Exhibit 10.2

 

RULES OF THE INVERNESS MEDICAL INNOVATIONS INC INLAND REVENUE

 

APPROVED OPTION PLAN

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                              DEFINITIONS

 

The words and expressions used in this Plan which have capital letters have the
meanings set out in the Appendix.

 

1.2                               INTERPRETATION

 

THE HEADINGS IN THE RULES ARE FOR CONVENIENCE AND SHOULD BE IGNORED WHEN
CONSTRUING THEM.  UNLESS THE CONTEXT OTHERWISE REQUIRES, WORDS IN THE SINGULAR
INCLUDE THE PLURAL AND VICE VERSA AND WORDS IMPORTING EITHER GENDER INCLUDE BOTH
GENDERS.

 

REFERENCE IN THE RULES TO ANY STATUTORY PROVISIONS ARE TO THOSE PROVISIONS AS
AMENDED, EXTENDED OR RE-ENACTED FROM TIME TO TIME, AND INCLUDE ANY REGULATIONS 
OR OTHER SUBORDINATE LEGISLATION MADE UNDER THEM.

 

2.                                      GRANT OF OPTIONS

 

2.1                               GRANT OF OPTIONS

 

The Grantor may at its discretion, grant to any Eligible Employee an Option or
Options at the Option Price over such whole number of Shares as it decides.

 

2.2                              PERIOD FOR GRANTING OPTIONS

 

Options may be granted at any time that the Grantor thinks appropriate.

 

2.3                               CONDITIONS TO BE SATISFIED ON THE EXERCISE OF
OPTIONS

 

An Option may be granted subject to such conditions as the Grantor may decide
being met before it can be exercised. Such conditions:

 

2.3.1                        MUST BE OBJECTIVE AND STATED IN WRITING AT THE DATE
OF GRANT AND APPROVED IN ADVANCE BY THE INLAND REVENUE;

 

2.3.2                        MAY NOT BE WAIVED OR AMENDED BY THE GRANTOR UNLESS:

 

(I)            AN EVENT OCCURS WHICH CAUSES THE BOARD TO CONSIDER THAT A WAIVER
OF OR AMENDMENT TO THE CONDITIONS WOULD BE A FAIRER MEASURE OF PERFORMANCE; AND

 

(II)           THE BOARD REASONABLY CONSIDERS THAT A WAIVER OF OR AMENDMENT TO
THE CONDITIONS WOULD NOT MAKE THE CONDITIONS MORE DIFFICULT TO SATISFY.

 

2.4                               MANNER OF GRANT AND PAYMENT FOR OPTIONS

 

An Option will be granted so that it constitutes a binding contract between the
Grantor and the Participant. Each Participant will be given an option
certificate as evidence of the grant of an

 

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Option.  There will be no payment for the grant of an Option.

 

2.5                               AN OPTION IS SUBJECT TO THE RULES BUT MAY BE
RENOUNCED

 

An Option is granted incorporating and subject to the Rules.  A Participant may
renounce an Option, in whole or in part, within 30 days following the Date of
Grant and, to the extent renounced, the Option will be treated as if it had
never been granted.

 

2.6                              An Option may be granted so as to be
exercisable in separate parts

 

An Option may be granted so as to be first exercisable in stages, each of which
will occur on a different Specified Anniversary in respect of a specific number
of Shares.  An Option granted under this Rule 2.6 shall be evidenced by a
separate Option certificate for each stage, each such certificate shall state
the number of Shares which will become exercisable for that stage and the
Specified Anniversary on which they will normally become exercisable, unless
otherwise provided in the Rules.  Where an Option has been granted in accordance
with this Rule 2.6, any reference in the Rules to the exercise, exercisability
or lapse of an Option will be read, where necessary, as relating to the exercise
or lapse of that Option in respect of the number of Shares and with the
Specified Anniversary referred to in each separate applicable Option
certificate.

 

2.7                               OPTIONS PERSONAL TO PARTICIPANTS

 

An Option is personal to the Participant to whom it is granted. It may not, nor
may any rights in respect of it, be transferred, assigned, charged or otherwise
disposed of to any Person other than, on the death of a Participant, when it may
be transmitted to his personal representatives.

 

3.                                      OPTION PRICE

 

3.1                               THE GRANTOR’S DECISION

 

The Grantor will decide the Option Price of an Option which will be stated at
the Date of Grant.

