERSIGNED

Equant France, a Limited Company with capital of 4 766 723 €, whose registered office is
situate at 190 Avenue de france, 75013 Paris, registered at the Registry of Businesses and
Companies of Paris under the number B 410 065 361, represented by Mr. Jean-Luc GODARD,
authorised to act by for this purpose by Mr. Didier DURIEZ the Managing Director of the
Company

Hervé KAUFFMANN

WHEREAS

Mr Kauffmann was engaged by the Company from 1st July 2004 as Chief Operating Officer on a
permanent contract of employment

At the same time, Mr Kauffmann was designated « Managing Director » of Equant NV a company
incorporated undet the laws of Holland by resolution of the AGM of the said company on 27th October
2004.

This amendment to Mr Kauffmann’s contract of employment serves to revise his salary to take into
account the new responsibilities which Equant NV has accorded to him, the time devoted to his
duties and the salary to be paid to him by the latter (NV)

IT IS HEREBY AGREED AS FOLLOWS

Article 1

Article 6 of Mr Kauffmann’s contract is modified as follows :

In consideration of his services, Mr Kauffmann’s flat-rate annual gross salary will be fixed at
€198,000 (one hundred and ninety thousand Euros) paid in 12 equal monthly instalments of €16,500
gross (Sixteen thousand five hundred euros)

Article 2 :

The amount of annual bonus stipulated at article 7 of Mr Kauffmann’s contract of employment is
adjusted proportionate to his new gross annual salary set out in Article 1 of this amendment

The same applies to the amounts of all payments stipulated in Mr Kauffmann’s contract of employment
to be calculate based on his gross annual base salary.

Article 3 :

It is agreed that :

Equant will pay for tax advice and assistance from specialist advisers of Mr Kauffmann’s choice up
to a maximum of 5000 Euros gross, to deal with the PAYE formalities

Equant will repay, up to a maximum limit of 3000 Euros, preparation of his tax returns for France

 

 

Equant is, accordingly, not responsible for any failure of fiscal obligations by Mr Kauffmann

Article 4 :

All the social benefits enjoyed by Mr Kauffmann as a result of his employment by Equant, as well as
those provided for executives at his level as set out in Article 13 of the contract of employment
of 1st July 2004 will be calculated on the basis of the total remuneration paid by Equant France SA
and by Equant NV. Corresponding contributions will be calculated within the the legal and
contractual limits in force in France

Generally, the social security contributions, pension and provisions will be paid in France on the
total remuneration received by Mr Kauffmann, according to the prevailing European arrangements but
subject to the prevailing arrangements in the Netherlands.

Article 5 :

This amendment comes into effect on 1st november 2004

The remaining terms of Mr Kaufmann’s contract of employment remain unchanged

Paris 7 December 2004

	 	 	 
	/s/ Hervé KAUFFMANN

	 	/s/ Jean-Luc GODARD

 

 

Employment agreement

The undersigned:

          1. EQUANT N.V., (“Equant”) established at Heathrowstraat 10 ( 1043 CH) Amsterdam, The
Netherlands, represented by Michael Berg, hereinafter “the Company”;

and

               2. Herve Kaufman residing at 132, avenue de Wagram 75017 Paris France
hereinafter “the Managing Director”;

Whereas:

	•  	The Managing Director is appointed as Managing Director of the Company by a resolution of
the general meeting of shareholders, dated 27 October, 2004. The parties desire to set forth
the terms and conditions applying to the Managing Director’s employment in this agreement.
	 
	•  	The Managing Director is also an employee with Equant France SA, established at
190 Avenue de France, 75013 Paris.

Declare and have agreed as follows:

	1.  	Date of Commencement of Employment and Position

	 	1.1.  	The Managing Director shall enter into an employment agreement with the Company
in the position of managing director (in Dutch: “statutair directeur”), effective as of
27 October, 2004.
	 
	 	1.2.  	The Managing Director’s place of employment will be the office of the Company in
Amsterdam. The Company will be entitled to change the place of employment after
consultation with the Managing Director.
	 
	 	1.3.  	The Managing Director shall fulfil all obligations vested in him by law, laid
down in the articles of association of the Company and in instructions determined or to
be determined in a management regulation.
	 
	 	1.4.  	The Managing Director is obliged to do or to refrain from doing all that managing
directors in similar positions should do or should refrain from doing. The Managing
Director shall fully devote himself, his time and his energy to promoting the interest
of the Company.
	 
	 	1.5.  	If the Managing Director is a member of the Supervisory Board of another company
within the same group (in Dutch: “q.q.-commissariaat”), he will pay the income derived
therefrom to the Company, unless the Company decides otherwise. The Managing Director
will not suffer any tax disadvantage.

 

 

	2.  	Duration of the Agreement and Notice of Termination

	 	2.1.  	This agreement is entered into for an indefinite period.
	 
	 	2.2.  	This agreement shall terminate in any event, without notice being required, on
the first day of the month following the date on which the Managing Director reaches the
age of 65, unless the Managing Director’s pension scheme provides for a different date.
	 
	 	2.3.  	The agreement may be terminated by either party with due observance of the
statutory notice period.
	 
	 	2.4.  	The Managing Director shall perform his duties under this agreement on a
part-time basis, during approximately 4 hours a week.
	 
	 	2.5.  	At the termination of this agreement the Managing Director shall resign from the
Supervisory Board position(s), if any held by him as referred to in article 1.5 of this
agreement.

	3.  	Compensation and Benefits

	 	3.1  	Salary

	 	(i)  	The Managing Director’s salary shall amount to EURO 22,000
(twenty-two thousand Euros) gross per year, which shall be paid in twelve equal
instalments at the end of each month (the “Base Salary”). The Managing Director
shall not be entitled to the payment of a holiday allowance, in addition to the
Base Salary.
	 
	 	(ii)  	With respect to all payments to the Managing Director, the Company will
make the usual withholdings for wage tax and social security premiums.

	 	3.2  	Bonuses

	 	(i)  	Equant shall provide Managing Director with the opportunity to earn an
annual cash bonus in accordance with the terms of the published bonus program (the
“Performance Bonus”). The Performance Bonus shall be based upon the achievement of
performance goals established by the Chief Executive Officer and any corporate
financial performance metrics (the “Performance Goals” established under the
published bonus program and shall be equal to fifty percent (50%) of the Managing
Director’s Base Salary (the Target Bonus”). The amount of the Target Bonus payable
as the Performance Bonus to Managing Director shall depend upon the relative
achievement of the Performance Goals. Such Performance Bonus shall not exceed
fifty (50%) of the Managing Director’s Base Salary, if performance Goals are
achieved at one-hundred percent (100%), and be payable in accordance with Equant’s
customary practices for similarly situated Managing Directors of Equant.

2

 

	 	   	At Equant’s option, the Performance Bonus program described in
this Article 3.2 (ii) may be administered on a six-month, rather than an
annual, basis.

	 	3.3  	Pension

	 	(i)  	The Managing Director shall not participate in the pension scheme of the Company.

	 	3.4  	Equant 1998 Share Option Plan and Other Equity-Based Plans.

	 	(i)  	Managing Director shall be eligible to participate in the Equant 1998
Share Option Plan and to participate in such other equity or equity-based plans as
may be implemented from time to time.

	4.  	Expenses

	 	4.1.  	To the extent the Company has given prior approval for such expenses, the Company
shall reimburse all reasonable expenses incurred by the Managing Director in the
performance of his duties upon submission of all the relevant invoices and vouchers.

	5.  	Holidays

	 	5.1.  	The Managing Director shall be entitled to 2 working days vacation per year. In
taking vacation, the Managing Director shall duly observe the interests of the Company.

	6.  	Sickness

	 	6.1.  	In the event of sickness as defined in article 7:629 of the Civil Code, the
Managing Director shall notify the Company as soon as possible, but nevertheless before
10:00 o’clock at the latest on the first day of sickness. The Managing Director shall
observe the Company’s policy pertaining to sickness, as determined by the Company from
time to time.
	 
	 	6.2.  	In the event of sickness, the Company shall pay to the Managing Director from the
first day of sickness 100% of his salary as defined in Article 3.1 up to a maximum of 52
weeks as from the first day of sickness. The above applies, however, only if and to the
extent that pursuant to the requirements of article 7:629, sub 3 through 7 and 9 of the
Civil Code, the Company is under the obligation to continue to pay the salary in
accordance with article 7:629, sub 1 of the Civil Code.
	 
	 	6.3.  	The Managing Director shall not be entitled to the salary payment referred to in
paragraph 2 of this article, if and to the extent that in connection with his sickness,
he can validly claim damages from a third party on account of loss of salary and if and
to the extent that the payments by the Company set forth in paragraph 2 of this article
exceed the minimum obligation referred to in article 7:629 sub 1 of the Civil Code. In
this event, the Company shall satisfy payment solely by means of an advanced payment on
the compensation to be received from the third party and upon assignment by the Managing
Director of his rights to damages vis-à-vis the third party concerned up to the total
amount of advanced payments made. The advanced payments shall be set-off by the Company
if the compensation is paid or, as the case may be, in proportion thereto.

3

 

	7.  	Confidentiality

	 	7.1.  	The Managing Director shall throughout the duration of this agreement and after
this agreement has been terminated for whatever reason, refrain from disclosing in any
manner to any individual (including other personnel of the Company or of other companies
affiliated with the Company unless such personnel must be informed in connection with
their work activities for the Company) any information of a confidential nature
concerning the Company or other companies affiliated with the Company, which has become
known to the Managing Director as a result of his employment with the Company and of
which the Managing Director knows or should have known to be of a confidential nature.
	 
	 	7.2.  	If the Managing Director breaches the obligations pursuant to paragraph 1 of this
article, the Managing Director shall contrary to article 7:650, sub 3, 4 and 5 of the
Civil Code, without any notice of default being required, pay to the Company for each
breach thereof, a penalty amounting to € 5,000. Alternatively, the Company will be
entitled to claim full damages.

	8.  	Documents

	 	8.1.  	The Managing Director shall not have nor keep in his possession any documents
and/or correspondence and/or data carriers and/or copies thereof in any manner
whatsoever, which belong to the Company or to other companies affiliated with the
Company and which have been made available to the Managing Director as a result of his
employment, except insofar as and for as long as necessary for the performance of his
work for the Company. In any event the Managing Director will be obliged to return to
the Company immediately, without necessitating the need for any request to be made in
this regard, any and all such documents and/or correspondence and/or data carriers
and/or copies thereof at termination of this agreement or on suspension of the Managing
Director from active duty for whatever reason.

	9.  	Non-solicitation of Employees

	 	9.1.  	For a period of one year following termination of the Managing Directors
employment with the Company for any reason, the Managing Director shall not, without the
prior written consent of the Company, directly or indirectly solicit for the purpose of
taking away any person who is an employee of the Company or any of its subsidiaries or
affiliated companies.

	10.  	Amendments

	 	10.1.  	Amendments to this agreement may only be agreed upon in writing and with regard
to the Company, solely when the competent body of the Company has taken a decision to
that effect.

	11.  	Applicable Law, No CAO

	 	11.1.  	The laws of the Netherlands govern this agreement.
	 
	 	11.2.  	No Collective Labour Agreement (in Dutch: “CAO”) is applicable to this
agreement.

4

 

In witness whereof, this agreement has been signed and executed in duplicate this 27 day of
October, 2004.

