Document:

Exhibit 10.9

 

	
  

  	
   

  	
   

  
	
  â

  	
  Cyclacel Group plc

  
	
   

  	
   

  

 

1 July,
2004

 

Professor
Gordon McVie

4 Stanley Road

Cotham

Bristol

BS6 6NW

 

 

Dear
Professor McVie,

 

I am
pleased to confirm the decision of the board of directors of Cyclacel Group plc to appoint you as a non-executive director
of Cyclacel Group plc (the Company) with effect from the
listing of the Company on the London Stock Exchange.

 

1.             Appointment

 

1.1           Your appointment is for an initial term of
three years (subject to the Company’s Articles of Association (the Articles)).  At the end of the initial term, subject to
the approval of the board of directors of the Company (the Board) and the Company’s
Shareholders, your directorship may be renewed for a further term.  Renewal of your appointment is contingent on
satisfactory performance and re-election at future annual general meetings (see
paragraph 1.2 below).  Non-executive directors
are typically expected to serve two three-year terms although the Board may
invite you to serve an additional term.

 

1.2           The office of non-executive director will
be held in accordance with the Articles as may be varied from time to
time.  Nothing in this letter will be
taken to exclude or vary the Articles as they apply to you as a director of the
Company. For the avoidance of doubt, the Articles to be adopted shortly and
immediately prior to a listing on the London Stock Exchange or similar major
stock market (a Listing) will require you to formally retire from the office
of non-executive director at the next annual general meeting.  However, you will be eligible for
re-election to serve until you are subject to the relevant provisions in the
Articles requiring retirement of directors by rotation.

 

2.             Your role

 

2.1           Non-executive directors have the same
general legal responsibilities to the Company as any other director.  The Board as a whole is collectively
responsible for the success of the company. 
The Board:

 

(a)                                  provides entrepreneurial
leadership of the Company within a framework of prudent and effective controls
which enable risk to be assessed and managed;

 

(b)                                 sets the Company’s strategic
aims, ensures that the necessary financial and human resources are in place for
the company to meet its objectives, and reviews management performance; and

 

(c)                                  sets the Company’s values and
standards and ensures that its obligations to its shareholders and others are
understood and met.

 

 

Cyclacel Group plc, Dundee Technopole, James Lindsay
Place, Dundee DD1 5JJ   Tel: (01382)
206062   Fax: (01382) 206067

Registered Office: 6-8 Underwood Street, London N1
7JQ  No: 5090795

 

1

 

All directors must take decisions objectively in the
interests of the Company.  As a director
you also owe a fiduciary duty to the Company which includes an obligation not
to do anything that might bring the Company into disrepute.

 

2.2           In addition to the requirements of all
directors, your role as a non-executive director has the following key
elements:

 

(a)                                  to challenge constructively
and help develop proposals on strategy;

 

(b)                                 to scrutinise the performance
of management in meeting agreed goals and objectives and monitor the reporting
of performance;

 

(c)                                  to be satisfied on the
integrity of financial information and that financial controls and systems of
risk management are robust and defensible; and

 

(d)                                 to be responsible for
determining appropriate levels of remuneration of executive directors and have
a prime role in appointing, and where necessary removing, executive directors
and in succession planning.

 

3.             Compliance

 

3.1           You will comply with, and seek to ensure that
the Company complies, or will comply within a reasonable period of time, with
the relevant requirements of the listing rules of the UK Listing Authority and
the Admission and Disclosure Standards of the London Stock Exchange, the
corresponding regulations of the NASDAQ Market and the US Securities and
Exchange Commission, including but not limited to the Sarbanes-Oxley Act of
2002, and other legal or regulatory requirements in any relevant jurisdiction
which apply to the Company.  In
particular, you will comply  and seek to
ensure that the Company complies, or will comply within a reasonable period of
time, with the “Model Code” on directors’ dealings in securities, the Combined
Code on Corporate Governance and/or with any code of conduct relating to directors
adopted by the Company from time to time or other legal or regulatory
requirements in any relevant jurisdiction which apply to the Company.

 

3.2           The Company will reimburse you for any
reasonable fees or other expenses you incur in taking advice from the Company’s
financial and legal advisors or other independent financial and legal advisors
in relation to the performance of your duties as a non-executive director of
the Company.  Before seeking such advice
and incurring any expense you should first obtain the written approval of the
Board.

