Exhibit 10.13


 


 












 


RULES OF THE

CYCLACEL GROUP PLC

DISCRETIONARY

SHARE OPTION PLAN (APPROVED AND UNAPPROVED PARTS)


 












 


Authorised by shareholders on 1 July, 2004

Adopted by the Board on 30 June, 2004

Part A approved by the Inland Revenue on [      ]
under reference:
X22776/IDA


 


 





ALLEN & OVERY LLP


LONDON


ICM: 874712.1


 


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CONTENTS


 


	
  Rule

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PART A: APPROVED PART

  	
   

  
	
  1.

  	
  Grant
  of Options

  	
   

  
	
  2.

  	
  Option
  Price

  	
   

  
	
  3.

  	
  Plan
  limits

  	
   

  
	
  4.

  	
  Rights of exercise

  	
   

  
	
  5.

  	
  Lapse
  of Options

  	
   

  
	
  6.

  	
  Exchange of Options

  	
   

  
	
  7.

  	
  Exercise
  Process

  	
   

  
	
  8.

  	
  Adjustment of Options

  	
   

  
	
  9.

  	
  Administration

  	
   

  
	
  10.

  	
  Amending
  the Plan

  	
   

  
	
  11.

  	
  General

  	
   

  
	
  12.

  	
  Governing
  law

  	
   

  
	
  PART B: UNAPPROVED PART

  	
   

  
	
  1.

  	
  Application of Part A

  	
   

  
	
  2.

  	
  Grant of Options

  	
   

  
	
  3.

  	
  Individual
  Limit

  	
   

  
	
  4.

  	
  Inland Revenue Approval

  	
   

  
	
  5.

  	
  Variation

  	
   

  
	
  6.

  	
  Withholding
  for Tax & National Insurance Contributions

  	
   

  
	
  7.

  	
  Extension of Plan
  Overseas

  	
   

  
	
  Definitions Appendix

  	
   

  
	
  1.

  	
  Interpretation

  	
   

  
	
  2.

  	
  Definitions

  	
   

  
					



 


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RULES OF THE CYCLACEL GROUP PLC


 


DISCRETIONARY SHARE OPTION PLAN


 


PART A: APPROVED
PART


 


1.                                     GRANT
OF OPTIONS


 


1.1                              How
Options are granted


 


The Grantor
may, at its discretion, grant to any Eligible Employee nominated by the
Remuneration Committee an Option at the Option Price over such whole number of
Shares as it decides, in accordance with the Rules.


 


1.2                              Manner
of grant and payment for Options


 


On the Date
of Grant, an Option will be granted as a deed, (or if the Company is not
incorporated under the laws of England and Wales in such form as to make it a
binding agreement between the Company and the Participant).  A single deed of grant may be executed in
favour of any number of Participants. 
There will be no payment for the grant of an Option.


 


1.3                              When
Options can be granted


 


(a)                                 Options
can only be granted during the period of 42 days starting on any of the
following:


 


(i)                                     the
day after the date on which the Company releases its results for any period;


 


(ii)                                  the
date of formal approval of the Plan by the Inland Revenue under
Schedule 4;


 


(iii)                               any
day on which the Remuneration Committee resolves that exceptional circumstances
exist which justify the grant of Options;


 


(iv)                              any
day on which any change to the legislation affecting discretionary share option
plans is announced or made;


 


(v)                                 the
day immediately following any general meeting of the Company;


 


(vi)                              the
day following the lifting of any restrictions imposed by statute, order,
regulation or the Model Code;


 


(b)                                No
Option can be granted after the Plan Period.


 


1.4                              Conditions
(including performance targets)


 


The exercise
of an Option may be subject to the satisfaction of a performance target or
other condition selected by the Remuneration Committee, which, in either case,
will normally have to be met before the Option can be exercised.  Such performance target or conditions:


 


(a)                                  must
be objective and stated in writing at the Date of Grant;


 


(b)                                 may
not be amended unless an event occurs which causes the Remuneration Committee
to consider that an amendment to the performance target or condition


 


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would be fairer and more
reasonable and the performance target or condition as amended would be no more
difficult to satisfy;


 


(c)                                  may
be waived if an event occurs which causes the Remuneration Committee reasonably
to consider that it should be waived.


 


In setting a
performance target or condition, the Remuneration Committee will take into
consideration the principles of good corporate governance applicable to a
company such as the Company (including, if the Remuneration Committee considers
it appropriate, the “Principles and Guidelines on Executive Remuneration”
published by the Association of British Insurers from time to time).


 


1.5                              Approvals
and consents


 


The grant of
an Option will be subject to obtaining any approval or consent required under
any applicable regulations or enactments.


 


1.6                              Notification
of grant


 


A
Participant will be issued with an option certificate specifying the Date of
Grant, the number of Shares under the Option, the Option Price, and any
performance targets and conditions.