	 	 	 	 	 	 	 
	/s/ Michael Berg

	 	 	 	/s/ Herve Kaufman
	 	 
	 

	 	 	 	 	 	 
	The Company

	 	 	 	The Managing Director	 	 
	Michael Berg

	 	 	 	Herve Kaufman	 	 

5

 

CONTRACT OF EMPLOYMENT

BETWEEN THE UNDERSIGNED

Equant France SA, a Limited Company with capital of 6 004 896 €, whose registered office is situate
at 190 avenue de France, 75013 Paris, registered at the Registry of Businesses and Companies of
Paris under the number B 410 065 361, represented by M Didier DURIEZ, President and Managing
Director of the Company acting under an authotoru dated 1st january 2004 attached hereto

hereafter “the Company”

On the one hand

and

Monsieur Yves GUILLAUMOT

a french national

living at

62 04 75 012 031

2, Place Neuve

1204 GENEVE, Switzerland

hereafter “Mr. Guillaumot”

On the other hand

hereafter together known as « the Parties

IT IS HEREBY AGREED AS FOLLOWS

This contract cancels and replaces any other pre-existing contract

Article 1: Effective date-Period-Function

From 1st July 2004 Mr. Guillaumot who accepts this, will fulfil the functions of «
Chief Financial Officer » for the Equant Group

As Chief Operating Officer Mr. Guillaumot will have the rank of Senior Executive without
classification conforming to the classification of the Collective Agreement applicable to the
Company Equant France SA

To this end, the Company informs Mr. Guillaumot that the Collective Agreement (Works Council
agreement with management) corresponding to the activities of the Company is, actually, that of
Telecommunications and that a company agreement is actually in force since 1st January
2004; it being understood that the reference to the applicable Collective Agreement does not form
an essential part of the current employment contract as the Parties expressly acknowledge by the
signature hereof.

1

 

Mr. Guillaumot must inform the Company in advance of any change in his personal circumstances
(address or otherwise), which change the statements made at the time of his appointment.

Mr. Guillaumot informs the Company Equant France SA that he is free from all undertakings and is
bound by no clause likely to impede his freedom of engagement, notably; non-competition or
non-solicitation clauses, as at the date of signature hereof capable of rendering liable Equant
France SA or any other company of the Equant Group (all companies controlled by Equant NV., in
accordance with Art L233-3 of the Business Code)

Article 2 : Functions

In his role as « Chief Financial Officer » of Equant NV Mr. Guillaumot will carry out his duties on
behalf of the Company or for any other company of the Equant Group , being clear that the nature of
those duties have a developing character according to the requirements for change and the needs of
the Company and the EQUANT GROUP

It is equally understood that these (described) duties are not in any way exhaustive, the Company
reserving the right to modify them provided that the changes are compatible with the experience and
role of Mr. Guillaumot

Article 3 : Lieu de Travail

Mr. Guillaumot will principally work from the registered office of the Company being 190, Avenue de
France, Paris

At all times, given the nature of his role, Mr. Guillaumot will be required to undertake frequent
and temporary travel notably in Europe and in the USA.

Mr. Guillaumot is informed (hereby) and expressly accepts by signature hereof, that his place of
work may be changed to any other place if the exercise of his duties so requires, or if EQUANT
finds it necessary, without such transfer constituting a fundamental change of the present contract
of employment. EQUANT will endeavour to take his personal wishes and career aspirations into
account and will assist him in his redeployment

Should the change in his place of work entail Mr. Guillaumot becoming domiciled outside France, he
will benefit from the mobility package in force at the time for senior Executives of the EQUANT
GROUP

Article 4 : Legal Status

Mr. Guillaumot will be considered as a Senior Executive, notwithstanding this fact, subject to the
provisions of the law, regulations and agreements governing the length of service and he shall be
paid exclusively and at fixed price for the proper execution of the tasks required of him.

Article 5 : Annual Leave

Mr. Guillaumot will have paid holidays according to those normally paid by the Company as well as
supplementary paid leave according to the applicable Collective Agreement or any other provision
applicable

Booking and payment of leave will be according to the rules applying in the Company

2

 

Mr. Guillaumot must take his leave taking into account the needs of the Company and the EQUANT
GROUP.

Article 6 : Salary 

In consideration of his services, Mr Guillaumot’s flat-rate annual gross salary will be fixed at
€260,000 (two hundred and sixty thousand Euros) paid in 12 equal monthly instalments of €21,666.67
gross (twenty one thousand six hundred and sixty six euros sixty seven cents)

On the recommendation of the President of the EQUANT Group a revision of this payment may be made
annually.

Article 7 : Bonus

Mr. Guillaumot may receive, in accordance with the prevailing Equant Bonus Plan and in addition to
his flat-rate annual gross salary (Art 6), a variable amount by way of annual bonus with a target
amount of 50% of his annual gross base salary the amount of which will be determined each year by
reference to the attainment of performance targets

These performance targets will be defined by his organizational superior, during an interview

The nature and mode of assessment of the performance targets to be achieved, as well as eligibility
and the mode of calculation of the amount to be paid, will be the subject of a written amendment
each for a maximum fixed period of one year.

Article 10 : Business Expenses

Reasonable professional fees and expenses incurred by Mr. Guillaumot in the course of his function
will be reimbursed against receipts.

These expenses will be reimbursed according to the rules in force at the Company and in the EQUANT
GROUP

Article 11 : Company Car

The Company will place a company car at the disposition of Mr. Guillaumot according to the rules of
the Company which he may use for his private use, it being understood that this provision will be
declared as a benefit in kind according to the French tax scales on his payslips, or benefit from a
car allowance in lieu of this benefit as permitted by the Remuneration Committee..

The company car must be used in accordance with the rules set out in the Policy “Car Policy” in
force at the Company of which a copy in English is attached to this contract.

On this point, Mr. Guillaumot expressly agrees to accept the use of the English language and
therefore, having read and understood this attachment accepts the obligations therein.

Article 12 : Communications Tools

3

 

The Company supplies to Mr. Guillaumot all the means of telecommunication necessary for the
discharge of his duties which he may use for his private use, it being understood that this
provision will be declared according to the French tax and social security rules on his payslips as
a benefit in kind and that he must use (them) in accordance with the rules in force, within the
Equant Group

Article 13: benefits

Mr. Guillaumot will benefit from schemes in place in the Company for insurances, health, pension
schemes or others set up for the executive employees of the Company and, in particular, the
facility to retain the services of a tax adviser according to the rules laid down by the Company

Article 14 : Sickness Absence

In case of sickness or accident Mr. Guillaumot must inform the Company as soon as possible and in
any event no later than 48 hours save in the case of force majeure.

He must also justify his absence in the same timescale supplying to the Company a medical
certificate and indicating the likely duration of his absence.

Article 15 : Professional Obligations

Article 15.1 Exclusivity

For the whole period of his employment by the Company Mr. Guillaumot undertakes not at any time
without express prior written permission from his organizational superior to engage in any
activity, of any kind, direct or indirect whether in his own name or in the name of any other
person or company which might interfere with his activities or which might compete, directly or
indirectly with the activity of the Company or any other company in the EQUANT GROUP.

Mr. Guillaumot thus irrevocably agrees during his employment by the Company not to do any
collaborative work, advising or assisting any other entity of any kind at all (whether as employee,
contractor, independent or other) as well as any financial backing, promotion or investment in the
business or capital of same.

Article 15. 2 Confidentiality and Trade Secrets

Mr. Guillaumot irrevocably agrees during his employment and at all times after the termination
thereof for any reason, not to use or divulge to any third party directly or indirectly for any
reason whatsoever, any confidential facts and information which he might have obtained during the
course of his employment without the prior written permission of the Company.

He undertakes thus not to divulge any information or documents relating to the business,
operations, transactions or finances of the Company or other companies of the EQUANT GROUP as well
as anything relating to know-how, inventions, techniques, formulas, projects, or concepts without
the aforementioned list being in any way subject to limitation

This undertaking applies equally to all information relating to client relationships, prospects or
suppliers of the Company or any company of the EQUANT GROUP

4

 

These obligations of exclusivity and confidentiality are considered to be fundamental conditions of
this contract of employment.

Article 15.3 Non-Compete Clause

Given the duties of Mr. Guillaumot, the Parties agree that in case of the termination of this
contract (that is top say the date of notification by the employer or that of sending of notice of
termination by the employee) for any reason Mr Guillaumot expressly undertakes not to take part in
or participate directly or indirectly in any capacity in any business which might compete with the
Company or the EQUANT GROUP in the business of data, Internet protocol (IP), voice transmission,
messaging or hosting.

For the purposes of this clause, competitors shall be considered as the principal national
telecommunications operators and the major business competitors of the Company and the EQUANT GROUP
as at the date of termination.

Mr. Guillaumot is also forbidden to hold more than 5% shares in any competitor company or to hold
financial interest above 5% of the profits of any competitor company or a company likely to become
one.

The ban on competition will apply from the last day of Mr. Guillaumot’s service and will last for 6
months

Given the business of the Company and the EQUANT GROUP and their worldwide presence, this ban will
apply to the whole world with the exception of the following countries Asia, Africa and Pacific Rim
(including Australia and NZ) as well as the Middle East.

In consideration of this non-competition obligation and after the ending of his contract by the
Company by way of termination without misconduct/gross misconduct Mr. Guillaumot will receive a
payment equal to 25% of his gross annual basic salary.

For the avoidance of doubt, the gross annual basic salary will mean the gross annual basic salary
paid over the 12 months preceding the termination of the contract of employment excluding all
bonuses annual or otherwise, allowances and other payments which might have been paid during the
period. This payment will be made to Mr. Guillaumot by way of six (6) equal monthly instalments
over the non-competition period.

In case of breach of the non-competition obligation, the compensatory payment set out above will
cease to be due from the Company and Mr. Guillaumot must repay to the Company the monies already
paid under this head

The Company reserves the right (in addition) to seek reparation for any actual prejudice caused as
a result of the fact of the competition activity and to have the activity stopped.

Article 15.4 Non-Solicitation

For 24 months following the date of termination of his contract of employment for any reason, Mr.
Guillaumot undertakes not, whether directly or indirectly, in his own name or in the name of any
other entity, individually or collectively to solicit, manipulate or attempt to lure away any
person who, to his knowledge was at the date of his termination, a consultant or employee of the
Company or any other company of the EQUANT GROUP, without express prior written permission of the
Company.

5

 

Further Mr. Guillaumot undertakes during the same period without the express prior written
permission of his organizational superior not to solicit directly or indirectly the clients of the
Company or of the EQUANT GROUP with whom he has been in contact during the 12 months preceding his
departure from the Company.

Article 16 : Return of Property

At the end of his contract of employment for any reason at all Mr. Guillaumot undertakes to return
to the Company all documents, work, materials, recordings, correspondence, codes, computer
information papers and other information whatsoever, (wherever and on whatever media it may be
held) concerning the Company’s business or that of any other company in the EQUANT GROUP

Mr. Guillaumot undertakes also to return any disks on which data may be recorded relating to the
business and all keys, credit cards and all other goods, in particular the company car, of the
Company or any other entity, which is linked to the Company, which may be in his possession or
under his control. He must produce proof of full compliance with this obligation.

Article 17 : Termination

Each of the Parties has the right to end the present contract on 6 months notice to the other.

This notice period shall not be required in the case of termination for misconduct/gross misconduct

Article 18 : Employment Guarantee Clause

In the event that :

     - The Company terminates his contract of employment following takeover of 100% shares in
Equant by France Telecom

and

     - if no equivalent employment to that held by Mr Guillaumot at the time of such termination can
be offered to him by France Telecom

Mr Guillaumot will receive a maximum payment equal to 12 months gross salary net of all deductible
taxes at the date of notice of redundancy.

