ex10-1



 



EXHIBIT 10.1



AMENDED AND RESTATED



BIORELIANCE



1997 INCENTIVE PLAN



     1.     Purpose. The purpose of this Plan is to strengthen BioReliance
Corporation, a Delaware corporation (the “Company”), by providing an incentive
to its employees, officers, consultants and directors and thereby encouraging
them to devote their abilities and industry to the success of the Company’s
business enterprise. It is intended that this purpose be achieved by extending
to employees, officers, consultants and directors of the Company and its
Subsidiaries a long-term incentive for high levels of performance and unusual
efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Dividend Equivalent Rights, Performance
Awards and/or Restricted Stock (as each term is herein defined). After the
Effective Date of this Plan, no further awards shall be made under any of the
Former Plans. Each award outstanding under a Former Plan as of the Effective
Date of this Plan shall remain outstanding and continue to be subject to the
terms of the Former Plan and the award agreement under which such award was
granted. Each Share that is available for the granting of new awards under
either of the Former Plans as of the Effective Date of this Plan and each Share
that is the subject of an award under either of the Former Plans but is not
issued prior to the time that such award expires or otherwise terminates shall,
after the Effective Date of this Plan, not be available for the granting of
awards under either of the Former Plans, but shall instead be available for the
granting of Options under this Plan.


     2.     Definitions. For purposes of the Plan:


     2.1 “Adjusted Fair Market Value” means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the sixty (60) day period ending on the date of a Change in Control.


     2.2 “Affiliate” means any entity, directly or indirectly, controlled by,
controlling or under common control with the Company or any corporation or
other entity acquiring, directly or indirectly, all or substantially all the
assets and business of the Company, whether by operation of law or otherwise.


     2.3 “Agreement” means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.


     2.4 “Automatic Option” means an Option granted pursuant to Section 6.


     2.5 “Award” means a grant of Restricted Stock, a Stock Appreciation Right,
a Performance Award, a Dividend Equivalent Right or any or all of them.


     2.6 “Beneficial Ownership” means ownership within the meaning of Rule 1
3d-3 promulgated under the Exchange Act.


     2.7 “Beneficiary” means an individual, trust or estate who or which, by a
written designation of the Optionee or Grantee filed with the Company by
operation of law, succeeds to the rights and obligations of the Optionee or
Grantee under the Plan and an Agreement upon the Optionee’s or Grantee’s death.


     2.8 “Board” means the Board of Directors of the Company.


     2.9 “Business Day” means any day on which the New York Stock Exchange is
open for trading.


     2.10 “Cause” shall mean:

 






 




     (a)  for purposes of Section 6.4, (i) a willful act which constitutes gross
misconduct or fraud and which is materially injurious to the Company or (ii)
conviction of, or plea of “guilty” or “no contest” to, a felony; and


     (b)  in all other cases, either (1) the definition set forth in the
employment agreement between the Optionee or Grantee and the Company, or in
absence thereof, (2) (i) intentional failure to perform reasonably assigned
duties, (ii) dishonesty or willful misconduct in the performance of duties,
(iii) involvement in a transaction in connection with the performance of duties
to the Company or any of its Subsidiaries which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is engaged in for
personal profit or (iv) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or
similar offenses). No act or failure to act shall be considered willful unless
done or omitted to be done in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company.


     2.11 “Change in Capitalization” means any increase or reduction in the
number of Shares, or any change (including, without limitation, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of
a reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, property dividend, combination or
exchange of shares, change in corporate structure or substantially similar
event.


     2.12 A “Change in Control” shall mean the occurrence during the term of
the Plan of any of the following events; provided, however, that the Committee,
in its sole discretion, may specify a more restrictive definition of Change in
Control in any Agreement and, in such event, the definition of Change in
Control set forth in the Agreement shall apply to the Award granted under such
Agreement:


     (1)  An acquisition in one or more transactions (other than directly from
the Company or pursuant to options granted under this Plan or otherwise by the
Company) of any voting securities of the Company (the “Voting Securities”) by
any Person (other than any member of the Knafel Family) immediately after which
such Person has Beneficial Ownership of (i) thirty percent (30%) or more of the
combined voting power of the Company’s then outstanding Voting Securities and
(ii) a number of Voting Securities having combined voting power greater than
the combined voting power of the Voting Securities then Beneficially Owned by
members of the Knafel Family; provided, however, in determining whether a
Change in Control has occurred, Voting Securities which are acquired in a
“Non-Control Acquisition” (as defined below) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition”
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (i) the Company or (ii) any Subsidiary, (B) the
Company or any Subsidiary, or (C) any Person in connection with a “Non-Control
Transaction” (as defined below);


     (2)  The individuals who, as of April 24, 1997, are members of the Board
(the “Incumbent Board”), cease for any reason to constitute at least two-thirds
of the Board; provided, however, that if the election, or nomination for
election by the Company’s stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of the Plan, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened “Election Contest” (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board (a
“Proxy Contest”) including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or


     (3)  Consummation of:


          (A)  A merger, consolidation or reorganization involving the
Company,


 






 


     unless



		
	 	(i) the stockholders of the Company immediately before such
merger, consolidation or reorganization own, directly or
indirectly, immediately following such merger, consolidation
or reorganization, more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation
or reorganization (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization;




		
	 	(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute
at least two-thirds of the members of the governing board of
directors of the Surviving Corporation;




		
	 	(iii) no Person (other than the Company or any Subsidiary,
any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation
or any Subsidiary, or any Person who, immediately prior to
such merger, consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power of
the Surviving Corporation’s then outstanding voting
securities; and




		
	 	(iv) a transaction described in clauses (i) through (iii)
shall herein be referred to as a “Non-Control Transaction”;



          (B)  A complete liquidation or dissolution of the Company; or


          (C)  An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).


Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the
proportional number of shares beneficially owned by the Subject Person;
provided, however, that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities beneficially
owned by the Subject Person, then a Change in Control shall occur.


     2.13 “Code” means the Internal Revenue Code of 1986, as amended.


     2.14 “Committee” means a committee, as described in Section 3.1, appointed
by the Board from time to time to administer the Plan and to perform the
functions set forth herein.


     2.15 “Company” means BioReliance Corporation, a Delaware corporation.


     2.16 “Date of Grant” means the date designated by the Committee as the
date as of which it grants an Option or Award, which shall not be earlier than
the date on which the Committee approves the granting of such Option or Award.


     2.17 “Director” means a director of the Company.


 






 


     2.18 “Disability” means:


     (a)  in the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is subject to the terms of an employment agreement
between such Optionee or Grantee and the Company or Subsidiary, which
employment agreement includes a definition of “Disability”, the term
“Disability” as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; and


     (b)  in all other cases, the term “Disability” as used in this Plan or any
Agreement shall mean a physical or mental infirmity which impairs the
Optionee’s or Grantee’s ability to perform substantially his or her duties for
a period of one hundred eighty (180) consecutive days.


     2.19 “Disability Date” means the date which is six months after the date
on which an Optionee or Grantee is first absent from active employment with the
Company by reason of a Disability.


     2.20 “Discretionary Option” means an Option granted pursuant to Section 5.


     2.21 “Dividend Equivalent Right” means a right to receive all or some
portion of the cash dividends that are or would be payable with respect to
Shares.


     2.22 “Division” means any of the operating units or divisions of the
Company designated as a Division by the Committee.