 

3.2                              DECIDING THE OPTION PRICE

 

The Option Price cannot be less than the higher of:

 

3.2.1                        THE MARKET VALUE OF A SHARE AS AT THE DATE OF
GRANT; AND

 

3.2.2                        THE NOMINAL VALUE OF A SHARE, IF THE SHARES ARE TO
BE SUBSCRIBED,

 

but subject to any adjustment under Rule 7.

 

4.                                      PLAN LIMIT

 

4.1                               Limit imposed by the Inland Revenue

 

No option will be granted to an Eligible Employee if it would, at the Date of
Grant, result in:

 

4.1.1        the total Market Value of the Shares (as calculated under
Rule 3.2.1) which the Eligible Employee could acquire on exercise of the Option;
and

 

4.1.2        the aggregate market values of the Shares which the Eligible
Employee could acquire on the exercise of any option(s) granted under the Plan
and any other

 

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Discretionary Share Option Plan approved by the Inland Revenue and established
by the Company or by an Associated Company,

 

exceeding £30,000 or any other Inland Revenue limit applicable from time to
time.  In determining the limits in this Rule 4.1, no account will be taken of
any Shares where the right to acquire them was released or has lapsed.

 

4.2                               TIME WHEN MARKET VALUE IS CALCULATED

 

Under Rule 4.1, Market Value is calculated as at the date when the Option is
granted.

 

4.3                               GRANT OF OPTIONS IN EXCESS OF LIMITS

 

IF AN OPTION IS GRANTED ON TERMS WHICH DO NOT COMPLY WITH RULE 4.1, THE NUMBER
OF SHARES OVER WHICH THAT OPTION HAS BEEN GRANTED WILL BE REDUCED AUTOMATICALLY
TO THE LARGEST LOWER NUMBER AS WOULD COMPLY WITH THE TERMS OF RULE 4.1.

 

An adjusted Option will take effect from the Date of Grant as if it had been
granted on the adjusted terms.

 

4.4                               ADJUSTMENT TO SHARES TO BE TAKEN INTO ACCOUNT

 

Where Shares which have been issued under the Plan or any other Discretionary
Share Option Plan are to be taken into account for the purposes of the limit in
Rule 4.1 and a Variation has taken place between the date of issue of those
Shares and the date on which the limit is to be calculated, then the number of
Shares taken into account for the purposes of the limit will be adjusted in the
manner the Grantor considers appropriate to take account of the Variation.

 

5.                                      RIGHTS OF EXERCISE AND LAPSE OF OPTIONS

 

5.1                               GENERAL RULES FOR EXERCISE

 

An option may not be exercised at any time when a Participant has, or within the
preceding 12 months has had, a Material Interest in a Close Company which is the
Company, any company which has Control of the Company or a Member of a
Consortium which owns the Company.

 

An Option:

 

5.1.1        CANNOT BE EXERCISED EARLIER THAN THE SPECIFIED ANNIVERSARY OF THE
DATE OF GRANT OR ANY LATER DATE DETERMINED BY THE GRANTOR AT THE DATE OF GRANT,
EXCEPT AS PROVIDED IN RULE 5.2;

 

5.1.2        MAY ONLY BE EXERCISED BY A PARTICIPANT WHILE HE IS A DIRECTOR OR
EMPLOYEE OF A PARTICIPATING COMPANY OR OF AN ASSOCIATED COMPANY, EXCEPT AS
PROVIDED IN RULE 5.3;

 

5.1.3        MAY ONLY BE EXERCISED IF ANY CONDITIONS IMPOSED UNDER RULE 2.3 AND
NOT WAIVED HAVE BEEN FULFILLED TO THE SATISFACTION OF THE GRANTOR, OTHER THAN
FOLLOWING AN EXCHANGE OF OPTIONS UNDER RULE 8.

 

5.2                               EXERCISABILITY UPON A CHANGE IN CONTROL OF THE
COMPANY

 

5.2.1        SUBJECT TO RULE 5.3 BELOW, AN OPTION SHALL BECOME FULLY
EXERCISABLE, WITHOUT REGARD TO ANY SPECIFIED ANNIVERSARY, IMMEDIATELY FOLLOWING:

 

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(I)                                     SHAREHOLDER APPROVAL OF THE DISSOLUTION
OR LIQUIDATION OF THE COMPANY;

 

(ii)                                  a Person obtaining Control of the Company
through acquisition of Shares or voting rights which result in that Person
holding more than 50 per cent of either the Company’s Shares or the combined
voting rights of the Company’s Shares;

 

(iii)                               the completion of a consolidation or  merger
of the Company, or a sale or other disposition of all or substantially all the
assets of the Company, unless at least 80% of the voting shares of the successor
entity arising from the relevant transaction would, immediately following the
transaction, be held by or on behalf of the same shareholders and in the same
proportions as those of the Company immediately before the transaction;

 

(iv)          there ceasing to be a majority of the Incumbent Directors on the
Board for any reason.