The « monthly gross salary » shall include the global annual salary, basic salary and bonus
received by Mr Guillaumot during the last full year of service before the date of redundancy,
divided by 12.

Article 19 : Applicable Law

This contract is subject to French Law

The interpretation and termination of this contract of employment shall only be subject to the
jurisdiction of the French courts,

6

 

Signed in Paris, on January 17, 2005

(two original counterparts)

			
	
Pour la société EQUANT
	 	Monsieur GUILLAUMOT

          Jean-Luc GODARD

Directeur des Ressources Humaines

Annexe :

Un exemplaire de la Politique “Véhicules”

Copie pouvoir

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Employment agreement

The undersigned:

          1. EQUANT N.V., (“Equant”) established at Heathrowstraat 10 ( 1043 CH) Amsterdam, The
Netherlands, represented by Charles Dehelly, hereinafter “the Company”;

and

               2. Yves Guillaumot residing at [ 2, Place Neuve 1204 GENEVE, SUISSE ]
hereinafter “the Managing Director”;

Whereas:

	•  	The Managing Director is appointed as Managing Director of the Company by a resolution of
the general meeting of shareholders, dated 1 April, 2005. The parties desire to set forth the
terms and conditions applying to the Managing Director’s employment in this agreement.
	 
	•  	The Managing Director is also an employee with Equant France SA, established at
190 Avenue de France, 75013 Paris.

Declare and have agreed as follows:

	1.  	Date of Commencement of Employment and Position

	 	1.1.  	The Managing Director shall enter into an employment agreement with the Company
in the position of managing director (in Dutch: “statutair directeur”), effective as of
1 April 2005.
	 
	 	1.2.  	The Managing Director’s place of employment will be the office of the Company in
Amsterdam. The Company will be entitled to change the place of employment after
consultation with the Managing Director.
	 
	 	1.3.  	The Managing Director shall fulfil all obligations vested in him by law, laid
down in the articles of association of the Company and in instructions determined or to
be determined in a management regulation.
	 
	 	1.4.  	The Managing Director is obliged to do or to refrain from doing all that managing
directors in similar positions should do or should refrain from doing. The Managing
Director shall fully devote himself, his time and his energy to promoting the interest
of the Company.
	 
	 	1.5.  	If the Managing Director is a member of the Supervisory Board of another company
within the same group (in Dutch: “q.q.-commissariaat”), he will pay the income derived
therefrom to the Company, unless the Company decides otherwise. The Managing Director
will not suffer any tax disadvantage.

 

 

	2.  	Duration of the Agreement and Notice of Termination

	 	2.1.  	This agreement is entered into for an indefinite period.
	 
	 	2.2.  	This agreement shall terminate in any event, without notice being required, on
the first day of the month following the date on which the Managing Director reaches the
age of 65, unless the Managing Director’s pension scheme provides for a different date.
	 
	 	2.3.  	The agreement may be terminated by either party with due observance of the
statutory notice period.
	 
	 	2.4.  	The Managing Director shall perform his duties under this agreement on a
part-time basis, during approximately 4 hours a week.
	 
	 	2.5.  	At the termination of this agreement the Managing Director shall resign from the
Supervisory Board position(s), if any held by him as referred to in article 1.5 of this
agreement.

	3.  	Compensation and Benefits

	 	3.1  	Salary

	 	(i)  	The Managing Director’s salary shall amount to EUROS Twenty-six
thousand (26,000.00 Euros) gross per year, which shall be paid in twelve equal
instalments at the end of each month (the “Base Salary”). The Managing Director
shall not be entitled to the payment of a holiday allowance, in addition to the
Base Salary.
	 
	 	(ii)  	With respect to all payments to the Managing Director, the Company will
make the usual withholdings for wage tax and social security premiums.

	 	3.2  	Bonuses

	 	(i)  	Equant shall provide Managing Director with the opportunity to earn an
annual cash bonus in accordance with the terms of the published bonus program (the
“Performance Bonus”). The Performance Bonus shall be based upon the achievement of
performance goals established by the Chief Executive Officer and any corporate
financial performance metrics (the “Performance Goals” established under the
published bonus program and shall be equal to fifty percent (50%) of the Managing
Director’s Base Salary (the Target Bonus”). The amount of the Target Bonus payable
as the Performance Bonus to Managing Director shall depend upon the relative
achievement of the Performance Goals. Such Performance Bonus shall not exceed
fifty (50%) of the Managing Director’s Base Salary, if performance Goals are
achieved at one-hundred percent (100%), and be payable in accordance with Equant’s
customary practices for similarly situated Managing Directors of Equant.
	 
	 	   	At Equant’s option, the Performance Bonus program described in
this Article 3.2 (ii) may be administered on a six-month, rather than an
annual, basis.

2

 

	 	3.3  	Pension

	 	(i)  	The Managing Director shall not participate in the pension scheme of the Company.

	4.  	Expenses

	 	4.1.  	To the extent the Company has given prior approval for such expenses, the Company
shall reimburse all reasonable expenses incurred by the Managing Director in the
performance of his duties upon submission of all the relevant invoices and vouchers.

	5.  	Holidays

	 	5.1.  	The Managing Director shall be entitled to 2 working days vacation per year. In
taking vacation, the Managing Director shall duly observe the interests of the Company.

	6.  	Sickness

	 	6.1.  	In the event of sickness as defined in article 7:629 of the Civil Code, the
Managing Director shall notify the Company as soon as possible, but nevertheless before
10:00 o’clock at the latest on the first day of sickness. The Managing Director shall
observe the Company’s policy pertaining to sickness, as determined by the Company from
time to time.
	 
	 	6.2.  	In the event of sickness, the Company shall pay to the Managing Director from the
first day of sickness 100% of his salary as defined in Article 3.1 up to a maximum of 52
weeks as from the first day of sickness. The above applies, however, only if and to the
extent that pursuant to the requirements of article 7:629, sub 3 through 7 and 9 of the
Civil Code, the Company is under the obligation to continue to pay the salary in
accordance with article 7:629, sub 1 of the Civil Code.
	 
	 	6.3.  	The Managing Director shall not be entitled to the salary payment referred to in
paragraph 2 of this article, if and to the extent that in connection with his sickness,
he can validly claim damages from a third party on account of loss of salary and if and
to the extent that the payments by the Company set forth in paragraph 2 of this article
exceed the minimum obligation referred to in article 7:629 sub 1 of the Civil Code. In
this event, the Company shall satisfy payment solely by means of an advanced payment on
the compensation to be received from the third party and upon assignment by the Managing
Director of his rights to damages vis-à-vis the third party concerned up to the total
amount of advanced payments made. The advanced payments shall be set-off by the Company
if the compensation is paid or, as the case may be, in proportion thereto.

	7.  	Confidentiality

	 	7.1.  	The Managing Director shall throughout the duration of this agreement and after
this agreement has been terminated for whatever reason, refrain from disclosing in any
manner to any individual (including other personnel of the Company or of other companies
affiliated with the Company unless such personnel must be informed in connection with
their work activities for the Company) any information of a confidential nature
concerning the Company or other companies affiliated with the Company, which has become
known to the

3

 

	 	   	Managing Director as a result of his employment with the Company and of which the
Managing Director knows or should have known to be of a confidential nature.
	 
	 	7.2.  	If the Managing Director breaches the obligations pursuant to paragraph 1 of this
article, the Managing Director shall contrary to article 7:650, sub 3, 4 and 5 of the
Civil Code, without any notice of default being required, pay to the Company for each
breach thereof, a penalty amounting to € 5,000. Alternatively, the Company will be
entitled to claim full damages.

	8.  	Documents

	 	8.1.  	The Managing Director shall not have nor keep in his possession any documents
and/or correspondence and/or data carriers and/or copies thereof in any manner
whatsoever, which belong to the Company or to other companies affiliated with the
Company and which have been made available to the Managing Director as a result of his
employment, except insofar as and for as long as necessary for the performance of his
work for the Company. In any event the Managing Director will be obliged to return to
the Company immediately, without necessitating the need for any request to be made in
this regard, any and all such documents and/or correspondence and/or data carriers
and/or copies thereof at termination of this agreement or on suspension of the Managing
Director from active duty for whatever reason.

	9.  	Non-solicitation of Employees

	 	9.1.  	For a period of one year following termination of the Managing Directors
employment with the Company for any reason, the Managing Director shall not, without the
prior written consent of the Company, directly or indirectly solicit for the purpose of
taking away any person who is an employee of the Company or any of its subsidiaries or
affiliated companies.

	10.  	Amendments

	 	10.1.  	Amendments to this agreement may only be agreed upon in writing and with regard
to the Company, solely when the competent body of the Company has taken a decision to
that effect.

	11.  	Applicable Law, No CAO

	 	11.1.  	The laws of the Netherlands govern this agreement.
	 
	 	11.2.  	No Collective Labour Agreement (in Dutch: “CAO”) is applicable to this
agreement.

In witness whereof, this agreement has been signed and executed in duplicate this 1st
day of April, 2005.

	 	 	 	 	 	 	 
	/s/ Charles Dehelly

	 	 	 	/s/ Yves Guillaumot
	 	 
	 

	 	 	 	 	 	 
	The Company

	 	 	 	The Managing Director	 	 
	Charles Dehelly

	 	 	 	Yves Guillaumot	 	 

4<PAGE>
                                                                    EXHIBIT 10.3

                         MICRUS ENDOVASCULAR CORPORATION
                           2005 EQUITY INCENTIVE PLAN

1.    PURPOSE OF THIS PLAN

      The purpose of this 2005 Equity Incentive Plan is to enhance the long-term
stockholder value of Micrus Endovascular Corporation by offering opportunities
to eligible individuals to participate in the growth in value of the equity of
Micrus Endovascular Corporation

2.    DEFINITIONS AND RULES OF INTERPRETATION

      2.1   DEFINITIONS.

      This Plan uses the following defined terms:

            (a) "ADMINISTRATOR" means the Board or the Committee, or any officer
or employee of the Company to whom the Board or the Committee delegates
authority to administer this Plan.

            (b) "AFFILIATE" means a "parent" or "subsidiary" (as each is defined
in Section 424 of the Code) of the Company and any other entity that the Board
or Committee designates as an "Affiliate" for purposes of this Plan.

            (c) "APPLICABLE LAW" means any and all laws of whatever
jurisdiction, within or without the United States, and the rules of any stock
exchange or quotation system on which Shares are listed or quoted, applicable to
the taking or refraining from taking of any action under this Plan, including
the administration of this Plan and the issuance or transfer of Awards or Award
Shares.

            (d) "AWARD" means a Stock Award (e.g. restricted stock unit award),
SAR, Cash Award, or Option granted in accordance with the terms of this Plan.

            (e) "AWARD AGREEMENT" means the document evidencing the grant of an
Award.

            (f) "AWARD SHARES" means Shares covered by an outstanding Award or
purchased under an Award.

            (g) "AWARDEE" means: (i) a person to whom an Award has been granted,
including a holder of a Substitute Award, (ii) a person to whom an Award has
been transferred in accordance with all applicable requirements of Sections 6.5,
7(h), and 17.

            (h) "BOARD" means the Board of Directors of the Company.

            (i) "CASH AWARD" means the right to receive cash as described in
Section 8.3.

<PAGE>

            (j) "CAUSE" shall mean: (i) an Awardee's gross negligence or willful
failure substantial to perform his or her duties and responsibilities to the
Company or deliberate violation of a Company policy; (ii) an Awardee's
commission of any act of fraud, embezzlement, dishonesty or any other willful
misconduct that has caused or is reasonably unexpected to result in material
injury to the Company; (iii) unauthorized use or disclosure by an Awardee of any
proprietary information or trade secrets of the Company or any other party to
whom an Awardee owes an obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) an Awardee's willful breach of any of his
or her obligations under any written agreement or covenant with the Company. The
determination as to whether an Awardee is being terminated for Cause shall be
made in good faith by the Company and shall be final and binding on the Awardee.