 

4.             Outside interests

 

4.1           You confirm that you and/or persons
connected to you have business interests other than those of the Company and
you have promptly declared in writing to the Company any conflicts of interest
that are apparent at present.  In the
event that you become aware of any potential conflicts of interest with your
role as non-executive director, these should be notified to the Board as soon
as they become apparent.

 

4.2           During your appointment, you should not
accept appointments (whether as director, agent, employee or consultant), nor
should you nor any connected persons to you hold shares in nor be interested in
any contracts with any company or firm engaged in a business competing with the
Company without first disclosing the same to the Board and obtaining its
written consent, such consent not to be unreasonably withheld.  This restriction does not apply to
shareholdings held for investment purposes where the shares concerned are
quoted or dealt in

 

2

 

on a recognised investment exchange and represent one
per cent or less of the issued shares of the class concerned.

 

4.3           The Board have determined that you are to
be independent for the purposes of the Combined Code on Corporate Governance.

 

5.                                      Committees

 

You will also serve as a member of the Board’s Audit
Committee, Remuneration Committee and Nomination Committee.  This will be covered in a separate
communication setting out the committee’s terms of reference and any specific
responsibilities relating thereto.

 

6.                                      Time commitment

 

You will not normally be required to provide your
services as non-executive director for more than 12
days per annum.  This will include your
attendance which is required at annual and extraordinary general meetings of
the Company and bi-monthly Board meetings (flexibility as to the exact dates
will be required) as well as any meetings of the non-executive directors.  In addition, you will be expected to devote
appropriate preparation time ahead of each meeting.

 

7.                                      Fees

 

7.1           The Company will pay you a director’s fee
of £10,000 per annum (gross) and payment
will be by equal quarterly instalments in arrears.  In addition, the Company will pay £330 if you attend in person
and £165 if you attend by telephone for each Board meeting and for each
committee meeting that you are required to attend that is not on the same date
as a Board meeting.  All payments will
be made on a gross basis by quarterly instalments in arrears against an
invoice.  You agree that these
arrangements will be disclosed to shareholders in the Company’s Remuneration
Committee Report.

 

7.2           The level of fees will be reviewed
annually.  All fees will cease to accrue
with effect from the date on which your appointment terminates.

 

7.3           The Company will reimburse you for all
reasonable and properly documented expenses you incur in performing your
duties.  If you are in any doubt as to
whether or not an expense is reasonable, you should discuss it with the Company
Secretary prior to incurring it.

 

7.4           You agree to obtain your own legal and tax
advice with regard to the tax consequences in any jurisdiction of payments made
to you or your designated entity by the Company.  You also agree to indemnify the Company against any applicable
withholding, social security and other taxes which may arise as a result of
such payments.

 

8.                                      Confidential Information

 

8.1                                 During your appointment you
will have access to trade secrets and other confidential information regarding
the business and financial affairs of the Company and any of its subsidiaries,
undertakings or affiliates.  You must
not, either during your appointment or afterwards, disclose to anyone or
otherwise make use of this confidential information, except in the proper performance
of your duties or as may be required by law or by any competent regulatory
body.  This does not apply, however, to
any information already in the public domain.

 

3

 

8.2           Your attention is drawn, in particular, to
the disclosure of price sensitive information as regulated by law.  You must not make any statements that might
risk breaching the relevant legal requirements without prior clearance from the
Board.

 

9.                                      Indemnification and Insurance

 

You will be entitled to the indemnification afforded
to directors by the Articles.  You will
also be covered by and will be required to participate in the Company’s
Directors and Officers liability insurance. 
The Company has obtained and will use its reasonable endeavours to
continue to obtain appropriate Directors and Officers liability insurance
subject to applicable limits as set by the Board from time to time for your
benefit and that of the other directors of the Company for as long as you or
the other directors are non-executive directors of the Company.

 

10.                               Termination of Appointment

 

10.1         Your appointment may be terminated by you
or by the Company at any time upon one month’s written notice.

 

10.2         At the time of
executing this letter you will appoint the Company as your attorney by
executing a power of attorney in the form set out in the Schedule to this
letter to do and sign in your name and on your behalf any thing and document as
may be required to make your resignation effective.

 

10.3         Your signature on the enclosed copy of this
letter constitutes your acceptance of the terms of this letter and your
irrevocable resignation as a director of the Company with effect from the date
of expiry of the term specified in paragraph 1.1.

 

Your
appointment will terminate automatically (without compensation) and you will no
longer receive fees (as referred to in paragraphs 6 and 7.1) on the date of
your ceasing to be a director. On termination of your appointment for whatever
reason, you will promptly return to the Company all papers, electronic files
and records and property of the Company and its Group Companies (if any)
including any copies thereof which are in your possession.