 

5.2.2                        FOR THE PURPOSES OF RULE 5.2:

 

(I)                                     A PERSON WILL BE DEEMED TO HAVE OBTAINED
CONTROL OF THE COMPANY IF HE AND OTHERS ACTING IN CONCERT  WITH HIM HAVE
TOGETHER OBTAINED CONTROL OF IT

 

(ii)                                  a change of Control will not be taken to
have occurred by reason only that the Company has acquired its own shares with
the result that any person becomes entitled to 50 per cent or more of the
combined voting power of all the company’s shares.

 

5.3                               LAPSING OF OPTIONS

 

Options that are not exercisable as of the date of the cessation of employment
with a Participating Company or an Associated Company will lapse as of the date
of cessation of such employment.  Options that are otherwise exercisable by
their terms will lapse, to the extent not exercised, on the earliest of:

 

5.3.1             THE TENTH ANNIVERSARY OF THE DATE OF GRANT;

 

5.3.2             THE FIRST ANNIVERSARY OF THE DATE OF CESSATION OF EMPLOYMENT
DUE TO THE DEATH OF THE PARTICIPANT;

 

5.3.3             THE FIRST ANNIVERSARY OF THE DATE OF CESSATION OF EMPLOYMENT
DUE TO THE DISABILITY OF THE PARTICIPANT (AS DETERMINED BY THE GRANTOR) OR THE
EXPIRY OF ANY PERIOD OF EXERCISE SPECIFIED UNDER RULE 5.4, PROVIDED THAT THE
DEATH OF THE PARTICIPANT DURING THE PERIOD PROVIDED IN THIS RULE 5.3.3 SHALL
EXTEND SUCH PERIOD UNTIL THE FIRST ANNIVERSARY OF THE DATE OF DEATH OF THE
PARTICIPANT OR THE DATE DESCRIBED IN RULE 5.3.1, IF EARLIER;

 

5.3.4              THE EXPIRY OF NINETY DAYS FOLLOWING THE DATE OF CESSATION OF
EMPLOYMENT FOR ANY REASON OTHER THAN DEATH, DISABILITY (AS DETERMINED BY THE
GRANTOR) OR CAUSE, UNLESS RULE 5.4 APPLIES, IN WHICH CASE THE OPTION WILL LAPSE
ON THE EXPIRY OF THE PERIOD OF EXERCISE SPECIFIED UNDER RULE 5.4;

 

5.3.5            IMMEDIATELY UPON THE CESSATION OF EMPLOYMENT OF THE PARTICIPANT
DUE TO TERMINATION FOR CAUSE;

 

5.3.6            immediately as of the date the Participant is deprived of the
legal or beneficial

 

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ownership of the Option by operation of law, or does or omits to do anything
which causes him to be so deprived or being declared bankrupt; and

 

5.3.7            IMMEDIATELY AS OF THE DATE THE PARTICIPANT ATTEMPTS TO BREACH
RULE 2.7.

 

5.4                    Extension of period for exercise

 

If a Participant ceases to hold office or employment in the circumstances
referred to in Rule 5.3.3 or 5.3.4, the Grantor may extend the period of
exercise so that, as to any Option otherwise exercisable on the date the
Participant no longer held office or employment, the exercisable portion of the
Option will remain exercisable from the date the Participant ceases to hold
office or employment until the later of:

 

5.4.1             the third anniversary of the Date of Grant; and

 

5.4.2             the third anniversary of the last occasion (if any) on which
the Participant exercised an option under a Discretionary Share Option Plan
approved by the Inland Revenue while holding office or employment with a
Participating Company or an Associated Company in circumstances which qualified
for relief from income tax.

 

EXCEPT THAT, NO OPTION SHALL BE EXERCISABLE AS OF THE TENTH ANNIVERSARY OF THE
DATE OF GRANT, OR AS OF THE FIRST ANNIVERSARY OF THE DATE OF DEATH OF THE
PARTICIPANT.