 


1.7                              Options
personal to Participants


 


An Option
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 an Option may be transmitted to the Participant’s personal
representatives.


 


1.8                              Disclaimer
of Options


 


A
Participant may disclaim all or part of his Option by notice in writing to the
Secretary of the Company within 30 days after the Date of Grant.  No consideration will be paid for the
disclaimer of the Option.  To the extent
that an Option is disclaimed, it will treated for all purposes as never having
been granted.


 


1.9                              National
Insurance elections and agreements


 


The Company may require, as a condition of exercise, an agreement under
paragraph 3A of Schedule 1 to the Social Security Contributions and Benefits
Act 1992 or to make an election under paragraph 3B of Schedule 1 to that Act in
relation to any secondary Class I National Insurance contributions arising on
the exercise of the Option.


 


2.                                     OPTION
PRICE


 


2.1                              Option
Price


 


The Board
will decide the Option Price of an Option which will be stated at the Date of
Grant.  The Option Price cannot be less
than the higher of:


 


(a)                                  the
Market Value of a Share on the Dealing Day immediately preceding the Date of
Grant or, if the Board decides, the average of the Market Values on the three
Dealing


 


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Days immediately preceding the
Date of Grant or the Market Value at any earlier time or times agreed by the
Board and the Inland Revenue; and


 


(b)                                 the
nominal value of a Share, if the Shares are to be subscribed,


 


but subject
to any adjustment under Rule 8.


 


2.2                              Excluded
Market Value


 


The Option
Price may not be determined on the basis of the Market Value of a Share on a
day which is earlier than the first Dealing Day following:


 


(a)                                  the
date of Revenue approval; or


 


(b)                                 the
day after the Company releases its results for any period.


 


3.                                     PLAN LIMITS


 


3.1                              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:


 


(a)                                  the
total Market Value of the Shares (calculated under Rule 2.1(a)) which the
Eligible Employee could acquire on exercise of the Option; and


 


(b)                                 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
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 limit applicable under paragraph 6 of Schedule 4 from
time to time.  In determining the limit
in this Rule 3.1, no account will be taken of any Shares where the right to
acquire them was disclaimed under Rule 1.8 or was exercised or has lapsed.


 


3.2                              Limit
on individual participation


 


No Option
will be granted to an Eligible Employee which would, at the Date of Grant,
result in the total Market Value of Shares over which he has been granted
options in the preceding 12 months under the Plan and any other discretionary
share option plan to exceed 100% of the Eligible Employee’s total remuneration
(including bonuses and commissions but excluding benefits in kind) from any
Participating Company employing him or with which he holds an office in the 12
months preceding the Date of Grant. 
However, in exceptional circumstances and at the discretion of the
Remuneration Committee, the individual limit on participation may be increased
to a maximum of 200% of the Eligible Employee’s total remuneration (including
bonuses and commissions but excluding benefits in kind) from any Participating
Company employing him or with which he holds an office in the 12 months
preceding the Date of Grant.


 


3.3                              The
10 per cent. limit over 10 years


 


The number
of Shares which may be allocated under the Plan on any day cannot, when added
to the aggregate of the number of Shares which have been allocated in the
previous 10 years under the Plan and any other Employees’ Share Plan adopted by
the Company, exceed that


 


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number of
Shares that represents 10 per cent. of the ordinary share capital of the
Company in issue immediately prior to that day.


 


3.4                              The
five per cent. limit over 10 years


 


The number
of Shares which may be allocated under the Plan on any day cannot, when added
to the aggregate of the number of Shares which have been allocated in the
previous 10 years under the Plan and any other share option plan in which
participation is at the discretion of the grantor of options under that plan
adopted by the Company, exceed that number of Shares that represents five per
cent. of the ordinary share capital of the Company in issue immediately prior
to that day.


 


3.5                              Exclusions
from the limits in Rules 3.3 and 3.4


 


In
calculating the limits in Rules 3.3 and 3.4:


 


(a)                                  any
Shares where the right to acquire them was released or lapsed;


 


(b)                                 any
Shares which are or have been allocated under the Cyclacel Group plc Senior
Executive Incentive Plan;


 


(c)                                  any
Option intended to be satisfied by transferring or processing the transfer of
existing Shares to the Participant.


 


will be
disregarded.


 


In
calculating the limit under Rule 3.4, there will also be disregarded any Shares
which were allocated under any other Employees’ Share Plan before admission of
the Shares to the Official List of the London Stock Exchange or any other
Recognised Stock Exchange.


 


3.6                              Meaning
of allocation


 


References
to Shares being allocated means, in the case of any share option plan, the
placing of unissued Shares or treasury Shares under option and, in relation to
other types of Employees’ Share Plan, means the issue and allotment of Shares
or, the transfer of Shares out of treasury.


