Exhibit 10.1

Warner Chilcott

Equity Incentive Plan

(Amended and Restated)

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TABLE OF CONTENTS

 

 

 

    

PAGE

Section 1. Purpose.

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Section 2. Administration.

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Section 3. Eligibility.

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Section 4. Shares Subject to Plan.

  A-2

Section 5. Awards.

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Section 6. Options.

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Section 7. Share Appreciation Rights.

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Section 8. Share Awards.

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Section 9. Share Units.

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Section 10. Performance Awards.

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Section 11. Dividend Equivalent Rights.

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Section 12. Payment for Class A Common Shares.

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Section 13. Termination of Service.

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Section 14. Adjustment of Class A Common Shares.

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Section 15. Securities Law Requirements.

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Section 16. General Terms.

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Section 17. Duration and Amendments.

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Section 18. Definitions.

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Section 19. Choice of Law.

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APPENDIX I CALIFORNIA SECURITIES LAW REQUIREMENTS

  APPENDIX I -1

APPENDIX II UNITED KINGDOM LAW REQUIREMENTS

  APPENDIX II -1

APPENDIX III UNITED KINGDOM TAX APPROVED OPTIONS

  APPENDIX III -1

 

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Warner Chilcott

Equity Incentive Plan

(Amended and Restated)

SECTION 1. Purpose.

The purpose of the Plan is to attract and retain the best available personnel,
to provide additional incentive to persons who provide services to the Company
and its Subsidiaries, and to promote the success of the Company’s business.
Unless the context otherwise requires, capitalized terms used herein are defined
in Section 18.

SECTION 2. Administration.

(a)    Authority of the Board. The Plan shall be administered by the Board. The
Board shall have full authority and sole discretion to take any actions it deems
necessary or advisable for the administration and operation of the Plan, subject
to the terms and conditions of the Plan, including, without limitation, the
right to construe and interpret the provisions of the Plan or any Award, to
provide for any omission in the Plan, to resolve any ambiguity or conflict under
the Plan or any Award, to accelerate vesting of or otherwise waive any
requirements applicable to any Award, to extend the term or any period of
exercisability of any Award, to modify the purchase price or exercise price
under any Award, to establish terms or conditions applicable to any Award and to
review any decisions or actions made or taken by the Board. All decisions,
interpretations and other actions of the Board shall be final and binding on all
participants and other persons deriving their rights from a participant.
Notwithstanding anything to the contrary herein, no action taken by the Board
shall adversely affect in any material respect the rights granted to any
participant under any outstanding Award without the participant’s written
consent. Notwithstanding anything to the contrary herein, the Board may, at its
discretion, delegate its authorities under the Plan to any officer of the
Company and may subject such delegation to such limits or parameters as it may
determine and may revoke such delegation at will.

SECTION 3. Eligibility.

The Board is authorized to grant Awards to employees, directors and consultants
of the Company or any Subsidiary of the Company. Employees who have been granted
Awards shall be participants in the Plan with respect to such Awards.

SECTION 4. Shares Subject to Plan.

(a)    Basic Limitation. Subject to the following provisions of this Section and
Section 14, the maximum number of Class A Common Shares that may be issued
pursuant to Awards under the Plan is 24,170,880 Class A Common Shares. Class A
Common Shares may only be authorized but unissued Class A Common Shares and,
unless permitted under Bermuda or other applicable law, may not be treasury
Class A Common Shares. Notwithstanding the foregoing and subject to the
provisions of Section 14 of the Plan, under the Plan no Person may be granted in
any calendar year Options, Stock Appreciation Rights or Performance Awards
denominated in Class A Common Shares that, in the case of each type of Award,
relate to more than two million Class A Common Shares or, with respect to any
Performance Award denominated in cash or valued with reference to property other
than Class A Common Shares, allow for a payment in excess of $5,000,000.

(b)    Additional Class A Common Shares. In the event that any outstanding Award
expires, is cancelled or otherwise terminated, any rights to acquire Class A
Common Shares allocable to the unexercised or unvested portion of such Award
shall again be available for the purposes of the Plan. In the event that Class A
Common Shares issued under the Plan are reacquired by the Company pursuant to
any forfeiture provision, such Class A Common Shares shall again be available
for the purposes of the Plan.

 

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SECTION 5. Awards.

(a)    Types of Awards. The Board may, in its sole discretion, make Awards of
one or more of the following: Options, Share Appreciation Rights, Share Awards,
Share Units, Performance Awards and Dividend Equivalent Rights. The Company
shall make Awards directly or cause one or more of its Subsidiaries to make
Awards; provided, however, that the Company shall be responsible for causing any
such Subsidiary to comply with the terms of any Award and the Plan.

(b)    Award Agreements. Each Award made under the Plan shall be evidenced by a
written agreement, and no Award shall be valid without any such agreement. An
Award shall be subject to all applicable terms and conditions of the Plan and to
any other terms and conditions which the Board in its sole discretion deems
appropriate for inclusion in the Award agreement provided such terms and
conditions are not inconsistent with the Plan. Accordingly, in the event of any
conflict between the provisions of the Plan and any such agreement, the
provisions of the Plan shall prevail. Prior to an Initial Public Offering,
awards made to California participants shall also be subject to the applicable
requirements set forth in Appendix I. Each agreement evidencing an Award shall
provide, in addition to any terms and conditions required to be provided in such
agreement pursuant to any other provision of this Plan, the following terms:

(i)    Number of Class A Common Shares. The number of Class A Common Shares
subject to the Award, if any, which number shall be subject to adjustment in
accordance with Section 14 of the Plan.

(ii)    Price. Where applicable, each agreement shall designate the price, if
any, to acquire any Class A Common Shares underlying the Award, which price
shall be payable in a form described in Section 12 and subject to adjustment
pursuant to Section 14.

(iii)    Vesting. Each Award agreement shall specify the dates and events on
which all or any installment of the Award shall be vested and non-forfeitable.
Notwithstanding the foregoing, upon a Change in Control any unvested Awards
which are subject to a time-based vesting schedule shall be fully vested and
non-forfeitable. Awards which are subject to a performance-based vesting
schedule shall not be affected by a Change in Control, i.e. such awards shall
not vest automatically upon a Change in Control.