     2.23 “Eligible Individual” means any of the following individuals who is
designated by the Committee as eligible to receive Options subject to the
conditions set forth herein: (a) any director (including any Non-Employee
Director), officer or employee of the company or a Subsidiary, (b) any
individual to whom the Company or a Subsidiary has extended a formal, written
offer of employment, or (c) any consultant or advisor who performs actual
services for the Company or a Subsidiary.


     2.24 “Exchange Act” means the Securities Exchange Act of 1934, as amended.


     2.25 “Fair Market Value” on any date means the closing price of the Shares
on such date on the principal national securities exchange on which such Shares
are listed or admitted to trading, or, if such Shares are not so listed or
admitted to trading, the closing price on such date as quoted on the Nasdaq
National Market or such other market in which such prices are regularly quoted,
or, if there have been no published bid or asked quotations with respect to
Shares on such date, the Fair Market Value shall be the value established by
the Board in good faith and, in the case of an Incentive Stock Option, in
accordance with Section 422 of the Code.


     2.26 “Former Plans” means the Microbiological Associates, Inc. 1988
Incentive Stock Option Plan, the Microbiological Associates, Inc. 1995
Non-Qualified Stock Option Plan, and the Magenta Corporation 1994 Incentive
Stock Option Plan.


     2.27 “Grantee” means a person to whom an Award has been granted under the
Plan.


     2.28 “Incentive Stock Option” means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive
Stock Option.


     2.29 “Knafel Family” means (i) Sidney R. Knafel and/or members of his
“immediate family” (as defined in Rule 16a-1 promulgated under the Exchange
Act), (ii) a trust solely for the benefit of any of the individuals referred to
in clause (i) above; (iii) the guardian, conservator, estate or other legal
representative of any of the individuals referred to in clause (i) above; and
(iv) any corporation, partnership, limited liability company or other entity
all of the outstanding equity securities of which are owned, directly or
indirectly, by the individuals or entities referred to in clause (i), (ii) or
(iii) above.


 






 


     2.30 “Non-Employee Director” means a director of the Company who is a
“Non-employee director” within the meaning of Rule 16b-3 promulgated under the
Exchange Act.


     2.31 “Nonqualified Stock Option” means an Option which is not an Incentive
Stock Option.


     2.32 “Normal Retirement Date” means the date on which an Optionee or
Grantee terminates active employment with the Company on or after attainment of
age 65, but does not include termination by the Company for Cause.


     2.33 “Option” means a Nonqualified Stock Option, an Incentive Stock
Option, a Discretionary Option, an Automatic Option, or any or all of them.


     2.34 “Optionee” means a person to whom an Option has been granted under
the Plan.


     2.35 “Outside Director” means a director of the Company who is an “Outside
Director” within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.


     2.36 “Parent” means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.


     2.37 “Performance Awards” means Performance Units, Performance Shares or
either or both of them.


     2.38 “Performance Cycle” means the time period specified by the Committee
at the time Performance Awards are granted during which the performance of the
Company, a Subsidiary or a Division will be measured.


     2.39 “Performance Objectives” has the meaning set forth in Section 11.


     2.40 “Performance Shares” means Shares issued or transferred to an
Eligible Individual under Section 11.


     2.41 “Performance Units” means Performance Units granted to an Eligible
Individual under Section 11.


     2.42 “Person” means “person” as such term is used for purposes of Section
13(d) or 14(d) of the Exchange Act, including, without limitation, any
individual, firm, corporation, partnership, limited liability company, joint
venture, association, trust or other entity, or any group of Persons.


     2.43 “Plan” means the BioReliance Corporation 1997 Incentive Plan, as
amended and restated from time to time.


     2.44 “Pooling Transaction” means an acquisition of the Company in a
transaction which is intended to be treated as a “pooling of interests” under
generally accepted accounting principles.


     2.45 “Restricted Stock” means Shares issued or transferred to an Eligible
Individual pursuant to Section 10.


     2.46 “Scientific Advisory Board” means the Scientific Advisory Board of
the Company.


     2.47 “Shares” means the common stock, par value $.0l per share, of the
Company.


     2.48 “Stock Appreciation Right” means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8
hereof.


 






 


     2.49 “Subsidiary” means any corporation or other Person of which a
majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Company.


     2.50 “Successor Corporation” means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.


     2.51 “Ten-Percent Stockholder” means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.


     2.52 “Termination of Employment” means the later of (i) a severance of the
employer-employee relationship with the Company or (ii) the resignation,
removal or termination of an officer of the Company.


     2.53 For the purpose of UK Approved Options, the following terms and
modifications shall apply, namely:




	 	 	 
	Agreement	 	
shall include an option certificate issued
pursuant to Section 5.1 of the Plan.
	 
	Beneficiary	 	
shall include the Optionee’s legal personal
representatives or executors (but so that, in
the event of the insolvency of an Optionee, all
his UK Approved Options shall lapse)
	 
	Change in Capitalization	 	
means a spin-off or other change which does not
cause a variation of share capital of the
Company, shall not result in an adjustment to
the number, price or other terms of UK Approved
Options, nor shall any such adjustments be made
without the prior approval of the UK Inland
Revenue.
	 
	Dividend Equivalent Right	 	
means a UK Approved Option shall not carry a
Dividend Equivalent Right.
	 
	Eligible Employee	 	
means an employee (including a Full-Time
director) of the Company or a Subsidiary who is
resident or ordinarily resident in the United
Kingdom at the Date of Grant of his Option, but
excluding any Excluded Person.
	 
	Excluded Person	 	
means any person who has (or within the
preceding 12 months has had) a material interest
in the Company (if then a close company within
the meaning of Schedule 9 to the Taxes Act) or a
company which is a close company and either
controls the Company or is a member of a
consortium which owns the Company.
	 
	Full-Time	 	
means an employee required under the terms of
his or her employment to work for his or her
employing company or companies for at least 25
hours per week (excluding meal breaks)
	 
	Option	 	
shall include a UK Approved Option unless
otherwise stated in the Plan.
	 
	Performance Award	 	
The grant of a UK Approved Option shall not
include a Performance Award.
	 
	Stock Appreciation Right	 	
The grant of a UK Approved Option shall not
include a Stock Appreciation Right.



 






 




	 	 	 
	Taxes Act	 	
Income and Corporation Taxes Act 1988 of the
United Kingdom.
	 
	UK Approved Option	 	
means a non-transferable right to acquire Shares
granted to an Eligible Employee pursuant to
Section 5 of the Plan and for the time being
subsisting.



     3.     Administration.


          3.1 The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist
of not fewer than two members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held. The
Committee shall consist of at least two (2) directors of the Company and may
consist of the entire Board; provided, however, that (A) if the Committee
consists of less than the entire Board, each member shall be a Non-employee
Director and (B) to the extent necessary for any Option or Award intended to
qualify as performance-based compensation under Section 162(m) of the Code to
so qualify, each member of the Committee, whether or not it consists of the
entire Board, shall be an Outside Director. No member of the Committee shall be
liable for any action, failure to act, determination or interpretation made in
good faith with respect to this Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, gross negligence or
reckless disregard of his or her duties. The Company hereby agrees to indemnify
each member of the Committee for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.


