Exhibit
10.14


 


 












RULES OF THE


CYCLACEL GROUP PLC


RESTRICTED SHARE
& CO-INVESTMENT PLAN












 


 


Approved by
shareholders on 1 July, 2004 and


adopted by the Board
on 30 June, 2004


 


 





 


ALLEN & OVERY


 


ALLEN & OVERY LLP


 


LONDON


 


Ref:


EP:271831.2


 

















 


CONTENTS


 


	
  1.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
  1.1

  	
  Definitions
  and interpretation

  	
   

  
	
   

  	
  1.2

  	
  How the Plan will operate

  	
   

  
	
   

  	
  1.3

  	
  Limit
  on the number of Shares which can be issued

  	
   

  
	
   

  	
  1.4

  	
  terms of awards

  	
   

  
	
   

  	
  1.5

  	
  Consents

  	
   

  
	
   

  	
  1.6

  	
  Ranking and Sale of Shares

  	
   

  
	
   

  	
  1.7

  	
  Withholding for tax

  	
   

  
	
   

  	
  1.8

  	
  Administration

  	
   

  
	
   

  	
  1.9

  	
  Amending the Plan

  	
   

  
	
   

  	
  1.10

  	
  General

  	
   

  
	
   

  	
  1.11

  	
  Data protection

  	
   

  
	
   

  	
  1.12

  	
  Governing law

  	
   

  
	
  2.

  	
  RESTRICTED
  SHARE PLAN

  	
   

  
	
   

  	
  2.1

  	
  Grant of Restricted Awards

  	
   

  
	
   

  	
  2.2

  	
  Rights in relation to Shares under Restricted Awards

  	
   

  
	
   

  	
  2.3

  	
  Vesting of Restricted Awards

  	
   

  
	
   

  	
  2.4

  	
  Lapse of Restricted Awards

  	
   

  
	
   

  	
  2.5

  	
  general
  offer, scheme of arrangement or voluntary winding up of the company

  	
   

  
	
   

  	
  2.6

  	
  Consequences
  of vesting of a Restricted Award

  	
   

  
	
   

  	
  2.7

  	
  Adjustment
  of Restricted Awards

  	
   

  
	
   

  	
  2.8

  	
  Exchange of Restricted Awards

  	
   

  
	
  3.

  	
  CO-INVESTMENT
  PLAN

  	
   

  
	
   

  	
  3.1

  	
  Invested Shares

  	
   

  
	
   

  	
  3.2

  	
  Grant of Matched Awards

  	
   

  
	
   

  	
  3.3

  	
  Vesting of Matched Awards

  	
   

  
	
   

  	
  3.4

  	
  Lapse of Matched Awards

  	
   

  
	
   

  	
  3.5

  	
  general offer, scheme of arrangement or
  voluntary winding up of the company

  	
   

  
	
   

  	
  3.6

  	
  Consequences
  of vesting of a Matched Award

  	
   

  
	
   

  	
  3.7

  	
  Adjustment of Matched Awards

  	
   

  
	
   

  	
  3.8

  	
  Exchange of Matched Awards

  	
   

  



 

















 


 


RULES OF THE CYCLACEL GROUP PLC


RESTRICTED SHARE
& CO-INVESTMENT PLAN


 


PART ONE


 


1.             GENERAL
PROVISIONS


 


1.1          DEFINITIONS AND INTERPRETATION


 


1.1.1        Definitions


 


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


 


1.1.2        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.


 


1.2          HOW THE PLAN WILL OPERATE


 


1.2.1        Policies set by the
Remuneration Committee


 


The
Remuneration Committee will, from time to time, set the policies for the
Company’s operation and administration of the Plan within the terms of the
Rules, which may include the determination of:


 


1.2.1.1          the
Eligible Employees who may be granted Awards (provided that an Eligible
Employee shall not be entitled to be granted Awards 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);


 


1.2.1.2          the
maximum Market Value of Shares which may be put under an Eligible Employee’s
Award;


 


1.2.1.3          what
performance target(s) will apply to the grant, vesting or exercise of an Award
and how these will be measured; and


 


1.2.1.4          how
Awards are granted.


 


In determining the policies, 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).


 


1.3              LIMIT ON THE NUMBER OF SHARES WHICH CAN BE ISSUED


 


1.3.1           The limit for all Shares
issued under the Plan


 

















 


The number of
Shares which can be allocated under the Plan on any day, when aggregated with
the number of Shares allocated in the previous 10 years under the Plan and any
other Employees’ Share Scheme of the Company cannot exceed 10 per cent. of the
ordinary issued share capital of the Company from time to time.


 


1.3.2        Meaning of allocation and
exclusion from these limits


 


The reference in this Rule 1.3 to the “allocation” of Shares means, in
the case of any share option plan, the placing of unissued Shares under option
and, in the case of any other Employees’ Share Scheme, the issue and allotment
of Shares.  For the purposes of the
limit in this Rule 1.3:


 


1.3.2.1     Shares where
the right to acquire these was released, cancelled or lapsed without being
exercised will be ignored; and


 


1.3.2.2     to the
extent that the exercise or vesting of Awards is to be satisfied by the
transfer of Shares already in issue, those Awards will not be treated as
granted over unissued Shares.


 


1.3.2.3     any Shares
which are or have been allocated under the Cyclacel Group plc Senior Executive
Incentive Plan are ignored.