 

5.5                               CESSATION FOLLOWING PREGNANCY

 

FOR THE PURPOSES OF RULE 5.3.4, A WOMAN WHO LEAVES EMPLOYMENT BECAUSE OF
PREGNANCY WILL BE REGARDED AS HAVING LEFT EMPLOYMENT ON THE DAY ON WHICH SHE
INDICATES EITHER THAT SHE DOES NOT INTEND TO RETURN TO WORK OR THAT SHE WILL NOT
BE RETURNING TO WORK.  IF SHE GIVES NO INDICATION, SHE WILL BE TREATED AS HAVING
LEFT EMPLOYMENT ON THE DAY AFTER THE DAY ON WHICH MATERNITY PAY UNDER THE
EMPLOYMENT RIGHTS ACT 1996 CEASES TO BE PAYABLE OR, IF LATER, ANY OTHER DATE
SPECIFIED IN THE TERMS OF HER EMPLOYMENT, WITHOUT HER RETURNING TO WORK.

 

6.                                      EXERCISE OF OPTIONS

 

6.1                               EXERCISE IN WHOLE OR IN PART

 

An Option may be exercised in whole or in part.

 

6.2                               MANNER OF EXERCISE

 

To exercise an Option, the Participant must deliver at the address specified in
the notice of exercise:

 

6.2.1        AN OPTION CERTIFICATE COVERING AT LEAST ALL THE SHARES OVER WHICH
THE OPTION IS THEN TO BE EXERCISED;

 

6.2.2        THE NOTICE OF EXERCISE IN THE PRESCRIBED FORM PROPERLY COMPLETED
AND SIGNED BY THE PARTICIPANT (OR BY HIS DULY AUTHORISED AGENT); AND

 

6.2.3        EVIDENCE TO THE SATISFACTION OF THE COMPANY THAT IT HAS RECEIVED OR
WILL RECEIVE AS SOON AS PRACTICABLE PAYMENT IN FULL OF THE EXERCISE PRICE FOR
THE SHARES OVER WHICH THE OPTION IS EXERCISED.

 

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6.3                               OPTION EXERCISE DATE

 

If any conditions must be fulfilled before an Option may be exercised, the
Option will not be validly exercised unless and until the Grantor is satisfied
that those conditions have been fulfilled.  Otherwise, the Option Exercise Date
will be the date of receipt of the items referred to in Rule 6.2.

 

6.4                               ISSUE OR TRANSFER OF SHARES

 

Subject to Rule 6.5, the Grantor will procure the delivery of any Shares to a
Participant (or his nominee) pursuant to the exercise of an Option within 30
days following the Option Exercise Date.

 

6.5                               CONSENTS

 

The delivery of any Shares under the Plan will be subject to obtaining any
necessary approval or consent.

 

6.6                               RANKING OF SHARES

 

SHARES ACQUIRED BY A PARTICIPANT UNDER THE PLAN WILL RANK EQUALLY IN ALL
RESPECTS WITH THE SHARES THEN IN ISSUE, EXCEPT THAT THEY SHALL NOT RANK FOR ANY
RIGHT ATTACHING TO THEM BY REFERENCE TO A RECORD DATE PRECEDING THE OPTION
EXERCISE DATE.

 

7.                                      ADJUSTMENT OF OPTIONS

 

7.1                               VARIATION IN EQUITY SHARE CAPITAL

 

If there is a Variation in the equity share capital of the Company:

 

7.1.1        THE NUMBER AND/OR THE NOMINAL VALUE OF SHARES OVER WHICH AN OPTION
IS GRANTED; AND

 

7.1.2        THE OPTION PRICE; AND

 

7.1.3        WHERE AN OPTION HAS BEEN EXERCISED BUT ON THE DATE OF THE VARIATION
NO SHARES HAVE BEEN DELIVERED PURSUANT TO THAT EXERCISE, THE NUMBER OF SHARES
WHICH MAY BE DELIVERED AND THE PRICE AT WHICH THEY MAY BE ACQUIRED,

 

will be adjusted in the manner the Grantor determines so that (as nearly as may
be without involving fractions of a Share or an Option Price calculated to more
than two decimal places) the Exercise Price will remain unchanged.