          3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:


               (a)  determine those Eligible Individuals to whom Discretionary Options may
be granted under the Plan and the number of such Discretionary Options to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Discretionary Option, including the purchase price per Share
subject to each Discretionary Option, and make any amendment or modification to
any applicable Agreement consistent with the terms of the Plan;


               (b)  select those Eligible Individuals to whom Awards shall be granted
under the Plan and to determine the number of Stock Appreciation Rights,
Performance Awards, Shares of Restricted Stock and/or Dividend Equivalent
Rights to be granted pursuant to each Award, the terms and conditions of each
Award, including the restrictions or Performance Objectives relating to Awards
and the maximum value of any Award, and make any amendment or modification to
any Agreement consistent with the terms of the Plan;


               (c)  accelerate a Discretionary Option or Award and to waive restrictive
conditions for a Discretionary Option or Award (including, without limitation,
any forfeiture conditions), in such circumstances as the Committee deems
appropriate, subject to any express limitations of the Plan, including, without
limitation, Section 16(b); provided, however, that nothing in this Section
3.2(c) shall be construed to limit the Committee’s authority under other
provisions of the Plan. In the case of any acceleration of a Discretionary
Option or Award after the attainment of the applicable Performance
Objective(s), the amount payable shall be discounted to its present value using
an interest rate equal to Moody’s Average Corporate Bond Yield for the month
preceding the month in which such acceleration occurs. This paragraph shall not
apply in respect of a UK Approved Option;

 






 




               (d)  to construe and interpret the Plan and the Options and Awards granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, without limitation, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and otherwise to
make the Plan fully effective. All decisions and determinations by the
Committee in the exercise of this power shall be final, binding and conclusive
upon the Company, its Subsidiaries, the Optionees and Grantees, and all other
persons having any interest therein;


               (e)  to determine the duration and purposes for leaves of absence which may
be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;


               (f)  to exercise its sole discretion with respect to the powers and rights
granted to it as set forth in the Plan; and


               (g)  generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the Company with
respect to the Plan.


     4.     Stock Subject to the Plan.


          4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 1,012,277 Shares; provided, however, that
in the aggregate, not more than one-third of the number of allotted Shares may
be made the subject of Restricted Stock Awards under Section 10 of the Plan;
and provided, further, that the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options granted under the Plan become
exercisable for the first time by an Optionee during any calendar year shall
not exceed $100,000. Upon a Change in Capitalization, the maximum number of
Shares referred to in the preceding sentence shall be adjusted in number and
kind pursuant to Section 13. The Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company’s treasury, or partly out of each, such number of Shares as shall be
determined by the Board.


          4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards
shall be reduced as follows:


               (a)  In connection with the granting of an Option or an Award (other than
the granting of a Performance Unit denominated in dollars), the number of
Shares shall be reduced by the number of Shares in respect of which the Option
or Award is granted or denominated.


               (b)  In connection with the granting of a Performance Unit denominated in
dollars, the number of Shares shall be reduced by an amount equal to the
quotient of (i) the dollar amount in which the Performance Unit is denominated,
divided by (ii) the Fair Market Value of a Share on the date the Performance
Unit is granted.


          4.3 Whenever any outstanding Option or Award or portion thereof expires,
is canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option or Award
(including any outstanding Options under any of the Former Plans), the Shares
allocable to the expired, canceled or otherwise terminated portion of the
Option or Award may again be the subject of Options or Awards granted
hereunder.


     5.     Option Grants for Eligible Individuals.


          5.1 Authority of Committee.


 






 


               (a)  Subject to the provisions of the Plan, the Committee shall have full
and final authority to select those Eligible Individuals who will receive
Discretionary Options, and the terms and conditions of the grant to such
Eligible Individuals shall be set forth in an Agreement. The terms and
conditions of UK Approved Options shall be set forth in a certificate executed
as a deed by the Company and UK Approved Options may only be granted to
Eligible Employees.


               (b)  Notwithstanding any provision of this Section 5, any Discretionary
Option granted under this Section 5 to an Eligible Individual who is a
Non-Employee Director shall be governed by the duration and termination
provisions set forth in Sections 6.4(a)-(e) of the Plan or such other duration
and termination provisions as determined by the Committee and set forth in an
Agreement.


     5.2 Purchase Price.


               (a)  The purchase price (which may be greater than, less than or equal to
the Fair Market Value on the Date of Grant) or the manner in which the purchase
price is to be determined for Shares under each Discretionary Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the purchase price per Share under each Incentive Stock Option shall not
be less than 100% of the Fair Market Value of a Share on the Date of Grant
(110% in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).


               (b)  The purchase price of a Share under a UK Approved Option shall be not
less than:


                    (i)  its market value as determined by the Committee in accordance with the
provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 of the
United Kingdom and approved prior to the grant of the related UK Approved
Option by the Shares Valuation Division of the UK Inland Revenue; or


                    (ii)  its nominal amount or (when applicable) such price as from time to
time adjusted pursuant to the Plan.


               (c)  No UK Approved Option shall be granted under this Plan to an Eligible
Employee if the aggregate purchase price of the Shares comprised therein, when
added to the aggregate of the amounts for which shares of the Company may be
acquired under any subsisting UK Approved Options granted to him under the Plan
or any other scheme (not being a savings-related share option scheme) approved
under Schedule 9 to the Taxes Act and established by the Company or a
Subsidiary, would exceed, or further exceed, pounds sterling 30,000 or such
other limit as may apply from time to time under paragraph 28 of Schedule 9 to
the Taxes Act (the “Limit”). For the purposes of determining whether an Option
is subject to the Limit, Options which fell to be treated under the provisions
of Section 115 of the Finance Act 1996 of the United Kingdom as unapproved
options shall be treated as having been granted under a scheme other than one
which is approved under Schedule 9 to the Taxes Act.


     5.3 Maximum Duration. Discretionary Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the Date of Grant.
The Committee may, subsequent to the granting of any Discretionary Option
(other than a UK Approved Option), extend the term thereof, but in no event
shall the term as so extended exceed the maximum term provided for in the
preceding sentence.


     5.4 Exercisability. Subject to Sections 5.5 and 7.3, each Discretionary
Option shall become exercisable in such installments (which need not be equal)
and at such times as may be designated by the Committee and set forth in the
Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Discretionary Option expires. No UK Approved Option
shall

 






 




become exercisable in any circumstances by an Optionee who is at the time of
such intended exercise an Excluded Person.


     5.5 Termination. Except as provided in Sections 5.1(b) and 12, and unless
otherwise provided by the Committee, in its sole discretion, in the applicable
Agreement, the following provisions shall apply to Discretionary Options upon a
Termination of Employment:


               (a)  Subject to Section 5.3 and except as provided in Section 5.5(d),
unless otherwise determined by the Committee at the time of grant (and set
forth in the applicable Agreement) or at a later date, except in the case of
Disability, retirement on or after the Optionee’s Normal Retirement Date and
death as provided in Sections 5.5(b) and 5.5(c) below, if an Optionee of a
Discretionary Option has a Termination of Employment with the Company or a
Subsidiary, any unexercised Discretionary Option held by such Optionee shall
expire ninety (90) days after the Optionee has a Termination of Employment for
any reason other than a termination for Cause, and such Discretionary Option
may only be exercised by the Optionee or his or her Beneficiary to the extent
that the Discretionary Option or a portion thereof was exercisable on the date
of Termination of Employment; provided, however, that no Discretionary Option
may be exercised after the expiration date specified for the particular
Discretionary Option in the Discretionary Option grant. If the Optionee’s
Termination of Employment arises as a result of a termination for Cause, then,
unless the Committee determines otherwise at the time of the Termination of
Employment, any unexercised Options held by such Optionee shall terminate and
expire concurrently with the Optionee’s Termination of Employment.