            (k) "CHANGE IN CONTROL" means any transaction or event that the
Board specifies as a Change in Control under Section 10.4.

            (l) "CODE" means the Internal Revenue Code of 1986.

            (m) "COMMITTEE" means a committee composed of Company Directors
appointed in accordance with the Company's charter documents and Section 4.

            (n) "COMPANY" means Micrus Endovascular Corporation, a Delaware
corporation.

            (o) "COMPANY DIRECTOR" means a member of the Board.

            (p) "CONSULTANT" means an individual who, or an employee of any
entity that, provides bona fide services to the Company or an Affiliate not in
connection with the offer or sale of securities in a capital-raising
transaction, but who is not an Employee.

            (q) "CORPORATE TRANSACTION" means any transaction or event described
in Section 10.3.

            (r) "DIRECTOR" means a member of the Board of Directors of the
Company or an Affiliate.

            (s) "DIVESTITURE" means any transaction or event that the Board
specifies as a Divestiture under Section 10.5.

            (t) "DOMESTIC RELATIONS ORDER" means a "domestic relations order" as
defined in, and otherwise meeting the requirements of, Section 414(p) of the
Code, except that reference to a "plan" in that definition shall be to this
Plan.

            (u) "EFFECTIVE DATE" means the first date of the sale by the Company
of shares of its capital stock in an initial public offering pursuant to a
registration statement on Form S-1 filed with the SEC.

                                       2
<PAGE>

            (v) "EMPLOYEE" means a regular employee of the Company or an
Affiliate, including an officer or Director, who is treated as an employee in
the personnel records of the Company or an Affiliate, but not individuals who
are classified by the Company or an Affiliate as: (i) leased from or otherwise
employed by a third party, (ii) independent contractors, or (iii) intermittent
or temporary workers. The Company's or an Affiliate's classification of an
individual as an "Employee" (or as not an "Employee") for purposes of this Plan
shall not be altered retroactively even if that classification is changed
retroactively for another purpose as a result of an audit, litigation or
otherwise. An Awardee shall not cease to be an Employee due to transfers between
locations of the Company, or between the Company and an Affiliate, or to any
successor to the Company or an Affiliate that assumes the Awardee's Options
under Section 10. Neither service as a Director nor receipt of a director's fee
shall be sufficient to make a Director an "Employee."

            (w) "EXCHANGE ACT" means the Securities Exchange Act of 1934.

            (x) "EXECUTIVE" means, if the Company has any class of any equity
security registered under Section 12 of the Exchange Act, an individual who is
subject to Section 16 of the Exchange Act or who is a "covered employee" under
Section 162(m) of the Code, in either case because of the individual's
relationship with the Company or an Affiliate. If the Company does not have any
class of any equity security registered under Section 12 of the Exchange Act,
"Executive" means any (i) Director, (ii) officer elected or appointed by the
Board, or (iii) beneficial owner of more than 10% of any class of the Company's
equity securities.

            (y) "EXPIRATION DATE" means, with respect to an Award, the date
stated in the Award Agreement as the expiration date of the Award or, if no such
date is stated in the Award Agreement, then the last day of the maximum exercise
period for the Award, disregarding the effect of an Awardee's Termination or any
other event that would shorten that period.

            (z) "FAIR MARKET VALUE" means the value of Shares as determined
under Section 18.2.

            (aa) "GRANT DATE" means the date the Administrator approves the
grant of an Award. However, if the Administrator specifies that an Award's Grant
Date is a future date or the date on which a condition is satisfied, the Grant
Date for such Award is that future date or the date that the condition is
satisfied.

            (bb) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option under Section 422 of the Code and designated as an
Incentive Stock Option in the Award Agreement for that Option.

            (cc) "NONSTATUTORY OPTION" means any Option other than an Incentive
Stock Option.

            (dd) "NON-EMPLOYEE DIRECTOR" means any person who is a member of the
Board but is not an Employee of the Company or any Affiliate of the Company and
has not been an Employee of the Company or any Affiliate of the Company at any
time during the preceding

                                       3
<PAGE>

twelve months. Service as a Director does not in itself constitute employment
for purposes of this definition.

            (ee) "OBJECTIVELY DETERMINABLE PERFORMANCE CONDITION" shall mean a
performance condition (i) that is established (A) at the time an Award is
granted or (B) no later than the earlier of (1) 90 days after the beginning of
the period of service to which it relates, or (2) before the elapse of 25% of
the period of service to which it relates, (ii) that is uncertain of achievement
at the time it is established, and (iii) the achievement of which is
determinable by a third party with knowledge of the relevant facts. Examples of
measures that may be used in Objectively Determinable Performance Conditions
include net order dollars, net profit dollars, net profit growth, net revenue
dollars, revenue growth, individual performance, earnings per share, return on
assets, return on equity, and other financial objectives, objective customer
satisfaction indicators and efficiency measures, each with respect to the
Company and/or an Affiliate or individual business unit.

            (ff) "OFFICER" means an officer of the Company as defined in Rule
16a-1 adopted under the Exchange Act.

            (gg) "OPTION" means a right to purchase Shares of the Company
granted under this Plan.

            (hh) "OPTION PRICE" means the price payable under an Option for
Shares, not including any amount payable in respect of withholding or other
taxes.

            (ii) "OPTION SHARES" means Shares covered by an outstanding Option
or purchased under an Option.

            (jj) "PLAN" means this 2005 Equity Incentive Plan of Micrus
Endovascular Corporation

            (kk) "PRIOR PLANS" means the Company's 1998 Stock Plan and 1996
Stock Option Plan.

            (ll) "PURCHASE PRICE" means the price payable under a Stock Award
for Shares, not including any amount payable in respect of withholding or other
taxes.

            (mm) "RULE 16B-3" means Rule 16b-3 adopted under Section 16(b) of
the Exchange Act.

            (nn) "SAR" OR "STOCK APPRECIATION RIGHT" means a right to receive
cash based on a change in the Fair Market Value of a specific number of Shares
pursuant to an Award Agreement, as described in Section 8.1.

            (oo) "SECURITIES ACT" means the Securities Act of 1933.

            (pp) "SHARE" means a share of the common stock of the Company or
other securities substituted for the common stock under Section 10.

                                       4
<PAGE>

            (qq) "STOCK AWARD" means an offer by the Company to sell shares
subject to certain restrictions pursuant to the Award Agreement as described in
Section 8.2 or, as determined by the Committee, a notional account representing
the right to be paid an amount based on Shares.

            (rr) "SUBSTITUTE AWARD" means a Substitute Option, Substitute SAR or
Substitute Stock Award granted in accordance with the terms of this Plan.

            (ss) "SUBSTITUTE OPTION" means an Option granted in substitution
for, or upon the conversion of, an option granted by another entity to purchase
equity securities in the granting entity.

            (tt) "SUBSTITUTE SAR" means a SAR granted in substitution for, or
upon the conversion of, a stock appreciation right granted by another entity
with respect to equity securities in the granting entity.

            (uu) "SUBSTITUTE STOCK AWARD" means a Stock Award granted in
substitution for, or upon the conversion of, a stock award granted by another
entity to purchase equity securities in the granting entity.

            (vv) "TERMINATION" means that the Awardee has ceased to be, with or
without any cause or reason, an Employee, Director or Consultant. However,
unless so determined by the Administrator, or otherwise provided in this Plan,
"Termination" shall not include a change in status from an Employee, Consultant
or Director to another such status. An event that causes an Affiliate to cease
being an Affiliate shall be treated as the "Termination" of that Affiliate's
Employees, Directors, and Consultants.

      2.2   RULES OF INTERPRETATION.

      Any reference to a "Section," without more, is to a Section of this Plan.
Captions and titles are used for convenience in this Plan and shall not, by
themselves, determine the meaning of this Plan. Except when otherwise indicated
by the context, the singular includes the plural and vice versa. Any reference
to a statute is also a reference to the applicable rules and regulations adopted
under that statute. Any reference to a statute, rule or regulation, or to a
section of a statute, rule or regulation, is a reference to that statute, rule,
regulation, or section as amended from time to time, both before and after the
Effective Date and including any successor provisions.

      3.    SHARES SUBJECT TO THIS PLAN; TERM OF THIS PLAN

      3.1   NUMBER OF AWARD SHARES.

      The Shares issuable under this Plan shall be authorized but unissued or
reacquired Shares, including Shares repurchased by the Company on the open
market. The number of Shares initially reserved for issuance over the term of
this Plan shall be 2,222,220 increased by (i) the number of Shares available for
issuance, as of the Effective Date, under the Prior Plans as last approved by
the Company's stockholders, including the Shares subject to outstanding options

                                       5
<PAGE>

under the Prior Plans, plus (ii) those Shares issued under the Prior Plans that
are forfeited or repurchased by the Company or that are issuable upon exercise
of options granted pursuant to the Prior Plans that expire or become
unexercisable for any reason without having been exercised in full after the
Effective Date, plus (iii) those Shares that are restored pursuant to the
decision of the Board or Committee pursuant to Section 6.4(a) to deliver only
such Shares as are necessary to award the net Share appreciation. The maximum
number of Shares shall be cumulatively increased on the first April 1 after the
Effective Date and each April 1 thereafter for 9 more years, by a number of
Shares equal to the lesser of (a) five percent (5%) of the number of Shares
issued and outstanding on the immediately preceding March 31, (b) 666,666
Shares, and (c) a number of Shares set by the Board. Except as required by
applicable law, the number of Shares reserved for issuance under this Plan shall
not be reduced until the earlier of the date such Shares are vested pursuant to
the terms of the applicable Award or the actual date of delivery of the Shares
to the Awardee. Also, if an Award later terminates or expires without having
been exercised in full, the maximum number of Shares that may be issued under
this Plan shall be increased by the number of Shares that were covered by, but
not purchased under, that Award. By contrast, the repurchase of Shares by the
Company shall not increase the maximum number of Shares that may be issued under
this Plan.

      3.2   SOURCE OF SHARES.

      Award Shares may be: (a) Shares that have never been issued, (b) Shares
that have been issued but are no longer outstanding, or (c) Shares that are
outstanding and are acquired to discharge the Company's obligation to deliver
Award Shares.

      3.3   TERM OF THIS PLAN.

            (a) This Plan shall be effective on, and Awards may be granted under
this Plan on and after, the effectiveness of the Company's initial public
offering.

            (b) Subject to the provisions of Section 14, Awards may be granted
under this Plan for a period of ten years from the effectiveness of the
Company's initial public offering. Accordingly, Awards may not be granted under
this Plan after such date.

4.    ADMINISTRATION

      4.1   GENERAL.

            (a) The Board shall have ultimate responsibility for administering
this Plan. The Board may delegate certain of its responsibilities to a
Committee, which shall consist of at least two members of the Board. The Board
or the Committee may further delegate its responsibilities to any Employee of
the Company or any Affiliate. Where this Plan specifies that an action is to be
taken or a determination made by the Board, only the Board may take that action
or make that determination. Where this Plan specifies that an action is to be
taken or a determination made by the Committee, only the Committee may take that
action or make that determination. Where this Plan references the
"Administrator," the action may be taken or determination made by the Board, the
Committee, or other Administrator. However, only the Board or the Committee may
approve grants of Awards to Executives, and an Administrator

                                       6
<PAGE>

other than the Board or the Committee may grant Awards only within the
guidelines established by the Board or Committee. Moreover, all actions and
determinations by any Administrator are subject to the provisions of this Plan.