 

4

 

	
  SIGNED by 

  	
  )

  
	
  on behalf of CYCLACEL GROUP PLC

  	
  )  /s/ John Banham

  
	
  in the presence of:  /s/ Paul
  McBarron

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  PROFESSOR
  GORDON MCVIE

  	
  )  /s/ Gordon McVie

  
	
  in the presence of:  /s/
  Alastair Gill

  	
  )

  

 

5

 

SCHEDULE 1

 

POWER
OF ATTORNEY

 

By this Power of
Attorney made on 1 July, 2004, I Professor
Gordon McVie of 4 Stanley Road, Cotham, Bristol BS6 6NW in accordance with the terms of my letter of
appointment (the Appointment Letter) with Cyclacel Group plc (the Company)
dated today HEREBY APPOINT the Company to act as my attorney with authority in
my name and on my behalf (so that words and expressions defined in the
Appointment Letter shall have the same meaning herein):

 

(a)                                  during the Appointment or after it has
terminated, to do any thing and sign or execute any document as may be required
under the constitution of the Company and each Group Company to make my
resignation as a director from those companies effective; and

 

(c)                                  to appoint any substitute and to
delegate to that substitute all or any powers conferred by this Power of
Attorney.

 

I declare that this Power of Attorney, having been given by me to secure
my obligations under Clause 10 of the Appointment Letter, shall be irrevocable
in accordance with section 4 of the Powers of Attorney Act 1971.

 

IN WITNESS whereof this Power of Attorney has
been duly executed.

 

 

	
  EXECUTED as a deed by

  	
  )

  
	
  Professor
  Gordon McVie

  	
  )  /s/ Gordon McVie

  
	
  in the presence of:

  	
  )

  
	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Alastair Gill

  	
   

  
	
  Name:

  	
  Alastair Gill

  	
   

  

 

6Exhibit 10.10

Cyclacel Group plc

 

 

	
   

  	
   

  

 

RULES OF THE

Cyclacel Group plc

SENIOR EXECUTIVE
INCENTIVE PLAN

	
   

  	
   

  

 

 

Authorised by
shareholders on 1 July, 2004

Adopted by the Board
on 30 June, 2004

 

 

 

CONTENTS

 

	
  Rule

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  	
   

  
	
  2.

  	
  GRANT OF OPTIONS

  	
   

  	
   

  
	
  3.

  	
  OPTION
  PRICE

  	
   

  	
   

  
	
  4.

  	
  PLAN
  LIMITS

  	
   

  	
   

  
	
  5.

  	
  VESTING
  OF THE OPTION

  	
   

  	
   

  
	
  6.

  	
  RIGHTS
  OF EXERCISE AND LAPSE OF THE OPTION

  	
   

  	
   

  
	
  7.

  	
  LAPSING
  OF THE OPTION

  	
   

  	
   

  
	
  8.

  	
  EXCHANGE
  OF OPTIONS

  	
   

  	
   

  
	
  9.

  	
  EXERCISE
  OF OPTIONS

  	
   

  	
   

  
	
  10.

  	
  ADJUSTMENT
  OF OPTIONS

  	
   

  	
   

  
	
  11.

  	
  ADMINISTRATION

  	
   

  	
   

  
	
  12.

  	
  AMENDING
  THE PLAN

  	
   

  	
   

  
	
  13.

  	
  GENERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  APPENDIX
  - Definitions

  	
   

  	
   

  	
   

  
							

 

 

 

 

RULES OF THE CYLACEL
GROUP PLC

 

SENIOR EXECUTIVE
INCENTIVE PLAN

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                               Definitions

 

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

 

1.2                               Interpretation

 

The headings in the Rules are for convenience
and should be ignored when construing them. 
Unless the context otherwise requires, words in the singular include the
plural and vice versa and words importing either gender include both genders.

 

Reference in the Rules to any statutory
provisions are to those provisions as amended, extended or re-enacted from time
to time, and include any regulations or other subordinate legislation made
under them.

 

2.                                      GRANT OF OPTIONS

 

2.1                               Grant
of Options

 

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

 

2.2                               Period
for granting Options

 

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

 

2.3                               Approvals
and consents

 

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

 

2.4                               Manner
of Grant and payment for Options

 

An Option will be granted so that it constitutes a binding contract between
the Grantor and the Participant. Each Participant will be given an option
certificate as evidence of the grant of an Option.  There will be no payment for the grant of an Option.

 

2.5                               Options
personal to Participants

 

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

 

2.6                               Disclaimer
of Options

 

A Participant may disclaim his Option, in whole or in part, in writing
to the Secretary of the Company within 30 days after the Date of Grant.  No consideration will be paid for the 

 

 

disclaimer of the Option.  To
the extent that an Option is disclaimed it will be taken never to have been
granted.

 

3.                                      OPTION PRICE

 

The Option Price of an Option will be stated at the Date of Grant, but
subject to any adjustment under Rule 10. 
The Option Price must not be less than the higher of one pence per Share
and the nominal value of a Share at any time.

 

4.                                      PLAN LIMITS

 

The number of Shares that may be allocated under the Plan cannot exceed
1,770,903 Shares.  The number of Shares
that may be allocated under the Plan will be subject to such adjustments as the
Remuneration Committee considers appropriate to reflect any Variation of the
issued equity share capital of the Company and adjustment to the Options made
pursuant to Rule 10.(1)

 

5.                                      VESTING OF THE OPTION

 

5.1                               Vesting

 

Subject to the completion of an IPO, the Option will vest and become
exercisable as follows:

 

	
  Percentage of Option vesting

  	
   

  	
  Date of
  vesting

  
	
  33.3%

  	
   

  	
  first anniversary of the Date of Completion

  
	
  66.6%

  	
   

  	
  second anniversary of the Date of Completion

  
	
  100%

  	
   

  	
  third anniversary of the Date of Completion

  

 

5.2                               Vesting
in full on a change of Control prior to an IPO

 

5.2.1              Subject to Rule 5.2.4, the Option will
vest in full if any Person (or persons acting in concert with that Person, as
defined by the City Code on Take-overs and Mergers) obtains Control of the
Company pursuant to a Sale prior to an IPO or as a result of making a general
offer or otherwise prior to an IPO.

 

5.2.2              In the event of a Sale of the Company
prior to an IPO, the Board shall make such arrangements in the form of
conditional notices of exercise or otherwise to ensure that a Participant is
given a reasonable opportunity to exercise his Option (and (if necessary) to
sell sufficient securities to meet any resulting tax liability), which shall
lapse immediately following completion of the Sale.

 

(1) The Remuneration Committee has determined that the number of Shares
that may be allocated under the Plan will be 3,541,806 in the event that the
Company’s Shares are listed on the London Stock Exchange and Nasdaq pursuant to
a global offer of Shares in June 2004 and the variation of share capital
described under the “Description of Share Capital” in the listing particulars
relating to the global offer is carried out.

 

2

 

5.2.3                        The Option will lapse on the
earlier of:

 

(i)            the completion of the Sale;

 

(ii)           at the end of the period of six months after
the date on which a person who made an offer to acquire Shares has obtained
Control of the Company and any condition subject to which the offer is made has
been satisfied.  For the purpose of this
Rule 5.2.3, a person will be deemed to have obtained Control of the Company if
he and others acting in concert with him have together obtained Control of it;
or

 

(iii)          at the end of the period during which any
Person has become bound or entitled to acquire Shares under sections 428 to
430F of the Companies Act 1985 remains so bound or entitled;

 

5.2.4             If a Company (the “Successor Company”) has
obtained Control of the company, and the shareholders of the Successor Company
immediately after it has obtained Control are substantially the same as the
shareholders of the Company immediately before that event, and the Successor
Company consents to the exchange of Options under this Rule, the Option will
not vest and/or be exercisable, but will be exchanged during the Appropriate
Period under the terms of Rule 8, save that references to the Acquiring Company
in that Rule will be deemed to be references to the Successor Company, provided
that the Board shall permit an Option to vest and become exercisable and the
relevant Participant to sell sufficient securities to the extent (if necessary)
to meet any resulting tax liability.

 

5.3                               Vesting
in full on a take-over, scheme of arrangement or winding up of the Company
after an IPO

 

The Option will in any event, subject to the completion of an IPO, vest
on the date:

 

5.3.1        that any person who made an offer to acquire
Shares has obtained Control of the Company as envisaged in Rule 6.2.1;

 

5.3.2        that any person becomes bound or entitled to
acquire Shares under sections 428 – 430F Companies Act 1985;

 

5.3.3.    on which the court sanctions a compromise or
arrangement proposed for the purposes of or in connection with a scheme for the
reconstruction of the Company or its amalgamation with any other company or
companies under section 425 of the Companies Act 1985;

 

5.3.4        on which a resolution for the voluntary
winding-up of the Company has been passed.

 

6.                                      RIGHTS OF EXERCISE AND LAPSE OF THE OPTION

 

6.1                               General
rules for exercise

 

Except as provided in Rules 6.2 and 6.3, the Option can only be
exercised to the extent that it has vested and may only be exercised by a
Participant while he is a director or employee of a Participating Company or of
an Associated Company and is not under notice of termination of employment with
a Participating Company or an Associated Company (whether such notice is given
by the Participant’s employer or by the Participant) at the date of exercise of
the Option.

 

3

 

6.2                               Exercise
in particular cases

 

The Option may be exercised following the Date of Completion:

 

6.2.1        within the period of six months after the date
on which a person who made an offer to acquire Shares has obtained Control of
the Company and any condition subject to which the offer is made has been
satisfied.  For the purpose of this
clause 6.2.1, a person will be deemed to have obtained Control of the Company
if he and others acting in concert (as defined by the City Code on Take-overs
and Mergers) with him have together obtained Control of it; or

 

6.2.2        at any time during which any Person who has
become bound or entitled to acquire Shares under sections 428 to 430F of the
Companies Act 1985 remains so bound or entitled;

 

6.2.3        within the period of six months following the
court sanctioning a compromise or arrangement proposed for the purposes of or
in connection with a scheme for the reconstruction of the Company or its
amalgamation with any other company or companies under section 425 of the
Companies Act 1985; or

 

6.2.4        within the period of one month following the
passing of a resolution for the voluntary winding-up of the Company.

 

6.3                               Dismissal
Without Cause

 

6.3.1        If the Participant is dismissed from Employment
Without Cause, the Participant’s Option will continue to vest and/or remain
exercisable as if the Participant had continued to remain in Employment.

 

6.3.2        The Participant will be considered to have been
dismissed from Employment Without Cause if (and only if) the Participant’s
Employment is terminated by the relevant Participating Company or Participating
Companies in circumstances other than where the Participant:

 

(a)                                  is guilty of any
serious or repeated breach of his obligations under his contract of employment and
any consent granted under it (including neglecting to diligently discharge his
duties); or

 

(b)                                 is guilty of serious
misconduct or any other conduct which affects or is likely to materially
prejudice the interests of the Company or a Participating Company or is
convicted of an arrestable offence (other than a road traffic offence for which
a non-custodial penalty is imposed); or

 

(c)                                  becomes bankrupt or
makes any arrangement or composition with his creditors; or

 

(d)                                 is disqualified from
being a director of any company by reason of an order made by any competent
court; or

 

(e)                                  resigns as a director
of a Participating Company without the prior consent of the Board; or

 

4

 

(f)                                    is guilty of any
material breach or non-observance of any code of conduct, rule or regulation
referred to in his contract of employment or fails or ceases to be registered
(where such registration is, in the reasonable opinion of the Board, necessary
for the performance of his duties) by any regulatory body in the United Kingdom
or elsewhere.

 

7.                                      LAPSING OF THE OPTION

 

7.1                               The
Option will lapse immediately to the extent not exercised on the first to occur
of:

 

7.1.1        the tenth anniversary of the Date of Grant;

 

7.1.2        the expiry of any period specified in Rule
5.2.3;

 

7.1.3        the expiry of any period specified in Rules
6.2.1,  6.2.2, 6.2.3 or 6.2.4;

 

7.1.4        the
Participant ceasing to be in Employment or where the Participant is under
notice of termination of Employment (whether such notice is given by the
Participant’s employer or by the Participant), unless the Option is exercisable
under any of Rules 6.2.1 to 6.2.4 or the Participant has been dismissed Without
Cause (in the circumstances set out in Rule 6.3);

 

7.1.5        where the
Participant has been dismissed Without Cause, the expiry of six months after
the third anniversary of the Date of Completion or (if later) the expiry of six
months after the lifting of any share trading restrictions (imposed by the
rules of any Applicable Exchange or Applicable Laws) which apply at the third
anniversary of the Date of Completion;

 

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

 

7.1.7             any attempt by the Participant to breach
Rule 2.5.

 

8.                                      EXCHANGE OF OPTIONS

 

8.1                               The
Acquiring Company

 

If any company (“the Acquiring Company”):

 

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

 

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

 

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

 

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

 

8.1.2        obtains Control of the Company in pursuance of
a compromise or arrangement sanctioned by the court under section 425 of
the Companies Act 1985; or

 

5

 

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

 

any Participant may, at any time within the
Appropriate Period, by agreement with the Acquiring Company, release any Option
which has not lapsed (“the Old Option”) in consideration of the grant to him of
an Option (“the New Option”) which (for the purposes of paragraph 27(4) of
Schedule 4 to the Taxes Act) is equivalent to the Old Option but relates
to shares in a different company (whether the Acquiring Company itself or some
other company falling within paragraph 16 of Schedule 4 to the Taxes Act).

 

8.2                               The
New Option

 

The New Option will not be regarded as equivalent to the Old Option
unless the conditions set out in paragraph 27(4) of Schedule 4 to the
Taxes Act are satisfied, but so that the provisions of the Plan will for this
purpose be construed as if the New Option were an option granted under the Plan
at the same time as the Old Option except for the purpose of the definition of
“Participating Company” in the Appendix, and as if:

 

8.2.1        the reference to Cyclacel Group plc in the
definition of the “Company” in the Appendix were a reference to the different
company mentioned in rule 8.1; and

 

8.2.2        references in Rules 10.3, 11.4, 11.5 and 11.6
to the “Grantor” were references to the grantor of the New Option.

 

9.                                      EXERCISE OF OPTIONS

 

9.1                               Exercise
in whole or in part

 

An Option may be exercised in whole or in part, provided that an Option
may not be exercised in respect of less than 100 Shares; unless either the
Option is over less than 100 Shares or it is the last occasion on which the
Option is exercised, when it may be exercised in respect of any number of
Shares up to the number in respect of which it remains capable of exercise.

 

9.2                               Manner
of exercise

 

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

 

9.2.1        an option certificate covering at least all the
Shares over which the Option is then to be exercised;

 

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

 

9.2.3        remittance in cleared funds for the Exercise
Price for the Shares over which the Option is exercised.

 

6

 

9.3                               Withholding
for tax

 

9.3.1        Each Option granted under this Plan is subject
to the condition that an exercise of the Option shall not be valid unless the
Participant has, in addition to complying with the other requirements of this
Plan, paid or procured the payment to his employer, or otherwise provided for,
an amount equal to any income tax and/or employee social security contributions
(if appropriate) which his employing company may be required to pay on the
Participant’s behalf by reason of that exercise.

 

9.3.2        Without limitation to Rule 9.3.1 above, the
Company, or Participating Company which is the Participant’s employer or the
trustees of any employee benefit trust may withhold any amount and make such
arrangements as it considers necessary to meet any liability of the Participant
to taxation or employee social security contributions in respect of the grant,
exercise or cancellation of options (or otherwise from benefits delivered under
this Scheme).  These arrangements may
include the sale of any shares on behalf of a Participant, unless the
Participant discharges the liability himself.

 

9.4                               Issue
or transfer of Shares

 

Subject to Rule 9.5, the Grantor will procure the delivery of any
Shares to a Participant (or his nominee) pursuant to the exercise of an Option
within 30 days following the Option Exercise Date.

 

9.5                               Regulatory
Consents

 

The delivery of any Shares under the Plan will be subject to obtaining
any necessary approval or consent under the provisions or rules or regulations
of any Applicable Exchange or Applicable Laws.

 

9.6                               Ranking
of Shares

 

Shares acquired by a Participant under the
Plan will rank equally in all respects with the Shares then in issue, except
that they shall not rank for any right attaching to them by reference to a
record date preceding the Option Exercise Date.

 

9.7                               Listing

 

If the Shares are listed on the London Stock Exchange or any other
Recognised Stock Exchange, the Company will apply for listing of any Shares
issued under the Plan as soon as practicable after their allotment.

 

10.                               ADJUSTMENT OF OPTIONS

 

10.1                        Variation
in equity share capital

 

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

 

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

 

10.1.2      the Option Price; and

 

10.1.3     where an Option has been
exercised but on the date of the Variation no Shares have been delivered
pursuant to that exercise, the number of Shares which may be delivered and the
price at which they may be acquired,

 

7

 

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

 

10.2                        Nominal
value of Shares

 

Apart from under this Rule 10.2, no adjustment under Rule 10.1 can
reduce the Option Price to less than the nominal value of a Share.  Where an Option subsists over both issued
and unissued Shares, an adjustment may only be made if the reduction of the
Option Price in respect of both the issued and the unissued Shares can be made
to the same extent.  Any adjustment made
to the Option Price of Options over unissued Shares will only be made if and to
the extent that the Board is authorised to:

 

10.2.1               capitalise from the
reserves of the Company a sum equal to the amount by which the nominal value of
the Shares in respect of which the Option is exercisable exceeds the adjusted
Exercise Price; and

 

10.2.2               apply that sum in
paying up the Shares so that on exercise of the Option the Board will
capitalise that sum and apply it in paying up the Shares.

 

10.3                        Notifying
Participants of adjustments

 

The Grantor will take the steps it considers necessary to notify
Participants of any adjustment made under Rule 10 and may call in, cancel,
endorse, issue or re-issue any certificate as a result of that adjustment.

 

11.                               ADMINISTRATION

 

11.1                        Notices

 

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

 

11.1.1     by personal delivery; or

 

11.1.2     by sending it by post:

 

(i)            in
the case of a company to its registered office; and

 

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

 

11.1.3                  by sending it by facsimile, email or any form of electronic transfer
acceptable to the Grantor to:

 

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

 

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

 

8

 

11.2                        When
notice is given

 

Any notice under Rule 11.1 will be given:

 

11.2.1      if
delivered, at the time of delivery;

 

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

 

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

 

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

 

11.3                        Documents
sent to shareholders

 

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

 

11.4                        Partial
exercise of Options

 

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

 

11.5                        Replacement
option certificates

 

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

 

11.6                        Shares
to cover Options

 

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

 

11.7                        Administration
of the Scheme

 

The Plan will be administered by the Remuneration Committee.  The Remuneration Committee has full
authority, consistent with the Plan, to administer the Plan, including authority
to interpret and construe any provision of the Plan and to adopt any
regulations for administering the Plan and any documents it thinks necessary or
appropriate.  The Remuneration
Committee’s decision on any matter concerning the Plan will be final and binding.

 

11.8                        Costs
of introducing and administering the Plan

 

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

 

9

 

12.                               AMENDING THE PLAN

 

12.1                        The
Board’s power to amend the Plan

 

Subject to the provisions of Rule 12, the Board can at any time amend
any of the provisions of the Plan in any respect.

 

12.2                        Shareholders’
approval

 

No amendment to the advantage of Participants will be made under
Rule 12.1 without the prior approval by ordinary resolution of the members
of the Company in general meeting unless the amendment is:

 

12.2.1      minor in nature;

 

12.2.2      to assist the administration of the Plan;

 

12.2.2      to take account of any changes in legislation; or

 

12.2.3      to obtain or maintain a
particular taxation, exchange control or regulatory treatment for the Company,
a Subsidiary of the Company or an Associated Company or any Participant.

 

12.3                        Participants’
approval

 

No amendment will be made under Rule 12.1
which would abrogate or adversely affect the subsisting rights of a Participant
unless it is made with the prior written consent of the Participant.

 

12.4                        Notice
of amendments

 

Participants will be given written notice of any amendments to the Plan
made under Rule 12.1 as soon as reasonably practicable after they have
been made.

 

12.5                        Prohibited
amendment

 

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

 

13.                               GENERAL

 

13.1                        Termination
of the Plan

 

The Plan will terminate on 14th June, 2014 or at any earlier time by
the passing of an appropriate resolution by the Board.  Termination of the Plan will not affect the
subsisting rights of Participants.

 

13.2                        The
Plan and funding the purchase of Shares

 

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

 

13.3                        Rights
of Participants and Eligible Employees

 

10

 

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

 

13.4                        No
rights to compensation or damages

 

A Participant acknowledges that these Rules set out the position
relating to his Option on a cessation or termination of his Employment and that
he has no additional rights to compensation or damages for the termination of
his office or employment with a Participating Company or Associated Company for
any reason whatsoever insofar as those rights arise or may arise from his
ceasing to have rights under or to be entitled to exercise any Option under the
Plan or from the loss or diminution in value of such rights or
entitlements.  Nothing in the Plan or in
any document executed under it will give any Person any right to continue in
Employment or will affect the right of the Company, any Subsidiary of the
Company or any Associated Company to terminate the employment of any
Participant without liability at any time, with or without Cause, or will
impose on the Company, any Participating Company, the Grantor, the Board or the
Remuneration Committee or their respective agents and employees any liability
in connection with the loss of a Participant’s benefits or rights under the
Plan for any reason as a result of the termination of his Employment.

 

13.5                        The
Benefits of Rule 13.3 and 13.4

 

The benefit of Rules 13.3 and 13.4 is given for the Company, for itself
and as trustee and agent of all its Subsidiaries and Associated Companies.  The Company will hold the benefit of these
Rules on trust and an agent for each of them and may assign the benefit of this
Rule 13.5 to any of them.

 

13.6                        Articles
of association

 

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

 

13.7                        Severability

 

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

 

13.8                        Governing
Law

 

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

 

11

 

APPENDIX

 

1.                                      DEFINITIONS

 

	
  Appendix

  	
   

  	
  this appendix which forms part of the Rules;

  
	
   

  	
   

  	
   

  
	
  Applicable Exchange

  	
   

  	
  any stock exchange on which Shares are listed and/ or traded;

  
	
   

  	
   

  	
   

  
	
  Applicable Laws

  	
   

  	
  the requirements relating to the operation of share option plans and
  the issue and/ or transfer of Shares under any Applicable Exchange and the
  applicable securities laws and other laws in any country or jurisdiction in
  which an Option is granted to a Participant and/ or in which the Participant
  resides at the date of exercise of his Option;

  
	
   

  	
   

  	
   

  
	
  Appropriate Period

  	
   

  	
  the meaning given by paragraph 26(3) of Schedule 4 to the Taxes
  Act;

  
	
   

  	
   

  	
   

  
	
  Associated Company

  	
   

  	
  the meaning given by paragraph 35 of Schedule 4 to the Taxes
  Act;

  
	
   

  	
   

  	
   

  
	
  Board

  	
   

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

  
	
   

  	
   

  	
   

  
	
  the Company

  	
   

  	
  Cyclacel Group plc (registered no. 05090795);

  
	
   

  	
   

  	
   

  
	
  Control

  	
   

  	
  means the power of a person to secure:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Date of Completion

  	
   

  	
  the date on which the Company’s IPO is completed:

  
	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

  	
  with respect to an Option, the date on which the Grantor grants it
  under Rule 2.1;

  
	
   

  	
   

  	
   

  
	
  Eligible Employee

  	
   

  	
  any person who at the Date of Grant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            an employee or director of a Participating
  Company on terms which, in either case, require him to devote substantially
  the whole of his working time to his duties as such; and

  

 

12

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Employees’ Share
  Plan

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Employment

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Exercise Price

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Grantor

  	
   

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

  
	
   

  	
   

  	
   

  
	
  IPO

  	
   

  	
  the admission of any part of the ordinary share capital of the
  Company or of a company which owns all the issued shares in the Company on
  any established Stock Exchange or National Market System, including without
  limitation the admission of shares to the Official List of the UK Listing
  Authority and the admission of shares to trading by the London Stock Exchange
  and/or the admission of shares to EASDAQ, NASDAQ or the New York Stock
  Exchange;

  
	
   

  	
   

  	
   

  
	
  London Stock
  Exchange

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Option

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Option Exercise
  Date

  	
   

  	
  the date when the exercise of an Option is effective because it
  complies with Rules 9.2 and 9.3;

  
	
   

  	
   

  	
   

  
	
  Option Price

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Participant

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Participating
  Company

  	
   

  	
  (i)                                     the
  Company; and

  

 

13

 

	
   

  	
   

  	
  (ii)           any other company which is under the
  Control of the Company and is a Subsidiary of the Company;

  
	
   

  	
   

  	
   

  
	
  Person

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Plan

  	
   

  	
  the Cylcacel Group plc Senior Executive Incentive Plan in its present
  form or as from time to time amended in accordance with the rules;

  
	
   

  	
   

  	
   

  
	
  Recognised Stock
  Exchange

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Remuneration
  Committee

  	
   

  	
  a duly authorised remuneration committee of the Board all the members
  are non-executive directors;

  
	
   

  	
   

  	
   

  
	
  Rules

  	
   

  	
  these rules as amended from time to time;

  
	
   

  	
   

  	
   

  
	
  Sale

  	
   

  	
  a sale or disposal by other means of shares in the Company by any
  shareholder(s) in one or more related transactions not involving an IPO, but
  involving a person or persons acquiring Control of the Company other than in
  the circumstances set out in Rule 5.2.4;

  
	
   

  	
   

  	
   

  
	
  Schedule 4

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Share

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Subsidiary

  	
   

  	
  a company is a subsidiary of another company if:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            that
  other company:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Taxes Act

  	
   

  	
  Income Tax (Pensions & Earnings) Act 2003; and

  
	
   

  	
   

  	
   

  
	
  Variation

  	
   

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

  

 

14

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