               (b)  Subject to Section 5.3, unless otherwise determined by the Committee
at the time of grant (and set forth in the applicable Agreement) or at a later
date, if an Optionee becomes disabled within the meaning of Section 2.17 hereof
or retires on or after the Optionee’s Normal Retirement Date, any unexercised
Discretionary Option held by such disabled or retired Optionee shall expire one
(1) year after the Disability Date or date of Termination of Employment by
reason of retirement, as the case may be, and such Option may only be exercised
by the Optionee or his or her Beneficiary to the extent that the Discretionary
Option or a portion thereof was exercisable on the Disability Date or the date
of Termination of Employment by reason of retirement, as the case may be;
provided, however, no Discretionary Option may be exercised after the
expiration date specified for the particular Discretionary Option in the
Discretionary Option grant.


               (c)  Subject to Section 5.3, unless otherwise determined by the Committee
at the time of grant (and set forth in the applicable Agreement) or at a later
date, if an Optionee dies while still employed by the Company, the Options
which the Optionee was entitled to exercise on the date of the Optionee’s death
may be exercised at any time after the Optionee’s death by the Optionee’s
Beneficiary; provided, however, that no Option may be exercised after the
earlier of: (i) one (1) year after the Optionee’s death or (ii) the expiration
date specified for the particular Option in the Option Agreement. If an
Optionee dies after his or her Termination of Employment, then the Options
which the Optionee was entitled to exercise on the date of the Optionee’s death
may be exercised by his or her Beneficiary within the period specified in
Sections 5.5(a) or 5.5(b), as the case may be.


               (d)  Subject to Section 5.3, upon an Optionee’s Termination of Employment
following a Change in Control, each Option held by the Optionee that was
exercisable as of the date of such Termination of Employment shall remain
exercisable for a period ending not before the earlier of (A) the first
anniversary of the Termination of Employment or (B) the expiration of the
stated term of the Option.


          5.6 Modification. No modification of a Discretionary Option shall
adversely alter or impair any rights or obligations under the Discretionary
Option without the Optionee’s consent.


     6.     Automatic Option Grants for Non-Employee Directors, Committee

 






 




Chairpersons and Scientific Advisory Board Members.


          6.1 Grant. Automatic Options shall be granted (i) to each Non-Employee
Director who becomes a member of the Board after April 24, 1997 upon election
or appointment, (ii) to each Non-Employee Director who is a member of the
Board, (iii) to each Non-Employee Director who is the chairperson of a
committee of the Board, (iii) to each member of the Scientific Advisory Board
who becomes a member of the Scientific Advisory Board after April 24, 1997 upon
election or appointment and (iv) to each member of the Scientific Advisory
Board, as follows:


               (a)  Initial Grant. Each Non-Employee Director who becomes a Director after
April 24, 1997 shall, upon becoming a Director, be granted an Automatic Option
in respect of 2,000 Shares and each member of the Scientific Advisory Board who
becomes a member of the Scientific Advisory Board after April 24, 1997 shall,
upon becoming a member of the Scientific Advisory Board, be granted an
Automatic Option in respect of 1,000 Shares.


               (b)  Annual Grants to Non-Employee Directors and Members of the Scientific
Advisory Board. Each Non-Employee Director shall be granted an Automatic Option
in respect of 5,000 Shares annually on the first Business Day on or after
January 1 of each calendar year that the Plan is in effect provided that the
Non-Employee Director is a Director on such date and each member of the
Scientific Advisory Board shall be granted an Automatic Option in respect of
500 Shares annually on the first Business Day on or after January 1 of each
calendar year that the Plan is in effect provided that the member of the
Scientific Advisory Board is a member on such date; provided, however, that a
Director or member of the Scientific Advisory Board shall not be entitled to
receive an annual grant pursuant to this Section 6.1(b) for the calendar year
in which such Director or member of the Scientific Advisory Board is first
elected or appointed to the Board or to the Scientific Advisory Board, as the
case may be.


               (c)  Annual Grants to Committee Chairpersons. Each Non-Employee Director
who, in accordance with the Bylaws of the Company, serves as a chairperson of
any committee of the Board as of the first Business Day on or after January 1
of each calendar year that the Plan is in effect shall, on such date, be
granted an Automatic Option in respect of 500 Shares.


               (d)  Terms and Conditions. All Automatic Options granted pursuant to this
Section 6 shall be evidenced by an Agreement containing such other terms and
conditions not inconsistent with the provisions of this Plan as determined by
the Board; provided, however, that such terms shall not vary the price, amount
or timing of the Automatic Options provided under this Section 6, including
provisions dealing with vesting, forfeiture and termination of such Automatic
Options.


          6.2 Purchase Price. The purchase price for Shares under each Automatic
Option shall be equal to 100% of the Fair Market Value of such Shares on the
Date of Grant.


          6.3 Vesting. Subject to Sections 6.4 and 7.3, each Automatic Option
granted after May 21, 1998 shall vest in one-third increments on each of the
first three anniversaries of the Grant Date; provided, however, that the
Optionee continues to serve as a Director or member of the Scientific Advisory
Board (as the case may be) as of such date. If an Optionee ceases to serve as a
Director or member of the Scientific Advisory Board (as the case may be) for
any reason, the Optionee shall have no rights with respect to any Automatic
Option (or portion thereof) which has not then vested pursuant to the preceding
sentence and the Optionee shall automatically forfeit any Automatic Option (or
portion thereof) which remains unvested.


          6.4 Duration. Each Automatic Option (and, with respect to Non-Employee
Directors, each Discretionary Option) shall terminate on the date which is the
tenth anniversary of the Date of Grant, unless terminated earlier as follows:


               (a)  If an Optionee’s service as a Director or member of the

 






 




Scientific Advisory Board terminates for any reason other than Disability,
death or Cause, the Optionee may for a period of three (3) months after such
termination exercise his or her Option to the extent, and only to the extent,
that such Option or portion thereof was vested and exercisable as of the date
the Optionee’s service as a Director or member of the Scientific Advisory Board
terminated, after which time the Option shall automatically terminate in full.


               (b)  If an Optionee’s service as a Director or member of the Scientific
Advisory Board terminates by reason of the Optionee’s resignation or removal
due to Disability, the Optionee may, for a period of one (1) year after such
termination, exercise his or her Option to the extent, and only to the extent,
that such Option or portion thereof was vested and exercisable, as of the date
the Optionee’s service as Director or member of the Scientific Advisory Board
terminated, after which time the Option shall automatically terminate in full.


               (c)  If an Optionee’s service as a Director or member of the Scientific
Advisory Board terminates for Cause, the Option granted to the Optionee
hereunder shall immediately terminate in full and no rights thereunder may be
exercised.


               (d)  If an Optionee dies while a Director or member of the Scientific
Advisory Board or within three (3) months after termination of service as a
Director or member of the Scientific Advisory Board as described in clause (a)
of this Section 6.4 or within twelve (12) months after termination of service
as a Director or member of the Scientific Advisory Board as described in clause
(b) of this Section 6.4, the Option granted to the Optionee may be exercised at
any time within twelve (12) months after the Optionee’s death by the person or
persons to whom such rights under the Option shall pass by will, or by the laws
of descent or distribution, after which time the Option shall terminate in
full; provided, however, that an Option may be exercised to the extent, and
only to the extent, that the Option or portion thereof was exercisable on the
date of death or earlier termination of the Optionee’s services as a Director
or member of the Scientific Advisory Board.


               (e)  In the event an Optionee’s service as a Director or member of the
Scientific Advisory Board of the Company is terminated by the Company following
a Change in Control, each Option held by the Optionee that was exercisable as
of the date of termination of the Optionee’s service shall remain exercisable
for a period ending not before the earlier of (A) the first anniversary of the
termination of the Optionee’s service as a Director or member of the Scientific
Advisory Board or (B) the expiration of the stated term of the Option.