 


3.7                              Grant
of Options in excess of limits


 


If an Option
is granted on terms which do not comply with this Rule 3, the number of Shares
over which that Option has been granted will:


 


(a)                                  in
the case of Rule 3.1 be reduced automatically to the largest lower number that
will ensure compliance with the relevant rule; or


 


(b)                                 in
any other case, together with the number of Shares over which all other Options
have been granted on the same Date of Grant, be reduced pro rata to the largest
lower number that complies with the relevant Rule.


 


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


 


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3.8                              Adjustment
to Shares to be taken into account


 


Where Shares
which have been issued under the Plan or any other Employees’ Share Plan
adopted by the Company are to be taken into account for the purposes of the
limits in this Rule 3 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 Board considers appropriate to take account of the
Variation.


 


4.                                     RIGHTS
OF EXERCISE


 


4.1                              General
rules for exercise


 


An Option
may not be exercised by the Participant (or, if appropriate the Participant’s
personal representative) at any time when the Participant cannot (or would not
have been able to) participate in the Plan due to the provisions of paragraph 9
of Schedule 4 (material interest in close company).  Except as provided in the other provisions
of this Rule 4, an Option:


 


(a)                                  may
be  exercised on or after the third
anniversary of the Date of Grant or any later date determined by the Board at
the Date of Grant;


 


(b)                                 may
only be exercised by a Participant while he is a director or employee of a
Participating Company or of an Associated Company;


 


(c)                                  may
only be exercised if any conditions imposed under Rule 1.4 and not waived have
been fulfilled to the satisfaction of the Board, other than following an
exchange of Options under Rule 4.10.


 


4.2                              Exercise
on ceasing to be a director or employee


 


Subject to
the provisions of Rule 5, an Option can be exercised at any time during the
period of 12 months following the earliest of the date on which the Participant
ceases to be an officer or employee of a Participating Company or an Associated
Company if cessation is because of:


 


(a)                                  injury,
disability, Redundancy, Retirement;


 


(b)                                 the
company which employs him ceasing to be under the Control of the Company or an
Associated Company;


 


(c)                                  the
transfer or sale of the undertaking or part-undertaking in which the
Participant is employed to a person who is neither under the Control of the
Company nor an Associated Company; or


 


(d)                                 a
reason other than those in Rule 4.2(a) to (c) above or Rule 4.5, at the discretion
of the Remuneration Committee, such discretion to be exercised within 14 days
of the cessation of office or employment.


 


4.3                              Extension
of period for exercise


 


If a
Participant ceases to be an officer or employee of a Participating Company or
an Associated Company in any of the circumstances referred to in Rule 4.2 the
Board may extend the period of exercise of the Participant’s Option so that
subject to Rule 5 it will remain exercisable until six months after the third
anniversary of its Date of Grant.


 


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4.4                              Pregnancy


 


For the
purposes of Rule 4.2(a) a Participant 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 date 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.


 


4.5                              Death


 


Any Option
held by a Participant who dies can be exercised by his personal representatives
within 12 months after the date of death, but in any event before the tenth
anniversary of the Date of Grant.


 


4.6                              Transfer
overseas


 


Any Option
held by a Participant transferring to a country outside the United Kingdom who
continues or will continue to hold an office or employment with a Participating
Company or an Associated Company as a result of that transfer and will either:


 


(a)                                  become
subject to income tax on his remuneration in the country to which he is
transferred so that he will suffer a tax disadvantage on the exercise of his
Option following the transfer; or


 


(b)                                 become
subject to restrictions on his ability to exercise his Option or to deal in the
Shares that may be acquired upon the exercise of that Option because of the
securities laws or exchange control laws of the country to which he is transferred,


 


may be
exercised in the period beginning three months before and ending three months
after the transfer of the Participant subject to performance conditions being
satisfied.


 


4.7                              General
offer


 


Subject to
satisfying the relevant performance conditions and Rule 5 and provided an
Option is not to be exchanged under Rule 4.10, an Option can be exercised
within the period of 6 months following the date on which an offeror (together
with others, if any, acting in concert with the offeror) obtains Control of the
Company as a result of making a general offer to acquire all the issued
Ordinary Shares of the Company or all of the Shares of the Company which are of
the same class as the Shares and any conditions  to which the offer was subject have been satisfied.


 


4.8                              Section 429
notice


 


Subject to
satisfying the relevant performance conditions and Rule 5 and provided an
Option is not to be exchanged under Rule 4.10, an Option can be exercised in
the period during which a person is entitled under sections 428 to 430F of the
Companies Act 1985 to acquire any Shares (or who would be so entitled but for
the fact that there were no dissenting shareholders on whom to serve notice).