 


1.3.3        Adjustment to Shares to be
taken into account


 


Where Shares
issued under the Plan or any other Employees’ Share Scheme of the Company are
to be taken into account for the purposes of any of the limits in this Rule 1.3
and a Variation in the equity share capital of the Company has taken place
between the date of issue of the Shares and the date on which the limit is to
be calculated, the number of Shares to be taken into account for the purposes
of any limit will be adjusted in the manner the Remuneration Committee
considers appropriate to take account of the Variation (subject to confirmation
from an appropriate independent professional that such adjustment is fair and
reasonable).


 


1.3.4        The individual limit


 


The
Remuneration Committee will, from time to time, specify a limit which will
apply to the maximum Market Value (at the Date of Grant) of Shares which may be
put under each type of Award on an annual basis in respect of any Eligible
Employee.  No Award will be granted to
an Eligible Employee in excess of this limit without the prior approval of the
Remuneration Committee.


 


1.3.5        Purported grant of an Award
in excess of limits


 


If an Award is
purported to be granted in breach of the limit in:


 


1.3.5.1     Rule 1.3.1,
the number of Shares over which the Award has been granted will, with the
number of Shares over which all other Awards have been granted on the same Date
of Grant, be reduced pro rata to the largest lower number that complies with
Rule 1.3.1.  Where this Rule 1.3.5 operates,
when the number of Shares under the Award has been adjusted accordingly, an
Award will take effect from the Date of Grant as if it had been granted on the
adjusted terms; and


 

















 


1.3.5.2               Rule
1.3.4, the number of Shares over which the Award has been granted will be
reduced to the largest lower number that would comply with Rule 1.3.4 and the
Award will take effect from the Date of Grant as if it had been granted over
the lower number of Shares at the outset.


 


1.4                               TERMS OF AWARDS


 


1.4.1        Grant of Awards


 


The Grantor
will grant each Award so that it constitutes a binding contract between the
Grantor and the Participant.  Each
Participant will be given an award certificate as evidence of grant of an
Award.


 


1.4.2        Performance targets


 


The grant,
exercise or vesting of an Award will be subject to a performance target
selected by the Remuneration Committee. 
The exercise or vesting of an Award may also be subject to any
additional terms and conditions the Remuneration Committee considers
appropriate.  The performance target and
any additional terms and conditions to which an Award is subject, will be
specified at the Date of Grant and stated in the award certificate.  The Remuneration Committee will have
discretion to decide whether and to what extent the performance target to which
an Award is subject has been met.  A
performance target may only be adjusted if an event occurs which causes the
Remuneration Committee, acting fairly and reasonably, to believe that the performance
target is no longer a fair target, in which case the Remuneration Committee can
waive or adjust the performance target accordingly.  A performance target cannot be adjusted so that it is more
difficult to satisfy.


 


1.4.3        Different performance targets
can apply to different Eligible Employees


 


Awards can be
subject to different performance targets for each Eligible Employee.


 


1.4.4        Awards personal to
Participants


 


An Award may
not, nor may any rights in respect of it, be sold, transferred, assigned,
charged or otherwise encumbered or disposed of to any Person.  A Participant’s Award(s) may be transmitted
to the Participant’s personal representatives on the Participant’s death.


 


1.4.5        Disclaimer of Award


 


A Participant
may disclaim an Award, in whole or in part, in writing to the Secretary of the
Company within thirty (30) days after the Date of Grant.  No consideration will be paid for the
disclaimer of an Award.  To the extent
that an Award is disclaimed it will be taken never to have been granted.


 


1.5          CONSENTS


 


The allotment
or transfer of Shares under the Plan will be subject to obtaining any necessary
approval or consent.  The Company will,
if appropriate, apply to the UK Listing Authority and any other Recognised
Stock Exchange for Shares issued under the Plan to be admitted to 


 

















 


the official
list of those exchanges and for Shares to be admitted to trading on those
exchanges (in either case unless listing or admission to trading has already
been granted).


 


1.6                               RANKING AND SALE OF SHARES


 


Shares
allotted or transferred to a Participant under the Plan will rank equally in
all respects with Shares of the same class, except that they will not rank for
any right attaching to them by reference to a record date preceding the date of
their acquisition by the Participant. 
In the case of an Option, the Option Exercise Date will be the date of
the acquisition of the Shares.


 


1.7                               WITHHOLDING FOR TAX


 


The Grantor or
any member of the Group which is a Participant’s employer may withhold any
amount and make any arrangements it considers necessary to meet any liability
of the Participant to taxation or social security contributions in connection
with the benefits delivered under the Plan. 
These arrangements may include the sale of any Shares acquired by a
Participant under the Plan on behalf of the Participant.


 


1.8                               ADMINISTRATION


 


1.8.1                        Notices


 


Any notice or
other communication in connection with the Plan (including award certificates)
can be given by electronic mail or by personal delivery, by facsimile, by
first-class post or airmail, (in the case of a company, to its registered
office and in the case of an individual to the individual’s last known address)
or by any other means which a Participating Company and its employees use to
communicate with each other.


 


1.8.2        When notice is given


 


Any notice
under Rule 1.8.1 will be given:


 


1.8.2.1     if
delivered, at the time of delivery;


 


1.8.2.2     if posted,
at 10:00am on the seventh business day after it was put into the post; or


 


1.8.2.3     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.