     7.     Terms and Conditions Applicable to All Options.


          7.1 Method of Exercise.


               (a)  The exercise of an Option shall be made only by a written notice
delivered in person or by mail to the Secretary of the Company at the Company’s
principal executive office, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid, as determined by
the Committee in its sole discretion, in either of the following forms (or any
combination thereof): (i) cash or (ii) the transfer of Shares to the Company
upon such terms and conditions as determined by the Committee. In addition,
both Discretionary Options and Automatic Options may be exercised through a
registered broker-dealer pursuant to such cashless exercise procedures (other
than Share withholding) which are, from time to time, deemed acceptable by the
Committee. Any Shares transferred to the Company (or withheld upon exercise) as
payment of the purchase price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such Option. The
Optionee shall deliver the Agreement evidencing the Option to the Secretary of
the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon

 






 




exercise shall be rounded to the nearest number of whole Shares.
Notwithstanding anything to the contrary contained herein, payment on exercise
of UK Approved Options shall be made only in cash.


               (b)  If the Fair Market Value of the Shares with respect to which the
Option is being exercised exceeds the exercise price of such Option, an
Optionee may, instead of exercising an Option as provided in Section 7.1(a),
request that the Committee authorize payment to the Optionee of the difference
between the Fair Market Value of part or all of the Shares which are the
subject of the Option and the exercise price of the Option, such difference to
be determined as of the date the Committee receives the request from the
Optionee. The Committee, in its sole discretion, may grant or deny such a
request from an Optionee with respect to part or all of the Shares as to which
the Option is then exercisable and, to the extent granted, shall direct the
Company to make the payment to the Optionee either in cash or in Shares or in
any combination thereof; provided, however, that payment in Shares shall be
made based upon the Fair Market Value of Shares as of the date the Committee
received the request from the Optionee. An Option shall be deemed to have been
exercised and shall be canceled to the extent that the Committee grants a
request pursuant to this Section 7.1(b). The provisions of this paragraph shall
not apply to holders of UK Approved Options.


          7.2 Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered Shares to the Optionee, and (iii) the Optionee’s name
shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may
be set forth in the applicable Agreement. The preceding sentence shall not
apply to any Optionee holding a UK Approved Option. If under the terms of a
resolution passed or an announcement made by the Company prior to the date of
exercise of a UK Approved Option, a dividend is to be or is proposed to be paid
to holders of Shares by reference to a record date after such date of exercise,
any Shares to be issued upon such exercise of a UK Approved Option will not
rank for such dividend. Subject as aforesaid, the Shares so to be issued shall
be identical and rank pari passu in all respects with the fully paid Shares
then in issue.


          7.3 Effect of Change in Control. In the event of a Change in Control, all
Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of a Discretionary Option, an Optionee will be
permitted to surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Discretionary Option or portion of a
Discretionary Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(x) (A) in the case of a Nonqualified Stock Option, the greater of (1) the Fair
Market Value, on the date preceding the date of surrender, of the Shares
subject to the Discretionary Option or portion thereof surrendered or (2) the
Adjusted Fair Market Value of the Shares subject to the Discretionary Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option,
the Fair Market Value, on the date preceding the date of surrender, of the
Shares subject to the Discretionary Option or portion thereof surrendered, over
(y) the aggregate purchase price for such Shares under the Discretionary Option
or portion thereof surrendered.


     8.     Stock Appreciation Rights. The Committee may in its sole discretion,
either alone or in connection with the grant of a Discretionary Option, grant
Stock Appreciation Rights in accordance with the Plan, the terms and conditions
of which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Option.


          8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at


 






 


any time if unrelated to an Option, or (ii) if related to an Option, either at
the time of grant, or at any time thereafter during the term of the Option.



          8.2 Stock Appreciation Right Related to an Option.



               (a)  Exercise. Subject to Section 8.8, a Stock Appreciation Right granted
in connection with an Option shall be exercisable at such time or times and
only to the extent that the related Options are exercisable (including, without
limitation, exercisability upon Termination of Employment), and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.


               (b)  Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.



          
8.3 Stock Appreciation Right Unrelated to an Option.



                 (a)  Terms. Stock Appreciation Rights unrelated to Options shall contain
such terms and conditions as to exercisability (subject to Sections 8.3(b) and
8.8), vesting and duration as the Committee shall determine, but in no event
shall they have a term of greater than ten (10) years.


                 (b)  Termination. Except as provided in Section 8.8 and subject to Section
8.3(a), and unless otherwise provided by the Committee, in its sole discretion,
in the applicable Agreement, upon a Grantee’s Termination of Employment or, in
the case of a Non-Employee Director, termination of service as a director, a
Stock Appreciation Right shall be exercisable by the Grantee to the same extent
that a Discretionary Option would be exercisable by an Optionee upon the
Optionee’s Termination of Employment under the provisions of Sections 5.5(a)
through (d) (or, as applicable for Non-Employee Directors, Section 6.4);
provided, however, no Stock Appreciation Right may be exercised after the
expiration date specified for the particular Stock Appreciation Right in the
applicable Agreement.


           8.4 Amount Payable. Upon exercise of a Stock Appreciation Right, the
Grantee shall be entitled to receive an amount determined by multiplying (x)
the excess of the Fair Market Value of a Share on the date preceding the date
of exercise of such Stock Appreciation Right over (A) in the case of a Stock
Appreciation Right related to an Option, the per Share purchase price under the
related option or (B) in the case of a Stock Appreciation Right unrelated to an
Option, the Fair Market Value of a Share on the date the Stock Appreciation
Right was granted, by (y) the number of Shares as to which the Stock
Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.


           8.5 Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company’s principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such Agreement
to the Grantee.


           8.6 Form of Payment. Payment of the amount determined under Section 8.4
may be made in the sole discretion of the Committee solely in whole Shares in a

 






 




number determined at their Fair Market Value on the date preceding the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment
in Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.


           8.7 Modification. No modification of an Award shall adversely alter or
impair any rights or obligations under the Agreement without the Grantee’s
consent.


           8.8 Effect of Change in Control. In the event of a Change in Control, all
Stock Appreciation Rights shall become immediately and fully exercisable. In
addition, to the extent set forth in an Agreement evidencing the grant of a
Stock Appreciation Right (but not with respect to any Stock Appreciation Right
granted in connection with an Incentive Stock Option), a Grantee will be
permitted to surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Stock Appreciation Right or portion of a Stock
Appreciation Right to the extent not yet exercised and the Grantee will be
entitled to receive a payment from the Company in cash or Shares, in either
case, with a value equal to the excess, if any, of (A) the Adjusted Fair Market
Value, on the date preceding the date of exercise, of the Shares over (B) the
aggregate Fair Market Value, on the date the Stock Appreciation was granted, of
the Shares subject to the Stock Appreciation Right or portion thereof
exercised.