 


4.9                              Company
reconstruction


 


Subject to
satisfying the relevant performance conditions and Rule 5 and provided an
Option is not to be exchanged under Rule 4.10, an Option can be exercised
within the period of six


 


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months
following the date when the court sanctions a compromise or arrangement under
section 425 of the Companies Act 1985 (or comparable overseas legislation)
proposed for the purposes of or in connection with a scheme for the
reconstruction or amalgamation of the Company.


 


4.10                       Reorganisation
or merger


 


If a Company
(the “Successor Company”) has obtained Control of the Company, and the
shareholders of the Successor Company immediately after it has obtained Control
are substantially the same as the shareholders of the Company immediately
before that event, and the Successor Company consents to the exchange of
Options under this Rule, Options will not be exercisable but will be exchanged
during the Appropriate Period under the terms of Rule 6, save that references
to the Acquiring Company in that Rule will be deemed to be references to the
Successor Company.


 


4.11                       Winding-Up


 


Subject to
satisfying the relevant performance conditions, an Option may be exercised at
any time following the giving of notice of a meeting to consider the voluntary
winding-up of the Company, but before the relevant resolution has been passed
or defeated or the meeting adjourned indefinitely, conditionally on the
resolution being passed.  This Rule does
not apply where the winding-up is for the purpose of a reconstruction or
amalgamation.


 


5.                                     LAPSE
OF OPTIONS


 


To the
extent not exercised, an Option will lapse on the earliest of:


 


(a)                                  the
tenth anniversary of the Date of Grant;


 


(b)                                 the
expiry of twelve months from the date on which the Participant ceases to be an
officer or employee of a Participating Company or an Associated Company in any
of the circumstances referred to in Rule 4.2 or, if Rule 4.3 applies, the
expiry of six months following the third anniversary of the Date of Grant;


 


(c)                                  the
date on which a Participant ceases to be an officer or employee of a
Participating Company or an Associated Company in any circumstances other than
those referred to in Rule 4.2 or Rule 4.5;


 


(d)                                 the
expiry of the period of twelve months following the death of a Participant;


 


(e)                                  the
expiry of the period of six months following the occurrence of the
circumstances permitting the exercise of Options in Rules 4.7 and 4.9;


 


(f)                                    the
expiry of the period in Rule 4.8 during which a person is entitled or bound to
acquire Shares under sections 428 to 430F of the Companies Act 1985 unless the
Option has been exchanged under Rule 4.10;


 


(g)                                 the
passing of an effective resolution or the making of an order by the court for
the winding-up of the Company;


 


(h)                                 the
Participant being deprived of the legal or beneficial ownership of the Option
by operation of law, or doing or omitting to do anything which causes him to be
so deprived or being declared bankrupt;


 


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(i)                                     the
Participant attempting to breach Rule 1.7; and


 


(j)                                     as
soon as any condition imposed under Rule 1.4 can, in the opinion of the Board,
no longer be met.


 


6.                                     EXCHANGE
OF OPTIONS


 


6.1                              The
Acquiring Company


 


If any
company (the “Acquiring Company”):


 


(a)                                  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; 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


 


(b)                                 obtains
Control of the Company as a result of a compromise or arrangement sanctioned by
the court under section 425 of the Companies Act 1985; or


 


(c)                                  becomes
entitled to acquire Shares under sections 428 to 430F of that Act,


 


any Participant
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 the Participant of a new Option (the “New
Option”) which (for the purposes of paragraph 27 of Schedule 4) 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).


 


6.2                              The
New Option


 


The New
Option will not be regarded as equivalent to the Old Option unless the
conditions set out in paragraph 27(4) of Schedule 4 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 and on the
same terms as the Old Option except for the purpose of the definition of
“Participating Company” in the Appendix, and as if:


 


(a)                                  the
reference to Cyclacel Group plc in the definition of the “Company” in the Appendix
were a reference to the different company mentioned in Rule 6.1; and


 


(b)                                 Rule
10.2 was omitted.


 


For the
avoidance of doubt, the Plan remains that of the company which first
established this Plan prior to the Option exchange.


 


7.                                     EXERCISE
PROCESS


 


7.1                              Exercise
in whole or in part


 


An Option
may be exercised in whole or in part, provided that an Option may not be
exercised in respect of less than 100 Shares nor otherwise than in multiples of
100 Shares on any one occasion unless either the Option is over less than 100 


Shares or it
is the last occasion


 


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on which the
Option is exercised, when it may be exercised in respect of any number of
Shares up to the number in respect of which it remains capable of exercise.