 

7.2                               NOMINAL VALUE OF SHARES

 

Apart from under this Rule 7.2, no adjustment under Rule 7.1 can reduce the
Option Price to less than the nominal value of a Share.  Where an Option
subsists over both issued and unissued Shares, an adjustment may only be made if
the reduction of the Option Price in respect of both the issued and the unissued
Shares can be made to the same extent.  Any adjustment made to the Option Price
of Options over unissued Shares will only be made if and to the extent that the
Board is authorised to:

 

7.2.1        CAPITALISE FROM THE RESERVES OF THE COMPANY A SUM EQUAL TO THE
AMOUNT BY WHICH THE NOMINAL VALUE OF THE SHARES IN RESPECT OF WHICH THE OPTION
IS EXERCISABLE EXCEEDS THE ADJUSTED EXERCISE PRICE; AND

 

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7.2.2        APPLY THAT SUM IN PAYING UP THE SHARES SO THAT ON EXERCISE OF THE
OPTION THE BOARD WILL CAPITALISE THAT SUM AND APPLY IT IN PAYING UP THE SHARES.

 

8.                                      EXCHANGE OF OPTIONS

 

8.1                               The Acquiring Company

 

If any company (“the Acquiring Company”):

 

8.1.1              obtains Control of the Company as a result of making a
general offer to acquire:

 

(i)                           the whole of the issued ordinary share capital of
the Company which is made on condition such that if it is satisfied the
Acquiring Company will have Control of the Company; or

 

(ii)                        all the shares in the Company which are of the same
class as the Shares,

 

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

 

8.1.2              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

 

8.1.3              becomes entitled to acquire Shares under sections 428 to 430F
of that Act,

 

any Participant may, at any time within the Appropriate Period, by arrangement
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 15 of Schedule 9) 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 10(b) or (c) of
Schedule 9).

 

8.2                    The New Option

 

The New Option will not be regarded as equivalent to the Old Option unless the
conditions set out in paragraph 15(3) of Schedule 9 are satisfied, but so that
the provisions of the Plan will for this purpose be construed as if the New
Option were an option granted under the Plan at the same time as the Old Option
except for the purpose of the definition of “Participating Company” in the
Appendix, and as if the reference to Inverness Medical Innovations Inc in the
definition of the “Company” in the Appendix were a reference to the different
company mentioned in Rule 8.1.

 

8.3                    EXCHANGE IN SIMILAR CIRCUMSTANCES

 

The exchange of Options as permitted under this Rule 8 may also apply on the
occurrence of an event similar to any of those described in Rules 8.1.1, 8.1.2
or 8.1.3 above, provided that the Inland Revenue shall have first agreed to
this.

 

9.                                      ADMINISTRATION

 

9.1                               ADMINISTRATION OF THE PLAN

 

The Plan will be administered by the Grantor.  The Grantor has full authority,
consistent with the Plan, to administer the Plan, including authority to
interpret and construe any provision of the Plan and to adopt any regulations
for administering the Plan and any documents it thinks

 

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necessary or appropriate.  The Grantor’s decision on any matter concerning the
Plan will be  final and binding.

 

9.2                               COSTS OF INTRODUCING AND ADMINISTERING THE
PLAN

 

The costs of introducing and administering the Plan will be borne by the
Company.  However, the Company may require any Subsidiary of the Company to
enter into an agreement which obliges that Subsidiary to reimburse the Company
for any costs borne by the Company,   directly or indirectly, in respect of the
Subsidiary’s officers or employees.  The Company may also enter into a similar
agreement with any Participating Company or Associated Company which is not a
Subsidiary of the Company.

 

10.                               AMENDING THE PLAN

 

10.1                        THE BOARD’S POWER TO AMEND THE PLAN

 

Subject to the provisions of Rule 10, the Board can at any time amend any of the
provisions of the Plan in any respect.

 

10.2                       PARTICIPANTS’ APPROVAL

 

No amendment will be made under Rule 10.1 which would abrogate or adversely
affect the subsisting rights of a Participant unless it is made with the
Participant’s consent.

 

10.3                        PROHIBITED AMENDMENT

 

No amendment will be made to the Plan if, as a result of the amendment, it would
cease to be an Employees’ Share Plan.

 

10.4                        Inland Revenue approval

 

While the Plan is to remain approved by the Inland Revenue, no amendment made
after it has been approved by the Inland Revenue will have effect until the
amendment has been approved by the Inland Revenue.