            (b) So long as the Company has registered and outstanding a class of
equity securities under Section 12 of the Exchange Act, the Committee shall
consist of Company Directors who are "Non-Employee Directors" as defined in Rule
16b-3 and, after the expiration of any transition period permitted by Treasury
Regulations Section 1.162-27(h)(3), who are "outside directors" as defined in
Section 162(m) of the Code.

      4.2   AUTHORITY OF THE BOARD OR THE COMMITTEE.

      Subject to the other provisions of this Plan, the Board or the Committee
shall have the authority to:

            (a) grant Awards, including Substitute Awards;

            (b) determine the Fair Market Value of Shares;

            (c) determine the Option Price and the Purchase Price of Awards;

            (d) select the Awardees;

            (e) determine the times Awards are granted;

            (f) determine the number of Shares subject to each Award;

            (g) determine the methods of payment that may be used to purchase
Award Shares;

            (h) determine the methods of payment that may be used to satisfy
withholding tax obligations;

            (i) determine the other terms of each Award, including but not
limited to the time or times at which Awards may be exercised, whether and under
what conditions an Award is assignable, and whether an Option is a Nonstatutory
Option or an Incentive Stock Option;

            (j) modify or amend any Award;

            (k) authorize any person to sign any Award Agreement or other
document related to this Plan on behalf of the Company;

            (l) determine the form of any Award Agreement or other document
related to this Plan, and whether that document, including signatures, may be in
electronic form;

            (m) interpret this Plan and any Award Agreement or document related
to this Plan;

                                       7
<PAGE>

            (n) correct any defect, remedy any omission, or reconcile any
inconsistency in this Plan, any Award Agreement or any other document related to
this Plan;

            (o) adopt, amend, and revoke rules and regulations under this Plan,
including rules and regulations relating to sub-plans and Plan addenda;

            (p) adopt, amend, and revoke special rules and procedures which may
be inconsistent with the terms of this Plan, set forth (if the Administrator so
chooses) in sub-plans regarding (for example) the operation and administration
of this Plan and the terms of Awards, if and to the extent necessary or useful
to accommodate non-U.S. Applicable Laws and practices as they apply to Awards
and Award Shares held by, or granted or issued to, persons working or resident
outside of the United States or employed by Affiliates incorporated outside the
United States;

            (q) determine whether a transaction or event should be treated as a
Change in Control, a Divestiture or neither;

            (r) determine the effect of a Corporate Transaction and, if the
Board determines that a transaction or event should be treated as a Change in
Control or a Divestiture, then the effect of that Change in Control or
Divestiture; and

            (s) make all other determinations the Administrator deems necessary
or advisable for the administration of this Plan.

      4.3   SCOPE OF DISCRETION.

      Subject to the provisions of this Section 4.3, on all matters for which
this Plan confers the authority, right or power on the Board, the Committee, or
other Administrator to make decisions, that body may make those decisions in its
sole and absolute discretion. Those decisions will be final, binding and
conclusive. In making its decisions, the Board, Committee or other Administrator
need not treat all persons eligible to receive Awards, all Awardees, all Awards
or all Award Shares the same way. Notwithstanding anything herein to the
contrary, and except as provided in Section 14.3, the discretion of the Board,
Committee or other Administrator is subject to the specific provisions and
specific limitations of this Plan, as well as all rights conferred on specific
Awardees by Award Agreements and other agreements.

5.    PERSONS ELIGIBLE TO RECEIVE AWARDS

      5.1   ELIGIBLE INDIVIDUALS.

      Awards (including Substitute Awards) may be granted to, and only to,
Employees, Directors and Consultants, including to prospective Employees,
Directors and Consultants conditioned on the beginning of their service for the
Company or an Affiliate. However, Incentive Stock Options may only be granted to
Employees, as provided in Section 7(g).

      5.2   SECTION 162(m) LIMITATION.

                                       8
<PAGE>

            (a) OPTIONS AND SARs. Subject to the provisions of this Section 5.2,
for so long as the Company is a "publicly held corporation" within the meaning
of Section 162(m) of the Code: (i) no Employee may be granted one or more SARs
and Options within any fiscal year of the Company under this Plan to purchase
more than 1,333,332 Shares under Options or to receive compensation calculated
with reference to more than that number of Shares under SARs, subject to
adjustment pursuant to Section 10, (ii) Options and SARs may be granted to an
Executive only by the Committee (and, notwithstanding anything to the contrary
in Section 4.1(a), not by the Board). If an Option or SAR is cancelled without
being exercised or of the Option Price of an Option is reduced, that cancelled
or repriced Option or SAR shall continue to be counted against the limit on
Awards that my be granted to any individual under this Section 5.2.

            (b) CASH AWARDS AND STOCK AWARDS. Any Cash Award or Stock Award
intended as "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code must vest or become exercisable contingent on the
achievement of one or more Objectively Determinable Performance Conditions. The
Committee shall have the discretion to determine the time and manner of
compliance with Section 162(m) of the Code.

6.    TERMS AND CONDITIONS OF OPTIONS

      The following rules apply to all Options:

      6.1   PRICE.

      Except as specifically provided herein or as otherwise determined by the
Administrator, a Nonstatutory Option shall have an Option Price that is not less
than 85% of the Fair Market Value of the Shares on the Grant Date. No Option
intended as "qualified incentive-based compensation" within the meaning of
Section 162(m) of the Code may have an Option Price less than 100% of the Fair
Market Value of the Shares on the Grant Date. In no event will the Option Price
of any Option be less than the par value of the Shares issuable under the Option
if that is required by Applicable Law. The Option Price of an Incentive Stock
Option shall be subject to Section 7(f).

      6.2   TERM.

      No Option shall be exercisable after its Expiration Date. No Option may
have an Expiration Date that is more than ten years after its Grant Date.
Additional provisions regarding the term of Incentive Stock Options are provided
in Sections 7(a) and 7(e).

      6.3   VESTING.

      Options shall be exercisable: (a) on the Grant Date, or (b) in accordance
with a schedule related to the Grant Date, the date the Optionee's directorship,
employment or consultancy begins, or a different date specified in the Option
Agreement. Additional provisions regarding the vesting of Incentive Stock
Options are provided in Section 7(d). No Option granted to an individual who is
subject to the overtime pay provisions of the Fair Labor Standards Act may be
exercised before the expiration of six months after the Grant Date.

                                       9
<PAGE>

      6.4   FORM AND METHOD OF PAYMENT.

            (a) The Board or Committee shall determine the acceptable form and
method of payment for exercising an Option.

            (b) Acceptable forms of payment for all Option Shares are cash,
check or wire transfer, denominated in U.S. dollars except as specified by the
Administrator for non-U.S. Employees or non-U.S. sub-plans.

            (c) In addition, the Administrator may permit payment to be made by
any of the following methods:

                  (i) other Shares, or the designation of other Shares, which
(A) are "mature" shares for purposes of avoiding variable accounting treatment
under generally accepted accounting principles (generally mature shares are
those that have been owned by the Optionee for more than six months on the date
of surrender), and (B) have a Fair Market Value on the date of surrender equal
to the Option Price of the Shares as to which the Option is being exercised;

                  (ii) provided that a public market exists for the Shares,
consideration received by the Company under a procedure under which a licensed
broker-dealer advances funds on behalf of an Optionee or sells Option Shares on
behalf of an Optionee (a "CASHLESS EXERCISE PROCEDURE"), provided that if the
Company extends or arranges for the extension of credit to an Optionee under any
Cashless Exercise Procedure, no Officer or Director may participate in that
Cashless Exercise Procedure;

                  (iii) cancellation of any debt owed by the Company or any
Affiliate to the Optionee by the Company including without limitation waiver of
compensation due or accrued for services previously rendered to the Company; and

                  (iv) any combination of the methods of payment permitted by
any paragraph of this Section 6.4.

            (d) The Administrator may also permit any other form or method of
payment for Option Shares permitted by Applicable Law.

      6.5   NONASSIGNABILITY OF OPTIONS.

      Except as determined by the Administrator, no Option shall be assignable
or otherwise transferable by the Optionee except by will or by the laws of
descent and distribution. However, Options may be transferred and exercised in
accordance with a Domestic Relations Order and may be exercised by a guardian or
conservator appointed to act for the Optionee. Incentive Stock Options may only
be assigned in compliance with Section 7(h).

      6.6   SUBSTITUTE OPTIONS.

      The Board may cause the Company to grant Substitute Options in connection
with the acquisition by the Company or an Affiliate of equity securities of any
entity (including by

                                       10
<PAGE>

merger, tender offer, or other similar transaction) or of all or a portion of
the assets of any entity. Any such substitution shall be effective on the
effective date of the acquisition. Substitute Options may be Nonstatutory
Options or Incentive Stock Options. Unless and to the extent specified otherwise
by the Board, Substitute Options shall have the same terms and conditions as the
options they replace, except that (subject to the provisions of Section 10)
Substitute Options shall be Options to purchase Shares rather than equity
securities of the granting entity and shall have an Option Price determined by
the Board.

      6.7   REPRICINGS.

      In furtherance of, and not in limitation of the provisions of Section 10,
Options may be repriced, replaced or regranted through cancellation or
modification without stockholder approval.

7.    INCENTIVE STOCK OPTIONS.

      The following rules apply only to Incentive Stock Options and only to the
extent these rules are more restrictive than the rules that would otherwise
apply under this Plan. With the consent of the Optionee, or where this Plan
provides that an action may be taken notwithstanding any other provision of this
Plan, the Administrator may deviate from the requirements of this Section,
notwithstanding that any Incentive Stock Option modified by the Administrator
will thereafter be treated as a Nonstatutory Option.

            (a) The Expiration Date of an Incentive Stock Option shall not be
later than ten years from its Grant Date, with the result that no Incentive
Stock Option may be exercised after the expiration of ten years from its Grant
Date.

            (b) Any Incentive Stock Option granted to a Ten Percent Stockholder,
must have an Expiration Date that is not later than five years from its Grant
Date, with the result that no such Option may be exercised after the expiration
of five years from the Grant Date. A "TEN PERCENT STOCKHOLDER" is any person
who, directly or by attribution under Section 424(d) of the Code, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate on the Grant Date.

            (c) No Incentive Stock Option may be granted more than ten years
from the date this Plan was approved by the Board.

            (d) Options intended to be incentive stock options under Section 422
of the Code that are granted to any single Optionee under all incentive stock
option plans of the Company and its Affiliates, including incentive stock
options granted under this Plan, may not vest at a rate of more than $100,000 in
Fair Market Value of stock (measured on the grant dates of the options) during
any calendar year. For this purpose, an option vests with respect to a given
share of stock the first time its holder may purchase that share,
notwithstanding any right of the Company to repurchase that share. Unless the
administrator of that option plan specifies otherwise in the related agreement
governing the option, this vesting limitation shall be applied by, to the extent
necessary to satisfy this $ 100,000 rule, treating certain stock options that
were intended to be incentive stock options under Section 422 of the Code as
Nonstatutory Options.

                                       11
<PAGE>

The stock options or portions of stock options to be reclassified as
Nonstatutory Options are those with the highest option prices, whether granted
under this Plan or any other equity compensation plan of the Company or any
Affiliate that permits that treatment. This Section 7(d) shall not cause an
Incentive Stock Option to vest before its original vesting date or cause an
Incentive Stock Option that has already vested to cease to be vested.

            (e) In order for an Incentive Stock Option to be exercised for any
form of payment other than those described in Section 6.4(b), that right must be
stated at the time of grant in the Option Agreement relating to that Incentive
Stock Option.

            (f) The Option Price of an Incentive Stock Option shall never be
less than the Fair Market Value of the Shares at the Grant Date. The Option
Price for the Shares covered by an Incentive Stock Option granted to a Ten
Percent Stockholder shall never be less than 110% of the Fair Market Value of
the Shares at the Grant Date.

            (g) Incentive Stock Options may be granted only to Employees. If an
Optionee changes status from an Employee to a Consultant, that Optionee's
Incentive Stock Options become Nonstatutory Options if not exercised within the
time period described in Section 7(i) (determined by treating that change in
status as a Termination solely for purposes of this Section 7(g)).

            (h) No rights under an Incentive Stock Option may be transferred by
the Optionee, other than by will or the laws of descent and distribution. During
the life of the Optionee, an Incentive Stock Option may be exercised only by the
Optionee. The Company's compliance with a Domestic Relations Order, or the
exercise of an Incentive Stock Option by a guardian or conservator appointed to
act for the Optionee, shall not violate this Section 7(h).

            (i) An Incentive Stock Option shall be treated as a Nonstatutory
Option if it remains exercisable after, and is not exercised within, the
three-month period beginning with the Optionee's Termination for any reason
other than the Optionee's death or disability (as defined in Section 22(e) of
the Code). In the case of Termination due to death, an Incentive Stock Option
shall continue to be treated as an Incentive Stock Option if it remains
exercisable after, and is not exercised within, the three month period after the
Optionee's Termination provided it is exercised before the Expiration Date. In
the case of Termination due to disability, an Incentive Stock Option shall be
treated as a Nonstatutory Option if it remains exercisable after, and is not
exercised within, one year after the Optionee's Termination.

            (j) An Incentive Stock Option may only be modified by the Board.

8.    STOCK APPRECIATION RIGHTS, STOCK AWARDS AND CASH AWARDS

      8.1   STOCK APPRECIATION RIGHTS.

      The following rules apply to SARs:

            (a) GENERAL. SARs may be granted either alone, in addition to, or in
tandem with other Awards granted under this Plan. The Administrator may grant
SARs to eligible

                                       12
<PAGE>

participants subject to terms and conditions not inconsistent with this Plan and
determined by the Administrator. The specific terms and conditions applicable to
the Awardee shall be provided for in the Award Agreement. SARs shall be
exercisable, in whole or in part, at such times as the Administrator shall
specify in the Award Agreement. The grant or vesting of a SAR may be made
contingent on the achievement of Objectively Determinable Performance
Conditions.

            (b) EXERCISE OF SARs. Upon the exercise of an SAR, in whole or in
part, an Awardee shall be entitled to a payment in an amount equal to the excess
of the Fair Market Value of a fixed number of Shares covered by the exercised
portion of the SAR on the date of exercise, over the Fair Market Value of the
Shares covered by the exercised portion of the SAR on the Grant Date. The amount
due to the Awardee upon the exercise of a SAR shall be paid in cash, Shares or a
combination thereof, over the period or periods specified in the Award
Agreement. An Award Agreement may place limits on the amount that may be paid
over any specified period or periods upon the exercise of a SAR, on an aggregate
basis or as to any Awardee. A SAR shall be considered exercised when the Company
receives written notice of exercise in accordance with the terms of the Award
Agreement from the person entitled to exercise the SAR. If a SAR has been
granted in tandem with an Option, upon the exercise of the SAR, the number of
shares that may be purchased pursuant to the Option shall be reduced by the
number of shares with respect to which the SAR is exercised.

            (c) NONASSIGNABILITY OF SARs. Except as determined by the
Administrator, no SAR shall be assignable or otherwise transferable by the
Awardee except by will or by the laws of descent and distribution.
Notwithstanding anything herein to the contrary, SARs may be transferred and
exercised in accordance with a Domestic Relations Order.

            (d) SUBSTITUTE SARs. The Board may cause the Company to grant
Substitute SARs in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. Any such substitution shall be effective on
the effective date of the acquisition. Unless and to the extent specified
otherwise by the Board, Substitute SARs shall have the same terms and conditions
as the options they replace, except that (subject to the provisions of Section
9) Substitute SARs shall be exercisable with respect to the Fair Market Value of
Shares rather than equity securities of the granting entity and shall be on
terms that, as determined by the Board in its sole and absolute discretion,
properly reflects the substitution.

            (e) REPRICINGS. A SAR may not be repriced, replaced or regranted,
through cancellation or modification without stockholder approval.

      8.2   STOCK AWARDS.

      The following rules apply to all Stock Awards:

            (a) GENERAL. The specific terms and conditions of a Stock Award
applicable to the Awardee shall be provided for in the Award Agreement. The
Award Agreement shall state the number of Shares that the Awardee shall be
entitled to receive or purchase, the terms and conditions on which the Shares
shall vest, the price to be paid, whether Shares are to be delivered at the time
of grant or at some deferred date specified in the Award Agreement (e.g. a
restricted

                                       13
<PAGE>

stock unit award agreement), whether the Award is payable solely in Shares, cash
or either and, if applicable, the time within which the Awardee must accept such
offer. The offer shall be accepted by execution of the Award Agreement. The
Administrator may require that all Shares subject to a right of repurchase or
risk of forfeiture be held in escrow until such repurchase right or risk of
forfeiture lapses. The grant or vesting of a Stock Award may be made contingent
on the achievement of Objectively Determinable Performance Conditions.

            (b) RIGHT OF REPURCHASE. If so provided in the Award Agreement,
Award Shares acquired pursuant to a Stock Award may be subject to repurchase by
the Company or an Affiliate if not vested in accordance with the Award
Agreement.

            (c) FORM OF PAYMENT. The Administrator shall determine the
acceptable form and method of payment for exercising a Stock Award. Acceptable
forms of payment for all Award Shares are cash, check or wire transfer,
denominated in U.S. dollars except as specified by the Administrator for
non-U.S. sub-plans. In addition, the Administrator may permit payment to be made
by any of the methods permitted with respect to the exercise of Options pursuant
to Section 6.4.

            (d) NONASSIGNABILITY OF STOCK AWARDS. Except as determined by the
Administrator, no Stock Award shall be assignable or otherwise transferable by
the Awardee except by will or by the laws of descent and distribution.
Notwithstanding anything to the contrary herein, Stock Awards may be transferred
and exercised in accordance with a Domestic Relations Order.

            (e) SUBSTITUTE STOCK AWARD. The Board may cause the Company to grant
Substitute Stock Awards in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. Unless and to the extent specified
otherwise by the Board, Substitute Stock Awards shall have the same terms and
conditions as the stock awards they replace, except that (subject to the
provisions of Section 10) Substitute Stock Awards shall be Stock Awards to
purchase Shares rather than equity securities of the granting entity and shall
have a Purchase Price that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution. Any such Substituted Stock Award
shall be effective on the effective date of the acquisition.

      8.3   CASH AWARDS.

      The following rules apply to all Cash Awards:

      Cash Awards may be granted either alone, in addition to, or in tandem with
other Awards granted under this Plan. After the Administrator determines that it
will offer a Cash Award, it shall advise the Awardee, by means of an Award
Agreement, of the terms, conditions and restrictions related to the Cash Award.

9.    EXERCISE OF AWARDS

      9.1   IN GENERAL.

                                       14
<PAGE>

      An Award shall be exercisable in accordance with this Plan and the Award
Agreement under which it is granted.

      9.2   TIME OF EXERCISE.

      Options and Stock Awards shall be considered exercised when the Company
receives: (a) written notice of exercise from the person entitled to exercise
the Option or Stock Award, (b) full payment, or provision for payment, in a form
and method approved by the Administrator, for the Shares for which the Option or
Stock Award is being exercised, and (c) with respect to Nonstatutory Options,
payment, or provision for payment, in a form approved by the Administrator, of
all applicable withholding taxes due upon exercise. An Award may not be
exercised for a fraction of a Share. SARs shall be considered exercised when the
Company receives written notice of the exercise from the person entitled to
exercise the SAR.

      9.3   ISSUANCE OF AWARD SHARES.

      The Company shall issue Award Shares in the name of the person properly
exercising the Award. If the Awardee is that person and so requests, the Award
Shares shall be issued in the name of the Awardee and the Awardee's spouse. The
Company shall endeavor to issue Award Shares promptly after an Award is
exercised or after the Grant Date of a Stock Award, as applicable. Until Award
Shares are actually issued, as evidenced by the appropriate entry on the stock
register of the Company or its transfer agent, the Awardee will not have the
rights of a stockholder with respect to those Award Shares, even though the
Awardee has completed all the steps necessary to exercise the Award. No
adjustment shall be made for any dividend, distribution, or other right for
which the record date precedes the date the Award Shares are issued, except as
provided in Section 10.

      9.4   TERMINATION

            (a) IN GENERAL. Except as provided in an Award Agreement or in
writing by the Administrator, including in an Award Agreement, and as otherwise
provided in Sections 9.4(b), (c), (d) and (e) after an Awardee's Termination,
the Awardee's Awards shall be exercisable to the extent (but only to the extent)
they are vested on the date of that Termination and only during the ninety (90)
days after the Termination, but in no event after the Expiration Date. To the
extent the Awardee does not exercise an Award within the time specified for
exercise, the Award shall automatically terminate.

            (b) LEAVES OF ABSENCE. Unless otherwise provided in the Award
Agreement, no Award may be exercised more than three months after the beginning
of a leave of absence, other than a personal or medical leave approved by an
authorized representative of the Company with employment guaranteed upon return.
Awards shall not continue to vest during a leave of absence, unless otherwise
determined by the Administrator with respect to an approved personal or medical
leave with employment guaranteed upon return.

            (c) DEATH OR DISABILITY. Unless otherwise provided by the
Administrator, if an Awardee's Termination is due to death or disability (as
determined by the Administrator with respect to all Awards other than Incentive
Stock Options and as defined by Section 22(e) of the

                                       15
<PAGE>

Code with respect to Incentive Stock Options), all Awards of that Awardee to the
extent exercisable at the date of that Termination may be exercised for one year
after that Termination, but in no event after the Expiration Date. In the case
of Termination due to death, an Award may be exercised as provided in Section
17. In the case of Termination due to disability, if a guardian or conservator
has been appointed to act for the Awardee and been granted this authority as
part of that appointment, that guardian or conservator may exercise the Award on
behalf of the Awardee. Death or disability occurring after an Awardee's
Termination shall not cause the Termination to be treated as having occurred due
to death or disability. To the extent an Award is not so exercised within the
time specified for its exercise, the Award shall automatically terminate.

            (d) DIVESTITURE. If an Awardee's Termination is due to a
Divestiture, the Board may take any one or more of the actions described in
Section 10.3 or 10.4 with respect to the Awardee's Awards.

            (e) ADMINISTRATOR DISCRETION. Notwithstanding the provisions of
Section 9.4 (a)-(d), the Plan Administrator shall have complete discretion,
exercisable either at the time an Award is granted or at any time while the
Award remains outstanding, to:

                  (i) Extend the period of time for which the Award is to remain
exercisable, following the Awardee's Termination, from the limited exercise
period otherwise in effect for that Award to such greater period of time as the
Administrator shall deem appropriate, but in no event beyond the Expiration
Date; and/or

                  (ii) Permit the Award to be exercised, during the applicable
post-Termination exercise period, not only with respect to the number of vested
Shares for which such Award may be exercisable at the time of the Awardee's
Termination but also with respect to one or more additional installments in
which the Awardee would have vested had the Awardee not been subject to
Termination.