 


7.2                              Manner
of exercise


 


Subject to
Rule 7.1, to exercise an Option, the Participant must deliver at the address
specified in the notice of exercise:


 


(a)                                  an
option certificate for all the Shares over which the Option is then to be
exercised;


 


(b)                                 the
notice of exercise in the prescribed form properly completed and signed by the
Participant (or by his duly authorised agent); and


 


(c)                                  evidence
to the satisfaction of the Company that it has received or will receive as soon
as practicable payment in full of the Option Price for the aggregate number of
Shares over which the Option is to be exercised.


 


7.3                              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 Board 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 7.2.


 


7.4                              Delivery
of Shares


 


Subject to
the other provisions of this Rule 7, the Grantor or the Board 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.


 


7.5                              Consents


 


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


 


7.6                              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 will not be entitled to any rights
attaching to the Shares by reference to a record date preceding the day on
which the Participant is entered on the Company’s register of shareholders in
respect of those Shares.


 


7.7                              Listing


 


If the
Shares are Listed, the Company will apply for Listing of any Shares issued under
the Plan as soon as practicable after their allotment.


 


8.                                     ADJUSTMENT
OF OPTIONS


 


8.1                              Variation
in equity share capital


 


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


 


(a)                                  the
number and/or the nominal value of Shares over which an Option is granted; and


 


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(b)                                 the
Option Price,


 


will be
adjusted in the manner the Board, with the prior approval of the Inland
Revenue, 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.


 


8.2                              Nominal
value of Shares


 


(a)                                 Apart
from under this Rule 8.2, no adjustment under Rule 8.1 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.


 


(b)                                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:


 


(i)                                     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


 


(ii)                                  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.


 


(c)                                 Where
an Option subsists over issued Shares only, any adjustment to the Option Price
may be made under and in accordance with Rule 8.1.


 


8.3                              Notifying
Participants of adjustments


 


The Grantor
will take the steps it considers necessary to notify Participants of any adjustment
made under Rule 8 and may call in, cancel, endorse, issue or re-issue any
certificate as a result of that adjustment.


 


9.                                     ADMINISTRATION


 


9.1                              Notices


 


Any notice
or other communication in connection with the Plan will be in writing and may
be given:


 


(a)                                  by
personal delivery; or


 


(b)                                 by
sending it by post:


 


(i)                                     in
the case of a company, to its registered office or other address that it
notifies in writing; and


 


(ii)                                  in
the case of an individual, to the individual’s last known address, or where the
individual is a director or employee of a Participating Company or an
Associated Company either to the individual’s last known address or to the
address of the place of business at which the individual performs the whole or
substantially the whole of the duties of the individual’s office or employment;
or


 


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(c)                                  by
sending it by facsimile, email or any form of electronic transfer acceptable to
the  Board:


 


(i)                                     in
the case of a company, to the facsimile number, email address or other number
or address that the company notifies; and


 


(ii)                                  in
the case of an individual, to the individual’s last known facsimile number or
email address, or where the individual is a director or employee of a
Participating Company or an Associated Company, to the individual’s workplace
facsimile number or email address.


 


9.2                              When
notice is given


 


Any notice
under Rule 9.1 will be given:


 


(a)                                  if
delivered, at the time of delivery;


 


(b)                                 if
posted, at 10.00am on the second business day after it was put into the post;
or


 


(c)                                  if
sent by facsimile, email or any other form of electronic transfer, at the time
of despatch.


 


In proving
service of notice it will be sufficient to prove that delivery was made or that
the envelope containing it was properly addressed, prepaid and posted or that
the facsimile message, email or other form of electronic transfer was properly
addressed and despatched as appropriate.


 


9.3                              Documents
sent to shareholders


 


Participants
may receive copies of any notice or document sent by the Company to the holders
of Shares.


 


9.4                              Partial
exercise of Options


 


If an Option
is exercised in part, the Grantor may call in, endorse or cancel and re-issue,
as it considers appropriate, any certificate for the balance of the Shares over
which the Option was granted.


 


9.5                              Replacement
option certificates


 


If any
option certificate is worn out, defaced or lost, it may be replaced on the
evidence that the Company requires being provided.


 


9.6                              Shares
to cover Options


 


The Grantor
will ensure that sufficient Shares are available to satisfy all outstanding
Options.


 


9.7                              Administration
of the Scheme


 


The Plan
will be administered by the Board.  The
Board has full authority, consistent with the Rules, 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
necessary or appropriate.  The Board’s
decision on any matter concerning the Plan will be final and binding.


 


13

















 


9.8                              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
Participating Company or Associated Company to enter into an agreement which
obliges that company to reimburse the Company for any costs borne by the
Company, directly or indirectly, in respect of the Participating Company’s or
Associated Company’s officers or employees.


