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                                                                   EXHIBIT 10.14

                             DELEK US HOLDINGS, INC.

                      DESCRIPTION OF DIRECTOR COMPENSATION

      Effective upon the completion of this offering, each non-employee director
of Delek US Holdings, Inc. (the "Company") who is not affiliated with Delek
Group Ltd. will receive an annual fee of $25,000 and a fee of $1,500 per board
meeting attended. Members of the audit and compensation committees who are
non-employee directors not affiliated with Delek Group Ltd. will receive $1,000
per meeting attended.

      In addition, upon the completion of this offering, each non-employee
director who is not affiliated with Delek Group Ltd. will receive an initial
grant of 3,000 stock options, each of which will have an exercise price per
share equal to the initial offering price to the public and shall vest ratably
on each of the first, second, third and fourth anniversaries of the grant date.
Upon the filing of a Registration Statement with the Securities and Exchange
Commission on Form S-8, each non-employee director who is not affiliated with
Delek Group Ltd. will receive a grant of 1,500 restricted stock units, each of
which will vest ratably on each of the first, second, third and fourth
anniversaries of the date of the completion of this offering. Beginning in 2007,
the Company intends to make annual grants to each non-employee director who is
not affiliated with Delek Group Ltd. of 3,000 stock options.EX-4.2

 

Exhibit 4.2

VERNALIS PLC

 

RULES OF THE

VERNALIS PLC

DISCRETIONARY

SHARE OPTION PLAN

 

Authorised by shareholders on 22 April 2003

Amended by the Board on 22 April 2003 and on 27 August 2003

ALLEN & OVERY

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	Page
	1.
	 	Definitions and Interpretation	 	2	 
	2.
	 	Grant of Options	 	2	 
	3.
	 	Option Price	 	3	 
	4.
	 	Plan Limits	 	4	 
	5.
	 	Rights of Exercise and Lapse of Options	 	5	 
	6.
	 	Exchange of Options	 	7	 
	7.
	 	Exercise of Options	 	8	 
	8.
	 	Adjustment of Options	 	10	 
	9.
	 	Administration	 	11	 
	10.
	 	Amending the Plan	 	13	 
	11.
	 	General	 	14	 

APPENDICES

			
	     	 
	1.      Definitions	 	 
	2.      Performance
	 	Conditions

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RULES OF THE VERNALIS PLC DISCRETIONARY SHARE OPTION 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 Appendix 1.
	 
	1.2	 	Interpretation
	 
	 	 	The headings in the Rules are for convenience and should be ignored when construing the
Rules. 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 can be granted only within the period of 42 days starting on:

	 	2.2.1	 	the day after the day on which the Company makes an announcement of its
results for the last preceding financial year, half-year or other period;
	 
	 	2.2.2	 	any day on which the Board resolves that exceptional circumstances exist which
justify the grant of Options;
	 
	 	2.2.3	 	any day on which any change to the legislation affecting Discretionary Share
Option Plans is proposed or made;
	 
	 	2.2.4	 	the day after any general meeting of the Company.

	 	 	No Option can be granted after the Plan Period.
	 
	2.3	 	Conditions to be satisfied on the exercise of Options
	 
	 	 	An Option may be granted subject to such conditions as the Remuneration Committee may decide
being met before it can be exercised. Such conditions:

	 	2.3.1	 	must be objective and stated in writing at the Date of Grant;

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	 	2.3.2	 	may not be waived or amended by the Grantor unless:

	 	(i)	 	an event occurs which causes the Remuneration Committee to
consider that a waiver of or amendment to the conditions would be a fairer
measure of performance; and
	 
	 	(ii)	 	the Remuneration Committee reasonably considers that a waiver
of or amendment to the conditions would not make the conditions more difficult
to satisfy;

	 	2.3.3	 	shall be linked to that which is, in the opinion of the Remuneration
Committee, sustained improvement in the underlying financial performance of the
Company.
	 
	 	2.3.4	 	In addition the Grantor may make the exercise of an Option subject to any
other conditions it thinks fit.

	2.4	 	Approvals and consents
	 
	 	 	The grant of an Option will be subject to obtaining any approval or consent required under
any applicable regulations or enactments.
	 
	2.5	 	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.
	 
	2.6	 	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 to his personal representatives on the death of a Participant.
	 
	2.7	 	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. If an Option is disclaimed it will be deemed never to have been
granted.
	 
	3.	 	OPTION PRICE
	 
	3.1	 	The Remuneration Committee’s decision
	 
	 	 	The Remuneration Committee will decide the Option Price of an Option, which Option Price
will be stated at the Date of Grant.
	 