(c)    No Rights as a Shareholder. A participant, or a transferee of a
participant, shall have no rights as a shareholder with respect to any Class A
Common Shares covered by an Award until Class A Common Shares are actually
issued in the name of such person (or if Class A Common Shares will be held in
street name, to a broker who will hold such Class A Common Shares on behalf of
such person).

SECTION 6. Options.

(a)    Option Agreement. The Board may, in its sole discretion, grant Options.
Each agreement evidencing an Award of Options shall contain the following
information, which shall be determined by the Board, in its sole discretion:

(i)    ISO/Nonstatutory Option. Each agreement shall designate an Option as
either an ISO or a Nonstatutory Option (provided that an Option shall be a
Nonstatutory Option unless the applicable award agreement specifically
designates such Option as an ISO).

(ii)    Exercisability. Each agreement shall specify the dates and events when
all or any installment of the Option becomes exercisable.

(iii)    Term. Each agreement shall state the term of each Option (including the
circumstances under which such Option will expire prior to the stated term
thereof), which shall not exceed ten years from the date of grant or (in respect
of an ISO) such shorter term as may be required by Section 6(b)(iii) below for
Ten Percent Class A Common Shareholders.

 

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(b)    Special ISO Rules. The following rules apply to ISO grants in addition to
any other rule that may apply under this Plan:

(i)    ISO Participants. ISOs may only be granted to employees of the Company or
a Subsidiary thereof.

(ii)    Exercise Price. The exercise price of an ISO shall not be less than 100%
of the Fair Market Value of a Class A Common Share on the date of grant or such
higher price as may be required by Section 6(b)(iii) below for Ten Percent
Class A Common Shareholders.

(iii)    Ten Percent Class A Common Shareholders. An individual who owns more
than ten percent of the total combined voting power of all classes of
outstanding stock of the Company or any of its Subsidiaries (a “Ten Percent
Class A Common Shareholder”) shall not be eligible for designation as a
participant under an ISO unless (A) the exercise price is at least 110% of the
Fair Market Value of a Class A Common Share on the date of grant and (B) the ISO
is not exercisable after the expiration of five years from the date of grant. In
determining stock ownership for purposes hereof, the attribution rules of
Section 424(d) of the Code shall apply.

(iv)    Dollar Limitation. The aggregate Fair Market Value of Class A Common
Shares (determined as of the respective date or dates of grant) for which one or
more Options granted to any participant under the Plan (or any other option plan
of the Company or any Subsidiary thereof) may for the first time become
exercisable as ISOs during any one calendar year shall not exceed the sum of
$100,000. To the extent a participant holds two or more Options which become
exercisable for the first time in the same calendar year, such Options shall
qualify as ISOs on the basis of the order in which such Options were granted.

(v)    Failure to Qualify. If all or a portion of an Award granted as an ISO
fails (or later ceases to) qualify as an ISO, such Option or portion thereof
shall be treated as a Nonstatutory Option.

SECTION 7. Share Appreciation Rights.

(a)    Generally. The Board may, in its sole discretion, grant “Share
Appreciation Rights,” including a concurrent grant of Share Appreciation Rights
in tandem with any Option. A Share Appreciation Right means a right to receive a
payment in cash, Class A Common Shares or a combination thereof in an amount
equal to the excess of (i) the Fair Market Value, or other specified valuation,
of a number of Class A Common Shares on the date the right is exercised over
(ii) the Fair Market Value, or other specified valuation, of such Class A Common
Shares on the date the right is granted. If a Share Appreciation Right is
granted in tandem with or in substitution for an Option, the designated Fair
Market Value in the Award agreement shall reflect the Fair Market Value of the
Class A Common Shares underlying the Awards on the date the Option is granted.

(b)    Share Appreciation Rights Award Agreement. Each agreement evidencing an
Award of Share Appreciation Rights shall contain the following information,
which shall be determined by the Board, in its sole discretion:

(i)    Base Value. Each agreement shall specify the base value of the Class A
Common Shares above which a participant shall be entitled to share in the
appreciation in the value of such Class A Common Shares.

(ii)    Exercisability. Each agreement shall specify the dates and events when
all or any installment of the Share Appreciation Rights becomes exercisable.

(iii)    Term. Each agreement shall state the term of each Share Appreciation
Right (including the circumstances under which such Share Appreciation Right
will expire prior to the stated term thereof), which shall not exceed ten years
from the date of grant.

 

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SECTION 8. Share Awards.

(a)    Generally. The Board may, in its sole discretion, make “Share Awards” by
granting or selling Class A Common Shares under the Plan. Each Share Award
agreement shall set forth the applicable dates and/or events on which all or any
portion of the Share Awards shall be vested and non-forfeitable. Payment in
Class A Common Shares of all or a portion of any bonus under any other
arrangement may be treated by the Board as an Award of Class A Common Shares
under the Plan.

(b)    No Purchase Price Necessary. In lieu of a purchase price, and except as
required by applicable law, a Share Award may be made in consideration of
services previously rendered by a participant to the Company or its Subsidiaries
thereof.

SECTION 9. Share Units.

(a)    Generally. The Board may, in its sole discretion, grant “Share Units”,
which in each case shall be a notional account representing Class A Common
Shares. Each Share Unit agreement shall set forth the applicable dates and/or
events on or after which all or any portion of the Share Unit Award may be
settled.

(b)    Settlement of Share Units. Share Units shall be settled in Class A Common
Shares unless the agreement evidencing the Award expressly provides for
settlement of all or a portion of the Share Units in cash equal to the value of
the Class A Common Shares that would otherwise be distributed in settlement of
such units. Class A Common Shares distributed to settle a Share Unit may be
issued with or without payment or consideration therefore, except as may be
required by applicable law or the Board in its sole discretion as set forth in
the agreement evidencing the Award. The Board may, in its sole discretion,
establish a program to permit participants to defer payments and distributions
made in respect of Share Units.