 


10.                              AMENDING
THE PLAN


 


10.1                       The
Board’s power to amend the Plan


 


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


 


10.2                       Shareholder
approval


 


Subject to
Rule 10.3 below, no amendment can be made to the advantage of Participants or
Eligible Employees to:


 


(a)                                  the
persons to whom Options may be granted;


 


(b)                                 the
limit on the number of Shares which may be issued under the Plan;


 


(c)                                  the
maximum entitlement for individual Participants;


 


(d)                                 the
rights attaching to Options and Shares;


 


(e)                                  the
determination of the Option Price;


 


(f)                                    the
rights of Participants in the event of a Variation; or


 


(g)                                 the
terms of this Rule 10.2,


 


without the
prior approval by ordinary resolution of the members of the Company in general
meeting.


 


10.3                       Permitted
amendments


 


Rule 10.2
will not apply to any amendment which is:


 


(a)                                  necessary
or desirable in order to obtain or maintain Inland Revenue approval of the Plan
under Schedule 4;


 


(b)                                 minor
and to benefit the administration of the Plan;


 


(c)                                  to
take account of any changes in legislation; or


 


(d)                                 to
obtain or maintain favourable taxation, exchange control or regulatory
treatment for the Company, any Participating Company or Associated Company or
any present or future Participant.


 


14

















 


10.4                       Participants’
approval


 


No amendment
will be made under Rule 10.1 which would abrogate or materially affect
adversely the subsisting rights of a Participant unless it is made with the
Participant’s written consent or by a resolution passed as if the Options
constituted a separate class of share capital and the provisions of the
articles of association of the Company and of the Companies Act 1985 relating
to class meetings applied to that class mutatis mutandis.


 


10.5                       Notice
of amendments


 


Participants
will be given written notice of any amendments which affect the Options they
hold to the Plan made under Rule 10.1 as soon as reasonably practicable after
they have been made.


 


10.6                       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.


 


10.7                       Inland
Revenue approval


 


While the
Plan is to remain approved by the Inland Revenue, no amendment to a key feature
(within the meaning of paragraph 30 of Schedule 4) following Inland
Revenue approval will have effect until after the amendment has been approved
by the Inland Revenue.


 


If the
Company wishes to terminate the approved status of the Plan, it will inform the
Inland Revenue as soon as is reasonably practicable after it has taken action
to do so.


 


11.                              GENERAL


 


11.1                       Termination
of the Plan


 


The Plan
will terminate at the end of the Plan Period or at any earlier time determined
by the Board.  Termination of the Plan
will not affect the subsisting rights of Participants.


 


11.2                       Funding
the Plan


 


The Company
and any Subsidiary of the Company may provide money to the Trustees or any
other person to enable them or him to acquire Shares to be held for the
purposes of the Plan, or enter into any guarantee or indemnity for those
purposes, to the extent permitted by any applicable law.


 


11.3                       Rights
of Participants and Eligible Employees


 


(a)                                 Nothing
in the Plan will give any officer or employee of any Participating Company or
Associated Company any right to participate in the Plan. Participation in one
grant does not imply a right to participate or be considered for participation
in a later grant.


 


(b)                                The
rights and obligations of any individual under the terms of the Participant’s
office or employment with a Participating Company or Associated Company will
not be affected by participation in the Plan nor any right which the
Participant may have to participate under it.


 


(c)                                 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.


 


15

















 


11.4                       No
rights to compensation or damages


 


A
Participant waives all and any rights to compensation or damages for the termination
of the Participant’s office or employment with a Participating Company or
Associated Company for any reason whatsoever (including unlawful termination of
employment) insofar as those rights arise or may arise from the Participant
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 Participant or
Eligible Employee or other person any right to continue in Employment or will
affect the right of the Company or any Associated Company to terminate the
employment of any Participant or Eligible Employee or any other person without
liability at any time, with or without cause, or will impose on the Grantor,
Company, any Participating Company, the Board or their respective agents and
employees any liability in connection with the loss of a Participant’s benefits
or rights as a result of the exercise of a discretion under the Plan for any
reason on the termination of the Participant’s employment.


 


11.5                       The
benefits of Rule 11.3 and 11.4


 


The benefit
of Rules 11.3 and 11.4 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 as agent for each of them and may assign the benefit of this
Rule 11.5 to any of them.


 


11.6                       Articles
of association


 


Any Shares
acquired on the exercise of Options shall be subject to the articles of
association of the Company.


 


11.7                       Witholding
for tax and National Insurance Contributions


 


If the Grantor or any Participating Company is obliged to account for
tax and Class 1 National Insurance contributions for which the Participant is
liable by virtue of the exercise of the Option, the Grantor or Participating
Company may withhold such amounts and/or make such arrangements as it considers
necessary to meet any liability to taxation or Class I National Insurance contributions,
including arrangements such that the Participant discharges the liability
personally.   If such liability has not
been discharged within a specified period notified to the Participant then the
Grantor or Participating Company may sell Shares on behalf of a Participant to
discharge the liability.