 


1.8.3        Documents sent to
shareholders


 


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


 


1.8.4        Replacement Award
certificates


 


If any Award
certificate is worn out, defaced, destroyed or lost, it may be replaced upon
production of such evidence that the Grantor requires being provided.  Nevertheless, in the 


 

















 


event of any
doubt regarding the extent or status of a Participant’s outstanding Awards
under the Plan, the Company’s records will be the correct and current statement
of this.


 


1.8.5        Shares to cover Awards


 


The Company
will ensure that sufficient Shares are available to satisfy all outstanding
Awards.


 


1.8.6        Administration of the Plan


 


The Plan will
be administered by the Remuneration Committee. The Remuneration Committee has
full authority, consistent with the Rules, to administer it, 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.  The Remuneration Committee’s
decision on any matter concerning the Plan will be final and binding.


 


1.8.7        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.


 


1.9                               AMENDING THE PLAN


 


1.9.1        The Company has discretion to
amend the Rules


 


Subject to the remainder this Rule 1.9, the Company can amend the Rules
at any time.


 


1.9.2        Additional sections


 


The Company can adopt additional sections of the Rules applicable in
any jurisdiction under which Awards may be subject to additional and/or
modified terms and conditions, having regard to any securities, exchange
control or taxation laws, which may apply to the Participant, the Company, any
Participating Company or Associated Company. Any additional sections must
conform to the basic principles of the Plan and must not exceed the limits set
out in the Rules.


 


1.9.3        No abrogation of existing
rights


 


No amendment will be made under Rule 1.9.1 which would adversely and
materially affect the existing rights of a Participant unless it is made with
his written consent or by a resolution passed as if the Awards affected
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 (with the necessary amendments) applied to that class.


 

















 


1.9.4        Shareholder approval


 


No amendment
to the advantage of Participants (except for an amendment which could be
included in an additional section adopted under Rule 1.9.2) can be made to the
provisions in the Rules (if any) relating to:


 


1.9.4.1               who
can be a Participant;


 


1.9.4.2               the
number of Shares which can be allocated under the Plan; and


 


1.9.4.3               the
basis for determining a Participant’s entitlement to and the terms of the
Shares and any adjustment in the event of a Variation,


 


without the
approval by ordinary resolution of the Company in general meeting, except for
minor amendments to benefit the administration of the Plan, to take account of
a change in legislation or to obtain or maintain favourable tax, exchange
control or regulatory treatment for Participants or Eligible Employees or for a
member of the Group in any jurisdiction.


 


1.10        GENERAL


 


1.10.1      Termination of the Plan


 


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


 


1.10.2      The Plan and funding the
purchase of Shares


 


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


 


1.10.3      Rights of Participants and
Eligible Employees


 


Participation
in the Plan is not pensionable.  Nothing
in the Plan or in any document executed under it 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 the individual’s office or
Employment with any member of the Group will not be affected by the
individual’s participation in the Plan nor any right which the individual may
have to participate under it.  A
Participant holding an Award will not have any rights of a shareholder of the
Company with respect to that Award or the Shares subject to it.


 


1.10.4      No rights to compensation or
damages


 


A Participant
waives all and any rights to compensation or damages under the Plan in
consequence of the termination of the Participant’s office or Employment with a
member of the Group for any reason. 
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 any
member of the Group to terminate the Employment of any Person without liability
at any time with or without cause, or will impose on any member of the Group,
the Grantor or the Remuneration Committee or their respective agents and
employees any liability in connection with the loss of a Participant’s benefits
or rights under the Plan, the failure or refusal of any person to exercise a
discretion under the Plan, and/or a Participant ceasing to be a person who has
the status or relationship of an employee or director of any member of the
Group for any reason as a result of the termination of the Participant’s
Employment.


 

















 


1.10.5      The benefit of Rules 1.10.3
and 1.10.4


 


The benefit of
Rules 1.10.3 and 1.10.4 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 those
Rules on trust and as agent for each of them and may assign the benefit of this
Rule 1.10.5 to any of them.


 


1.10.6      Articles of Association


 


Any Shares
acquired under the Plan will be subject to the Articles of Association of the
Company as amended from time to time.


 


1.10.7      Claims for relief under the
Taxation of Chargeable Gains Act 1992


 


If Shares are
transferred to a Participant under an Award, the Participant will, if required
by the person making the transfer, join that person in making a claim for
relief under section 165 of the Taxation of Chargeable Gains Act 1992 in
respect of the disposal made by the person making that transfer.


 


1.10.8      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, which will
remain in full force and effect.


 


1.10.9      Third party rights


 


Nothing in
this Plan confers any benefit, right or expectation on a person who is not an
Eligible Employee. No third party has any rights under the Contracts (Rights of
Third Parties) Act 1999 to enforce any term of this Plan.  This does not affect any other right or
remedy of a third party which may exist.


 


1.11                        DATA PROTECTION


 


By participating in the Plan, the
Participant consents to the collection, processing, transmission and storage in
any form whatsoever by the Company of any data of a professional or personal
nature which is necessary for the purpose of introducing and sustaining the
Plan.  This may include providing
information to trustees of an employee benefit trust, or to registrars, or
brokers, or third party administrators of the Plan, or to future purchasers of
the company or the business in which the Participant works.  By participating in the Plan, the
Participant also consents to the transfer of personal data to countries or
territories outside the European Economic Area.