 

11.                               GENERAL

 

11.1                        RIGHTS OF PARTICIPANTS AND ELIGIBLE EMPLOYEES

 

Nothing in the Plan will give any officer or employee of any Participating
Company or Associated Company any right to participate in the Plan.  The rights
and obligations of any individual under the terms of his office or employment
with a Participating Company or Associated Company will not be affected by his
participation in the Plan nor any right which he may have to participate under
it.  A Participant holding an Option will not have any rights of a shareholder
of the Company with respect to that Option or the Shares subject to it.

 

11.2                        NO RIGHTS TO COMPENSATION OR DAMAGES

 

A Participant waives all and any rights to compensation or damages for the
termination of his office or employment with a Participating Company or
Associated Company for any reason whatsoever insofar as those rights arise or
may arise from his ceasing to have rights under or to be entitled to exercise
any Option under the Plan as a result of that termination or from the loss or
diminution in value of such rights or entitlements.  Nothing in the Plan or in
any document executed under it will give any Person any right to continue in
employment or will affect the right of the Company, any Subsidiary of the
Company or any Associated Company

 

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to terminate the employment of any Participant without liability at any time,
with or without Cause, or will impose on the Company, any Participating Company,
the Grantor or their respective agents and employees any liability in connection
with the loss of a Participant’s benefits or rights on the exercise of a
discretion under the Plan for any reason as a result of the termination of his
employment.

 

11.3                        THE BENEFITS OF RULE 11.1 AND 11.2

 

The benefit of Rules 11.1 and 11.2 is given for the Company, for itself and as
trustee and agent of all its Subsidiaries and Associated Companies.  The Company
will hold the benefit of these Rules on trust and an agent for each of them and
may assign the benefit of this Rule 11.3 to any of them.

 

11.4                        CONSTITUTIONAL DOCUMENTS

 

Any Shares acquired on the exercise of Options shall be subject to the
constitutional documents of the Company.

 

11.5                        SEVERABILITY

 

The invalidity or non-enforceability of one or more provisions of the Plan will
not affect the validity or enforceability of the other provisions of the Plan.

 

11.6                        GOVERNING LAW

 

These Rules will be governed by and construed in accordance with the law of the
state of Delaware.

 

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APPENDIX:  DEFINITIONS

 

 

Appendix

this appendix which forms part of the Rules;

 

 

 

 

Appropriate Period

the meaning given by paragraph 15(2) of Schedule 9;

 

 

 

 

Associated Company

in relation to the Company:

 

(i)                          any company which has Control of the Company;

 

(ii)                       any company (other than a Participating Company)
which is under the Control of any company referred to in (i) above;

 

 

 

 

Board

the board of directors for the time being of the Company or a duly authorised
committee of it;

 

 

 

 

Cause

means fraud, embezzlement, material dishonesty, conviction of a felony or crime
involving moral turpitude, or a material breach or a material failure to perform
or a material negligence in the performance of the duties of employment;

 

 

 

 

Close Company

the meaning given by section 414 (1) of the Taxes Act as varied by paragraph 8
of Schedule 9;

 

 

 

 

the Company

Inverness Medical Innovations Inc (registered no. 3391092 8100);

 

 

 

 

Control

means the power of a person to secure:

 

(i)                             by means of the holding of shares or the
possession of voting power in or in relation to that or any other body
corporate; or

 

(ii)                          by virtue of any power conferred by the articles
of association or other document regulating that or any other body corporate,

 

that the affairs of the first mentioned body corporate are conducted in
accordance with the wishes of that person;

 

 

 

 

Date of Grant

with respect to an Option the date on which the Grantor grants it under
Rule 2.4;

 

 

 

 

Discretionary Share Option Plan

a share option plan, other than a savings-related share option plan, in which
participation is at the discretion of the grantor of options under that plan;

 

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Eligible Employee

any person who at the Date of Grant:

 

(i)                                     is an employee or director of a
Participating Company on terms which, in either case, require him to devote
substantially the whole of his working time to his duties as such and, in the
case of a director, no less than 25 hours per week (excluding meal breaks); and

 

(ii)                                  is not precluded from participating in the
Plan by paragraph 8 of Schedule 9;

 

 

 

 

Employees’ Share Plan

a scheme for encouraging or facilitating the holding of shares or debentures in
a company by or for the benefit of:

 

(i)                                    the bona fide employees or former
employees of the company, the company’s subsidiary or holding company or a
subsidiary of the company’s holding company; or

 