 


11.8                       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.


 


11.9                       Third
Parties


 


This Plan
confers no benefit, right or expectation on a person who is not a
Participant.  No third party has any
rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this Plan.  Any other right or
remedy which a third party may have is unaffected by this Rule.


 


16

















 


11.10                Data
Protection


 


All
Eligible Employees agree as a condition of their participation in the Plan that
any personal data in relation to them may be held by a Participating Company
and/or a trustee and passed on to a third party broker, registrar,
administrator and/or future purchaser of the Company for all purposes relating
to the operation or administration of the Plan, including to countries or
territories outside the European Economic Area.


 


12.                              GOVERNING
LAW


 


These Rules
will be governed by and construed in accordance with the law of England.  All Participants, the Company and any other
Participating Company or Associated Company will submit to the jurisdiction of
the English courts in relation to any disputes arising under the Plan.


 


17

















 


PART B: UNAPPROVED
PART


 


1.                                     APPLICATION
OF PART A


 


Save as
modified by the Rules set out below, all provisions in the Rules of Part A are
incorporated into this Part B as if fully set out herein and so as to be part
of Part B and (for the avoidance of doubt) shares allocated under this Part B
shall be taken into account for the purposes of Rule 3 of Part A.


 


2.                                     GRANT OF
OPTIONS


 


Rule 1.1
shall be amended by the insertion of the following words at the end:


 


“provided
that an Eligible Employee shall not be granted an Option if that Eligible
Employee is within a year of the age at which the Eligible Employee is bound or
entitled to retire under his contract of employment.”


 


3.                                     INDIVIDUAL
LIMIT


 


Rule 3.1 of
Part A will not apply in this Part B.


 


4.                                     INLAND
REVENUE APPROVAL


 


4.1                                Rules
1.3(a)(ii), 2.2(a), 10.3(a) and 10.7 will not apply to Options granted under
Part B of this Plan.  In Rule 2.1(a) the
words “and the Inland Revenue” will be deleted.  In Rule 8.1 the words “with the prior approval of the Inland
Revenue” will be deleted.


 


4.2                                Apart
from any election made under Rule 1.9, there will be no need to seek Inland
Revenue approval or agreement for anything done under Part B of this Plan and
references to events occurring by reference to Inland Revenue approval will be
ignored.


 


5.                                     VARIATION


 


Demerger or distribution in
specie


 


In the event
of a demerger, exempt distribution under section 213 of the Taxes Act or
other distribution in specie, Options may be adjusted in the manner described
in Rule 8.


 


6.            WITHHOLDING
FOR TAX & NATIONAL INSURANCE CONTRIBUTIONS 


 


The Grantor or any Participating Company may withhold such amounts
and/or make such arrangements as it considers necessary to meet any liability
to taxation or Class I National Insurance contributions, including the sale of
Shares on behalf of a Participant, unless the Participant discharges the
liability personally.


 


7.                                     EXTENSION
OF PLAN OVERSEAS


 


Notwithstanding
any other provision of this Plan, the Board may in respect of Participants who
are or who may be subject to taxation outside the United Kingdom on their
remuneration amend or add to the provisions of the Plan as it considers necessary
or desirable to take account of or to mitigate or to comply with the relevant
overseas taxation, securities or exchange control laws provided that the terms
of Options granted to such Participants are not overall more favourable than
the terms of Options granted to other Participants.


 


18

















 


Definitions Appendix


 


1.                                     INTERPRETATION


 


The words
and expressions used in this Plan which have capital letters have the meanings
set out in the Appendix.  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 or
re-enacted from time to time, and include any regulations or other subordinate
legislation made under them.


 


2.                                     DEFINITIONS


 


	
  Appendix

  	
  this appendix which
  forms part of the Rules;

  
	
   

  	
   

  
	
  Appropriate Period

  	
  the relevant period
  referred to in paragraph 26(3) of Schedule 4;

  
	
   

  	
   

  
	
  Associated Company

  	
  the meaning given by
  paragraph 35 of Schedule 4;

  
	
   

  	
   

  
	
  Board

  	
  the board of
  directors for the time being of the Company or a duly authorised committee of
  the board which for the avoidance of doubt may include the Remuneration
  Committee;

  
	
   

  	
   

  
	
  Company

  	
  Cyclacel Group plc,
  registered in England and Wales under no. 5090795;

  
	
   

  	
   

  
	
  Control

  	
  in relation to a body
  corporate, the power of a person to secure:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  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 it is granted under Rule 1.2;

  
	
   

  	
   

  
	
  Dealing Day

  	
  any day on which the
  London Stock Exchange is open for the transaction of business;

  



 


19

















 


	
  Eligible Employee

  	
  any person who at the
  Date of Grant:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  is either an employee
  (other than an employee who is a director) of a Participating Company or is a
  Full-Time Director of a Participating Company;