 


1.12                        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 anything arising under the Plan.  The Remuneration Committee may, in its
absolute discretion, determine that another law may apply to the application of
the Plan outside the United Kingdom.


 

















 


PART TWO


 


2.             RESTRICTED SHARE PLAN


 


2.1          GRANT OF RESTRICTED AWARDS


 


2.1.1        Grant of Restricted Awards


 


The
Remuneration Committee may, at its discretion, grant or it may procure the
Grantor to grant to any Eligible Employee a Restricted Award over such whole
number of Shares as it decides.  There
will be no payment for the grant of a Restricted Award.


 


2.1.2        Period for granting
Restricted Awards


 


Restricted
Awards may be granted at any time that the Remuneration Committee thinks
appropriate other than during a Close Period of the Company.


 


2.1.3        Conditions to be satisfied
before the vesting of Restricted Awards


 


The
performance target which must be met before a Restricted Award vests will be
notified to the Participant on his award certificate and will apply until
amended by, or a different performance target is specified, by the Remuneration
Committee.


 


2.2          RIGHTS IN
RELATION TO SHARES
UNDER RESTRICTED AWARDS


 


A Participant has no voting, dividend or
other rights attaching to the Shares under a Restricted Award made to the
Participant, before the Restricted Award vests.  However, the Trustee may in its discretion reinvest any dividends
declared on the Shares subject to a Restricted Award (net of any taxes and, if
applicable, associated costs) as soon as reasonably possible after that
dividend has been paid and the Shares acquired with the dividend will be held
by the Trustee as part of the Restricted Award. The Trustee will, at its
discretion, be entitled to vote or abstain from voting in respect of and accept
or reject any offer in relation to the Shares subject to a Restricted Award.


 


2.3          VESTING OF RESTRICTED AWARDS


 


2.3.1        Normal vesting


 


Unless the Remuneration Committee decides
otherwise at the Date of Grant, and subject to Rules 2.3.2, 2.3.3 and 2.4, a
Restricted Award will vest on the third anniversary of its Date of Grant to the
extent that the performance target which applies to that Restricted Award has
been met.   However, if this would be on
a day which is on a Close Period, the day on which the Restricted Award vests
will be the first Dealing Day following the end of the Close Period.


 


2.3.2        Early vesting on cessation of
Employment (good leaver)


 


If a
Participant ceases to be in Employment due to death, ill-health, injury or
disability (evidenced to the satisfaction of the Remuneration Committee),
Redundancy, Retirement, the company by which the Participant is employed
ceasing to be a member of the Group or the transfer of the undertaking or
part-undertaking in which the Participant is employed to a person or body
corporate outside the Group, then the Participant’s Restricted Award will vest
in full immediately.


 

















 


2.3.3        Early vesting on cessation of
Employment (other circumstances)


 


If a Participant ceases to be in Employment
for any reason other than those specified in Rule 2.3.2 the Remuneration
Committee may preserve and vest all or part of a Participant’s Restricted Award
on any terms it thinks fit subject to the satisfaction of the performance
target measured to the date of cessation of employment.


 


2.4          LAPSE OF RESTRICTED AWARDS


 


2.4.1        Lapsing of Restricted Awards


 


A Restricted
Award will lapse and cease to be capable of (further) vesting on the earliest
of:


 


2.4.1.1     the
Participant ceasing to be in Employment in any circumstances other than those
referred to at Rule 2.3.2 and where the Remuneration Committee has not
preserved all or part of the Restricted Award under Rule 2.3.3.  If the Remuneration Committee preserves part
only of a Restricted Award under Rule 2.3.3 the part that is not preserved will
lapse immediately;


 


2.4.1.2     the
Participant being deprived of the legal or beneficial ownership of the
Restricted Award by operation of law, or doing or omitting to do anything which
causes him to be so deprived or being declared bankrupt; and


 


2.4.1.3     the
Participant attempting to breach Rule 1.4.4.


 


2.4.2        Lapse where no or only
partial vesting


 


Where, after
all applicable testing of the performance target to which it is subject, a
Restricted Award has not vested or only vested in part under the performance
target, the unvested part of the Restricted Award will lapse with immediate
effect.


 


2.4.3        Female Participants on
maternity leave


 


For the
purposes of this Rule 2.4, a female Participant on maternity leave will not
cease to be in Employment until the earlier of the date on which she notifies
her employer of her intention not to return to work or the date on which she
ceases to have statutory or contractual rights to return to work.


 


2.5          GENERAL OFFER, SCHEME OF ARRANGEMENT OR VOLUNTARY
WINDING UP OF THE COMPANY


 


2.5.1        Circumstances in which this
Rule applies


 


Subject to
Rule 2.8 this Rule applies where:


 


2.5.1.1     an
offeror (either alone or with any party acting in concert with the offeror)
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 (or such part of
it which is not at the time owned by the offeror and any party acting in
concert with the offeror) which is made on a condition such that if it is
satisfied the company or person making the offer will have Control of the
Company; or


 

















 


2.5.1.2     the Court
sanctions a scheme of arrangement affecting the Shares under section 425 of the
Companies Act 1985; or


 


2.5.1.3     a resolution
is passed for the voluntary winding up of the Company.