(ii)                                 the wives, husbands, widows, widowers or
children or step-children under the age of 18 of such employees or former
employees;

 

 

 

 

Exercise Price

the total amount payable on the exercise of an Option, whether in whole or in
part, being an amount equal to the relevant Option Price multiplied by the
number of Shares in respect of which the Option is exercised;

 

 

 

 

Grantor

in relation to an Option, the Person who granted it;

 

 

 

 

Incumbent Director

any duly elected member of the Board on the date this Plan was approved, as well
as any subsequently elected member of the Board if such person’s election was
approved by or such person was nominated for election by either (a) a vote of at
least a majority of the Incumbent Directors or (b) a vote of at least a majority
of the Incumbent Directors who are members of a nominating committee comprised,
in the majority, of Incumbent Directors; provided that any  person who initially
joins the Board in connection with an actual or threatened election contest or
proxy solicitation on behalf of a person other than the Board shall not be
considered an Incumbent Director.

 

 

 

 

Market Value

in relation to a Share on any day its market value, determined in accordance
with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in
advance with the Inland Revenue Shares Valuation;

 

 

 

 

Material Interest

the meaning given by section 187 (3) of the Taxes Act;

 

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Member of a Consortium

the meaning given by section 187 (7) of the Taxes Act;

 

 

 

 

Option

a right to acquire Shares under the Plan which is either subsisting or is
proposed to be granted;

 

 

 

 

Option Exercise Date

the date when the exercise of an Option is effective because it complies with
Rules 6.2 and 6.3;

 

 

 

 

Option Price

the price per Share at which a Participant may acquire Shares on the exercise of
an Option determined under Rule 3;

 

 

 

 

Participant

any Eligible Employee to whom an Option has been granted, or (where the context
requires) his personal representatives;

 

 

 

 

Participating Company

(i)                          the Company; and

 

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

 

 

 

 

Person

any individual, corporation, partnership, limited liability company, trust or
other entity of whatever nature;

 

 

 

 

Plan

the Inverness Medical Innovations Inc Inland Revenue Approved Option Plan in its
present form or as from time to time amended in accordance with the Rules;

 

 

 

 

Rules

these rules as amended from time to time;

 

 

 

 

Schedule 9

Schedule 9 to the Taxes Act;

 

 

 

 

Share

a fully paid ordinary share in the capital of the Company which satisfies
paragraphs 10 to 14 of Schedule 9;

 

 

 

 

Specified Anniversary

in respect of an Option or any part of it, the date or dates, specified by the
Company at the Date of Grant, on which the Option (or part of it) shall first
become exercisable;

 

 

 

 

Subsidiary

a company is a subsidiary of another company if:

 

(i)                          that other company:

 

(a)                        is a member of it and controls the composition of its
board of directors; or

 

(b)                       holds more than half in nominal value of its equity
share capital; or

 

(ii)                       the first mentioned company is a subsidiary of any
company which is that other’s subsidiary;

 

12

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Taxes Act

the Income and Corporation Taxes Act 1988; and

 

 

 

 

Variation

in relation to the equity share capital of the Company a capitalisation issue,
an offer or invitation made by way of rights, a subdivision, a consolidation or
reduction, or any other variation.

 

13

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INVERNESS MEDICAL INNOVATIONS INC.

 

RULES OF THE

INVERNESS MEDICAL INNOVATIONS INC.

INLAND REVENUE APPROVED

OPTION PLAN

 

Approved by the Inland Revenue on 27 March 2003 under Reference: X22502/PC

 

Adopted by the Board on 10 March 2003 as authorised by the Inverness Medical
Innovations Inc. 2001 Stock Option and Incentive Plan

 

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CONTENTS

 

Rule

 

 

 

 

1.

DEFINITIONS AND INTERPRETATION

 

 

 

 

2.

GRANT OF OPTIONS

 

 

 

 

3.

OPTION PRICE

 

 

 

 

4.

PLAN LIMIT

 

 

 

 

5.

RIGHTS OF EXERCISE AND LAPSE OF OPTIONS

 

 

 

 

6.

EXERCISE OF OPTIONS

 

 

 

 

7.

ADJUSTMENT OF OPTIONS

 

 

 

 

8.

EXCHANGE OF OPTIONS

 

 

 

 

9.

ADMINISTRATION

 

 

 

 

10.

AMENDING THE PLAN

 

 

 

 

11.

GENERAL

 

 

 

 

 

Appendix - Definitions

 

 

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