            (f) CONSULTING OR EMPLOYMENT RELATIONSHIP. Nothing in this Plan or
in any Award Agreement, and no Award or the fact that Award Shares remain
subject to repurchase rights, shall: (A) interfere with or limit the right of
the Company or any Affiliate to terminate the employment or consultancy of any
Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B)
interfere with the application of any provision in any of the Company's or any
Affiliate's charter documents or Applicable Law relating to the election,
appointment, term of office, or removal of a Director.

10.   CERTAIN TRANSACTIONS AND EVENTS

      10.1  IN GENERAL.

Except as provided in this Section 10, no change in the capital structure of the
Company, merger, sale or other disposition of assets or a subsidiary, change in
control, issuance by the Company of shares of any class of securities or
securities convertible into shares of any class of securities, exchange or
conversion of securities, or other transaction or event shall require or be the

                                       16
<PAGE>

occasion for any adjustments of the type described in this Section 10.
Additional provisions with respect to the foregoing transactions are set forth
in Section 14.3.

      10.2  CHANGES IN CAPITAL STRUCTURE.

      In the event of any stock split, reverse stock split, recapitalization,
combination or reclassification of stock, stock dividend, spin-off, or similar
change to the capital structure of the Company (not including a Corporate
Transaction or Change in Control), the Board shall make whatever adjustments it
concludes are appropriate to: (a) the number and type of Awards that may be
granted under this Plan, (b) the number and type of Options that may be granted
to any individual under this Plan, (c) the terms of any SAR, (d) the Purchase
Price of any Stock Award, (e) the Option Price and number and class of
securities issuable under each outstanding Option, and (f) the repurchase price
of any securities substituted for Award Shares that are subject to repurchase
rights. The specific adjustments shall be determined by the Board. Unless the
Board specifies otherwise, any securities issuable as a result of any such
adjustment shall be rounded down to the next lower whole security. The Board
need not adopt the same rules for each Award or each Awardee.

      10.3  CORPORATE TRANSACTIONS.

      Except for grants to Non-Employee Directors pursuant to Section 11 herein,
in the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption shall be binding on all Participants), (b) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (c) the sale of all or substantially all of the assets of the
Company, or (d) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction (each,
a "CORPORATE TRANSACTION"), any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement shall be binding on all participants under this Plan.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to participants as was provided
to stockholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares held by the participants, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the participant. In the
event such successor corporation (if any) does not assume or substitute Awards,
as provided above, pursuant to a transaction described in this Subsection 10.3,
the vesting with respect to such Awards shall fully and immediately accelerate
or the repurchase rights of the Company shall fully and immediately terminate,
as the case may be, so that the Awards may be exercised or the repurchase rights
shall terminate before, or otherwise in connection with the closing or
completion of the Corporate Transaction or event, but then terminate.
Notwithstanding anything in this Plan to the contrary, the Committee may, in its
sole discretion, provide that the vesting of

                                       17
<PAGE>

any or all Award Shares subject to vesting or right of repurchase shall
accelerate or lapse, as the case may be, upon a transaction described in this
Section 10.3. If the Committee exercises such discretion with respect to
Options, such Options shall become exercisable in full prior to the consummation
of such event at such time and on such conditions as the Committee determines,
and if such Options are not exercised prior to the consummation of the Corporate
Transaction, they shall terminate at such time as determined by the Committee.
Subject to any greater rights granted to participants under the foregoing
provisions of this Section 10.3, in the event of the occurrence of any Corporate
Transaction, any outstanding Awards shall be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
or sale of assets.

      10.4  CHANGES IN CONTROL.

      The Board may also, but need not, specify that other transactions or
events constitute a "CHANGE IN CONTROL". The Board may do that either before or
after the transaction or event occurs. Examples of transactions or events that
the Board may treat as Changes in Control are: (a) any person or entity,
including a "group" as contemplated by Section 13(d)(3) of the Exchange Act,
acquires securities holding 30% or more of the total combined voting power or
value of the Company, or (b) as a result of or in connection with a contested
election of Company Directors, the persons who were Company Directors
immediately before the election cease to constitute a majority of the Board. In
connection with a Change in Control, notwithstanding any other provision of this
Plan, the Board may, but need not, take any one or more of the actions described
in Section 10.3. In addition, the Board may extend the date for the exercise of
Awards (but not beyond their original Expiration Date). The Board need not adopt
the same rules for each Award or each Awardee.

      10.5  DIVESTITURE.

      If the Company or an Affiliate sells or otherwise transfers equity
securities of an Affiliate to a person or entity other than the Company or an
Affiliate, or leases, exchanges or transfers all or any portion of its assets to
such a person or entity, then the Board may specify that such transaction or
event constitutes a "DIVESTITURE". In connection with a Divestiture,
notwithstanding any other provision of this Plan, the Board may, but need not,
take one or more of the actions described in Section 10.3 or 10.4 with respect
to Awards of Award Shares held by, for example, Employees, Directors or
Consultants for whom that transaction or event results in a Termination. The
Board need not adopt the same rules for each Award or Awardee.

      10.6  DISSOLUTION.

      If the Company adopts a plan of dissolution, the Board may cause Awards to
be fully vested and exercisable (but not after their Expiration Date) before the
dissolution is completed but contingent on its completion and may cause the
Company's repurchase rights on Award Shares to lapse upon completion of the
dissolution. The Board need not adopt the same rules for each Award or each
Awardee. Notwithstanding anything herein to the contrary, in the event of a
dissolution of the Company, to the extent not exercised before the earlier of
the completion of the dissolution or their Expiration Date, Awards shall
terminate immediately prior to the dissolution.

                                       18
<PAGE>

      10.7  CUT-BACK TO PRESERVE BENEFITS.

      If the Administrator determines that the net after-tax amount to be
realized by any Awardee, taking into account any accelerated vesting,
termination of repurchase rights, or cash payments to that Awardee in connection
with any transaction or event set forth in this Section 10 would be greater if
one or more of those steps were not taken or payments were not made with respect
to that Awardee's Awards or Award Shares, then, at the election of the Awardee,
to such extent, one or more of those steps shall not be taken and payments shall
not be made.

11.   AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS

      11.1  AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS

            (a) GRANT DATES. Option grants to Non-Employee Directors shall be
made on the dates specified below:

                  (i) Each Non-Employee Director who is first elected or
appointed to the Board at any time after the effective date of this Plan shall
automatically be granted, on the date of such initial election or appointment,
an Option to purchase 17,778 Shares (the "INITIAL GRANT").

                  (ii) Commencing in 2006, on the date of each annual
stockholders meeting, each individual who is to continue to serve as a
Non-Employee Director shall automatically be granted an Option to purchase 8,889
Shares (the "ANNUAL GRANT"), provided, however, that such individual has served
as a Non-Employee Director for at least six (6) months.

            (b) EXERCISE PRICE.

                  (i) The Option Price shall be equal to one hundred percent
(100%) of the Fair Market Value of the Shares on the Option grant date.

                  (ii) The Option Price shall be payable in one or more of the
alternative forms authorized pursuant to Section 6.4. Except to the extent the
sale and remittance procedure specified thereunder is utilized, payment of the
Option Price must be made on the date of exercise.

            (c) OPTION TERM. Each Option shall have a term of ten (10) years
measured from the Option grant date.

            (d) EXERCISE AND VESTING OF OPTIONS. Except as otherwise determined
by the whole Board, the Shares underlying each Option granted pursuant to
Section 11.1 shall vest and be exercisable as set forth below.

                  (i) INITIAL GRANT. The Shares underlying each Option issued
pursuant to the Initial Grant shall vest and be exercisable as to 2.0833% of the
Shares at the end of each full succeeding month from the date of grant, rounded
down to the nearest whole Share, for so

                                       19
<PAGE>

long as the Non-Employee Director continuously remains a Director of, or a
Consultant to, the Company.

                  (ii) ANNUAL GRANT. The Shares underlying each Option issued
pursuant to the Annual Grant shall vest and be exercisable as to 8.3333% of the
Shares at the end of each full succeeding month from the date of grant, rounded
down to the nearest whole Share, for so long as the Non-Employee Director
continuously remains a Director of, or a Consultant to, the Company.

            (e) TERMINATION OF SERVICE. The following provisions shall govern
the exercise of any Options held by the Awardee at the time the Awardee ceases
to serve as a Non-Employee Director, Employee or Consultant:

                  (i) IN GENERAL. Except as otherwise provided in Section 10.3,
after cessation of service (the "CESSATION DATE"), the Awardee's Options shall
be exercisable to the extent (but only to the extent) they are vested on the
Cessation Date and only during the three months after such Cessation Date, but
in no event after the Expiration Date. To the extent the Awardee does not
exercise an Option within the time specified for exercise, the Option shall
automatically terminate.

                  (ii) DEATH OR DISABILITY. If an Awardee's cessation of service
is due to death or disability (as determined by the Board), all Options of that
Awardee, to the extent exercisable upon such Cessation Date, may be exercised
for one year after the Cessation Date, but in no event after the Expiration
Date. In the case of a cessation of service due to death, an Option may be
exercised as provided in Section 16. In the case of a cessation of service due
to disability, if a guardian or conservator has been appointed to act for the
Awardee and been granted this authority as part of that appointment, that
guardian or conservator may exercise the Option on behalf of the Awardee. Death
or disability occurring after an Awardee's cessation of service shall not cause
the cessation of service to be treated as having occurred due to death or
disability. To the extent an Option is not so exercised within the time
specified for its exercise, the Option shall automatically terminate.

            (f) BOARD DISCRETION. The Awards under this Section 11.1 are not
intended as the exclusive Awards that may be made to Non-Employee Directors
under this Plan. The Board may, in its discretion, amend the Plan with respect
to the terms of the Awards herein, may add or substitute other types of Awards
or may temporarily or permanently suspend Awards hereunder, all without approval
of the Company's stockholders.

                                       20
<PAGE>

      11.2  CERTAIN TRANSACTIONS AND EVENTS

            (a) In the event of a Corporate Transaction while the Awardee
remains a Non-Employee Director, the Shares at the time subject to each
outstanding Option held by such Awardee pursuant to Section 11, but not
otherwise vested, shall automatically vest in full so that each such Option
shall, immediately prior to the effective date of the Corporate Transaction,
become exercisable for all the Shares as fully vested Shares and may be
exercised for any or all of those vested Shares. Immediately following the
consummation of the Corporate Transaction, each Option shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
Affiliate thereof).

            (b) In the event of a Change in Control while the Awardee remains a
Non-Employee Director, the Shares at the time subject to each outstanding Option
held by such Awardee pursuant to Section 11, but not otherwise vested, shall
automatically vest in full so that each such Option shall, immediately prior to
the effective date of the Change in Control, become exercisable for all the
Shares as fully vested Shares and may be exercised for any or all of those
vested Shares. Each such Option shall remain exercisable for such fully vested
Shares until the expiration or sooner termination of the Option term in
connection with a Change in Control.

            (c) Each Option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Awardee in consummation of such Corporate Transaction had
the Option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price payable per share
under each outstanding Option, provided the aggregate Option Price payable for
such securities shall remain the same. To the extent the actual holders of the
Company's outstanding Common Stock receive cash consideration for their Common
Stock in consummation of the Corporate Transaction, the successor corporation
may, in connection with the assumption of the outstanding Options granted
pursuant to Section 11, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Corporate Transaction.