 


2.5.2        Date of vesting


 


On the
occurrence of an event described in Rule 2.5.1, a Restricted Award will subject
to Rule 2.4, vest to the extent specified by the Remuneration Committee in
accordance with Rule 2.5.3 as follows:


 


2.5.2.1          in
relation to Rule 2.5.1.1, on the date that the change of Control takes effect;


 


2.5.2.2          in
relation to Rule 2.5.1.2, on the date on which the scheme of arrangement is
sanctioned by the Court ,; and


 


2.5.2.3          in
relation to Rule 2.5.1.3, conditionally on the resolution being passed.


 


2.5.3        The discretion of the Remuneration
Committee


 


The
Remuneration Committee will confirm as soon as practicable after the relevant
event referred to in Rule 2.5.2 above the extent (if any) to which a Restricted
Award will vest, taking into account the extent to which the performance target
applicable to that Restricted Award has been met up to the date of vesting and
such other factors as the Remuneration Committee believes to be relevant in
determining the extent to which the Restricted Award should vest.


 


2.6          CONSEQUENCES OF VESTING OF A RESTRICTED AWARD


 


As soon as
practicable following the vesting of a Restricted Award, the Shares subject to
it in respect of which it has vested will, subject to Rules 1.5 and 1.7, be
transferred to the Participant.


 


2.7          ADJUSTMENT OF RESTRICTED AWARDS


 


2.7.1        Variation in equity share
capital


 


If there is a
Variation in the equity share capital of the Company the number and/or the
nominal value of the Shares over which a Restricted Award is granted will be
adjusted in the manner the Remuneration Committee determines (subject to
confirmation from an appropriate independent professional that such adjustment
is fair and reasonable).


 


2.7.2        Notifying Participant of
adjustments


 


The Grantor
will take the steps it considers necessary to notify Participants of any
adjustment under Rule 2.7 and may call in, cancel, endorse, issue or re-issue
any award certificate as a result of that adjustment.


 

















 


2.8          Exchange of Restricted Awards


 


2.8.1        Circumstances in which
Restricted Awards are exchanged


 


If this Rule
applies, Restricted Awards will not vest but will be exchanged under the terms
of this Rule.  This Rule applies when:


 


2.8.1.1          a
company (the “Acquiring Company”) has obtained Control of the Company;


 


2.8.1.2          the
shareholders of the Acquiring Company immediately after it has obtained Control
of the Company are substantially the same as the shareholders of the Company
immediately before that event; and


 


2.8.1.3          the
Acquiring Company consents to the exchange of Restricted Awards under this
Rule.


 


2.8.2        The Exchange


 


When this Rule applies Participants’
Restricted Awards (“Old Awards”) will become awards (“New Awards”) in respect
of shares in the Acquiring Company. 
Each New Award will be equivalent to each Old Award before the change of
Control.  The New Awards will not be
regarded as equivalent to the Old Awards unless:


 


2.8.2.1          they
are governed by the Rules in effect immediately before the release of the Old
Awards; and


 


2.8.2.2          the
total Market Value of the Shares the subject of the Old Awards immediately before
the exchange is equal to the total Market Value immediately after the exchange
of the shares the subject of the New Awards. 
The provisions of the Plan will, for this purpose be construed as if the
New Awards were granted under the Plan at the same time as the Old Awards.


 


2.8.3        The New Awards


 


References to
Shares will, in relation to the New Awards, be taken as references to shares of
the Acquiring Company References to the Company will be taken to be references
to the Acquiring Company where appropriate. 
The New Awards will not vest or lapse if Rule 2.5 applies in respect of
the change of Control which lead to the grant of the New Awards.


 

















 


PART THREE


 


3.             CO-INVESTMENT PLAN


 


3.1          INVESTED SHARES


 


3.1.1        Invitation to acquire
Invested Shares


 


The Remuneration
Committee may, at its discretion, invite any Eligible Employee to acquire
Invested Shares in order to qualify for a Matched Award.  The invitation will be in the form approved
by the Remuneration Committee and will state:


 


3.1.1.1     the maximum
number of Invested Shares that may be acquired by all Eligible Employees
invited to participate at that invitation;


 


3.1.1.2     the
performance target to apply to any Matched Award;


 


3.1.1.3     how the
Eligible Employee should pay for the Invested Shares and how the Invested
Shares will be acquired.


 


3.1.2        Period for making invitations


 


Invitations to
acquire Invested Shares may be made at any time that the Remuneration Committee
thinks appropriate but not so that the making of the invitation, or the
acquisition of Invested Shares or the grant of a Matched Award consequent on
that invitation would fall during a Close Period of the Company.


 


3.1.3        Accepting an invitation


 


To accept an
invitation to acquire Invested Shares an Eligible Employee must return the
invitation form duly completed by the date specified in it, indicating the cash
amount that he wishes to apply in the purchase of Invested Shares.


 


3.1.4        Scaling down


 


If the
Remuneration Committee receives applications for Invested Shares in excess of
the maximum number of Invested Shares available at that invitation each
application will be scaled back on the basis the Remuneration Committee
determines.