	3.2	 	Deciding the Option Price
	 
	 	 	The Option Price cannot be less than the higher of:

	 	3.2.1	 	the Market Value of a Share on the Dealing Day immediately preceding the Date
of Grant or, if the Remuneration Committee decides, the average of the Market Values on
the three or five (as determined by the Remuneration Committee) Dealing Days
immediately preceding the Date of Grant; and

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	 	3.2.2	 	the nominal value of a Share, if the Shares are to be subscribed,

	 	 	but subject to any adjustment under Rule 9.
	 
	4.	 	PLAN LIMITS
	 
	4.1	 	Limit imposed by Institutional Shareholders
	 
	 	 	Other than in the first year of operation of the Plan or in exceptional circumstances at the
discretion of the Remuneration Committee, no Option will be granted to an Eligible Employee
which would, at the Date of Grant, result in the total Market Value of the Shares over which
he has been granted options under the Plan and any other Discretionary Share Option Plan to
exceed one times the annual rate of his total Remuneration per annum from any Participating
Company employing him. In the first year of operation of the Plan an Option may be granted
to an Eligible Employee which would, at the Date of Grant, result in the total Market Value
of the Shares over which the Eligible Employee had been granted Options under the Plan and
any other Discretionary Share Option Plan being a multiple of up to 2.75 times his annual
salary (excluding bonuses, commissions and benefits in kind).
	 
	4.2	 	Time when Market Value is calculated
	 
	 	 	Under Rule 4, Market Value is calculated as at the date when the Option is granted.

	 
	4.3	 	The 10 per cent. limit over 10 years
	 
	 	 	The number of Shares which may be allocated under the Plan on any day cannot, when added to
the aggregate of the number of Shares which have been allocated in the previous 10 years
under:

	 	•	 	the Plan;
	 
	 	•	 	the Vernalis Deferred Share Bonus Scheme (excluding “Qualifying Awards” as defined
in the rules of the Vernalis Deferred Share Bonus Scheme);
	 
	 	•	 	the Vernalis Executive Share Option Scheme adopted on 18 September 1996;
	 
	 	•	 	the Vernalis Group SAYE Share Option Scheme (excluding options granted before 18
September 1996 under the Vernalis Group SAYE Share Option Scheme); and
	 
	 	•	 	any other Employees’ Share Plan adopted by the Company since 18 September 1996,

	 	 	exceed that number of Shares that represents 10 per cent of the ordinary share capital of
the Company in issue immediately prior to that day.
	 
	4.4	 	Exclusions from the limits
	 
	 	 	In calculating the limits in Rule 4.3, any Shares where the right to acquire them was
released or lapsed without being exercised will be disregarded.
	 
	4.5	 	Meaning of allocation
	 
	 	 	References to the “allocation” of Shares means, in the case of any share option plan, the
placing of unissued shares under option and, in relation to other types of Employees’ Share
Plan, means the issue and allotment of shares.

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	4.6	 	Grant of Options in excess of limits
	 
	 	 	If an Option is granted on terms which do not comply with Rule 4, the number of Shares over
which that Option has been granted will:

	 	4.6.1	 	in the case of Rule 4.1, be reduced automatically to the largest lower number
as would comply with the terms of that Rule;
	 
	 	4.6.2	 	in any other case, together with the number of Shares over which all other
Options have been granted on the same Date of Grant, be reduced pro rata to the largest
lower number that complies with the relevant Rule.
	 
	 	An adjusted Option will take effect from the Date of Grant as if it had been granted on the
adjusted terms.

	4.7	 	Adjustment to Shares to be taken into account
	 
	 	 	Where Shares which have been issued under the Plan or any other Employees’ Share Plan of the
Company are to be taken into account for the purposes of the limits in Rule 4 and a
Variation in the equity share capital of the Company has taken place between the date of
issue of those Shares and the date on which the limit is to be calculated, then the number
of Shares taken into account for the purposes of the limit will be adjusted in the manner
the Board considers appropriate to take account of the Variation.
	 
	5.	 	RIGHTS OF EXERCISE AND LAPSE OF OPTIONS
	 
	5.1	 	General rules for exercise
	 
	 	 	Except as provided in Rule 5.2, an Option:

	 	5.1.1	 	cannot be exercised earlier than the third anniversary of the Date of Grant or
any later date determined by the Grantor at the Date of Grant;
	 
	 	5.1.2	 	may be exercised only by a Participant while he is a director or employee of a
Participating Company or of an Associated Company;
	 
	 	5.1.3	 	may be exercised only if all conditions imposed under Rule 2.3 and not waived
have been fulfilled to the satisfaction of the Remuneration Committee, other than
following an exchange of options under Rule 6.

