Galen Holdings PLC













THE RULES OF THE GALEN HOLDINGS PLC





APPROVED EXECUTIVE SHARE OPTION SCHEME



AND THE



UNAPPROVED EXECUTIVE SHARE OPTION SCHEME









Adopted by the Board of Directors of the Company



on 9 October 1996





(as amended by the Board of Directors on 10 June 1997 and by the Company at the Annual General Meeting on 19 February 2002)



The Approved Scheme received formal approval under Schedule 9

to the Income and Corporation

Taxes Act 1988 by the Board of Inland Revenue



on 22 October 1996



under reference X18451









Ashurst Morris Crisp

Broadwalk House

5 Appold Street

London

EC2A 2HA

GALEN HOLDINGS PLC



APPROVED EXECUTIVE SHARE OPTION SCHEME



CONTENTS



RULE

|1  | INTERPRETATION AND CONSTRUCTION                                   |            
|-- | ----------------------------------------------------------------- | -----------
|   | Definitions                                                       | (a)        
|   | Construction                                                      | (b) to (d) 
|2  | LIMIT ON ORDINARY SHARE CAPITAL PLACED UNDER OPTION               | (a) to (d) 
|3  | ORDINARY SHARE CAPITAL                                            |            
|   | Availability of authorised capital and Scheme Shares              | (a)        
|   | Variation of capital and adjustment of Options                    | (b)        
|4  | LIMITS ON AN EMPLOYEE'S PARTICIPATION                             |            
|   | Limit by reference to all approved executive share option schemes | (a)        
|   | [Limit by reference to all executive share option schemes         | (b)]       
|5  | GRANT OF AN OPTION                                                |            
|   | General                                                           | (a)        
|   | Timing of grant                                                   | (b) and (c)
|   | Additional conditions                                             | (d)        
|   | Option Certificate                                                | (e)        
|   | Renunciation of Options                                           | (f)        
|6  | NON TRANSFERABILITY OF OPTIONS                                    |            
|7  | RIGHTS TO EXERCISE OPTIONS                                        |            
|   | General                                                           | (a) to (c) 
|   | Transfer to another country                                       | (d)        
|   | Death                                                             | (e)        
|   | Cessation of employment in special circumstances                  | (f) and (g)
|   | Cessation of employment in other circumstances                    | (h) and (i)
|   | Discretion to extend exercise period                              | (j)        
|8  | LOSS OF OFFICE OR EMPLOYMENT                                      | (a) to (c) 
|9  | TAKEOVERS, RECONSTRUCTION, AMALGAMATION AND LIQUIDATION           |            
|   | Change in Control of the Company - Acquiring Company              | (a) to (d) 
|   | Change in Control of the Company - Acquiring Person               | (e)        
|   | Changes to Scheme Share class or rights                           | (f)        
|   | Liquidation                                                       | (g)        
|   | Administration                                                    | (h)        
|   | Voluntary arrangement                                             | (i)        
|10 | EXERCISE OF OPTIONS AND LISTING OF SHARES                         |            
|   | Procedures on exercise                                            | (a) and (b)
|   | Rights attaching to Scheme Shares                                 | (c)        
|   | Listing                                                           | (d)        
|11 | SCHEME AMENDMENTS AND TERMINATION                                 |            
|   | Amendments                                                        | (a) to (f) 
|   | Termination                                                       | (g)        
|12 | ADMINISTRATION                                                    |            
|   |                                                                   |            
|   | Notices and documents                                             | (a) to (c) 
|   | Disputes                                                          | (d)        
|   | Costs of the Scheme                                               | (e)        
|   | Employee Trust                                                    | (f)        



SCHEDULE



RULES OF THE UNAPPROVED EXECUTIVE SHARE OPTION SCHEME



GALEN HOLDINGS PLC



APPROVED EXECUTIVE SHARE OPTION SCHEME



RULES





1. INTERPRETATION AND CONSTRUCTION



Definitions



(a)	In the Rules of this Scheme and in the Schedule attached hereto unless the context otherwise requires the following words and expressions shall have the meanings set out below:





|Acquiring Company       | Any company which:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        | (a)	has obtained Control of the Company either:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                        | (i)	as a result of making a Takeover Offer; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                        | (ii)	in pursuance of a Compromise; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                        | (b)	becomes bound or entitled to acquire Scheme Shares on the terms of an offer contained in Article 422 Notice(s).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Acquiring Person        | Any person, not being an Acquiring Company, who:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                        | (a)	either alone or together with any person acting in concert with him has obtained Control of the Company as a result of making a Takeover Offer or otherwise; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                        | (b)	having Control of the Company, makes a general offer to acquire the whole of the issued Ordinary Share Capital (other than that which is already owned by him and/or by any person acting in concert with him).                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Acquisition Price       | The amount payable in relation to the exercise of an Option, being the amount (after any adjustment pursuant to Rule 3(b)) of the Option Price multiplied by the number of Scheme Shares in respect of which the Option is exercised.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|the Act                 | The Income and Corporation Taxes Act 1988.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Adoption Date           | The date on which this Scheme is adopted by the Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Appropriate Period      | In relation to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                        | (a)	a Takeover Offer, means the period of 6 months beginning with the time when the person making the Takeover Offer has obtained Control of the Company and any condition subject to which the Takeover Offer is made is satisfied;                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                        | (b)	a Compromise, means:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                        | (i)	where the Option is to be exercised the period permitted in the operation of Rules 9(aa) to 9(ae); or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                        | (ii)	where the Option is to be Rolled-over, the period of 6 months beginning with the time when the court sanctions the Compromise;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                        | (c)	an Article 422 Notice means the period during which the Acquiring Company is entitled and bound to acquire shares on the terms of the offer contained in such Article 422 Notice; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                        | (d)	an Acquiring Person who obtains Control of the Company, or who having Control of the Company makes a general offer for the whole of the issued Ordinary Share Capital, (other than that which is already owned by him and/or any person acting in concert with him) means the period of 6 months beginning with the time when the Acquiring Person obtains Control or makes the offer as the case may be.                                                                                                                                                                                                                                                                
|Article 422 Notice      | In relation to the Company, means a notice served by a person who has become entitled to serve such a notice on the shareholders of the Company under Article 422 of the Companies Order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|the Companies Order     | The Companies (Northern Ireland) Order 1986.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|the Company             | Galen Holdings PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Compromise              | In relation to the Company, means a compromise or arrangement sanctioned or to be sanctioned by the court under Article 418 of the Companies Order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Control                 | Control as defined in section 840 of the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Date of Grant           | The date on which an Option is granted to an Employee, which shall be the date specified on the Option Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Directors               | The Board of Directors of the Company from time to time or a duly authorised committee thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Employee                | Either:
(i)	an employee (other than a director) of a Group Company; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                        | (ii)	a director (other than a non-executive director) of a Group Company who is contracted to work at least 25 hours per week, exclusive of meal breaks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                        | who in either case:(aa)	is required to devote substantially the whole of his working time to the business of the Group; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                        | (ab)	is not precluded from participating in this Scheme by paragraph 8 of Schedule 9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Employees' Share Scheme | An employees' share scheme as defined in Article 11 of the Companies Order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Flotation               | Flotation means the time when the ordinary shares of the Company is placed on the Official List of the London Stock Exchange or any other stock exchange which is recognised under the Financial Services Act 1986.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Grantor                 | Either:(i)	in relation to an Option granted by the Directors, the Directors; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                        | (ii)	in relation to an Option granted by the Trustees, the Trustees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Group                   | The Company and its Subsidiaries from time to time and the expression "member of the Group" shall be construed accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Group Company           | The Company, or a company which is for the time being a Subsidiary over which the Company has Control and which has been nominated by the Directors to participate for the time being in this Scheme.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Market Value            | (a)	In the case of Options granted under this Scheme, means:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                        | (i)	if at the relevant time shares which are of the same class as Scheme Shares are listed in the London Stock Exchange Daily Official List, an amount equal to the middle market quotation of a Scheme Share (as derived from that List) on the dealing day immediately preceding the Date of Grant or, if the Grantor so decides, an amount equal to the arithmetic average of the middle market quotations of a Scheme Share (as derived from that List) during the five dealing days immediately preceding the Date of Grant, or where the context requires the Option Rollover date or such other price as may be agreed in advance with the Board of Inland Revenue; or
|                        | (ii)	if paragraph (i) above does not apply the market value of a Scheme Share as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992, and agreed in advance with the Board of Inland Revenue, on the Date of Grant or where the context requires, the Option Rollover date or such earlier date or dates as may be agreed with the Board of Inland Revenue; or                                                                                                                                                                                                                                                                              
|                        | (b)	in the case of options granted under any other share option scheme of the Company approved under the provisions of Schedule 9 (other than a savings related share option scheme), the market value of an ordinary share in the capital of the Company determined under the rules of such scheme for the purpose of the grant of each such option.                                                                                                                                                                                                                                                                                                                        
|Option                  | A right to acquire Scheme Shares at the Acquisition Price granted to an Employee under the provisions of this Scheme and for the time being subsisting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Option Certificate      | The certificate in respect of a grant of an Option which shall be issued to an Option-holder in accordance with Rule 5(e).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Option-holder           | Any person who holds an Option or (where the context admits) his legal personal representative(s).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Option Price            | The price per Scheme Share determined by the Grantor, being a price not less than the Market Value of a Scheme Share at the Date of Grant except when Scheme Shares are subscribed when the price shall not be less than the greater of:                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                        | (i)	the nominal value of a Scheme Share; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                        | (ii)	the Market Value of a Scheme Share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Option Rollover         | In relation to an Option, means a release by an Option-holder with the consent of the Acquiring Company of his rights ("old rights") under this Scheme in consideration of the grant to him of rights ("new rights") which are equivalent to the old rights but which relate to shares in:                                                                                                                                                                                                                                                                                                                                                                                   
|                        | (a)	the Acquiring Company; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                        | (b)	a company which has Control of the Acquiring Company; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                        | (c)	a company which either is, or has Control of, a company which is a member of a consortium within the meaning of paragraph 10 (c) of Schedule 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                        | and the term "equivalent" shall be construed in accordance with Rule 9(c).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ordinary Share Capital  | The ordinary share capital of the Company as defined in section 832(1) of the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Rolled-over             | The action of effecting an Option Rollover or its completion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|the Rules               | The rules for the time being governing this Scheme.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Schedule 9              | Schedule 9 to the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|this Scheme             | The Galen Holdings PLC Approved Executive Share Option Scheme in its present form or as from time to time amended in accordance with the provisions hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Scheme Shares           | Fully paid ordinary shares in the capital of the Company or any shares representing the same, which satisfy the conditions specified in paragraphs 10 to 14 inclusive of Schedule 9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Subsidiary              | A company which is a subsidiary of the Company within the meaning of Article 4 of the Companies Order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Takeover Offer          | In relation to the Company, means either:(a)	a general offer to acquire the whole of the issued Ordinary Share Capital which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or                                                                                                                                                                                                                                                                                                                                                                                                                            
|                        | (b)	a general offer to acquire all the shares in the Company of the same class as the Scheme Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Trustees                | The trustees of any trust created by the Company which complies with the requirements of Article 11 of the Companies Order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