 


3.1.5        Acquisition and holding of
Invested Shares


 


As soon as
practicable after the receipt of an invitation form from an Eligible Employee
the Remuneration Committee will, subject to the provision of cleared funds from
the Participant (other than where the Participant has directed all or part of
his annual cash bonus received from the Company to be used for such purpose),
procure the acquisition on behalf of that Eligible Employee of the number of
Invested Shares that match the number of Invested Shares on a 1:1 basis.  The Trustee will hold the Invested Shares
acquired for the Participant on trust as bare trustee on behalf of the
Participant until the earlier of the vesting of the Matched Award or the expiry
of the Relevant Period of the Matched Award granted in respect of those
Invested Shares.


 

















 


3.2          GRANT OF MATCHED AWARDS


 


3.2.1        Grant of Matched Awards


 


As soon as
possible after Invested Shares are acquired on behalf of an Eligible Employee
following an invitation under Rule 3.1 the Remuneration Committee will grant or
it may procure the Grantor to grant to that Eligible Employee a Matched Award
over the number of Shares that have an aggregate Market Value on the Date of
Grant of the Matched Award which is equal to the Invested Share Amount.  Subject to the remainder of the Rules of
this Part Three, the Shares under a Matched Award will not vest until the end
of the Relevant Period.


 


3.2.2        Conditions to be satisfied
before the vesting of Matched Awards


 


The
performance target which must be met before the Matched Award can vest will
notified to the Participant on his award certificate and will apply until
amended by or a different performance target is specified by, the Remuneration
Committee.


 


3.2.3        Terms of Invested Shares


 


By accepting the grant of the Matched Award the Participant agrees
that:


 


3.2.3.1          any
dividends declared on his Invested Shares during the Relevant Period belong to
the Participant but will be paid on behalf of the Participant to the Trustee,
who may reinvest them in Shares (net of any taxes and, if appropriate,
associated costs) as soon as reasonably practicable after those dividends are
paid to the Trustee and those Shares will be held by the Trustee as part of the
holding of Invested Shares; and


 


3.2.3.2          he is
entitled to instruct the Trustee on how to vote or abstain from voting in
relation to the Invested Shares and whether to accept or reject any offer in
relation to them.


 


3.2.4        Rights in relation to Matched
Awards


 


A Participant has no voting, dividend or
other rights attaching to Shares under a Matched Award made to the Participant,
before the Matched Award vests. 
However, the Trustee may in its discretion reinvest any dividends
declared on the Shares subject to a Matched Award (net of any taxes and, if
applicable, associated costs) as soon as reasonably possible after that
dividend has been paid and the Shares acquired with the dividend will be held
by the Trustee as part of the Matched Award. 
The Trustee will, at its discretion, be entitled to vote or abstain from
voting in respect of and accept or reject any offer in relation to the Shares
under a Matched Award.


 


3.3          VESTING OF MATCHED AWARDS


 


3.3.1        Normal vesting


 


Unless the
Remuneration Committee decides otherwise at the Date of Grant, and subject to
Rules 3.3.2, 3.3.3 and 3.4 and any additional terms and conditions which apply
to the Matched Award, a Matched Award will vest on the third anniversary of its
Date of Grant to the extent that the performance target which applies to that
Matched Award has been met.  However, if
this would be on a day which is on a Close Period, the day on which the Matched
Award will be the first Dealing Day following the end of the Close Period.


 

















 


3.3.2        Early vesting on cessation of
Employment (good leaver)


 


If a
Participant ceases to be in Employment due to


 


•      death,


 


•      ill-health, injury or
disability (evidenced to the satisfaction of the Remuneration Committee),


 


•      Redundancy or retirement,


 


•      the company by which the
Participant is employed ceasing to be a member of the Group or,


 


•      the transfer of the
undertaking or part-undertaking in which the Participant is employed to a
person or body corporate outside the Group,


 


then the
Participant’s Matched Award will vest in full immediately.


 


3.3.3        Early vesting on cessation of
Employment (other circumstances)


 


If a Participant ceases to be in Employment
for any reason other than those specified in Rule 3.3.2, the Remuneration
Committee may preserve and vest all or part of a Participant’s Matched Award on
any terms it thinks fit subject to the satisfaction of the performance target
measured to the date of cessation of employment.


 


3.4          LAPSE OF MATCHED AWARDS


 


3.4.1        Lapsing of Matched Awards


 


A Matched
Award will lapse and cease to be capable of (further) vesting on the earliest
of:


 


3.4.1.1          the
Participant ceasing to be in Employment in any circumstances other than those
referred to in Rule 3.3.2 and where the Remuneration Committee has not
preserved all or part of the Matched Award under Rule 3.3.3.  If the Remuneration Committee preserves part
only of a Matched Award under Rule 3.3.3 the part that is not preserved will
lapse immediately;


 


3.4.1.2          the
Participant being deprived of the legal or beneficial ownership of the Matched
Award by operation of law, or doing or omitting to do anything which causes him
to be so deprived or being declared bankrupt; and


 


3.4.1.3          the
Participant attempting to breach Rule 1.4.4.


 


3.4.2        Lapse where no or only
partial vesting


 


Where, after
all applicable testing of the performance target to which it is subject, a
Matched Award has not vested or only vested in part under the performance
target, the unvested part of the Matched Award will lapse with immediate
effect.


 


3.4.3        Female Participants on
maternity leave


 


For the
purposes of this Rule 3.4, a female Participant on maternity leave will not
cease to be in Employment until the earlier of the date on which she notifies
her employer of her intention 


 

















 


not to return
to work or the date on which she ceases to have statutory or contractual rights
to return to work.