     9.     Dividend Equivalent Rights. Dividend Equivalent Rights may be granted
to Eligible Individuals in tandem with an Option or Award. The terms and
conditions (including, without limitation, terms and conditions relating to a
Change in Control) applicable to each Dividend Equivalent Right shall be
specified in the Agreement under which the Dividend Equivalent Right is
granted. Amounts payable in respect of Dividend Equivalent Rights may be
payable currently or deferred until the lapsing of restrictions on such
Dividend Equivalent Rights or until the vesting, exercise, payment, settlement
or other lapse of restrictions on the Option or Award to which the Dividend
Equivalent Rights relate. In the event that the amount payable in respect of
Dividend Equivalent Rights are to be deferred, the Committee shall determine
whether such amounts are to be held in cash or reinvested in Shares or deemed
(notionally) to be reinvested in Shares. If amounts payable in respect of
Dividend Equivalent Rights are to be held in cash, there may be credited at the
end of each year (or portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum as the Committee, in its sole
discretion, may determine. Dividend Equivalent Rights may be settled in cash or
Shares or a combination thereof, in a single installment or multiple
installments. With respect to Dividend Equivalent Rights granted in tandem with
an Option, the Agreement may provide that the Optionee may elect to have
amounts payable in respect of such Dividend Equivalent Rights applied against
the exercise price of such Option. To the extent necessary for any Dividend
Equivalent Right intended to qualify as performance-based compensation under
Section 162(m) of the Code to so qualify, the terms and conditions of the
Dividend Equivalent Right shall be such that payment of the Dividend Equivalent
Right is contingent upon the attainment of specified Performance Objectives
within the Performance Cycle, as provided for in Section 11, and such Dividend
Equivalent Right shall be treated as a Performance Award for purposes of
Sections 11 and 16(b).


     10.     Restricted Stock.


           10.1 Grant. The Committee may grant Awards to Eligible Individuals of
Restricted Stock, which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its sole discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the terms and provisions set forth below in this Section
10.


           10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Date of Grant provided that the Grantee has
executed an

 






 




Agreement evidencing the Award, the appropriate blank stock powers and, in the
sole discretion of the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the issuance of such Shares.
If a Grantee shall fail to execute the Agreement evidencing a Restricted Stock
Award, the appropriate blank stock powers and, in the sole discretion of the
Committee, an escrow agreement and any other documents which the Committee may
require within the time period prescribed by the Committee at the time the
Award is granted, the Award shall be null and void. At the sole discretion of
the Committee, Shares issued in connection with a Restricted Stock Award shall
be deposited together with the stock powers with an escrow agent (which may be
the Company) designated by the Committee. Unless the Committee determines
otherwise and as set forth in the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to receive
all dividends or other distributions paid or made with respect to the Shares.


           10.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 10.4, such Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee.


           10.4 Lapse of Restrictions.


                 (a)  Generally. Subject to Section 10.4(b), restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or times and on
such terms and conditions as the Committee may determine. The Agreement
evidencing the Award shall set forth any such restrictions.


                 (b)  Effect of Change in Control. Unless the Committee shall determine
otherwise at the time of the grant of an Award of Restricted Stock, the
restrictions upon Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth any such
provisions.


           10.5 Terms of Restricted Stock.


                 (a)  Forfeiture of Restricted Stock. Subject to Sections 10.4(b) and
10.5(b), all Restricted Stock shall be forfeited and returned to the Company
and all rights of the Grantee with respect to such Restricted Stock shall
terminate unless the Grantee continues in the service of the Company as an
employee or director until the expiration of the forfeiture period for such
Restricted Stock and satisfies any and all other conditions set forth in the
Agreement. The Committee, in its sole discretion, shall determine the
forfeiture period (which may, but need not, lapse in installments) and any
other terms and conditions applicable with respect to any Restricted Stock
Award.


                 (b)  Waiver of Forfeiture Period. Notwithstanding anything contained in
this Section 10 to the contrary, the Committee may, in its sole discretion,
waive the forfeiture period and any other conditions set forth in any Agreement
under appropriate circumstances (including, without limitation, the death,
Disability or retirement of the Grantee or a material change in circumstances
arising after the Date of Grant) and subject to such terms and conditions
(including, without limitation, forfeiture of a proportionate number of the
Restricted Stock) as the Committee shall deem appropriate, provided that the
Grantee shall at that time have completed at least one (1) year of employment
or service after the Date of Grant.


           10.6 Modification or Substitution. Subject to the terms of the Plan,
including, without limitation, Section 16(b), the Committee may modify
outstanding Awards of Restricted Stock or accept the surrender of outstanding
Shares of Restricted Stock (to the extent the restrictions on such Shares have
not yet lapsed) and grant new Awards in substitution for them. Notwithstanding
the foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee’s consent.


 






 


           10.7 Treatment of Dividends. At the time an Award of Shares of Restricted
Stock is granted, the Committee may, in its sole discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared
or paid on such Shares by the Company shall be (i) deferred until the lapsing
of the restrictions imposed upon such Shares and (ii) held by the Company for
the account of the Grantee until such time. In the event that dividends are to
be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its sole discretion, may determine. Payment of deferred dividends
in respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.


           10.8 Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.


     11.     Performance Awards.


           11.1 (a) Performance Objectives. Performance Objectives for Performance
Awards may be expressed in terms of (i) earnings per Share, (ii) Share price,
(iii) pre-tax profits, (iv) net earnings, (v) return on equity or assets, (vi)
revenues, (vii) EBITDA, (viii) market share or market penetration or (ix) any
combination of the foregoing, and may be determined before or after accounting
changes, special charges, foreign currency effects, acquisitions, divestitures
or other extraordinary events. Performance Objectives may be in respect of the
performance of the Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary or a Division. Performance Objectives may be absolute or
relative and may be expressed in terms of a progression within a specified
range. The Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date on which
a quarter of the Performance Cycle has elapsed or (ii) the date which is ninety
(90) days after the commencement of the Performance Cycle, and in any event,
while the performance relating to the Performance Objectives remains
substantially uncertain.


                 (b)  Determination of Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance Award
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied.


           11.2 Performance Units. The Committee, in its sole discretion, may grant
Awards of Performance Units to Eligible Individuals (with the exception of
Non-Employee Directors), the terms and conditions of which shall be set forth
in an Agreement between the Company and the Grantee. Performance Units shall be
denominated in Shares or dollars and, contingent upon the attainment of
specified Performance Objectives within the Performance Cycle, represent the
right to receive payment as provided in Section 11.2(b) depending on the level
of Performance Objective attainment. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which must be
satisfied in order for the Performance Units to vest and the Performance Cycle
within which such Performance Objectives must be satisfied.


                 (a) Vesting and Forfeiture. Subject to Sections 11.1(b) and 11.4, a
Grantee shall become vested with respect to the Performance Units to the extent
that the Performance Objectives set forth in the Agreement are satisfied for
the Performance Cycle.


 






 


                 (b)  Payment of Awards. Payment to Grantees in respect of vested
Performance Units shall be made as soon as practicable after the last day of
the Performance Cycle to which such Award relates unless the Agreement
evidencing the Award provides for the deferral of payment, in which event the
terms and conditions of the deferral shall be set forth in the Agreement.
Subject to Section 11.4, such payments may be made entirely in Shares valued at
their Fair Market Value as of the last day of the applicable Performance Cycle
or such other date specified by the Committee, entirely in cash, or in such
combination of Shares and cash as the Committee in its sole discretion shall
determine at any time prior to such payment.


           11.3 Performance Shares. The Committee, in its sole discretion, may grant
Awards of Performance Shares to Eligible Individuals (with the exception of
Non-Employee Directors), the terms and conditions of which shall be set forth
in an Agreement between the Company and the Grantee. Each Agreement may require
that an appropriate legend be placed on Share certificates. Awards of
Performance Shares shall be subject to the following terms and provisions:


                 (a)  Rights of Grantee. The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares
represented by such Award shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the sole discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of
such Performance Shares, If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers
and, in the sole discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the sole discretion of the Committee, Shares issued in connection with
an Award of Performance Shares shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in the sole discretion
of the Committee, all of the rights of a stockholder with respect to such
Shares, including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.


                 (b)  Non-transferability. Until any restrictions upon the Performance
Shares awarded to a Grantee shall have lapsed in the manner set forth in
Sections 11.3(c) or 11.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may
also impose such other restrictions and conditions on the Performance Shares,
if any, as it deems appropriate.


                 (c)  Lapse of Restrictions. Subject to Sections 11.1(b) and 11.4,
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its sole discretion, determine at the time an Award is granted.


                 (d)  Treatment of Dividends. At the time the Award of Performance Shares is
granted, the Committee may, in its sole discretion, determine that the payment
to the Grantee of dividends, or a specified portion thereof, declared or paid
on actual Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Performance Shares) or
held in cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account at the beginning of the year at a rate per annum as the Committee,
in its sole discretion, may determine. Payment of deferred

 






 




dividends in respect of Performance Shares (whether held in cash or in
additional Performance Shares), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Performance
Shares in respect of which the deferred dividends were paid, and any dividends
deferred (together with any interest accrued thereon) in respect of any
Performance Shares shall be forfeited upon the forfeiture of such Performance
Shares.


                 (e)  Delivery of Shares. Upon the lapse of the restrictions on Performance
Shares awarded the Committee shall cause a stock certificate to be delivered to
the Grantee, free of all restrictions hereunder.


           11.4 Effect of Change in Control. In the event of a Change in Control:


                 (a)  With respect to Performance Units, unless otherwise determined by the
Committee, the Grantee shall (i) become vested in all Performance Units and
(ii) be entitled to receive in respect of all Performance Units which become
vested as a result of a Change in Control a cash payment within ten (10)
Business Days after such Change in Control in an amount as determined by the
Committee at the time of the Award of such Performance Unit and as set forth in
the Agreement.


                 (b)  With respect to Performance Shares, unless otherwise determined by the
Committee, restrictions shall lapse immediately on all Performance Shares.


                 (c)  The Agreements evidencing Performance Shares and Performance Units
shall provide for the treatment of such Awards (or portions thereof) which do
not become vested as the result of a Change in Control, including, without
limitation, provisions for the adjustment of applicable Performance Objectives.


           11.5 Termination. Except as provided in Section 12, and unless otherwise
provided by the Committee, in its sole discretion, in the applicable Agreement,
the following provisions shall apply to Performance Awards upon a Termination
of Employment:


                 (a)  Termination of Employment. Except as provided in Sections 11.5(b) and
(d), in the case of a Grantee’s Termination of Employment, prior to the end of
a Performance Cycle, the Grantee will not be entitled to any Performance
Awards, and any Performance Shares shall be forfeited.


                 (b)  Disability, Retirement or Death. Unless otherwise provided by the
Committee, in its sole discretion, in the Agreement, if a Grantee’s Disability
Date or Termination of Employment by reason of retirement on or after the
Grantee’s Normal Retirement Date or death occurs following at least twelve
months of participation in any Performance Cycle, but prior to the end of a
Performance Cycle, the Grantee or such Grantee’s Beneficiary, as the case may
be, shall be entitled to receive a pro-rata share of his or her Performance
Award as determined under Subsection (c).


                 (c)  Pro-Rata Payment.


                       (i)  Performance Units. With respect to Performance Units, the amount of
any payment made to a Grantee (or Beneficiary) under circumstances described in
Section 11.5(b) will be the amount determined by multiplying the amount of the
Performance Units payable in Shares or dollars which would have been earned,
determined at the end of the Performance Cycle, had such employment not been
terminated, by a fraction, the numerator of which is the number of whole months
such Grantee was employed during the Performance Cycle, and the denominator of
which is the total number of months of the Performance Cycle. Any such payment
shall be made as soon as practicable after the end of the respective
Performance Cycle, and shall relate to attainment of Performance Objectives
over the entire Performance Cycle.


                       (ii)  Performance Shares. With respect to Performance Shares, the amount of
Performance Shares held by a Grantee (or Beneficiary) with

 






 




respect to which restrictions shall lapse under circumstances described in
Section 11.5(b) will be the amount determined by multiplying the amount of the
Performance Shares with respect to which restrictions would have lapsed,
determined at the end of the Performance Cycle, had such employment not been
terminated, by a fraction, the numerator of which is the number of whole months
such Grantee was employed during the Performance Cycle, and the denominator of
which is the total number of months of the Performance Cycle. The Committee
shall determine the amount of Performance Shares with respect to which
restrictions shall lapse under this Section 11.5(c)(ii) as soon as practicable
after the end of the respective Performance Cycle, and such determination shall
relate to attainment of Performance Objectives over the entire Performance
Cycle. At that time, all Performance Shares relating to that Performance Cycle
with respect to which restrictions shall not lapse shall be forfeited.


                 (d)  Other Events. Notwithstanding anything to the contrary in this Section
11, the Committee may, in its sole discretion, determine to pay all or any
portion of a Performance Award to a Grantee who has terminated employment prior
to the end of a Performance Cycle under certain circumstances (including,
without limitation, a material change in circumstances arising after the Date
of Grant) and subject to such terms and conditions that the Grantee shall have
completed, at his or her Termination of Employment at least one year of
employment after the Date of Grant.


           11.6 Modification or Substitution. Subject to the terms of the Plan,
including, without limitation, Section 16(b), the Committee may modify
outstanding Performance Awards or accept the surrender of outstanding
Performance Awards and grant new Performance Awards in substitution for them.
Notwithstanding the foregoing, no modification of a Performance Award shall
adversely alter or impair any rights or obligations under the Agreement without
the Grantee’s consent.


     12.     Employment Agreement Governs Termination of Employment. An employment
agreement, if applicable, between an Optionee or Grantee and the Company shall
govern with respect to the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee, to the extent that such employment agreement provides for
terms and conditions that differ from the terms and conditions provided for in
the applicable Agreement or the Plan; provided, however, that to the extent
necessary for an Option or Award intended to qualify as performance-based
compensation under Section 162(m) of the Code to so qualify, the terms of the
applicable Agreement or the Plan shall govern the Option or Award; and,
provided further, that the Committee shall have reviewed and, in its sole
discretion, approved the employment agreement.


     13.     Adjustment Upon Changes in Capitalization.



                 (a)  In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted under the Plan, (ii) the maximum number and
class of Shares or other stock or securities with respect to which Options or
Awards may be granted to any Eligible Individual during any calendar year,
(iii) the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the
purchase price therefor, if applicable, (iv) the number and class of Shares or
other securities in respect of which Automatic Options are to be granted under
Section 6 and (v) the Performance Objectives.


                 (b)  Any such adjustment in the Shares or other stock or securities subject
to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the extent
otherwise permitted by Sections 422 and 424 of the Code.


                 (c)  If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to, or an Optionee shall be entitled to exercise an Option
with respect to, new, additional or different shares of stock or securities,
such new, additional or different shares shall thereupon be subject to all of
the conditions,

 






 




restrictions and performance criteria which were applicable to the Shares
subject to the Award or Option, as the case may be, prior to such Change in
Capitalization.


           14.     Effect of Certain Transactions. Subject to Sections 7.3, 8.8, 10.4(b)
and 11.4 or as otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a “Transaction”), the Plan and the Options and Awards issued
hereunder shall continue in effect in accordance with their respective terms,
except that following a Transaction each Optionee and Grantee shall be entitled
to receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or transfer
in respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction.


           15.     Limitation on Transfer. Subject to any limitations on transferability
specifically provided for elsewhere in the Plan, the rights and interest of an
Optionee or Grantee in any Option or Award may not be assigned or transferred
other than by will or the laws of descent and distribution or, in the
Committee’s sole discretion, pursuant to a domestic relations order (within the
meaning of Exchange Act Rule 16a-12). During the lifetime of an Optionee or
Grantee, and except as the preceding sentence provides, only the Optionee or
Grantee personally may exercise rights under the Plan. Except as otherwise
specifically provided in the Plan, the Beneficiary of an Optionee or Grantee
may exercise the rights of the Optionee or Grantee only to the extent they were
exercisable under the Plan at the date of the death of the Optionee or Grantee
and are otherwise currently exercisable.


           16.     Interpretation. Following the required registration of any equity
security of the Company pursuant to Section 12 of the Exchange Act:


                 (a)  The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.


                 (b)  Unless otherwise expressly stated in the relevant Agreement, each
Option, Stock Appreciation Right and Performance Award granted under the Plan
is intended to be performance-based compensation within the meaning of Section
162(m)(4)(C) of the Code (except that, in the event of a Change in Control,
payment of Performance Awards to a Grantee who remains a “covered employee”
with respect to such payment within the meaning of Section 162(m)(3) of the
Code may not qualify as performance-based compensation). The Committee shall
not be entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options or Awards if the ability to exercise such discretion or
the exercise of such discretion itself would cause the compensation
attributable to such Options or Awards to fail to qualify as performance-based
compensation. Notwithstanding anything to the contrary in the Plan, the
provisions of the Plan may at any time be bifurcated by the Board or the
Committee in any manner so that certain provisions of the Plan or any
Performance Award intended (or required in order) to satisfy the applicable
requirements of Section 162(m) of the Code are only applicable to persons whose
compensation is subject to Section 162(m).


                 (c)  UK Approved Options are intended to comply with Schedule 9 to the
Taxes Act, and in particular, but without limitation, with paragraphs 10 to 14
thereof, and the Plan shall, except were inconsistent with the subject or
context, be interpreted accordingly.


     17.     Pooling Transactions. Notwithstanding anything contained in the Plan
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a Pooling Transaction, the Committee shall take
such actions,

 






 




if any, as are specifically recommended by an independent accounting firm
retained by the Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including, without
limitation, (i) deferring the vesting, exercise, payment, settlement or lapsing
of restrictions with respect to any Option or Award, (ii) providing that the
payment or settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (iii) providing for the extension of the term
of any Option or Award to the extent necessary to accommodate the foregoing,
but not beyond the maximum term permitted for any Option or Award.


     18.     Effective Date, Termination and Amendment of the Plan. The effective
date of this Plan shall be the date the Plan is adopted by the Board, subject
only to the approval by the affirmative vote of the holders of a majority of
the securities of the Company present, or represented, and entitled to vote at
a meeting of stockholders duly held in accordance with the applicable laws of
the State of Delaware within twelve (12) months of the adoption of the Plan by
the Board.


     The Plan shall terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board and no Option or Award may be granted
thereafter. The Board may sooner terminate the Plan and the Board may at any
time and from time to time amend, modify or suspend the Plan; provided,
however, that: (a) no such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and (b) to the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law.


     No alteration shall be made to provisions of the Plan relating to UK
Approved Options without the prior written approval of the UK Inland Revenue.


     19.     Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.


     20.     Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:


                 (i)  give any person any right to be granted an Option or Award other than
at the sole discretion of the Committee;


                 (ii)  give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;


                 (iii)  limit in any way the right of the Company to terminate the
employment of any person at any time; or


                 (iv)  be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person at any particular rate of compensation
or for any particular period of time.


     21.     Regulations and Other Approvals; Governing Law.



                 21.1 Except as to matters of federal law, the Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to conflicts of laws
principles thereof.


 






 


            21.2 The obligation of the Company to sell or deliver Shares with respect
to Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.


           21.3 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.


     The Board may make such changes as may be necessary or appropriate to
obtain or maintain the approval of the provisions of the Plan relating to UK
Approved Options by the UK Inland Revenue.


           21.4 Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its sole discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.


           21.5 Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to an Option or Award granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall be
appropriately amended to reflect their status as restricted securities as
aforesaid.


     22.     Miscellaneous.


           22.1 Multiple Agreements. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same time, or at
some other time. The Committee may also grant more than one Option or Award to
a given Eligible Individual during the term of the Plan, either in addition to,
or in substitution for, one or more Options or Awards previously granted to
that Eligible Individual.


           22.2 Withholding of Taxes.


                 (a)  At such times as an Optionee or Grantee recognizes taxable income in
connection with the receipt of Shares or cash hereunder (a “Taxable Event”),
the Optionee or Grantee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the Taxable Event (the
“Withholding Taxes”) prior to the issuance, or release from escrow, of such
Shares or the payment of such cash. The Company shall have the right to deduct
from any payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes.
In satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the “Tax Election”), which may
be accepted or rejected in the sole discretion of the Committee, to have
withheld a portion of the Shares then issuable to him or her having an
aggregate Fair

 






 




Market Value equal to the Withholding Taxes.


                 (b)  If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) Business Days of such disposition, notify the
Company thereof, by delivery of written notice to the Company at its principal
executive office.


           22.3 Power of Attorney given by UK Employees. The following provisions
shall apply only to Options and Awards granted to UK-resident or ordinarily
resident Employees.


                 (a)  It shall be a condition of all Options (which term shall for the
purposes of paragraphs 22.3 (a) through (d) exclude UK Approved Options which
retain approval from the UK Inland Revenue under Schedule 9 to the Taxes Act)
and Awards granted to UK Employees and a condition precedent to the vesting,
exercisability, or release for consideration, of all such Options and Awards
that, if the vesting, exercise, or release for consideration gives rise to a
liability of the Company or any Subsidiary (the “Relevant Body”) under Section
203F of the Taxes Act or otherwise pursuant to the United Kingdom’s Pay As You
Earn (“PAYE”) system (or any other similar withholding tax system in any other
applicable jurisdiction), the Relevant Body shall (to the extent permitted by
English law) be entitled to withhold from such Grantee’s or Optionee’s salary
or other payments due to him, and/or the Grantee or Optionee shall be required
to pay to the Relevant Body, as a condition of such vesting, exercise or
release, the amount which the Relevant Body is required to pay to the UK Inland
Revenue (or other relevant taxing authority).


                 (b)  Any payment by the Grantee or Optionee shall be made within such
period as the Relevant Body shall notify to him. The Company may refuse to
permit (a) the vesting or exercise of any Option or Award or (b) the release of
any Option or Award for consideration if any such payment is not satisfied by
the Grantee or Optionee within such period as shall have been notified to him.


                 (c)  Alternatively, if the Committee so decides in its absolute discretion,
the PAYE or other taxation liability falling upon any Relevant Body may be
satisfied by (a) the Company not releasing to the Grantee or Optionee concerned
such number of Shares (which expression shall for this purpose include other
shares or securities to be issued upon such vesting or exercise) or (b)
deducting from any consideration for the release of an Option or Award such
monetary amount as shall in either case equal in value the amount required to
be paid to the Inland Revenue (or other relevant taxing authority), together
(where relevant) with any commission or similar costs associated with or to be
incurred upon the disposal of any such Shares to fund such tax liability.


                 (d)  Each holder of an Option or an Award under the Plan hereby appoints
any Director of the Company or a Subsidiary as his attorney for the purpose of
signing, in the name and on behalf of such holder, any documents required to
implement the foregoing (including, without prejudice to the generality of the
foregoing, the right to sell Shares not so released as aforesaid).