SECTION 10. Performance Awards.

(a)    The Board may, in its sole discretion, grant any Awards under the Plan
pursuant to terms which condition the Award recipient’s right to receive the
Award, exercise the Award or have the Award settled, and the timing thereof,
upon achievement or satisfaction of such performance conditions as may be
specified by the Board. The Board may use such business criteria and other
measures of performance as it deems appropriate in establishing any performance
conditions.

(b)    Any such Awards may, in the discretion of the Board, be subject to such
conditions as the Board deems necessary or appropriate to ensure that such Award
satisfies the requirements for “performance-based compensation” within the
meaning of Section 162(m) of the Code, or any successor provision thereto. For
these purposes, one or more of the following criteria relating to the Company or
a designated business segment, business unit, division, business line or other
sub-category of the Company or its businesses may be used by the Board in
establishing performance goals for such Awards: (i) revenues, (ii) expenses,
(iii) gross profit, (iv) operating income, (v) net income, (vi) earnings per
share, (vii) cash flow, (viii) capital expenditures, (ix) working capital,
(x) economic value added, (xi) stock price per share, (xii) market value,
(xiii) enterprise value, (xiv) book value, (xv) return on equity, (xvi) return
on book value, (xvii) return on invested capital, (xviii) return on asset,
(xix) capital structure, (xx) return on investment, (xxi) utilization,
(xxii) cash net income, (xxiii) adjusted cash net income, (xxiv) EBITDA and
(xxv) adjusted EBITDA. The performance goals relating to such criteria may be
expressed as absolute measures or measures relative to stated references,
including, without limitation, the achievements of one or more other businesses
or indices.

(c)    The Board will have the authority to adjust performance goals for any
performance period as equitably necessary, without enlarging or diminishing the
participants’ rights, in recognition of (i) extraordinary or nonrecurring events
experienced by the Company during the performance period, (ii) changes in
applicable accounting rules or principles or changes in the Company’s methods of
accounting during the performance

 

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period or (iii) other corporate transactions or events affecting Awards,
including, without limitation, the occurrence of a dividend or other
distribution (other than an ordinary dividend), whether in the form of cash,
securities or other property, recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, issuance of warrants or other rights to purchase shares or other
securities of the Company; provided that such adjustment is appropriate to
prevent diminution or enlargement of the benefits or potential benefits intended
to be provided under the Plan.

SECTION 11. Dividend Equivalent Rights.

(a)    Generally. The Board may, in its sole discretion, grant Dividend
Equivalent Rights with respect to any Award.

(b)    Settlement of Dividend Equivalent Rights. Dividend Equivalent Rights may
be settled in cash, Class A Common Shares, or other securities or property, all
as provided in the Award agreement. The Board may, in its sole discretion, grant
share units, which in each case shall be a notional account representing Class A
Common Shares. The Board may, in its sole discretion, establish a program to
permit participants to defer payments and distributions made in respect of
Dividend Equivalent Rights.

SECTION 12. Payment for Class A Common Shares.

(a)    General Rule. The purchase price of Class A Common Shares issued under
the Plan shall be payable in cash or personal check at the time when such
Class A Common Shares are purchased, except as otherwise provided in this
Section 12.

(b)    Surrender of Class A Common Shares. At the sole discretion of the Board,
all or any part of the purchase price and any applicable withholding
requirements may be paid by surrendering, or attesting to the ownership of,
Class A Common Shares that are already owned by the participant. Such Class A
Common Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Award is
exercised. The participant shall not surrender, or attest to the ownership of,
Class A Common Shares in payment of any portion of the purchase price (or
withholding) if such action would cause the Company or any Subsidiary thereof to
recognize a compensation expense (or additional compensation expense) with
respect to the applicable Award for financial reporting purposes, unless the
Board consents thereto.

(c)    Services Rendered. At the sole discretion of the Board, and except as
required by applicable law, Class A Common Shares may be awarded under the Plan
in consideration of services rendered to the Company or a Subsidiary thereof
prior to or after the Award.

(d)    Net Exercise. At the sole discretion of the Board on or after an Initial
Public Offering, payment of all or any portion of the purchase price under any
Award under the Plan and any applicable withholding requirements may be made by
reducing the number of Class A Common Shares otherwise deliverable pursuant to
the Award by the number of such Class A Common Shares having a Fair Market Value
equal to the purchase price.

(e)    Exercise/Sale. At the sole discretion of the Board and subject to
applicable law, on or after an Initial Public Offering, payment may be made in
whole or in part by the delivery (on a form prescribed by the Company) of an
irrevocable direction (i) to a securities broker approved by the Company to sell
Class A Common Shares and to deliver all or part of the sales proceeds to the
Company, or (ii) to pledge Class A Common Shares to a securities broker or
lender approved by the Company as security for a loan, and to deliver all or
part of the loan proceeds to the Company, in each case in payment of all or part
of the purchase price and any withholding requirements.

(f)    Discretion of Board. Should the Board exercise its sole discretion to
permit the participant to pay the purchase price under an Award in whole or in
part in accordance with Section 12 (b) through (e) above, it shall not be bound
to permit such alternative method of payment for the remainder of any such Award
or with respect to any other Award or participant under the Plan.

 

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SECTION 13. Termination of Service.

(a)    Termination of Service. If a participant’s Service terminates for any
reason, the Award shall be subject to the rights of repurchase, and the other
provisions, set forth in the written agreement with the participant governing
such Award.

(b)    Leave of Absence. For purposes of this Section 13, unless otherwise
required by applicable law, Service shall be deemed to continue while a
participant is on a bona fide leave of absence, if such leave is approved by the
Company in writing or if continued crediting of service for this purpose is
expressly required by the terms of such leave or by applicable law (as
determined by the Board).

SECTION 14. Adjustment of Class A Common Shares.

(a)    General. If there shall be a Recapitalization, an adjustment shall be
made to each outstanding Award such that each such Award shall thereafter be
exercisable or payable, as the case may be, in such securities, cash and/or
other property as would have been received in respect of Class A Common Shares
subject to, or referenced by, such Award had such Award been exercised and/or
settled in full immediately prior to such Recapitalization and such an
adjustment shall be made successively each time any such change shall occur. In
addition, in the event of any Recapitalization, the Board will adjust, in a
manner it deems fair and equitable, the number of Class A Common Shares that may
be issued under the Plan, the number of Class A Common Shares that may be issued
to any Person in any calendar year, the number of Class A Common Shares subject
to outstanding Awards, and the purchase price applicable to outstanding Awards
to prevent dilution or enlargement of participants’ rights under the Plan and
outstanding Awards. Should the vesting of any Award be conditioned upon the
Company’s attainment of performance conditions, the Board may, in a fair and
equitable manner, make such adjustments to the terms and conditions of such
Awards and the criteria therein to recognize unusual and nonrecurring events
affecting the Company or in response to changes in applicable laws, regulations
or accounting principles. Notwithstanding the foregoing, the Board shall not
without a participant’s consent make any adjustment to an ISO or an Award that
is subject to Section 409A of the Code that does not comply with the rules of
Section 424(a) of the Code or Section 409A of the Code, respectively, or would
otherwise cause the ISO to fail to qualify as an ISO for purposes of Section 422
of the Code.

(b)    Mergers and Consolidations. In the event that the Company is a party to a
merger or consolidation, outstanding Awards shall be subject to the agreement of
merger or consolidation. Subject to the terms of the applicable Award agreement,
the agreement with respect to such merger or consolidation, without the
participants’ consent, may provide for:

(i)    The continuation or assumption of such outstanding Awards under the Plan
by the Company (if it is the surviving entity) or by the surviving entity or its
direct or indirect parent;

(ii)    The substitution by the surviving entity or its direct or indirect
parent of share awards with substantially the same terms and economic value for
such outstanding Awards;

(iii)    The acceleration of the vesting of or right to exercise or receive
settlement with respect to such outstanding Awards immediately prior to or as of
the date of the merger or consolidation, and the expiration of such outstanding
Awards to the extent not timely exercised or purchased by the date of the merger
or consolidation or other date thereafter designated by the Board, after
reasonable advance written notice thereof to the holder of each such Award; or

(iv)    The cancellation of all or any portion of such outstanding Awards;
provided that, with respect to “in-the-money” Awards, such cancellation must be
made in exchange for a cash payment of the excess of the fair market value of
the Class A Common Shares subject to such outstanding Awards or portion thereof
being canceled over the purchase price, if any, with respect to such Awards or
portion thereof being canceled.

 

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SECTION 15. Securities Law Requirements.

(a)    Class A Common Shares Not Registered. Class A Common Shares shall not be
issued under the Plan unless the issuance and delivery of such Class A Common
Shares comply with (or are exempt from) all applicable requirements of law,
including (without limitation) the Securities Act, state or foreign securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company’s securities may then be traded. The
Company shall not be obligated to file any registration statement under any
applicable securities laws to permit the purchase or issuance of any Class A
Common Shares under the Plan, and accordingly any certificates for Class A
Common Shares may have an appropriate legend or statement of applicable
restrictions endorsed thereon. Each participant and any person deriving its
rights from any participant shall, as a condition to the purchase or issuance of
any Class A Common Shares under the Plan, deliver to the Company an agreement or
certificate containing such representations, warranties and covenants as the
Company may deem necessary or appropriate to ensure that the issuance of Class A
Common Shares is not required to be registered under any applicable securities
laws.

(b)    California Participants. Prior to an Initial Public Offering, if an Award
shall be made to a participant based in California, then such Award shall meet
the additional requirements set forth in Appendix I.

(c)    United Kingdom Participants: At any time, if an Award shall be made to a
participant based in the United Kingdom, such Award shall be subject to the
additional terms and conditions set forth in Appendix II.

SECTION 16. General Terms.

(a)    Nontransferability of Awards. No Award may be transferred, assigned,
pledged or hypothecated by any participant except in compliance with the terms
of the agreement governing such Award. The exercisability of an Option or other
right to acquire Class A Common Shares under the Plan by someone other than the
participant shall be governed by the agreement pursuant to which such Option was
granted.

(b)    Restrictions on Transfer of Class A Common Shares. Any Class A Common
Shares issued under the Plan shall be subject to such vesting and special
forfeiture conditions, repurchase rights, rights of first offer and other
transfer restrictions as the Board may determine. Such restrictions shall be set
forth in the applicable Award agreement and shall apply in addition to any
restrictions that may apply to holders of Class A Common Shares generally.

(c)    Withholding Requirements. As a condition to the receipt or purchase of
Class A Common Shares pursuant to an Award, a participant shall make such
arrangements as the Board may require for the satisfaction of any federal,
state, local or foreign withholding obligations that may arise in connection
with such receipt or purchase. The participant shall also make such arrangements
as the Board may require for the satisfaction of any federal, state, local or
foreign withholding obligations that may arise in connection with the
disposition of Class A Common Shares acquired pursuant to an Award.

(d)    No Retention Rights. Nothing in the Plan or in any Award granted under
the Plan shall confer upon a participant any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Company (or any Subsidiary thereof employing or retaining
the participant) or of the participant, which rights are hereby expressly
reserved by each, to terminate his or her Service at any time and for any
reason, with or without cause.

(e)    Unfunded Plan. Participants shall have no right, title or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, nor a

 

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fiduciary relationship between the Company and any participant, beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right shall be
no greater than the rights of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts. The Plan is not
intended to be subject to the Employee Retirement Income Security Act of 1974,
as amended.

SECTION 17. Duration and Amendments.

(a)    Term of the Plan. The Plan, as set forth herein, shall become effective
on the date of its adoption by the Board of Directors of the Company, subject to
(i) the approval of the holders of a majority of the Class A Common Shares and
(ii) any other shareholder approval required pursuant to the Sponsor
Shareholders Agreement to the extent then in effect. If the requisite
shareholder approvals set forth in the immediately preceding sentence to approve
the Plan are not obtained within 12 months of its adoption by the Board of
Directors of the Company, any Awards that have already been made shall be
rescinded, and no additional Awards shall be made thereafter under the Plan. The
Plan shall terminate automatically on the day preceding the tenth anniversary of
its adoption by the Board of Directors of the Company unless earlier terminated
pursuant to Section 17(b) below.

(b)    Right to Amend or Terminate the Plan. The Board may amend, suspend or
terminate the Plan at any time and for any reason; provided, however, that any
amendment of the Plan (except as provided in Section 14) which increases the
maximum number of Class A Common Shares available for issuance under the Plan in
the aggregate, changes the legal entity authorized to make Awards under this
Plan from the Company (or its successor) to any other legal entity or which
materially changes the class of persons who are eligible for the grant of ISOs,
shall be subject to: (i) the approval of the holders of a majority of the
Class A Common Shares and (ii) any other shareholder approval required pursuant
to the Sponsor Shareholders Agreement to the extent then in effect. Except as
may be required by the Sponsor Shareholders Agreement to the extent then in
effect or as the Board may deem necessary or desirable in order to comply with
any applicable law or regulations, approval of the holders of the Class A Common
Shares shall not be required for any other amendment of the Plan.

(c)    Effect of Amendment or Termination. Any amendment of the Plan shall not
adversely affect in any respect any participant’s rights under any Award
previously made or granted under the Plan without the participant’s consent
unless determined to be required in order to comply with applicable law or
regulations. No Class A Common Shares shall be issued or sold under the Plan
after the termination thereof, except pursuant to an Award granted prior to such
termination. The termination of the Plan shall not affect any Awards outstanding
on the termination date.

(d)    Modification, Extension and Assumption of Awards. Within the limitations
of the Plan and applicable law or regulations, the Board may modify, extend or
assume outstanding Awards or may provide for the cancellation of outstanding
Awards in return for the grant of new Awards for the same or a different number
of Class A Common Shares and at the same or a different price. The foregoing
notwithstanding, no modification of an Award shall, without the consent of the
participant, impair the participant’s rights or increase the participant’s
obligations under such Award or impair the economic value of any such Award
unless determined to be required in order to comply with applicable law or
regulations.

SECTION 18. Definitions.

(a)    “Affiliate” shall mean, with respect to any Person, any other Person who,
directly or indirectly, controls such first Person or is controlled by said
Person or is under common control with said Person, where “control” means the
power and ability to direct, directly or indirectly, or share equally in or
cause the direction of, the management and/or policies of a Person, whether
through ownership of voting shares or other equivalent interests of the
controlled Person, by contract (including proxy) or otherwise.

 

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(b)    “Award” shall mean the grant of an Option, Share Appreciation Right,
Share Award, Share Unit, Performance Award or Dividend Equivalent Right under
the Plan.

(c)    “Board” shall mean the Board of Directors of the Company, as constituted
from time to time, or if such Board of Directors has appointed a committee to
administer the Plan that is composed of two or more directors, each of whom is
both an “outside director” (within the meaning of Section 162(m) of the Code)
and a “non-employee director” (within the meaning of Rule 16b-3 under the
Exchange Act).

(d)    “Change in Control” shall mean the occurrence of:

(i)    any Person other than the Company, its Affiliates, an employee benefit
plan or trust maintained by the Company or its affiliates, or the “Sponsors” (as
defined in the Management Shareholders Agreement) becoming the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the combined voting power of the Company’s then
outstanding securities (excluding any Person who becomes such a beneficial owner
in connection with a transaction described in clause (A) of paragraph
(iii) below);

(ii)    at any time during a period of twelve consecutive months, individuals
who at the beginning of such period constituted the Board ceasing for any reason
to constitute at least a majority thereof, unless the election by the Company’s
shareholders of each new director during such twelve-month period was approved
by a vote of at least a majority of the directors then still in office who were
directors at the beginning of such twelve-month period; or

(iii)    the consummation of (A) a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity or any parent thereof) at least 50% of
the combined voting power or the total fair market value of the securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) any sale, lease, exchange
or other transfer (in one transaction or a series of transactions) of assets of
the Company having a total gross fair market value equal to more than 50% of the
total gross fair market value of all assets of the Company immediately prior to
such transaction or transactions.

(e)    “Class A Common Share” shall mean one Class A ordinary share of the
Company, par value $.01 or, in the case of Awards by any successor or parent to
Warner Chilcott Limited, an ordinary or common share of such parent or
successor.

(f)    “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

(g)    “Company” shall mean Warner Chilcott Limited, an exempted Bermuda limited
company or any successor or parent thereto as designated by the Board.

(h)    “Covered Employee” shall mean a person whose compensation from the
Company is, or is deemed likely by the Board to be, subject to the limitation on
deductibility set forth in Code Section 162(m) of the Code.

(i)    “Dividend Equivalent Right” shall mean an Award that entitles the holder
to receive for each eligible Class A Common Share that is subject to (or
referenced by) such Award an amount equal to the dividends paid on one Class A
Common Share at such time as dividends are otherwise paid to shareholders of the
Company holding Class A Common Shares or, if later, when the Award becomes
vested.

(j)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

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(k)    “Fair Market Value” shall mean the closing price of a Class A Common
Shares as reported on the composite tape of the Nasdaq Global Market or any
reporting system selected by the Board on the relevant dates or, if no sale of
Class A Common Shares is reported for that date, on the date or dates that the
Board determines, in its sole discretion, to be appropriate for purposes of the
valuation.

(l)    “Initial Public Offering” shall mean the initial Public Offering
registered on Form S-1 (or any successor form under the Securities Act).

(m)    “ISO” shall mean an “incentive stock option” described in Section 422(b)
of the Code.

(n)    “Management Shareholders Agreement” shall mean that certain Management
Shareholders Agreement dated as of the date hereof by and among the Company,
Warner Chilcott Holdings Company II, Limited, Warner Chilcott Holdings Company
III, Limited and the other parties thereto (as the same shall be amended,
supplemented or modified from time to time) to the extent then in force.

(o)    “Nonstatutory Option” shall mean a “stock option” not described in
Sections 422(b) of the Code.

(p)    “Option” shall mean an ISO or Nonstatutory Option granted under the Plan
and entitling the holder to purchase Class A Common Shares.

(q)    “Performance Award” shall mean an Award granted under Section 10.

(r)    “Person” shall mean an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization.

(s)    “Plan” shall mean this Warner Chilcott Equity Incentive Plan, as amended
from time to time.

(t)    “Public Offering” shall mean an underwritten public offering of Class A
Common Shares pursuant to an effective registration statement under the
Securities Act, other than pursuant to a registration statement on Form S-4 or
Form S-8 or any similar or successor form.

(u)    “Recapitalization” shall mean an event or series of events affecting the
capital structure of the Company including, but not limited to, a share split,
reverse share split, share dividend (subject to the exclusion below), spin-off,
recapitalization, combination or reclassification of the Company’s securities,
but shall exclude any share dividend to the extent the treatment of a stock
dividend is covered in the agreement governing the Award.

(v)    “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

(w)    “Service” shall mean service as an employee, director or consultant of
the Company or any Subsidiary thereof.

(x)    “Sponsor Shareholders Agreement” means that certain Shareholders
Agreement dated as of January 18, 2005, by and among the Company, Warner
Chilcott Holdings Company II, Limited, Warner Chilcott Holdings Company III,
Limited, Bain Capital Integral Investors II, L.P., DLJMB Overseas Partners III,
C.V., J.P. Morgan Partners (BHCA), L.P., Thomas H. Lee (Alternative) Fund V;
L.P. and the other parties thereto (as such agreement may be amended, modified
or supplemented from time to time) to the extent then in effect.

(y)    “Share Appreciation Right” shall have the meaning described in
Section 7(a).

(z)    “Share Award” shall have the meaning described in Section 8(a).

 

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(aa)    “Share Unit” shall have the meaning described in Section 9(a).

(bb)    “Subsidiary” shall mean, with respect to any specified Person, any other
Person in which such specified Person, directly or indirectly through one or
more Affiliates or otherwise, beneficially owns at least 50% of either the
ownership interest (determined by equity or economic interests) in, or the
voting control of, such other Person.

SECTION 19. Choice of Law.

All issues concerning the construction, validity and interpretation of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts made and performed entirely within
such state, without regard to the conflicts of laws rules of such state. Any
legal action or proceeding with respect to the Plan shall be brought in the
courts of the United States for the Southern District of New York.

 

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APPENDIX I

CALIFORNIA SECURITIES LAW REQUIREMENTS.

The terms of this Appendix I apply only to Awards made prior to an Initial
Public Offering that would be subject to Section 25110 of the California
Corporations Code or any successor law but for the exemption contained in
Section 25102(o) of the California Corporation Code (or any successor law). For
purposes of determining the applicability of the California securities law
requirements contained in this Appendix, all Awards shall be deemed made in the
State in which the participant is principally employed by the Company or any
Subsidiary thereof (as determined by the employer’s records) on the date of
grant or issuance of the Award. Except as modified by the provisions of this
Appendix I, all the other relevant provisions of the Plan shall be applicable to
such Awards.

(i)    Number of Securities. At no time shall the total number of securities
issuable upon exercise of all outstanding Options and the total number of
Class A Common Shares provided for under this or any share bonus or similar plan
or agreement of the Company exceed the applicable percentage calculated in
accordance with Title 10 California Code of Regulations, Chapter 3, Subchapter
2, Article 4, Subarticle 4, Section 260.140.45.

(ii)    Exercise Price. The exercise price of an Option shall not be less than
85% of the Fair Market Value on the date of grant (110% of the Fair Market Value
on the date of grant for an Option granted to Ten Percent Class A Common
Shareholders).

(iii)    Purchase Price. The purchase price of an Award of Class A Common Shares
shall not be less than 85% of the Fair Market Value on the date of issuance
(100% of the Fair Market Value on the date of issuance for an Award granted to
Ten Percent Class A Common Shareholders).

(iv)    Vesting and Exercisability. Except in the case of an Option granted to a
consultant, officer of the Company (or any Subsidiary thereof), or any member of
the Board of Directors of the Company, each Option shall become exercisable and
vested with respect to at least 20% of the total number of Class A Common Shares
subject to such Option each year, beginning no later than one year after the
date of grant.

(v)    Repurchase Rights. Except in the case of an Award granted or issued to a
consultant, officer of the Company (or any Subsidiary thereof), or any member of
the Board of Directors of the Company, any rights of the Company to repurchase
Class A Common Shares acquired under the Plan applicable to a participant whose
Service terminates:

(A)    Shall be exercised by the Company (if at all) within 90 days after the
date the participant’s Service terminates (or for Class A Common Shares upon the
exercise of an Award after Service terminates, within 90 days after the date of
such exercise) and shall terminate on the date of an Initial Public Offering,
and

(B)    Shall lapse at the rate of at least 20% of the Class A Common Shares
subject to such Award per year (regardless of the portion of the Award exercised
or exercisable), with the initial lapse to occur no later than one year after
the date of grant, to the extent the repurchase right permits repurchase at less
than Fair Market Value. Any repurchase right shall not be exercisable for less
than the original purchase price paid by a participant.

(vi)    Limited Transferability Rights.

(A)    A Nonstatutory Option or other right to acquire Class A Common Shares
(other than an ISO) may, to the extent permitted by the Board, be assigned in
whole or in part during the participant’s lifetime (1) as a gift to one or more
members of the participant’s immediate family or (2) by instrument

 

APPENDIX I - 1

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to an inter vivos or testamentary trust in which such Award is to be passed to
beneficiaries upon the death of the trustor (settlor). The terms applicable to
the assigned portion shall be the same as those in effect for the Award
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Board may deem appropriate.

(B)    Except as provided in Subsection (A) above, an Award may not be assigned
or transferred other than by will or by the laws of descent and distribution
following the participant’s death.

(vii)    Financial Reports. The Company shall deliver a financial statement at
least annually to each participant holding Awards or Class A Common Shares
issued under the Plan, unless such participant is a key employee whose duties in
connection with the Company assure such individual access to equivalent
information.

 

APPENDIX I - 2

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APPENDIX II

UNITED KINGDOM LAW REQUIREMENTS.

Any participant in the Plan who is based in the United Kingdom shall participate
in the Plan on the following additional terms and conditions:

 

  1. It shall be a condition of issue of any Class A Common Shares that the
participant must, if required by the Company, enter into an election under
section 431(1) of the Income Tax (Earnings and Pensions) Act 2003 in respect of
any or all Class A Common Shares acquired by the participant under the Plan.

 

  2. In a case where the Company or an Affiliate or Subsidiary or any other
person (the “Relevant Person”) is obliged to (or would suffer a disadvantage if
they were not to) account for any tax (in any jurisdiction) by virtue of the
receipt of any benefit under the Plan (whether in cash or Class A Common Shares)
or for any social security contributions payable or assessable (which, unless
the Board determines otherwise when the Award is made, shall not include
secondary/employer’s National Insurance contributions in the UK) (together, the
“Tax Liability”), the participant (or his personal representatives) must either:

 

  (a) make a payment to the Relevant Person of an amount equal to the Tax
Liability; or

 

  (b) enter into arrangements acceptable to the Relevant Person to secure that
such a payment is made (whether by authorizing the sale of some or all of the
Class A Common Shares on his behalf and the payment to the Relevant Person of
the relevant amount out of the proceeds of sale or otherwise),

and in this regard the participant (or his personal representatives) shall do
all such things and execute such documents as the Relevant Person may reasonably
require in connection with the satisfaction of the Tax Liability.

 

  3. An individual who participates in the Plan shall waive all and any rights
to compensation or damages in consequence of the termination of his office or
employment with the Company or any Subsidiary or Affiliate for any reason
whatsoever, whether lawfully or otherwise, insofar as those rights arise or may
arise from his ceasing to have rights under the Plan as a result of such
termination, or from the loss or diminution in value of such rights or
entitlements, including by reason of the operation of the terms of the Plan or
the provisions of any statute or law relating to taxation. An individual who is
eligible to participate in the Plan shall have no right to participate in the
Plan.

 

  4. Benefits under the Plan shall not form part of a Participant’s remuneration
for any purpose and shall not be pensionable.

 

  5. By participating in the Plan, the Participant consents to the collection,
processing, transmission and storage by the Company, in any form whatsoever, of
any data of a professional or personal nature which is necessary for the
purposes of introducing and administering the Plan. The Company may share such
information with any Subsidiary or Affiliate, any trustee, registrars, brokers,
other third party administrator or any person who obtains control of the Company
(pursuant to a Change in Control) or acquires the company, undertaking or
part-undertaking which employs the Participant, whether within or outside of the
European Economic Area.

 

APPENDIX II - 1

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APPENDIX III

UNITED KINGDOM TAX APPROVED OPTIONS

An Option granted under the Plan which is stated to be granted as a “UK Approved
Option” shall be granted on the terms of the Plan as amended by the provisions
of, and on the additional terms and conditions of, this Appendix III.

Definitions

In this Appendix III:

“Appropriate Limit” means the limit set out in Paragraph 6 of Schedule 4 to
ITEPA;

“Appropriate Period” means the relevant period of time as set out in Paragraph
26(3) of Schedule 4 to ITEPA;

“Associated Company” means an associated company of the Company within the
meaning that the expression bears in Paragraph 35 of Schedule 4 of ITEPA;

“Close Company” means a close company as defined in Paragraph 37 of Schedule 4
to ITEPA;

“Control” has the meaning given by Section 840 of the Taxes Act;

“Eligible Employee” means any individual who:

 

(A) is a director (who is required to work at least 25 hours per week exclusive
of meal breaks) or any employee of a Participating Company; and

 

(B) does not have, as at the date on which the Option is granted, and has not
had within the preceding 12 months, a Material Interest in a Close Company which
is:

 

  (1) the Company; or

 

  (2) a company which has Control of the Company or is a Member of a Consortium
which owns the Company;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

“Market Value” means, in relation to a Class A Common Share on any day, its
market value as determined in accordance with Part VIII of the Taxation of
Chargeable Gains Act 1992 and agreed in advance with Shares Valuation at HM
Revenue and Customs;

“Material Interest” has the meaning given by Paragraph 10 of Schedule 4 to
ITEPA;

“Member of a Consortium” has the meaning given by Paragraph 36(2) of Schedule 4
to ITEPA;

“Original Market Value” means, in relation to any Class A Common Share to be
taken into account for the purposes of the limits in Rule 2.6, its Market Value
as determined for the purposes of the grant of the relevant Option;

 

APPENDIX III - 1

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“Participating Company” means:

 

(A) the Company; and

 

(B) any other company which is under the Control of the Company and is for the
time being designated by the Board as a Participating Company; and

“Taxes Act” means the Income and Corporation Taxes Act 1988.

Provisions applying at Grant

Options may only be granted under this Appendix III to Eligible Employees.

Options may only be granted under this Appendix III at such time or times as the
Class A Common Shares over which Options are to be granted satisfy the
conditions specified in Paragraphs 16 to 20 of Schedule 4 to ITEPA. To the
extent these conditions are not met at the date the holder of the Option wishes
to exercise an Option (whether in whole or in part) the Option shall be deemed
to have been granted solely under the Plan and not in accordance with this
Appendix III.

The exercise price of an Option shall not be less than the Market Value of a
Class A Common Share on the date on which the Option is granted, but shall be
subject only to any adjustment pursuant to Rule 5.1;

Options may be granted subject to such objective conditions of exercise as the
Board may determine.

Any condition in respect of an Option granted under Part A may only be altered
if events happen which mean that the Board considers that the original condition
is no longer appropriate and that an altered condition reflects a more fair and
reasonable measure. Such an alteration may only be effected to the extent that
the Board reasonably considers that it will subsequently be no more difficult
for the holder of the Option to satisfy the condition as so altered than it was
for him to achieve the condition in its original form at the date on which the
Option was granted. Any such alteration to an Option must be agreed in advance
with HM Revenue and Customs.

Any Option granted to an Eligible Employee shall be limited to take effect so
that, immediately following such grant, the aggregate of the Original Market
Value of all Class A Common Shares over which he has been granted option rights
which are subsisting under:

this Appendix III; and

any other share option scheme approved under Schedule 4 to ITEPA which has been
adopted by the Company or an Associated Company,

shall not exceed or further exceed the Appropriate Limit.

The agreement entered into pursuant to Section 6(a) of the Plan shall, in
addition to the provisions set out in Section 6(a), specify:

the date on which the Option was granted;

that the Option has been granted in accordance with this Appendix III; and

the full terms of any conditions of exercise which the Board has determined
shall apply to the Option.

The agreement entered into pursuant to Section 6(a) of the Plan shall be
executed by the Company in such other manner as to take effect in law as a deed.

Options may only be granted under this Appendix III following approval of this
Appendix III by HM Revenue and Customs under Schedule 4 to ITEPA.

 

APPENDIX III - 2

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Provisions applying at Exercise

An Option may not be exercised by the holder of the Option if he has, or has had
at any time within the 12 month period preceding the date of exercise, a
Material Interest in the issued ordinary share capital of a Close Company which
is the Company or a company which has Control of the Company or is a Member of a
Consortium which owns the Company.

Options may be transferred upon a participant’s death to his personal
representative(s). Where an Option may be exercised by the personal
representatives of a deceased Participant, exercise shall be permitted for no
longer than 1 year following the date of his death.

For the purposes of section 524 and paragraph 35A of Schedule 4 to ITEPA the
specified retirement age shall be 55.

Class A Common Shares to be issued pursuant to the exercise of an Option shall
be issued within 28 days following the effective date of exercise of the Option.

The Board shall procure the transfer of any Class A Common Shares to be
transferred pursuant to the exercise of an Option within 28 days following the
effective date of exercise of the Option.

Class A Common Shares issued pursuant to the exercise of an Option will rank
pari passu in all respects with the Class A Common Shares then in issue at the
date of such issue, except that they will not rank for any rights attaching to
Class A Common Shares by reference to a record date preceding the date of issue.

Class A Common Shares to be transferred pursuant to the exercise of an Option
will be transferred free of all liens, charges and encumbrances and together
with all rights attaching thereto, except they will not rank for any rights
attaching to Class A Common Shares by reference to a record date preceding the
date of transfer.

If and so long as the Class A Common Shares are admitted to trading on any stock
exchange, stock market or other recognized exchange (the “Relevant Exchange”),
the Company shall apply for any Class A Common Shares issued pursuant to the
exercise of an Option to be admitted to trading on the Relevant Exchange, as
soon as practicable after the issue thereof.

Option Exchange

If any company (the “Acquiring Company”):

obtains Control of the Company as a result of making:

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

a general offer to acquire all the shares in the Company which are of the same
class as the shares which may be acquired on the exercise of Options,

in ether case ignoring any shares which are already owned by it or a member of
the same group of companies;

obtains Control of the Company in pursuance of a compromise or arrangement
sanctioned by the Court under Section 425 of the Companies Act 1985 or Article
418 of the Companies (Northern Ireland) Order 1986; or

becomes bound or entitled to acquire Shares under Sections 428 to 430F of the
Companies Act 1985 or Articles 421 to 423 of the Companies (Northern Ireland)
Order 1986,

 

APPENDIX III - 3

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any holder of an Option may at any time within the Appropriate Period, by
agreement with the Acquiring Company, release any Option which has not lapsed
(the “Old Option”) in consideration of the grant to him of an option (the “New
Option”) which (for the purposes of Paragraph 27 of Schedule 4 to ITEPA) is
equivalent to the Old Option but relates to shares in a different company
(whether the Acquiring Company itself or some other company falling within
Paragraph 16(b) or (c) of Schedule 4 to ITEPA).

The New Option shall not be regarded for the purposes of Rule 4.1 as equivalent
to the Old Option unless the conditions set out in Paragraph 27(4) of Schedule 4
to ITEPA are satisfied, but so that the provisions of the Plan shall for this
purpose be construed is if:

the New Option were an option granted under the Plan at the same time as the Old
Option; and

except for the purposes of the definition of “Participating Company”, the
reference to “Warner Chilcott Holdings Company, Limited” in the definition of
“Company” were a reference to the different company mentioned in Rule 4.1.

Adjustments and Alterations

The number of Class A Common Shares over which an Option has been granted and
the exercise price thereof shall be adjusted in such manner as the Board shall
determine following any capitalization issue (other than a scrip dividend),
rights issue, subdivision, consolidation, reduction or other variation of share
capital of the Company to the intent that (as nearly as may be without involving
fractions of a Class A Common Share or an aggregate exercise price calculated,
and rounded up, to more than two decimal places) the aggregate exercise price
payable in respect of an Option shall remain unchanged, provided that no
adjustment made pursuant to this Rule 5.1 shall be made without the prior
approval of HM Revenue and Customs (so long as this Appendix III is approved by
HM Revenue and Customs under Schedule 4 to ITEPA).

Where an Option subsists over both issued and unissued Class A Common Shares, an
adjustment permitted by Rule 5.1 may only be made if any reduction of the
exercise price of both issued and unissued Class A Common Shares can be made to
the same extent.

Any alternation or addition to a key feature of this Appendix III (or any Option
granted under this Appendix III), at a time when it is approved by HM Revenue
and Customs under Schedule 4 to ITEPA, shall not have effect until is has been
approved by HM Revenue and Customs.

 

APPENDIX III - 4

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Terms of the Plan

The following provisions of the Plan shall not apply to Options granted in
accordance with this Appendix III:

Sections 12(b), (c) and (d);

Section 12(e)(i), unless the documentation in relation to such provisions has
previously been approved by HM Revenue and Customs;

Section 14(a);

the words “or by the surviving entity or its direct or indirect parent” in
Section 14(b)(i);

Section 14(b)(ii);

Section 14(b)(iv); and

Section 16(b).

 

APPENDIX III - 5