 


3.5          GENERAL OFFER, SCHEME OF ARRANGEMENT OR
VOLUNTARY WINDING UP OF THE COMPANY


 


3.5.1        Circumstances in which this Rule
applies


 


Subject to
Rule 3.8, this Rule applies where:


 


3.5.1.1          an
offeror (either alone or with any party acting in concert with the offeror)
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 (or such part of
it which is not at the time owned by the offeror and any party acting in
concert with the offeror) which is made on a condition such that if it is
satisfied the company or person making the offer will have Control of the
Company; or


 


3.5.1.2          the
Court sanctions a scheme of arrangement affecting the Shares under section 425
of the Companies Act 1985; or


 


3.5.1.3          a
resolution is passed for the voluntary winding up of the Company.


 


3.5.2        Date of vesting


 


On the
occurrence of an event described in Rule 3.5.1, a Matched Award will, subject
to Rule 3.4, vest to the extent specified by the Remuneration Committee in
accordance with Rule 3.5.3 as follows:


 


3.5.2.1          in
relation to Rule 3.5.1.1, on the date that the change of Control takes effect;


 


3.5.2.2          in
relation to Rule 3.5.1.2, on the date on which the scheme of arrangement is
sanctioned by the Court; and


 


3.5.2.3          in
relation to Rule 3.5.1.3, conditionally on the resolution being passed.


 


3.5.3        The discretion of the
Remuneration Committee


 


The
Remuneration Committee will confirm as soon as practicable after the extent (if
any) to which a Matched Award will vest, taking into account the extent to
which the performance target applicable to that Matched Award has been met up
to the date of vesting and such other factors as the Remuneration Committee
believes to be relevant in determining the extent to which the Matched Award
should vest.


 


3.6          CONSEQUENCES OF VESTING OF A MATCHED AWARD


 


As soon as
practicable following the vesting of a Matched Award, the Shares subject to it
in respect of which it has vested and the Invested Shares related to that
Matched Award will, subject to Rules 1.5 and 1.7, be transferred to the
Participant.


 


3.7          ADJUSTMENT OF MATCHED AWARDS


 


3.7.1        Variation in equity share
capital


 


If there is
Variation in the equity share capital of the Company the number and/or the
nominal value of the Shares over which a Matched Award is granted may be
adjusted in such manner 


 

















 


as the
Remuneration Committee determines (subject to confirmation from an appropriate
independent professional that such adjustment is fair and reasonable).


 


3.7.2        Notifying Participants of
adjustments


 


The Grantor
will take the steps it considers necessary to notify Participants of any
adjustment under Rule 3.7 and may call in, cancel, enclose, issue or re-issue
any award certificate as a result of that adjustment.


 


3.8          Exchange of Matched Awards


 


3.8.1        Circumstances in which
Matched Awards are exchanged


 


If this Rule
applies, Matched Awards will not vest but will be exchanged under the terms of
this Rule.  This Rule applies when:


 


3.8.1.1          a
company (the “Acquiring Company”) has obtained Control of the Company;


 


3.8.1.2          the
shareholders of the Acquiring Company immediately after it has obtained Control
of the Company are substantially the same as the shareholders of the Company
immediately before that event, and


 


3.8.1.3          the
Acquiring Company consents to the exchange of Matched Awards under this Rule.


 


3.8.2        The Exchange


 


When this Rule
applies Matched Awards (“Old Awards”) will become awards (“New Awards”) in
respect of shares in the Acquiring Company. 
Each New Award will be equivalent to each Old Award before the change of
Control.  The New Awards will not be
regarded as equivalent to the Old Awards unless:


 


3.8.2.1          they
are governed by the Rules in effect immediately before the release of the Old
Awards; and


 


3.8.2.2          the
total Market Value of the Shares the subject of the Old Awards immediately
before the exchange is equal to the total Market Value immediately after the
exchange of the shares the subject of the New Awards.  The provisions of the Plan will, for this purpose be construed as
if the New Awards were granted under the Plan at the same time as the Old
Awards.


 


3.8.3        The New Awards


 


References to
Shares will, in relation to the New Awards, be taken as references to shares of
the Acquiring Company.  References to
the Company shall be taken to be references to the Acquiring Company, where
appropriate.  The New Awards will not
vest or lapse if Rule 3.5 applies in respect of the change of Control which
lead to the grant of the New Awards.


 

















 


APPENDIX 1


 


DEFINITIONS


 


	
  Associated Company

  	
   

  	
  in relation
  to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Award

  	
   

  	
  a Restricted
  Award or a Matched Award granted under the Plan;

  
	
   

  	
   

  	
   

  
	
  Board

  	
   

  	
  the board of
  directors of the Company or a duly authorised committee of it, which may
  include the Remuneration Committee;

  
	
   

  	
   

  	
   

  
	
  Close Period

  	
   

  	
  a period
  when the members of the Board are prohibited from dealing in Shares under the
  Criminal Justice Act 1993, or the Financial Services Authority model code on
  transactions in securities, or under any other statute, regulation or similar
  code to which the Company is subject;

  
	
   

  	
   

  	
   

  
	
  The Company

  	
   

  	
  Cyclacel
  Group Plc which, for the purposes of the Rules, may act through the Board;

  
	
   

  	
   

  	
   

  
	
  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 powers 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 Award, the date on which the Grantor grants it;