	5.2	 	Exercise in particular cases
	 
	 	 	An Option may be exercised:

	 	5.2.1	 	within the period of one year following the date of death of the Participant
to whom the Option was granted;
	 
	 	5.2.2	 	within the period of one year following the date on which the Participant
ceases to hold an office or employment with a Participating Company or an Associated
Company if such cessation is because of:

	 	(i)	 	ill health, Disability, Retirement or Redundancy (if the
Participant ceases employment due to Redundancy more than 12 months from the
Date of Grant);

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	 	(ii)	 	the company which employs him ceasing to be under the Control
of the Company or such company ceasing to be an Associated Company;
	 
	 	(iii)	 	the transfer or sale of the undertaking or part-undertaking in
which he is employed to a person who is neither under the Control of the
Company nor an Associated Company; or
	 
	 	(iv)	 	any circumstances other than the circumstances specified in
Rule 5.2.1 or Rule 5.2.2 (i) to (iii), at the discretion of the Remuneration
Committee exercised within 14 days of the cessation of office or employment.

	 	5.2.3	 	within the period of 6 months following the date on which a Person who made an
offer to acquire Shares (which was either unconditional or was made on a condition such
that if it were satisfied the person making the offer would have Control of the
Company), has obtained Control of the Company and any condition subject to which the
offer is made has been satisfied. A person will be deemed to have obtained Control of
the Company if he and others acting in concert with him (as defined by the City Code
on Take-overs and Mergers) have together obtained Control of it;
	 
	 	5.2.4	 	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;
	 
	 	5.2.5	 	within the period of 6 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;
	 
	 	5.2.6	 	at any time after notice has been given, but before a resolution for the
voluntary winding-up of the Company has been passed or defeated or the meeting
concluded or adjourned indefinitely, conditionally on the resolution being passed. If
the resolution is passed all Options will, to the extent that they have not been
exercised, lapse immediately. The Company will give Participants notice of any such
resolution; and
	 
	 	5.2.7	 	in the period beginning three months before and ending three months after the
transfer of a Participant to a country outside the United Kingdom who continues or will
continue to hold an office or employment with a Participating Company or an Associated
Company as a result of that transfer and will either:

	 	(i)	 	become subject to income tax on his remuneration in the country
to which he is transferred so that he will suffer a tax disadvantage on the
exercise of his Option following the transfer; or
	 
	 	(ii)	 	becomes subject to restrictions on his ability to exercise his
Option or to deal in the Shares that may be acquired upon the exercise of that
Option because of the securities laws or exchange control laws of the country
to which he is transferred.

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	5.3	 	Cessation following pregnancy
	 
	 	 	For the purposes of Rule 5.2.2(i), a woman who leaves employment because of pregnancy will
be regarded as having left employment on the day on which she indicates either that she does
not intend to return to work or that she will not be returning to work. If she does not
give such indication she will be treated as having left employment on the day after the day
on which maternity pay under the Employment Rights Act 1996 ceases to be payable, or if
later, any other date specified in the terms of her employment.
	 
	5.4	 	Lapsing of Options
	 
	 	 	An Option will lapse to the extent not exercised on the earliest of:

	 	5.4.1	 	the tenth anniversary of the Date of Grant;
	 
	 	5.4.2	 	the expiry of any of the periods specified in Rule 5.2.1 and 5.2.2 (except
that if at the time any of the applicable periods under Rule 5.2.2 expire, time is
running under the period in Rule 5.2.1, the Option will not lapse until the expiry of
the period under Rule 5.2.1);
	 
	 	5.4.3	 	the expiry of any of the periods specified in Rules 5.2.3, 5.2.4 and 5.2.5
except where an Option is released in consideration of the grant of a New Option
(during one of the periods specified in Rules 5.2.3, 5.2.4 or 5.2.5) under Rule 6;
	 
	 	5.4.4	 	the Participant ceasing to hold an office or employment with a Participating
Company or an Associated Company in any circumstances other than:

	 	(i)	 	those specified in Rules 5.2.1 or 5.2.2 (including where
the Remuneration Committee has exercised its discretion under Rule
5.2.2(iv)); or
	 
	 	(ii)	 	for any reason whatsoever during any of the periods
specified in Rules 5.2.3, 5.2.4, 5.2.5 or 5.2.6;

	 	5.4.5	 	subject to Rule 5.2.6, the passing of an effective resolution, or the making
of an order by the court, for the winding-up of the Company;
	 
	 	5.4.6	 	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;
	 
	 	5.4.7	 	the time specified in any performance conditions attached to the Option but
only to the extent specified in the performance conditions; and
	 
	 	5.4.8	 	the Participant attempting to breach Rule 2.6.

	6.	 	EXCHANGE OF OPTIONS
	 
	6.1	 	The Acquiring Company
	 
	 	 	If any company (“the Acquiring Company”):

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

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	 	(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

	 	6.1.2	 	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
	 
	 	6.1.3	 	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 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).
	 
	6.2	 	The New Option
	 
	 	 	The New Option will not be regarded as equivalent to the Old Option unless the conditions
set out in paragraph 27(4) of Schedule 4 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:

	 	6.2.1	 	the reference to Vernalis plc in the definition of the “Company” in the
Appendix were a reference to the different company mentioned in Rule 6.1; and
	 
	 	6.2.2	 	the proviso to Rule 10.1 and Rule 10.2 were omitted; and
	 
	 	6.2.3	 	references in Rules 8.3, 9.4, 9.5 and 9.6 to the “Grantor” were references to
the grantor of the New Option.

	7.	 	EXERCISE OF OPTIONS
	 
	7.1	 	Exercise in whole or in part
	 
	 	 	An Option may be exercised in whole or in part, provided that an Option may not be exercised
in respect of less than 100 Shares nor otherwise than in multiples of 100 Shares on any one
occasion unless either the Option is over less than 100 Shares or it is the last occasion on
which the Option is exercised, when it may be exercised in respect of any number of Shares
up to the number in respect of which it remains capable of exercise.
	 
	7.2	 	Manner of exercise
	 
	 	 	Subject to Rule 7.1 and 7.3, to exercise an Option, the Participant must deliver at the
address specified in the notice of exercise:

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

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	 	7.2.2	 	the notice of exercise in the prescribed form properly completed and signed by
the Participant (or by his duly authorised agent); and
	 
	 	7.2.3	 	remittance in cleared funds for the Exercise Price for the Shares over which
the Option is exercised.

	7.3	 	Equity Settled Stock Appreciation Rights
	 
	 	 	The Company may, in its discretion, decide that this Rule 7.3 rather than Rule 7.2 will apply
to a Participant on the exercise of an Option and if so, shall notify the Participant of this
prior to the date on which the Option first becomes exercisable. Where an Option is
exercised in accordance with this Rule:

	 	7.3.1	 	the Participant will be exercising that Option to acquire such whole number of
Shares as is as close as possible equal to the difference between the Market Value of
the Shares on the Option Exercise Date and the Exercise Price which would be applicable
under rule 7.2 (the “Exercise Gain”), with any fractional entitlement to Shares arising
from the calculation of the Exercise Gain being rounded down and with the cash balance
being transferred to the Participant at the same time as the Shares referred to at Rule
7.3.3 are transferred to the Participant;
	 
	 	7.3.2	 	the Participant will complete and return to the Company such documents as the
Company may require and notify to the Participant, including an undertaking to pay to
the Company out of the proceeds of sale of sufficient Shares from the Exercise Gain the
aggregate nominal value of the number of Shares as is equal to the Exercise Gain;
	 
	 	7.3.3	 	as soon as practicable following receipt of the documents referred to at 7.3.2,
the Company will calculate the amount of the Participant’s Exercise Gain and allot to
the Company’s broker, or such other person nominated by the Company (the “Broker”) such
whole number of Shares as is as close as possible to the Participant’s Exercise Gain and
instruct the Broker to:

	 	(i)	 	sell sufficient Shares to satisfy payment of the aggregate nominal
value of the Shares equal to the Exercise Gain and of any income tax and social
security contributions (in accordance with Rule 7.5) arising on the exercise of
the Option under Rule 7.3.1;
	 
	 	(ii)	 	pay over to the Company on behalf of the Participant the sale
proceeds equal to the aggregate nominal value of the Shares representing the
Exercise Gain; and
	 
	 	(iii)	 	pay over to the Company or the Participant’s employer the sale
proceeds equal to the Participant’s liability to income tax and social security
contributions (in accordance with Rule 7.5); and
	 
	 	(iv)	 	transfer the balance of Shares together with any cash balance from
the sale of Shares to the Participant.

	 	 	The Company may, at any time and in its discretion, amend the provisions for dealing with
the delivery of Shares and any cash balances as set out in this Rule 7.3.3.

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	7.4	 	Option Exercise Date
	 
	 	 	If any conditions as set out in Rule 2.3 must be fulfilled before an Option may be
exercised, the Option may not be exercised unless and until the Remuneration Committee is
satisfied that those conditions have been fulfilled. Otherwise, the Option Exercise Date
will be the date on which (i) all documents referred to in Rule 7.2, or, Rule 7.3 (duly
completed to the satisfaction of the Company) have been received; and (ii) any other
conditions which the exercise of the Option may be subject to have been met.
	 
	7.5	 	Withholding for tax
	 
	 	 	The Grantor or the Participant’s employing company may withhold any amount and make the
arrangements it considers necessary to meet any liability of the Participant to taxation or
social security contributions in connection with the grant, exercise or cancellation of
Options (or otherwise from benefits delivered under the Plan). These arrangements may
include the sale of any Shares acquired by a Participant under the Plan on behalf of a
Participant. Where the Company has made the exercise of an Option subject to the condition
that the Participant shall enter into an agreement or election for the purposes of
paragraphs 3A(2) or 3B(1) respectively of Schedule 1 to the Social Security Contributions
and Benefits Act 1992 in relation to the recovery of or transfer of liability of secondary
class 1 national insurance contributions, the exercise of the Option is also conditional
upon such condition being met.
	 
	7.6	 	Issue or transfer of Shares
	 
	 	 	Subject to Rule 7.6, the Grantor will use its best endeavours to procure the delivery or
transfer of any Shares to a Participant (or his nominee) pursuant to the exercise of an
Option within 30 days following the Option Exercise Date.
	 
	7.7	 	Consents
	 
	 	 	The delivery or transfer of any Shares under the Plan will be subject to obtaining any
necessary approval or consent.
	 
	7.8	 	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.
	 
	7.9	 	Listing
	 
	 	 	If the Shares are listed on the London Stock Exchange, the Company will apply for listing of
any Shares issued under the Plan as soon as practicable after their allotment.
	 
	8.	 	ADJUSTMENT OF OPTIONS
	 
	8.1	 	Variation in equity share capital
	 
	 	 	If there is a Variation in the equity share capital of the Company:

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

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	 	8.1.3	 	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,

	 	 	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.
	 
	8.2	 	Nominal value of Shares
	 
	 	 	Apart from under this Rule 8.2, no adjustment under Rule 8.1 can reduce the Option Price to
less than the nominal value of a Share. Where an Option subsists over both issued and
unissued Shares, an adjustment may only be made if the reduction of the Option Price in
respect of both the issued and the unissued Shares can be made to the same extent. 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:

	 	8.2.1	 	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
	 
	 	8.2.2	 	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.

	8.3	 	Notifying Participants of adjustments
	 
	 	 	The Board will take the steps it considers necessary to notify Participants of any
adjustment made under Rule 8 and may call in, cancel, endorse, issue or re-issue any
certificate as a result of that adjustment.
	 
	9.	 	ADMINISTRATION
	 
	9.1	 	Notices
	 
	 	 	Any notice or other communication in connection with the Plan will be in writing and may be
given:

	 	9.1.1	 	by personal delivery; or
	 
	 	9.1.2	 	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

	 	9.1.3	 	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

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	 	(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.

	9.2	 	When notice is given
	 
	 	 	Any notice under Rule 9.1 will be given:

	 	9.2.1	 	if delivered, at the time of delivery;
	 
	 	9.2.2	 	if posted, at 10.00am on the second business day after it was put into the post; or
	 
	 	9.2.3	 	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.
	 
	9.3	 	Documents sent to shareholders
	 
	 	 	Participants may receive copies of any notice or document sent by the Company to the holders
of Shares.
	 
	9.4	 	Partial exercise of Options
	 
	 	 	If an Option is received in part, the Grantor may call in, endorse or cancel and re-issue,
as it considers appropriate, any certificate for the balance of the Shares over which the
Option was granted.
	 
	9.5	 	Replacement option certificates
	 
	 	 	If any option certificate is worn out, defaced or lost, it may be replaced on the evidence
that the Grantor requires being provided.
	 
	9.6	 	Shares to cover Options
	 
	 	 	The Grantor will ensure that sufficient Shares are available to satisfy all outstanding
Options.
	 
	9.7	 	Administration of the Scheme
	 
	 	 	The Plan will be administered by the 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.

12

 

	9.8	 	Costs of introducing and administering the Plan
	 
	 	 	The costs of introducing and administering the Plan will be borne by the Company. However,
the Company may require any 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.
	 
	10.	 	AMENDING THE PLAN
	 
	10.1	 	The Board’s power to amend the Plan
	 
	 	 	Subject to the provisions of Rule 10, the Board can at any time amend any of the provisions
of the Plan in any respect.
	 
	10.2	 	Shareholders’ approval
	 
	 	 	No amendment to the advantage of Participants will be made under Rule 10.1 without the prior
approval by ordinary resolution of the members of the Company in general meeting unless the
amendment is:

	 	10.2.1	 	minor and to benefit the administration of the Plan;
	 
	 	10.2.2	 	to take account of any changes in legislation; or
	 
	 	10.2.3	 	to obtain or maintain favourable taxation, exchange control or regulatory treatment
for the Company, a Subsidiary of the Company or an Associated Company or any
Participant.

	10.3	 	Participants’ approval
	 
	 	 	No amendment will be made under Rule 10.1 which would abrogate or adversely affect the
subsisting rights of a Participant unless it is made:

	 	10.3.1	 	with the written consent of the number of Participants that hold Options under the
Plan to acquire 75 per cent. of the Shares which would be delivered if all Options
granted and subsisting under the Plan were exercised (ignoring any conditions which may
be attached to their exercise); or
	 
	 	10.3.2	 	by a resolution at a meeting of Participants passed by not less than 75 per cent. of
the Participants who attend and vote either in person or by proxy,

	 	 	and for the purpose of this Rule 10.3 the provisions of the articles of association of the
Company relating to shareholder meetings will apply with the necessary changes.
	 
	10.4	 	Overseas Eligible Employees
	 
	 	 	The Board may, in respect of Options granted to Eligible Employees who are or may become
subject to taxation outside the United Kingdom on their remuneration, amend the Rules and
the
Grantor may amend the terms of Options in each case as it considers necessary or desirable
to take account of or to mitigate or to comply with relevant overseas taxation, securities
or exchange control laws provided that the terms of Options granted to such Eligible
Employees are not overall more favourable than the terms of Options granted to other
Eligible Employees.

13

 

	10.5	 	Notice of amendments
	 
	 	 	Participants will be given written notice of any amendments to the Plan made under Rule 10.1
as soon as reasonably practicable after they have been made.
	 
	10.6	 	Prohibited amendment
	 
	 	 	No amendment will be made to the Plan if, as a result of the amendment, it would cease to be
an Employees’ Share Plan.
	 
	11.	 	GENERAL
	 
	11.1	 	Termination of the Plan
	 
	 	 	The Plan will terminate at the end of the Plan Period 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.
	 
	11.2	 	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.
	 
	11.3	 	Rights of Participants and Eligible Employees
	 
	 	 	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.
	 
	11.4	 	No rights to compensation or damages
	 
	 	 	A Participant waives all and any 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 as a result of that termination or
from the loss or diminution in value of such rights or entitlements. Nothing in the Plan or
in any document executed under it will give any 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 on the exercise of a
discretion under the Plan for any reason as a result of the termination of his employment.

14

 

	11.5	 	The Benefits of Rule 11.3 and 11.4
	 
	 	 	The benefit of Rules 11.3 and 11.4 is given for the Company, for itself and as trustee and
agent of all its Subsidiaries and Associated Companies. The Company will hold the benefit
of these Rules on trust and an agent for each of them and may assign the benefit of this
Rule 11.5 to any of them.
	 
	11.6	 	Articles of association
	 
	 	 	Any Shares acquired on the exercise of Options shall be subject to the articles of
association of the Company.
	 
	11.7	 	Claims for relief under the Taxation of Chargeable Gains Act 1992
	 
	 	 	If Shares are transferred to a Participant in pursuance of any Option granted under the
Plan, the Participant will, if required by the person making the transfer, join that person
in making a claim for relief under section 165 of the Taxation of Chargeable Gains Act 1992
in respect of the disposal effecting the transfer.
	 
	11.8	 	Severability
	 
	 	 	The invalidity or non-enforceability of one or more provisions of the Plan will not affect
the validity or enforceability of the other provisions of the Plan.
	 
	11.9	 	Governing Law
	 
	 	 	These Rules will be governed by and construed in accordance with the law of England. All
Participants, the Company and any other Participating Company or Associated Company will
submit to the jurisdiction of the English courts in relation to anything arising under the
Plan.

15

 

APPENDIX 1

	1.	 	DEFINITIONS

	 	 	 	 	 	 	 
	Appendix	 	this appendix which forms part of the Rules;
	 
	 	 	 	 	 	 
	Appropriate Period	 	the meaning given by paragraph 26(3) of Schedule 4 to the
Taxes Act;
	 
	 	 	 	 	 	 
	Associated Company	 	in relation to the Company:
	 
	 	 	 	 	 	 
	 	 	(i)	 	any company which has Control of the Company;
	 
	 	 	 	 	 	 
	 	 	(ii)	 	any company (other than a Participating Company)
which is under the Control of any company referred to in
(i) above;
	 
	 	 	 	 	 	 
	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	 	Vernalis plc (registered no. 2304992);
	 
	 	 	 	 	 	 
	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 Grant	 	with respect to an Option the date on which the Grantor
grants it under Rule 2.5;
	 
	 	 	 	 	 	 
	Dealing Day	 	any day on which the London Stock Exchange is open for
the transaction of business;
	 
	 	 	 	 	 	 
	Discretionary Share
Option Plan	 	a share option plan, other than a savings-related share
option plan, in which participation is at the discretion
of the grantor of options under that plan;
	 
	 	 	 	 	 	 
	Eligible Employee	 	any person who at the Date of Grant:
	 
	 	 	 	 	 	 
	 	 	(i)	 	is 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

16

 

	 	 	 	 	 	 	 
	 	 	(ii)	 	is not within 2 years of his normal retirement date
under his contract of employment;
	 
	 	 	 	 	 	 
	Employees’ Share Plan	 	in relation to the Company a scheme for encouraging or
facilitating the holding of shares or debentures in the
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;
	 
	 	 	 	 	 	 
	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;
	 
	 	 	 	 	 	 
	Jointly Owned Company	 	any company of which not less than 50 per cent. of its
ordinary share capital is beneficially owned by the
Company and/or any Subsidiary of the Company and any
company under the Control of any such company;
	 
	 	 	 	 	 	 
	London Stock Exchange	 	the London Stock Exchange plc or any successor body
carrying on the business of the London Stock Exchange
plc;
	 
	 	 	 	 	 	 
	Market Value	 	in relation to a Share on any day:
	 
	 	 	 	 	 	 
	 	 	(i)	 	if the Shares are listed on the London Stock Exchange
its middle market quotation (as derived from the Daily
Official List of the London Stock Exchange on that day);
or
	 
	 	 	 	 	 	 
	 	 	(ii)	 	if the Shares are not listed on the London Stock
Exchange its market value, determined in accordance with
Part VIII of the Taxation of Chargeable Gains Act 1992
and agreed in advance with the Shares Valuation Division
of the Inland Revenue;
	 
	 	 	 	 	 	 
	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 7.2, and 7.4;

17

 

	 	 	 	 	 	 	 
	Option Price	 	the price per Share at which a Participant may acquire
Shares on the exercise of an Option determined under Rule
3;
	 
	 	 	 	 	 	 
	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
	 
	 	 	 	 	 	 
	 	 	(ii)	 	any other company which is under the Control of the
Company, is a Subsidiary of the Company and is for the
time being designated by the Board as a Participating
Company; and
	 
	 	 	 	 	 	 
	 	 	(iii)	 	any other company which is a Jointly Owned Company
and which has been designated by the Board as being a
Participating Company;
	 
	 	 	 	 	 	 
	Person	 	any individual, corporation, partnership, limited
liability company, trust or other entity of whatever
nature;
	 
	 	 	 	 	 	 
	Plan	 	the Vernalis plc Discretionary Share Option Plan in its
present form or as from time to time amended in
accordance with the Rules;
	 
	 	 	 	 	 	 
	Plan Period	 	the period starting on the date the Plan is approved by
the Company in general meeting and ending on the 10th
anniversary of that date;
	 
	 	 	 	 	 	 
	Redundancy	 	termination of the Participant’s employment attributable
wholly or mainly to the fact that:
	 
	 	 	 	 	 	 
	 	 	(i)	 	the employer has ceased or intends to cease;
	 
	 	 	 	 	 	 
	 	 	 	 	(a)	 	to carry on the business for the purpose of which the
Participant was employed; or
	 
	 	 	 	 	 	 
	 	 	 	 	(b)	 	to carry on that business in the place the
Participant was employed; or
	 
	 	 	 	 	 	 
	 	 	(ii)	 	the requirements of that business:
	 
	 	 	 	 	 	 
	 	 	 	 	(a)	 	for employees to carry out work of a particular kind; or
	 
	 	 	 	 	 	 
	 	 	 	 	(b)	 	to carry out that work in the place where the

Participant was employed,
	 
	 	 	 	 	 	 
	 	 	have ceased or diminished or are expected to cease or
diminish;

18

 

	 	 	 	 	 	 	 
	Remuneration	 	on any day, an Eligible Employee’s base salary for the
current year together with any bonus(es) paid to that
Eligible Employee in the previous year;
	 
	 	 	 	 	 	 
	Remuneration Committee	 	a duly authorised remuneration committee of the Board all
or the majority of whose members are non-executive
directors;
	 
	 	 	 	 	 	 
	Retirement	 	retirement at any age at which the Participant is bound
or entitled to retire under his contract of Employment or
early retirement with the agreement of the company which
employs him;
	 
	 	 	 	 	 	 
	Rules	 	these rules as amended from time to time;
	 
	 	 	 	 	 	 
	Schedule 4	 	Schedule 4 to the Taxes Act;
	 
	 	 	 	 	 	 
	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	 	the 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.

19

 

APPENDIX 2 Performance Conditions

	1.	 	Introduction
	 
	 	 	This Appendix 2 contains the performance conditions to which any Options granted under the
Plan will be subject unless and until the Remuneration Committee decides otherwise. Words and
expressions defined in the rules of the Plan will have the same meaning in this Appendix 2
unless otherwise stated.
	 
	2.	 	Definitions
	 
	 	 	The following definitions will apply in this Schedule.

	 	 	 
	Average Share Price

	 	the average of a company’s Share Price on the 30 Dealing Days ending
with the day in question (or, if that day is not a Dealing Day, ending on the preceding
Dealing Day);
	 
	 	 
	Comparator Group

	 	the FTSE Small Cap Index;
	 
	 	 
	End Date

	 	the last Dealing Day in any Performance Period, or in the event of
re-testing the first anniversary of the End Date;
	 
	 	 
	FTSE Small Cap Index

	 	an index of FTSE all share listed UK companies excluding the
350 largest stock as constituted from time to time;
	 
	 	 
	Performance Period

	 	with respect to an Option the period of three years starting on its Date
of Grant;
	 
	 	 
	Share Price

	 	the middle market quotations of a Share as derived from the Daily
Official List of the London Stock Exchange;
	 
	 	 
	Start Date

	 	the last Dealing Day immediately preceding the start of a Performance
Period;

	3.	 	Performance Conditions
	 
	 	 	The vesting of an Option will be dependent on the Company’s Share Price growth relative to
the Share Price growth of the constituent companies in the Comparator Group. Ranking of
Companies

 

 

	 	 	As soon as reasonably practicable following the end of a Performance Period, the Remuneration
Committee will rank all of the companies in the Comparator Group by their respective growths
in Average Share Price. Accordingly, the Remuneration Committee will, for the Company and
every company in the Comparator Groups, compare its Average Share Price on the End Date with
its Average Share Price on the Start Date, and compute the percentage growth from one to the
other. The Company and the companies in the Comparator Groups will then be ranked by the
resulting figures (the company having the highest figure having the highest ranking). The
Company’s “Ranking” in the Comparator Group will be calculated by dividing its position in
the ranking by the number of companies in the Comparator Group and multiplying the result by
100.
	 
	5.	 	Vesting of Option
	 
	 	 	An Option will vest and be exercisable:

	(i)	 	 	in full if the Company’s Ranking places it at or above the upper quartile of the
companies in the Comparator Group; and
	 
	(ii)	 	 	as to 50% of the shares subject to that Option if the Company’s Ranking places it
at the median point of the companies in the Comparator Group.
	 
	 	 	 	If the Company’s Ranking places it between the median and the upper quartile, an Option
will vest and be exercisable on a straight-line sliding scale between these two points.
	 
	 	 	 	None of the shares subject to an Option will vest if the Company’s Ranking places it
below the median of the companies in the Comparator Group.

	6.	 	Re-testing of performance condition
	 
	 	 	The performance targets will first be tested on the End Date. If the target is not satisfied
in full at this time it can be retested, but not beyond the fourth anniversary of the Date of
Grant over a period commencing on the Start Date
	 
	7.	 	Lapse of Option
	 
	 	 	To the extent that an Option does not become exercisable by the fourth anniversary of the
Date of Grant, it will lapse.
	 
	8.	 	Adjustment
	 
	 	 	The Remuneration Committee may make any adjustment to the performance condition set out in
this Schedule that it considers appropriate to take account of any change to the
determination of a company’s Share Price or any other factors it considers relevant.

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