  
	
   

  	
   

  
	
   

  	
  (b)

  	
  is not precluded from
  participating by paragraph 9 of Schedule 4 (material interest in a close
  company);

  
	
   

  	
   

  
	
   

  	
  (c)

  	
  is not within six
  months of his normal retirement date under his contract of employment;
  and  

  
	
   

  	
   

  
	
   

  	
  (d)

  	
  subject to the
  Board’s decision in individual cases, has not given or received notice of
  termination of employment with a Participating Company, whether or not such
  termination is lawful;

  
	
   

  	
   

  
	
  Employees’ Share Plan

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

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  the employees or
  former employees of the Company, the Company’s subsidiary or holding company
  or a subsidiary of the Company’s holding company; or

  
	
   

  	
   

  
	
   

  	
  (b)

  	
  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;

  
	
   

  	
   

  
	
  Full-Time Director

  	
  a director whose
  terms of appointment require him to devote not less than 25 hours per week
  (excluding meal breaks) to his duties under the appointment;

  
	
   

  	
   

  
	
  Grantor

  	
  in relation to an
  Option, the Person who granted it, which may be the Company or any other
  Person;

  
	
   

  	
   

  
	
  Group

  	
  the Company and all
  companies which are under the Control of the Company;

  
	
   

  	
   

  
	
  Listed

  	
  admitted to trading
  on a Recognised Stock Exchange and Listing will be construed accordingly;

  
	
   

  	
   

  
	
  London Stock Exchange

  	
  the London Stock
  Exchange plc or any successor body carrying on the business of the London
  Stock Exchange 

  



 


20

















 


	
   

  	
  plc;

  
	
   

  	
   

  
	
  Market Value

  	
  in relation to a
  Share on any day:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  if the Shares are
  Listed, its middle market quotation as derived from the Daily Official List
  of the London Stock Exchange on that day; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  if the Shares are not
  Listed, its market value, determined in accordance with Part VIII of the
  Taxation of Chargeable Gains Act 1992 and agreed in advance with the Shares
  Valuation Division of the Inland Revenue;

  
	
   

  	
   

  	
   

  
	
  Model Code

  	
  the Model Code on
  directors’ dealings in securities as set out in the appendix to Chapter
  16  of the Listing Rules as amended
  from time to time;

  
	
   

  	
   

  
	
  Option

  	
  a right to acquire
  Shares under the Plan;

  
	
   

  	
   

  
	
  Option Exercise Date

  	
  the date when the
  exercise of an Option is effective because it complies with Rules 7.2 and
  7.3;

  
	
   

  	
   

  
	
  Option Price

  	
  the price determined
  by the Board under Rule 2 at which a Share subject to an Option may be
  acquired on the exercise of that Option;

  
	
   

  	
   

  
	
  Participant

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

  
	
   

  	
   

  
	
  Participating Company

  	
  the Company and any other company in the
  Group to which the Board has resolved the Plan will extend;

  
	
   

  	
   

  
	
  Person

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

  
	
   

  	
   

  
	
  Plan

  	
  the Cyclacel Group
  plc Discretionary Share Option Plan (Approved and Unapproved Parts) as
  amended from time to time in accordance with the Rules;

  
	
   

  	
   

  
	
  Plan Period

  	
  the period starting
  on the date the Plan is approved by the Board and ending on the 10th
  anniversary of that date or such shorter period as the Board may specify when
  the Plan is approved;

  
	
   

  	
   

  
	
  Recognised Stock Exchange

  	
  the London Stock
  Exchange and any other stock exchange outside the United Kingdom that is for
  the time being designated as a recognised stock exchange for the purpose of
  section 841 of the Taxes Act.;

  
	
   

  	
   

  
	
  Redundancy

  	
  termination of the
  Participant’s employment by reason of redundancy within the terms of the
  Employment Rights Act 1996;

  



 


21

















 


	
  Retirement

  	
  retirement at or
  after age 55 in accordance with the Participant’s contract of employment or
  otherwise with the consent of the company which employs him;

  
	
   

  	
   

  
	
  Rules

  	
  the rules of the Plan
  as amended from time to time;

  
	
   

  	
   

  
	
  Schedule 4

  	
  Schedule 4 to
  the Income Tax (Earnings and Pensions) Act 2003;

  
	
   

  	
   

  
	
  Share

  	
  a fully paid ordinary
  share in the capital of the Company which satisfies paragraphs 16 to 20 of
  Schedule 4;

  
	
   

  	
   

  
	
  SIP

  	
  an Inland Revenue
  approved Share Incentive Plan;

  
	
   

  	
   

  
	
  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, reduction
  or any other variation in respect of which the Inland Revenue will allow an
  adjustment of Options.

  



 


22