  
	
   

  	
   

  	
   

  
	
  Dealing Day

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Disability

  	
   

  	
  long-term
  disability evidenced to the satisfaction of the Remuneration Committee;

  



 

















 


	
  Eligible Employee

  	
   

  	
  any person
  who at a Date of Grant (or the date of invitation, in the case of Invested
  Shares) is an employee of a Participating Company;

  
	
   

  	
   

  	
   

  
	
  Employees’ Share Scheme

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            the
  employees or former employees of the Company, the Company’s Subsidiaries 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;

  
	
   

  	
   

  	
   

  
	
  Employment

  	
   

  	
  employment
  as an employee of a Participating Company or an Associated Company;

  
	
   

  	
   

  	
   

  
	
  Grant Period

  	
   

  	
  the period
  of 42 days starting on the day after any of the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           the
  date of any general meeting of the Company;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)          the
  date on which any change to the legislation affecting the Plan is proposed or
  made;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)          the
  date of lifting of any restrictions on the grant of an Award; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)           the
  date on which the Board believes that exceptional circumstances exist which
  justify the grant of Awards;

  
	
   

  	
   

  	
   

  
	
  Grantor

  	
   

  	
  in relation
  to an Award, the Person who has granted that Award which may be the Company,
  an employee benefit trust or any other Person;

  
	
   

  	
   

  	
   

  
	
  Group

  	
   

  	
  the Company
  and its Subsidiaries;

  
	
   

  	
   

  	
   

  
	
  Invested Share Amount

  	
   

  	
  the gross
  amount applied in the acquisition of Invested Shares, as determined in
  accordance with Rule 3.1;

  
	
   

  	
   

  	
   

  
	
  Invested Shares

  	
   

  	
  Shares acquired
  by a Participant under Rule 3.1 in order to qualify for a Matched Award;

  
	
   

  	
   

  	
   

  
	
  Market Value

  	
   

  	
  in relation
  to a Share, its middle market quotation (as derived from the Daily Official
  List of the London Stock Exchange plc) on the Dealing Day immediately preceding
  the relevant date;

  
	
   

  	
   

  	
   

  
	
  Matched Award

  	
   

  	
  a contingent
  right to acquire Shares which has been granted or is proposed to be granted
  under Rule 3.2;

  



 

















 


	
  Participant

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Person

  	
   

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

  
	
   

  	
   

  	
   

  
	
  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;

  
	
   

  	
   

  	
   

  
	
  Plan

  	
   

  	
  the Cyclacel
  Group Plc Restricted Share & Co-Investment Plan constituted by the Rules;

  
	
   

  	
   

  	
   

  
	
  Plan Period

  	
   

  	
  the period
  starting on the date the Plan is approved by the Company in general meeting
  and ending on the tenth anniversary of that date;

  
	
   

  	
   

  	
   

  
	
  Recognised Stock Exchange

  	
   

  	
  a stock
  exchange that is for the time being designated as a recognised stock exchange
  for the purpose of section 841 of the Income & Corporation Taxes Act
  1988;

  
	
   

  	
   

  	
   

  
	
  Redundancy

  	
   

  	
  termination
  of Employment attributable wholly or mainly to the fact that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            the
  employer has ceased or intends to cease:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           to
  carry on the business for the purpose of which the employee was employed; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           to
  carry on that business in the place the employee was employed; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           the
  requirements of that business:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           for
  employees to carry out work of a particular kind; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           to
  carry out that work in the place where the employee was employed,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  have ceased or diminished or are expected to cease or diminish;

  



 

















 


	
  Relevant Period

  	
   

  	
  in relation
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            a
  Restricted Award, the period commencing on the date on which the Award is
  granted and ending on the third anniversary of that date; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           a
  Matched Award, the period commencing on the date on which the Award is
  granted and ending on the third anniversary of that date, or where the
  Participant ceases employment without the Matching Award having vested, the
  period commencing on the date on which the Award is granted and ending on the
  date of cessation of the Participant’s employment;

  
	
   

  	
   

  	
   

  
	
  Remuneration Committee

  	
   

  	
  the duly
  authorised remuneration committee of the Board;

  
	
   

  	
   

  	
   

  
	
  Restricted Award

  	
   

  	
  a contingent
  right to acquire Shares which has been granted or is proposed to be granted
  under Rule 2.1;

  
	
   

  	
   

  	
   

  
	
  Retirement

  	
   

  	
  retirement
  at or after any age at which the Participant is bound or entitled to retire
  under his contract of Employment or early retirement with the agreement of
  the company which employs him;

  
	
   

  	
   

  	
   

  
	
  Rules

  	
   

  	
  these rules
  as amended from time to time;

  
	
   

  	
   

  	
   

  
	
  Share

  	
   

  	
  a fully paid
  ordinary share in the capital of the Company;

  
	
   

  	
   

  	
   

  
	
  Subsidiary

  	
   

  	
  a company is
  a subsidiary of another company if:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            that
  other company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           holds
  a majority of the voting rights in it; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           is
  a member of it and controls alone, pursuant to an agreement with other
  shareholders or member; a majority of the voting rights in it; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Trustee

  	
   

  	
  the trustee
  for the time being of an employee benefit trust established by the Company as
  an Employees’ Share Scheme;

  
	
   

  	
   

  	
   

  
	
  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.