            (d) The grant of Options pursuant to Section 11 shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

            (e) The remaining terms of each Option granted pursuant to Section
11 shall, as applicable, be the same as terms in effect for Awards granted under
this Plan. Notwithstanding the foregoing, the provisions of Section 9.4 and
Section 10 shall not apply to Options granted pursuant to Section 11.

      11.3  LIMITED TRANSFERABILITY OF OPTIONS.

      Each Option granted pursuant to Section 11 may be assigned in whole or in
part during the Awardee's lifetime to one or more members of the Awardee's
family or to a trust established exclusively for one or more such family members
or to an entity in which the Awardee is

                                       21
<PAGE>

majority owner or to the Awardee 's former spouse, to the extent such assignment
is in connection with the Awardee 's estate or financial plan or pursuant to a
Domestic Relations Order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the Option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the Option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Administrator may
deem appropriate. The Awardee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding Options under Section 11,
and those Options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Awardee 's death while
holding those Options. Such beneficiary or beneficiaries shall take the
transferred Options subject to all the terms and conditions of the applicable
Award Agreement evidencing each such transferred Option, including (without
limitation) the limited time period during which the Option may be exercised
following the Awardee 's death.

12.   WITHHOLDING AND TAX REPORTING

      12.1  TAX WITHHOLDING ALTERNATIVES.

            (a) GENERAL. Whenever Award Shares are issued or become free of
restrictions, the Company may require the Awardee to remit to the Company an
amount sufficient to satisfy any applicable tax withholding requirement, whether
the related tax is imposed on the Awardee or the Company. The Company shall have
no obligation to deliver Award Shares or release Award Shares from an escrow or
permit a transfer of Award Shares until the Awardee has satisfied those tax
withholding obligations. Whenever payment in satisfaction of Awards is made in
cash, the payment will be reduced by an amount sufficient to satisfy all tax
withholding requirements.

            (b) METHOD OF PAYMENT. The Awardee shall pay any required
withholding using the forms of consideration described in Section 6.4(b), except
that, in the discretion of the Administrator, the Company may also permit the
Awardee to use any of the forms of payment described in Section 6.4(c). The
Administrator, in its sole discretion, may also permit Award Shares to be
withheld to pay required withholding. If the Administrator permits Award Shares
to be withheld, the Fair Market Value of the Award Shares withheld, as
determined as of the date of withholding, shall not exceed the amount determined
by the applicable minimum statutory withholding rates.

      12.2  Reporting of Dispositions.

      Any holder of Option Shares acquired under an Incentive Stock Option shall
promptly notify the Administrator, following such procedures as the
Administrator may require, of the sale or other disposition of any of those
Option Shares if the disposition occurs during: (a) the longer of two years
after the Grant Date of the Incentive Stock Option and one year after the date
the Incentive Stock Option was exercised, or (b) such other period as the
Administrator has established.

                                       22
<PAGE>

13.   COMPLIANCE WITH LAW

      The grant of Awards and the issuance and subsequent transfer of Award
Shares shall be subject to compliance with all Applicable Law, including all
applicable securities laws. Awards may not be exercised, and Award Shares may
not be transferred, in violation of Applicable Law. Thus, for example, Awards
may not be exercised unless: (a) a registration statement under the Securities
Act is then in effect with respect to the related Award Shares, or (b) in the
opinion of legal counsel to the Company, those Award Shares may be issued in
accordance with an applicable exemption from the registration requirements of
the Securities Act and any other applicable securities laws. The failure or
inability of the Company to obtain from any regulatory body the authority
considered by the Company's legal counsel to be necessary or useful for the
lawful issuance of any Award Shares or their subsequent transfer shall relieve
the Company of any liability for failing to issue those Award Shares or
permitting their transfer. As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Awardee to satisfy any
requirements or qualifications that may be necessary or appropriate to comply
with or evidence compliance with any Applicable Law.

14.   AMENDMENT OR TERMINATION OF THIS PLAN OR OUTSTANDING AWARDS

      14.1  AMENDMENT AND TERMINATION.

      The Board may at any time amend, suspend, or terminate this Plan.

      14.2  STOCKHOLDER APPROVAL.

      The Company shall obtain the approval of the Company's stockholders for
any amendment to this Plan if stockholder approval is necessary or desirable to
comply with any Applicable Law or with the requirements applicable to the grant
of Awards intended to be Incentive Stock Options. The Board may also, but need
not, require that the Company's stockholders approve any other amendments to
this Plan.

      14.3  EFFECT.

      No amendment, suspension, or termination of this Plan, and no modification
of any Award even in the absence of an amendment, suspension, or termination of
this Plan, shall impair any existing contractual rights of any Awardee unless
the affected Awardee consents to the amendment, suspension, termination, or
modification. Notwithstanding anything herein to the contrary, no such consent
shall be required if the Board determines, in its sole and absolute discretion,
that the amendment, suspension, termination, or modification: (a) is required or
advisable in order for the Company, this Plan or the Award to satisfy Applicable
Law, to meet the requirements of any accounting standard or to avoid any adverse
accounting treatment, or (b) in connection with any transaction or event
described in Section 10, is in the best interests of the Company or its
stockholders. The Board may, but need not, take the tax or accounting
consequences to affected Awardees into consideration in acting under the
preceding sentence. Those decisions shall be final, binding and conclusive.
Termination of this Plan shall not affect the Administrator's ability to
exercise the powers granted to it under this Plan with respect to

                                       23
<PAGE>

Awards granted before the termination of Award Shares issued under such Awards
even if those Award Shares are issued after the termination.

15.   RESERVED RIGHTS

      15.1  NONEXCLUSIVITY OF THIS PLAN.

      This Plan shall not limit the power of the Company or any Affiliate to
adopt other incentive arrangements including, for example, the grant or issuance
of stock options, stock, or other equity-based rights under other plans.

      15.2  UNFUNDED PLAN.

      This Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Awardees, any such accounts will be used merely as a
convenience. The Company shall not be required to segregate any assets on
account of this Plan, the grant of Awards, or the issuance of Award Shares. The
Company and the Administrator shall not be deemed to be a trustee of stock or
cash to be awarded under this Plan. Any obligations of the Company to any
Awardee shall be based solely upon contracts entered into under this Plan, such
as Award Agreements. No such obligations shall be deemed to be secured by any
pledge or other encumbrance on any assets of the Company. Neither the Company
nor the Administrator shall be required to give any security or bond for the
performance of any such obligations.

16.   SPECIAL ARRANGEMENTS REGARDING AWARD SHARES

      16.1  ESCROW OF STOCK CERTIFICATES.

      To enforce any restrictions on Award Shares, the Administrator may require
their holder to deposit the certificates representing Award Shares, with stock
powers or other transfer instruments approved by the Administrator endorsed in
blank, with the Company or an agent of the Company to hold in escrow until the
restrictions have lapsed or terminated. The Administrator may also cause a
legend or legends referencing the restrictions to be placed on the certificates.

      16.2  REPURCHASE RIGHTS.

            (a) GENERAL. If a Stock Award is subject to vesting conditions, the
Company shall have the right, during the seven months after the Awardee's
Termination, to repurchase any or all of the Award Shares that were unvested as
of the date of that Termination. The repurchase price shall be determined by the
Administrator in accordance with this Section 16.2 which shall be either (i) the
Purchase Price for the Award Shares (minus the amount of any cash dividends paid
or payable with respect to the Award Shares for which the record date precedes
the repurchase) or (ii) the lower of (A) the Purchase Price for the Shares or
(B) the Fair Market Value of those Award Shares as of the date of the
Termination. The repurchase price shall be paid in cash. The Company may assign
this right of repurchase.

                                       24
<PAGE>

            (b) PROCEDURE. The Company or its assignee may choose to give the
Awardee a written notice of exercise of its repurchase rights under this Section
16.2. However, the Company's failure to give such a notice shall not affect its
rights to repurchase Award Shares. The Company must, however, tender the
repurchase price during the period specified in this Section 16.2 for exercising
its repurchase rights in order to exercise such rights.

17.   BENEFICIARIES

      An Awardee may file a written designation of one or more beneficiaries who
are to receive the Awardee's rights under the Awardee's Awards after the
Awardee's death. An Awardee may change such a designation at any time by written
notice. If an Awardee designates a beneficiary, the beneficiary may exercise the
Awardee's Awards after the Awardee's death. If an Awardee dies when the Awardee
has no living beneficiary designated under this Plan, the Company shall allow
the executor or administrator of the Awardee's estate to exercise the Award or,
if there is none, the person entitled to exercise the Option under the Awardee's
will or the laws of descent and distribution. In any case, no Award may be
exercised after its Expiration Date.

18.   MISCELLANEOUS

      18.1  GOVERNING LAW.

      This Plan, the Award Agreements and all other agreements entered into
under this Plan, and all actions taken under this Plan or in connection with
Awards or Award Shares, shall be governed by the laws of the State of Delaware.

      18.2  DETERMINATION OF VALUE.

      Fair Market Value shall be determined as follows:

            (a) LISTED STOCK. If the Shares are traded on any established stock
exchange or quoted on a national market system, Fair Market Value shall be the
closing sales price for the Shares as quoted on that stock exchange or system
for the date the value is to be determined (the "VALUE DATE") as reported in The
Wall Street Journal or a similar publication. If no sales are reported as having
occurred on the Value Date, Fair Market Value shall be that closing sales price
for the last preceding trading day on which sales of Shares are reported as
having occurred. If no sales are reported as having occurred during the five
trading days before the Value Date, Fair Market Value shall be the closing bid
for Shares on the Value Date. If Shares are listed on multiple exchanges or
systems, Fair Market Value shall be based on sales or bid prices on the primary
exchange or system on which Shares are traded or quoted.

            (b) STOCK QUOTED BY SECURITIES DEALER. If Shares are regularly
quoted by a recognized securities dealer but selling prices are not reported on
any established stock exchange or quoted on a national market system, Fair
Market Value shall be the mean between the high bid and low asked prices on the
Value Date. If no prices are quoted for the Value Date, Fair Market Value shall
be the mean between the high bid and low asked prices on the last preceding
trading day on which any bid and asked prices were quoted.

                                       25
<PAGE>

            (c) NO ESTABLISHED MARKET. If Shares are not traded on any
established stock exchange or quoted on a national market system and are not
quoted by a recognized securities dealer, the Administrator (following
guidelines established by the Board or Committee) will determine Fair Market
Value in good faith. The Administrator will consider the following factors, and
any others it considers significant, in determining Fair Market Value: (i) the
price at which other securities of the Company have been issued to purchasers
other than Employees, Directors, or Consultants, (ii) the Company's
stockholder's equity, prospective earning power, dividend-paying capacity, and
non-operating assets, if any, and (iii) any other relevant factors, including
the economic outlook for the Company and the Company's industry, the Company's
position in that industry, the Company's goodwill and other intellectual
property, and the values of securities of other businesses in the same industry.

      18.3  RESERVATION OF SHARES.

      During the term of this Plan, the Company shall at all times reserve and
keep available such number of Shares as are still issuable under this Plan.

      18.4  ELECTRONIC COMMUNICATIONS.

      Any Award Agreement, notice of exercise of an Award, or other document
required or permitted by this Plan may be delivered in writing or, to the extent
determined by the Administrator, electronically. Signatures may also be
electronic if permitted by the Administrator.

      18.5  NOTICES.

      Unless the Administrator specifies otherwise, any notice to the Company
under any Option Agreement or with respect to any Awards or Award Shares shall
be in writing (or, if so authorized by Section 18.4, communicated
electronically), shall be addressed to the Secretary of the Company, and shall
only be effective when received by the Secretary of the Company.

                                       26

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