Construction



(b)	Words or expressions used herein shall where appropriate:



1. when denoting the masculine gender include the feminine and vice-versa;
2. when denoting the singular include the plural and vice versa;
3. unless the context otherwise requires have the same meanings as in Schedule 9 as amended from time to time;
4. when referring to any enactment be construed as a reference to that enactment as for the time being amended or re-enacted and shall include any regulations made thereunder;
5. when referring to Rules throughout this Scheme be taken to refer to the Rules of this Scheme; and
6. be construed such that the headings and sub-headings are for ease of reference only, and not form part of the Rules.



(c)	For the purpose of any application of the provisions of this Scheme, following an Option Rollover:



(i)	Rules 1,3,7,8, 9, 10, 12(a), 12(c), and 12(d), shall only in relation to the new rights be construed as if the following terms have the meaning assigned to them in this Rule 1(c) and not the meanings assigned to them in Rule 1(a):



Company	the company in respect of whose shares new rights have been granted;



Directors	the board of directors of the company in respect of whose shares new rights have been granted or a duly authorised committee thereof;



Scheme Shares	fully paid ordinary shares in the capital of the company for the time being over whose shares new rights have been granted and which satisfy the conditions specified in paragraphs 10 to 14 inclusive of Schedule 9.



(d)	Where under any of the provisions of these Rules it is provided that an Option shall lapse, that Option shall cease to be exercisable thereafter notwithstanding any other provision of these Rules.



1. LIMIT ON ORDINARY SHARE CAPITAL PLACED UNDER OPTION
2. ORDINARY SHARE CAPITAL
3. LIMITS ON AN EMPLOYEE'S PARTICIPATION
4. GRANT OF AN OPTION
5. NON TRANSFERABILITY OF OPTIONS
6. RIGHTS TO EXERCISE OPTIONS
7. LOSS OF OFFICE OR EMPLOYMENT
8. TAKEOVERS, RECONSTRUCTION, AMALGAMATION AND LIQUIDATION
9. EXERCISE OF OPTIONS AND LISTING OF SHARES
10. SCHEME AMENDMENTS AND TERMINATION
11. ADMINISTRATION
12. This Schedule to the Approved Executive Share Option Scheme ("the Scheme") sets out the Rules of the Unapproved Executive Share Option Scheme ("the Unapproved Scheme").
13. The Unapproved Scheme shall not be approved by the United Kingdom Board of Inland Revenue under Schedule 9 to the Act.
14. The Rules of the Scheme as from time to time amended shall be incorporated and form part of the rules of the Unapproved Scheme with the following modifications:-
15. reference throughout the Scheme to the words "this Scheme" shall be taken as reference to "this Unapproved Scheme";
16. adjustments under Rule 3(b) will not require the approval of the Board of Inland Revenue;
17. Rules 4(a), 7(c), 11(d) in Rule 1(a) shall have no effect;.
18. there shall be no requirement for the Scheme Shares to comply with paragraphs 10 to 14 inclusive of Schedule 9 to the Act;
19. The definition of "Employee" in Rule 1(a) shall be deleted and the following substituted
20. Where in relation to Options granted under the Unapproved Scheme the Company or a participating company is liable under any statute or regulation or otherwise to account to any revenue or other authority for sums in respect of tax or social security then the Company may impose such conditions upon the exercise of Options as are necessary or desirable to ensure that the requisite cash funds may be recovered from the Option-holder, including if necessary a condition that no exercise may take place unless the Company or a participating company has been provided by the Option-holder with cash funds sufficient to meet any liability for PAYE pursuant to section 203B of the Act or otherwise.



FORM OF RENUNCIATION



To:



I, the undersigned, being the Option-holder mentioned in this certificate, hereby renounce the Option as herein represented, as provided by Rule 5(f) of the Rules of the Scheme.



SIGNED and delivered as a deed by





(optionholder signature)





in the presence of:



Witness signature:





Witness name (print):





Address:

















Occupation: