Document:

Exhibit 10.42

 

 

GW Pharmaceuticals plc

 

 

 

LONG-TERM INCENTIVE PLAN

 

 

 

Approved by shareholders of the Company on 18 March 2008

 

Adopted by the Board of Directors of the Company on 18 March 2008

 

The Plan is a discretionary benefit offered by GW Pharmaceuticals plc for the benefit of employees within its group.  Its main purpose is to increase the interest of the employees in GW Pharmaceuticals plc’s long-term business goals and performance through share ownership.  The Plan is an incentive for the employees’ future performance and commitment to the goals of the GW Pharmaceuticals group.

 

Shares purchased or received under the Plan, any cash received under the Plan and any gains obtained under the Plan are not part of salary for any purpose (except to any extent required by statute).

 

The Plan is being offered for the first time in 2008 and the Remuneration Committee of the Board of Directors of GW Pharmaceuticals plc shall have the right to decide, in its sole discretion, whether or not further awards will be granted in the future and to which employees those awards will be granted.

 

Participation in the Plan is an investment opportunity distinct from any employment contract and entails the risks associated with an investment.  An individual who participates in the Plan is treated as being aware of such risks and accepts such risks of his own free will.

 

The detailed rules of the Plan are set out overleaf.

 

 

 

CONTENTS

 

	
Rule
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS   AND INTERPRETATION
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
ELIGIBILITY
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
INVESTMENT   SHARES
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
GRANT OF   AWARDS
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
LIMITS
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
VESTING OF   AWARDS
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
CONSEQUENCES   OF VESTING
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
EXERCISE OF   OPTIONS
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
CASH   ALTERNATIVE
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
LAPSE OF   AWARDS
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
LEAVERS
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
TAKEOVERS   AND OTHER CORPORATE EVENTS
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
ADJUSTMENT   OF AWARDS
    	
 
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
ALTERATIONS
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
MISCELLANEOUS
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE 1 - CASH CONDITIONAL AWARDS
    	
 
    	
22
    
	
 
    	
 
    	
 
    
	
SCHEDULE 2 - EMI AWARDS
    	
 
    	
23
    

 

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1.                                DEFINITIONS AND INTERPRETATION

 

1.1                         In the Plan, unless the context otherwise requires:

 

“AIM Rules” means the rules published by the London Stock Exchange governing its Alternative Investment Market;

 

“Award” means a Performance Award or a Matching Award in the form of a Conditional Award or an Option;

 

“Board” means the board of directors of the Company or a duly authorised committee of the Board or a duly authorised person;

 

“Committee” means the remuneration committee of the Board or, on and after the occurrence of a corporate event described in Rule 12 (Takeovers and other corporate events), the remuneration committee of the Board as constituted immediately before such event occurs;

 

“Company” means GW Pharmaceuticals plc (registered in England and Wales with registered number 4160917);

 

“Conditional Award” means a conditional right to acquire Shares granted under the Plan which is designated as a conditional award under Rule 4.2 (Type of Award);

 

“Control” means control within the meaning of section 719 of ITEPA;

 

“Dividend Equivalent”  means a benefit calculated by reference to dividends paid on Shares as described in Rule 4.4;

 

“Early Vesting Date” means either:

 

(a)                           the date of cessation of employment of a Participant in the circumstances referred to in Rules 11.1 (Good leavers); or

 

(b)                          the date of Vesting referred to in Rule 12.1 (General offers), Rule 12.2 (Schemes of arrangement and winding up) or Rule 12.3 (Demergers and similar events) (as applicable);

 

“Exercise Period” means the period referred to in Rule 7.2 during which an Option may be exercised;

 

“Grant Date” means the date on which an Award is granted;

 

“Group Member” means:

 

(a)                          a Participating Company or a body corporate which is the Company’s holding company (within the meaning of section 736 of the Companies Act 1985) or a Subsidiary of the Company’s holding company;

 

(b)                          a body corporate which is a subsidiary undertaking (within the meaning of section 258 of that Act) of a body corporate within paragraph (a) above and has been designated by the Board for this purpose; and

 

(c)                           any other body corporate in relation to which a body corporate within paragraph (a) or (b) above is able (whether directly or indirectly) to exercise 20% or more of its equity voting rights and has been designated by the Board for this purpose;

 

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“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

 

“Investment Shares” means Shares acquired pursuant to Rule 3 (Investment Shares) and any further Shares added to a holding of Investment Shares under Rule 3.4 (Variation of share capital — Investment Shares);

 

“London Stock Exchange” means London Stock Exchange plc or any successor to that company;

 

“Matching Award” means an Award designated as a Matching Award under Rule 4.2 (Type of Award);

 

“Normal  Vesting Date” means the date on which an Award Vests under Rule 6.1 (Timing of Vesting: Normal Vesting Date);

 

“Option” means a right to acquire Shares granted under the Plan which is designated as an option under Rule 4.2 (Type of Award);

 

“Option Price” means the amount, if any, payable per Share on the exercise of an Option;

 

“Participant” means in the case of a Performance Award, such eligible employee to whom a Performance Award is granted, and, in the case of a Matching Award, a person who acquires Investment Shares pursuant to Rule 3 (Investment Shares) including, in either case, his personal representatives;

 

“Participating Company” means the Company or any Subsidiary of the Company;

 

“Performance Award” means an Award designated as a Performance Award under Rule 4.2 (Type of Award);

 

“Performance Condition” means a condition related to performance which is specified by the Committee under Rule 4.1 (Terms of grant);

 

“Performance Shares” means Shares subject to a Performance Award;

 

“Plan” means the GW Pharmaceuticals plc Long-Term Incentive Plan as amended from time to time;

 

“Return Date” means the date by which an invitation issued under Rule 3.2 (Invitations in respect of Investment Shares) must be returned to the Company;

 

“Rule” means a rule of the Plan;

 

“Shares” means fully paid ordinary shares in the capital of the Company;

 

“Subsidiary” means a body corporate which is a subsidiary (within the meaning of section 736 of the Companies Act 1985);

 

“Tax Liability” means any amount of tax or social security contributions for which a Participant would or may be liable and for which any Group Member or former Group Member would or may be obliged to (or would or may suffer a disadvantage if it were not to) account for to any relevant authority;

 

“Vest” means:

 

(a)                          in relation to a Conditional Award, a Participant becoming entitled to have Shares transferred to him (or his nominee) subject to the Rules;

 

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(b)                          in relation to an Option, it becoming exercisable

 

and Vesting shall be construed accordingly;

 

“Vested Shares” means those Shares in respect of which an Award Vests.

 

1.2                         Any reference in the Plan to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.

 

1.3                         Expressions in italics and headings are for guidance only and do not form part of the Plan.

 

2.                                ELIGIBILITY

 

An individual is eligible to participate in the Plan only if he is an employee (including an executive director) of a Participating Company.

 

3.                                INVESTMENT SHARES

 

3.1                         Source of Investment Shares

 

In relation to the proposed grant of any Matching Award, an individual’s Investment Shares shall, at the discretion of the Committee, comprise:

 

(a)                          Shares acquired pursuant to Rule 3.3 (Acquisition of Investment Shares) using an amount of the individual’s post-tax annual bonus; and/or

 

(b)                          Shares acquired pursuant to Rule 3.3 (Acquisition of Investment Shares) using an individual’s monies other than an amount of his post-tax annual bonus.

 

3.2                         Invitations in respect of Investment Shares

 

The Committee may invite any person eligible to participate in the Plan to provide funds to acquire Shares in accordance with Rule 3.1 (Source of Investment Shares). Any such invitation shall specify:

 

(a)                          the maximum amount which may be used to acquire Investment Shares (or the basis for calculating such amount);

 

(b)                          the procedure for providing the funds to invest in Investment Shares;

 

(c)                           a Return Date;

 

(d)                          the maximum number of Shares over which a related Matching Award will be made (or how that number will be determined); and

 

(e)                           such other terms relating to the Investment Shares as the Committee may decide from time to time.

 

3.3                     Acquisition and holding of Investment Shares

 

As soon as practicable after the Return Date, and subject to any restrictions referred to in Rule 4.7 (Approvals and consents), the Company will procure the acquisition of the Investment Shares.  Investment Shares will then be held in one or more of the following ways:

 

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(a)                          on the Participant’s behalf by a nominee chosen from time to time by the Committee; or

 

(b)                          directly by the Participant but he will deposit the documents of title relating to the Investment Shares with any person specified by the Committee; or

 

(c)                           by such other method as the Committee decides that will enable it to monitor ownership of the Investment Shares.

 

3.4                        Variation of share capital – Investment Shares

 

Unless the Committee decides otherwise, if:

 

(a)                          a Participant acquires any further Shares by virtue of his holding of Investment Shares under a variation of share capital of the Company then he may add those Shares to his holding of Investment Shares;

 

(b)                          a Participant receives a special dividend by virtue of his holding of Investment Shares, he may purchase further Shares with the dividend and add those Shares to his holding of Investment Shares;

 

(c)                           a Participant receives securities other than Shares by virtue of his holding of Investment Shares, he may sell (or where appropriate redeem) those securities and use the proceeds to purchase further Shares which may be added to his holding of Investment Shares

 

and, in any such case, his Award shall be adjusted accordingly under Rule 13 (Adjustment of Awards).

 

3.5                        Voting and dividend rights

 

While a Participant’s Investment Shares are held for the purposes of the Plan, he shall be entitled to exercise full voting rights in respect of those Investment Shares and receive any dividends declared by reference to the dividend record dates falling after the date of acquisition of the Investment Shares.

 

3.6                     Release of Investment Shares on or after Vesting

 

On or as soon as practicable after the Vesting or lapse of a Matching Award, the Committee shall transfer or procure the transfer of:

 

(a)                          the legal title for the Investment Shares related to the Award; and/or

 

(b)                          any documents of title relating to those Investment Shares

 

to the Participant (or his nominee).

 

4.                                GRANT OF AWARDS

 

4.1                         Terms of grant

 

Subject to Rule 4.6 (Timing of grant), Rule 4.7 (Approvals and consents) and Rule 5 (Limits), the Committee may resolve to grant an Award on:

 

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(a)                          the terms set out in the Plan; and

 

(b)                          such additional terms (whether a Performance Condition and/or any other terms) as the Committee may specify(1)

 

to, in the case of a Performance Award, such eligible employees as it decides and, in the case of a Matching Award, to those eligible employees who have acquired Investment Shares.

 

4.2                         Type of Award

 

On or before the Grant Date, the Committee shall determine whether an Award shall be a Performance Award or a Matching Award and whether that Award shall be in the form of a Conditional Award or an Option.  If the Committee does not specify the type of an Award on or before the Grant Date then an Award shall be an Option with an Option Price equal to the then nominal value of a Share.

 

4.3                         Method of grant

 

An Award shall be granted as follows:

 

(a)                          by deed executed by the Company; and

 

(b)                          if an Award is an Option, the Committee shall determine the Option Price (if any) on or before the Grant Date provided that the Committee may reduce or waive such Option Price on or prior to the exercise of the Option.

 

4.4                         Treatment of dividends

 

The Committee may decide on or before the grant of an Award that either:-

 

(a)                          a Participant (or his nominee) shall be entitled to receive a benefit determined by reference to the value of the dividends that would have been paid on the Vested Shares in respect of dividend record dates occurring during the period between the Grant Date and the date of Vesting.  The Committee shall decide the basis on which the value of such dividends shall be calculated which may assume the reinvestment of dividends.  The Committee may also decide at this time whether the Dividend Equivalent shall be provided to the Participant in the form of cash and/or Shares.  The Dividend Equivalent shall be provided in accordance with Rule 7.3; or

 

(b)                          it shall grant an Award on terms where the number of Shares comprised in an Award shall increase by deeming dividends that would have been paid on such Shares in respect of dividend record dates occurring within the period between the Grant Date and the date of Vesting to have been reinvested in additional Shares on such terms (as to the inclusion or exclusion of any dividend tax credit, the price at which any such additional Shares shall be deemed to have been purchased or otherwise) as the Committee shall decide.

 

4.5                         Method of satisfying Awards

 

Unless specified to the contrary by the Committee on the Grant Date, an Award may be satisfied:

 

(1)    This means that awards may be granted with or without performance conditions being imposed.  Note, however, that the Company stated in the letter from Hans Schram to major shareholders dated 18 January 2008 and the circular to shareholders regarding the establishment of the Plan dated ·  · 2008 that it was envisaged that all awards granted to senior executives would be subject to performance conditions.

 

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(a)                          by the issue of new Shares; and/or

 

(b)                          by the transfer of treasury Shares; and/or

 

(c)                           by the transfer of Shares (other than the transfer of treasury Shares).

 

The Committee may decide to change the way in which it is intended that an Award may be satisfied after it has been granted, having regard to the provisions of Rule 5 (Limits).

 

4.6                         Timing of grant

 

Subject to Rule 4.7 (Approvals and consents), an Award may only be granted:

 

(a)                          in the 6 weeks beginning with:

 

(i)                           the date on which the Plan is approved by the shareholders of the Company; or

 

(ii)                        the dealing day after the date on which the Company announces its results for any period; or

 

(b)                          at any other time when the Committee considers that the circumstances justify its grant

 

but an Award may not be granted after ·  · 2018 (that is, the expiry of the period of 10 years beginning with the date on which the Plan is approved by the shareholders of the Company)(2).

 

4.7                         Approvals and consents

 

The grant of any Award shall be subject to obtaining any approval or consent required under the AIM Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers, or any other relevant UK or overseas regulation or enactment.

 

4.8                         Non-transferability and bankruptcy

 

An Award granted to any person:

 

(a)                          shall not be transferred, assigned, charged or otherwise disposed of (except on his death to his personal representatives) and shall lapse immediately on any attempt to do so; and

 

(b)                          shall lapse immediately if he is declared bankrupt.

 

5.                                LIMITS

 

5.1                         10 per cent. in 10 years limit

 

An Award shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 5.2) on or after 28 June 2001 and in the period of 10 calendar years ending with that calendar year under:

 

(a)         the Plan;

 

(b)         any other employee share plan operated by the Company; and

 

(c)         any other share incentive arrangement operated by the Company for the benefit of directors of, or consultants to, any Participating Company

 

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to exceed such number as represents 10 per cent. of the ordinary share capital of the Company in issue at that time.

 

5.2                         Meaning of “allocated”

 

For the purposes of Rule 5.1:

 

(a)                          Shares are allocated:

 

(i)                           when an option, award or other contractual right to acquire unissued Shares or treasury Shares is granted;

 

(ii)                        where Shares are issued or treasury Shares are transferred otherwise than pursuant to an option, award or other contractual right to acquire Shares, when those Shares are issued or treasury Shares transferred;

 

(b)                          any Shares which have been issued or which may be issued (or any Shares transferred out of treasury or which may be transferred out of treasury) to any trustees to satisfy the exercise of any option, award or other contractual right granted under any arrangement falling within Rule 5.1 shall count as allocated unless they are already treated as allocated under this Rule; and

 

(c)                           for the avoidance of doubt, existing Shares other than treasury Shares that are transferred or over which options, awards or other contractual rights are granted shall not count as allocated.

 

5.3                         Post-grant events affecting numbers of “allocated” Shares

 

For the purposes of Rule 5.2:

 

(a)                          where:

 

(i)                           any option, award or other contractual right to acquire unissued Shares or treasury Shares is released or lapses (whether in whole or in part); or

 

(ii)                        after the grant of an option, award or other contractual right the Committee determines that:

 

(aa)                it shall be satisfied by the payment of cash equal to the gain made on its vesting or exercise; or

 

(bb)                it shall be satisfied by the transfer of existing Shares (other than Shares transferred out of treasury)

 

the unissued Shares or treasury Shares which consequently cease to be subject to the option, award or other contractual right shall not count as allocated; and

 

(b)                          the number of Shares allocated in respect of an option, award or other contractual right shall be such number as the Board shall reasonably determine from time to time.

 

5.4                         Changes to investor guidelines

 

Treasury Shares shall cease to count as allocated Shares for the purposes of Rule 5.2 if

 

(2)    The Company has undertaken to review the Plan five years after adoption (at the latest) — see the letter from Hans Schram to major shareholders dated 18 January 2008.

 

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institutional investor guidelines cease to require such Shares to be so counted.

 

5.5                         Individual limit

 

(a)                          The maximum total market value of Shares (calculated as set out in this Rule) over which Awards may be granted to any employee during any financial year of the Company is 100% of his salary (as defined in this Rule) unless Rule 5.5(b) applies.

 

(b)                          If the Committee decides that exceptional circumstances exist, such as in relation to the recruitment or retention of an eligible employee, then Awards may be granted to him in excess of the limit set out in Rule 5.5(a).

 

For the purpose of this Rule 5.5:

 

(i)                               an employee’s salary shall be taken to be his base salary (excluding benefits in kind), expressed as an annual rate payable by the Participating Companies to him on the Grant Date (or such earlier date as the Committee shall determine).  Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent amount of sterling determined by using any rate of exchange which the Committee may reasonably select; and

 

(ii)                            the market value of the Shares over which an Award is to be granted shall be taken to be an amount equal to the closing quotation of such Shares (as derived from such source as the Committee may determine) on the dealing day before the Grant Date or, if the Committee so determines, the average of the closing quotations during a period determined by the Committee not exceeding the period of 5 dealing days ending with the dealing day before the Grant Date provided such dealing day(s) do not fall within any period when dealings in Shares are prohibited under the AIM Rules, the Company’s share dealing code or any other relevant regulation or enactment.

 

5.6                         Effect of limits

 

Any Award shall be limited and take effect so that the limits in this Rule 5 are complied with.

 

5.7                         Restriction on use of unissued Shares and treasury Shares

 

No Shares may be issued or treasury Shares transferred to satisfy the Vesting of any Conditional Award or the exercise of any Option to the extent that such issue or transfer would cause the number of Shares allocated (as defined in Rule 5.2 and adjusted under Rule 5.3) to exceed the limit in Rule 5.1 (10 per cent. in 10 years limit) except where there is a variation of share capital of the Company which results in the number of Shares so allocated exceeding such limits solely by virtue of that variation.

 

6.                                VESTING OF AWARDS

 

6.1                         Timing of Vesting: Normal Vesting Date

 

Subject to Rule 6.3 (Restrictions on Vesting: regulatory and tax issues), an Award shall Vest on the later of:

 

(a)                          the date on which the Committee determines whether or not any Performance Condition and any other condition imposed on the Vesting of the Award has been satisfied (in whole or part); and

 

(b)                          the third anniversary of the Grant Date, or such other date as the Committee may determine on or before the grant of the relevant Award

 

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except where earlier Vesting occurs on an Early Vesting Date under Rule 11 (Leavers) or Rule 12 (Takeovers and other corporate events).

 

6.2                         Extent of Vesting

 

An Award shall only Vest to the extent:

 

(a)                          that any Performance Condition is satisfied on the Normal Vesting Date or, if appropriate, the Early Vesting Date;

 

(b)                          permitted by any other term imposed on the Vesting of the Award; and

 

(c)                           in relation to Vesting before the Normal Vesting Date, as permitted by Rules 11.3 and 12.5 (Reduction in number of Vested Shares).

 

Where, under Rule 11 (Leavers) or Rule 12 (Takeovers and other corporate events), an Award would (subject to the satisfaction of any Performance Condition) Vest before the end of the full period over which performance would be measured under Performance Condition then, unless provided to the contrary by the Performance Condition, the extent to which the Performance Condition has been satisfied in such circumstances shall be determined by the Committee on such reasonable basis as it decides.

 

6.3                         Restrictions on Vesting: regulatory and tax issues

 

An Award shall not Vest unless and until the following conditions are satisfied:

 

(a)                          the Vesting of the Award, and the issue or transfer of Shares after such Vesting, would be lawful in all relevant jurisdictions and in compliance with the AIM Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

 

(b)                          if, on the Vesting of the Award, a Tax Liability would arise by virtue of such Vesting and the Board decides that such Tax Liability shall not be satisfied by the sale of Shares pursuant to Rule 6.5 (Payment of Tax Liability) then the Participant must have entered into arrangements acceptable to the Board that the relevant Group Member will receive the amount of such Tax Liability;

 

(c)                           the Participant has entered into such arrangements as the Committee requires (and where permitted in the relevant jurisdiction) to satisfy a Group Member’s liability to social security contributions in respect of the Vesting of the Award; and

 

(d)                          where the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income: elections to disapply tax charge on restricted securities) or any similar arrangement in any overseas jurisdiction.

 

For the purposes of this Rule 6.3, references to Group Member include any former Group Member.

 

6.4                         Tax Liability before Vesting

 

If a Participant will, or is likely to, incur any Tax Liability before the Vesting of an Award then that Participant must enter into arrangements acceptable to any relevant Group Member to ensure that it receives the amount of such Tax Liability.  If no such arrangement is made then the Participant shall be deemed to have authorised the Company to sell or procure the sale of

 

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sufficient of the Shares subject to his Award on his behalf to ensure that the relevant Group Member receives the amount required to discharge the Tax Liability and the number of Shares subject to his Award shall be reduced accordingly.

 

For the purposes of this Rule 6.4, references to Group Member include any former Group Member.

 

6.5                         Payment of Tax Liability

 

The Participant authorises the Company to sell or procure the sale of sufficient Vested Shares on or following the Vesting of his Award on his behalf to ensure that any relevant Group Member or former Group Member receives the amount required to discharge the Tax Liability which arises on Vesting except to the extent that the Board decides that all or part of the Tax Liability shall be funded in a different manner.

 

7.                                CONSEQUENCES OF VESTING

 

7.1                         Conditional Awards

 

On or as soon as reasonably practicable after the Vesting of a Conditional Award, the Board shall, subject to Rule 6.5 (Payment of Tax Liability) and any arrangement made under Rules 6.3(b) and 6.3(c) (Restrictions on Vesting: regulatory and tax issues), transfer or procure the transfer of the Vested Shares to the Participant (or a nominee for him).

 

7.2                         Options

 

An Option shall, subject to Rule 8.1 (Restrictions on the exercise of an Option: regulatory and tax issues), be exercisable in respect of Vested Shares at any time prior to the tenth anniversary of the Grant Date, unless it lapses earlier under Rule 11.1 (Good leavers), Rule 11.2 (Cessation of employment in other circumstances), Rule 12.1 (General offers), Rule 12.2 (Schemes of arrangement and winding up) or Rule 12.3 (Demergers and similar events).

 

7.3                         Dividend Equivalent

 

If the Committee decided under Rule 4.4 (Treatment of dividends) that a Participant would be entitled to a Dividend Equivalent in relation to Shares under their Award but did not decide at that time whether the Dividend Equivalent would be provided in the form of cash and/or Shares, then the Committee shall make such decision on or as soon as practicable after Vesting.

 

The Committee, acting fairly and reasonably, may decide to exclude the value of all or part of a special dividend or any other dividend from the amount of the Dividend Equivalent.

 

The provision of the Dividend Equivalent to the Participant shall be made as soon as practicable after the issue or transfer of Vested Shares and:

 

(a)                          in the case of a cash payment, shall be subject to such deductions (on account of tax or similar liabilities) as may be required by law or as the Board may reasonably consider to be necessary or desirable; and

 

(b)                          in the case of a provision of Shares, Rule 6.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 6.5 (Payment of Tax Liability) shall apply as if such provision was the Vesting of an Award.

 

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8.                                EXERCISE OF OPTIONS

 

8.1                         Restrictions on the exercise of an Option: regulatory and tax issues

 

An Option which has Vested may not be exercised unless the following conditions are satisfied:

 

(a)                          the exercise of the Option and the issue or transfer of Shares after such exercise would be lawful in all relevant jurisdictions and in compliance with the AIM Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

 

(b)                          if, on the exercise of the Option, a Tax Liability would arise by virtue of such exercise and the Board decides that such Tax Liability shall not be satisfied by the sale of Shares pursuant to Rule 8.4 (Payment of Tax Liability) then the Participant must have entered into arrangements acceptable to the Board that the relevant Group Member will receive the amount of such Tax Liability;

 

(c)                           the Participant has entered into such arrangements as the Committee requires (and where permitted in the relevant jurisdiction) to satisfy a Group Member’s liability to social security contributions in respect of the exercise of the Option; and

 

(d)                          where the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income: elections to disapply tax charge on restricted securities) or any similar arrangement in any overseas jurisdiction.

 

For the purposes of this Rule 8.1, references to Group Member include any former Group Member.

 

8.2                         Exercise in whole or part

 

An Option must be exercised over at least 2,000 Shares on any occasion unless the Committee decides that a Participant may exercise the Option in respect of such fewer number of Shares as it decides or there are fewer than 2,000 Shares (or such other number as the Committee may decide) in respect of which the Option may be exercised at the relevant time, in which case the Option must be exercised to the maximum extent possible at that time.

 

8.3                         Method of exercise

 

The exercise of any Option shall be effected in the form and manner prescribed by the Board.  Unless the Board, acting fairly and reasonably determines otherwise, any notice of exercise shall, subject to Rule 8.1 (Restrictions on the exercise of an Option: regulatory and tax issues), take effect only when the Company receives it, together with payment of any relevant Option Price (or, if the Board so permits, an undertaking to pay that amount).

 

8.4                         Payment of Tax Liability

 

The Participant authorises the Company to sell or procure the sale of sufficient Vested Shares on or following exercise of his Option on his behalf to ensure that any relevant Group Member receives the amount required to discharge the Tax Liability which arises on such exercise except to the extent that he agrees to fund all or part of the Tax Liability in a different manner.

 

8.5                         Transfer or allotment timetable

 

As soon as reasonably practicable after an Option has been exercised, the Company shall, subject to Rule 8.4 (Payment of Tax Liability) and any arrangement made under Rules 8.1(b) and 8.1(c) (Restrictions on exercise: regulatory and tax issues), transfer or procure the transfer

 

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to him (or a nominee for him) or, if appropriate, allot to him (or a nominee for him) the number of Shares in respect of which the Option has been exercised.

 

8.6                         Lapse of Options

 

An Option which has become exercisable shall, subject to Rule 11.2 (Cessation of employment in other circumstances), Rule 12.1 (General offers), Rule 12.2 (Schemes of arrangement and winding up) or Rule 12.3 (Demergers and similar events), lapse at the end of the Exercise Period to the extent it has not been exercised.

 

9.                                CASH ALTERNATIVE

 

9.1                         Committee determination

 

Where a Conditional Award Vests or where an Option has been exercised and Vested Shares have not yet been allotted or transferred to the Participant (or his nominee), the Committee may determine that, in substitution for his right to acquire such number of Vested Shares as the Committee may decide (but in full and final satisfaction of his right to acquire those Shares), he shall be paid by way of additional employment income a sum equal to the cash equivalent (as defined in Rule 9.3) of that number of Shares in accordance with the following provisions of this Rule 9.

 

9.2                         Limitation on the use of this Rule

 

Rule 9.1 shall not apply in relation to an Award made to a Participant in any jurisdiction where the presence of Rule 9.1 would cause:

 

(a)                          the grant of the Award to be unlawful or for it to fall outside any applicable securities law exclusion or exemption; or

 

(b)                          adverse tax or social security contribution consequences for the Participant or any Group Member as determined by the Board

 

provided that this Rule 9.2 shall only apply if its application would prevent the occurrence of a consequence referred to in (a) or (b) above.

 

9.3                         Cash equivalent

 

For the purpose of this Rule 9, the cash equivalent of a Share is:

 

(a)                          in the case of a Conditional Award, the market value of a Share on the day when the Award Vests;

 

(b)                          in the case of an Option, the market value of a Share on the day when the Option is exercised reduced by the Option Price.

 

Market value on any day shall be determined as follows:

 

(a)                          if on the day of Vesting or exercise, Shares are admitted to trading on the Alternative Investment Market of the London Stock Exchange, the closing quotation of a Share, as derived from such source as the Committee may determine, on that day; or

 

(b)                          if Shares are not so quoted, such value of a Share as the Committee reasonably determines.

 

13

 

9.4                         Payment of cash equivalent

 

Subject to Rule 9.5 (Share alternative), as soon as reasonably practicable after the Committee has determined under Rule 9.1 that a Participant shall be paid a sum in substitution for his right to acquire any number of Vested Shares:

 

(a)                          the Company shall pay to him or procure the payment to him of that sum in cash; and

 

(b)                          if he has already paid the Company for those Shares, the Company shall return to him the amount so paid by him.

 

9.5                         Share alternative

 

If the Committee so decides, the whole or any part of the sum payable under Rule 9.4 shall, instead of being paid to the Participant in cash, be applied on his behalf:

 

(a)                          in subscribing for Shares at a price equal to the market value by reference to which the cash equivalent is calculated; or

 

(b)                          in purchasing such Shares; or

 

(c)         partly in one way and partly in the other

 

and the Company shall allot or transfer to him (or his nominee) or procure the transfer to him (or his nominee) of the Shares so subscribed for or purchased.

 

9.6                         Deductions

 

There shall be deducted from any payment under this Rule 9 such amounts (on account of tax or similar liabilities) as may be required by law or as the Board may reasonably consider to be necessary or desirable.

 

10.                         LAPSE OF AWARDS

 

10.1                  An Award shall lapse:

 

(a)                          in accordance with the Rules; or

 

(b)                          to the extent it does not Vest under these Rules.

 

10.2                  Dealings in Investment Shares

 

A Matching Award shall lapse on the date on which the Participant:

 

(a)                          does any act in breach of any of the terms relating to his Investment Shares unless the Committee decides otherwise; or

 

(b)                          loses his entitlement to, transfers, charges, or otherwise disposes of the Investment Shares to which the relevant Matching Award relates

 

and such lapse shall be pro-rata to the number of Investment Shares in respect of which such act or event occurs.

 

14

 

11.                         LEAVERS

 

11.1                  Good leavers

 

If a Participant ceases to be a director or employee of a Group Member before the Normal Vesting Date by reason of:

 

(a)                          death;

 

(b)                          retirement with the agreement of the Committee (in the case of Participants who are executive directors of the Company or members of senior management) or the employer (in the case of all other Participants);

 

(c)                           ill health, injury or disability evidenced to the satisfaction of the Committee;

 

(d)                          redundancy (within the meaning of the Employment Rights Act 1996) or any overseas equivalent;

 

(e)                           his office or employment being with either a company which ceases to be a Group Member or relating to a business or part of a business which is transferred to a person who is not a Group Member; or

 

(f)                            for any other reason, if the Committee so decides

 

then:

 

(i)                                     subject to Rule 6.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 12 (Takeovers and other corporate events), his Award shall Vest on the Normal Vesting Date and Rule 11.3 (Leavers: reduction in number of Vested Shares) shall apply; unless

 

(ii)                                  the Committee decides that, subject to Rule 6.3 (Restrictions on Vesting: regulatory and tax issues), his Award shall Vest on the date of cessation and Rule 11.3 (Leavers: reduction in number of Vested Shares) shall apply.

 

If an event as described in this Rule 11.1 occurs, and paragraph (ii) above applies, an Option may, subject to Rule 8.1 (Restrictions on the exercise of an Option: regulatory and tax issues), be exercised within six months of such event but, to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

 

11.2                  Cessation of employment in other circumstances

 

If a Participant ceases to be a director or employee of a Group Member for any reason other than those specified in Rule 11.1 (Good leavers) then any Award held by him shall lapse immediately on such cessation.

 

11.3                  Leavers: reduction in number of Vested Shares

 

Where an Award Vests on or after a Participant ceasing to be a director or employee of a Group Member, the Committee shall determine the number of Vested Shares of that Award by the following steps:

 

(a)                          applying any Performance Condition and any other condition imposed on the Vesting of the Award; and

 

(b)                          if the Committee so decides, applying such reduction to the number of Shares determined under Rule 11.3(a) as it sees fit (such reduction to be, unless it decides otherwise, on such pro-rata basis as it may determine).

 

15

 

If an Award Vests under any of Rules 12.1 to 12.3 when the holder of that Award has ceased to be a director or employee of a Group Member then this Rule 11.3 shall take precedence over Rule 12.5.

 

11.4                  Meaning of ceasing employment

 

A Participant shall not be treated for the purposes of this Rule 11 as ceasing to be a director or employee of a Group Member until such time as he is no longer a director or employee of any Group Member.  If any Participant ceases to be such a director or employee before the Vesting of his Award in circumstances where he retains a statutory right to return to work then he shall be treated as not having ceased to be such a director or employee until such time (if at all) as he ceases to have such a right to return to work while not acting as an employee or director.

 

The reason for the termination of office or employment of a Participant shall be determined by reference to Rules 11.1 and 11.2 regardless of whether such termination was lawful or unlawful.

 

12.                        TAKEOVERS AND OTHER CORPORATE EVENTS

 

12.1                  General offers

 

If any person (or group of persons acting in concert):

 

(a)                          obtains (or, in the reasonable opinion of the Committee, is expected to obtain) Control of the Company as a result of making a general offer to acquire Shares; or

 

(b)                          having obtained Control of the Company makes such an offer and such offer becomes unconditional in all respects

 

the Committee shall within 7 days of becoming aware of that event or forming such opinion (as applicable) notify every Participant accordingly and, subject to Rule 12.4 (Internal reorganisations), the following provisions shall apply:

 

(i)                              subject to Rule 6.3 (Restrictions on Vesting: regulatory and tax issues), all Awards shall Vest on such date as the Committee may determine (being no later than the date of the change in Control of the Company or the offer becoming unconditional in all respects, as applicable) (such date being the Early Vesting Date) if they have not then Vested and Rule 12.5 (Corporate events: reduction in number of Vested Shares) shall apply; and

 

(ii)                           any Option may, subject to Rule 8.1 (Restrictions on the exercise of an Option: regulatory and tax issues), be exercised within one month of the Early Vesting Date, but to the extent that an Option is not exercised within that period, that Option shall (regardless of any other provision of the Plan) lapse at the end of that period.

 

12.2                  Schemes of arrangement and winding up

 

In the event that:

 

(a)                          a compromise or arrangement is sanctioned by the Court under section 425 of the Companies Act 1985 in connection with or for the purposes of a change in Control of the Company; or

 

(b)                          the Company passes a resolution for a voluntary winding up of the Company; or

 

(c)                           an order is made for the compulsory winding up of the Company

 

16

 

or, in the reasonable opinion of the Committee, any of the above events is expected to occur, all Awards shall, subject to Rule 6.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 12.4 (Internal reorganisations), Vest on such date as the Committee may determine (being no later than the date of such event) (such date being the Early Vesting Date) if they have not then Vested and Rule 12.5 (Corporate events: reduction in number of Vested Shares) shall apply.

 

If an event as described in this Rule 12.2 occurs (or, in the reasonable opinion of the Committee, is expected to occur) then an Option may, subject to Rule 8.1 (Restrictions on the exercise of an Option: regulatory and tax issues) and Rule 12.4 (Internal reorganisations), be exercised within one month of the Early Vesting Date, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

 

12.3                  Demergers and similar events

 

If a demerger, special dividend or other similar event (the “Relevant Event”) is proposed which, in the opinion of the Committee, would affect the market price of Shares to a material extent, then the Committee may, at its discretion, decide that the following provisions shall apply:

 

(a)                          the Committee shall, as soon as reasonably practicable after deciding to apply these provisions, notify a Participant that, subject to earlier lapse under Rule 11 (Leavers), his Award Vests and, if relevant, his Option may be exercised on such terms as the Committee may determine and during such period preceding the Relevant Event or on the Relevant Event as the Committee may determine and shall lapse at the end of that period to the extent unexercised;

 

(b)                          if an Award Vests, or an Option is exercised, conditional upon the Relevant Event and such event does not occur then the conditional Vesting or exercise shall not be effective and the Award shall continue to subsist; and

 

(c)                           if the Committee decides that an Award Vests under this Rule 12.3 then the date of that Vesting shall be the Early Vesting Date and the provisions of Rule 12.5 (Corporate events: reduction in number of Vested Shares) shall apply.

 

12.4                  Internal reorganisations

 

In the event that:

 

(a)                          a company (the “Acquiring Company”) is expected to obtain Control of the Company as a result of an offer referred to in Rule 12.1 (General offers) or a compromise or arrangement referred to in Rule 12.2(a) (Schemes of arrangement and winding up); and

 

(b)                          at least 75% of the shares in the Acquiring Company are expected to be held by substantially the same persons who immediately before the obtaining of Control of the Company were shareholders in the Company

 

then the Committee, with the consent of the Acquiring Company, may decide before the obtaining of such Control that an Award shall not Vest under Rule 12.1 or Rule 12.2 but shall be automatically surrendered in consideration for the grant of a new award which the Committee determines is equivalent to the Award it replaces except that it will be over shares in the Acquiring Company or some other company.

 

17

 

The Rules will apply to any new award granted under this Rule 12.4 as if references to Shares were references to shares over which the new award is granted and references to the Company were references to the company whose shares are subject to the new award.

 

12.5                  Corporate events: reduction in number of Vested Shares

 

If an Award Vests under any of Rules 12.1 to 12.3, the Committee shall determine the number of Vested Shares of that Award by the following steps:

 

(a)                          applying any Performance Condition and any other condition imposed on the Vesting of the Award;  and

 

(b)                          subject to Rule 11.3 (Leavers: reduction in number of Vested Shares), and if the Committee so decides, by applying such reduction to the number of Shares determined under Rule 12.5(a) as it sees fit (such reduction to be, unless it decides otherwise, on such pro-rata basis as it may determine).

 

If an Award Vests under any of Rules 12.1 to 12.3 after the holder of that Award has ceased to be a director or employee of a Group Member then Rule 11.3 shall take precedence over this Rule 12.5.

 

13.                         ADJUSTMENT OF AWARDS

 

13.1                  General rule

 

In the event of:

 

(a)                          any variation of the share capital of the Company; or

 

(b)                          a demerger, special dividend or other similar event which affects the market price of Shares to a material extent

 

the Committee may make such adjustments as it considers appropriate under Rule 13.2 (Method of adjustment) taking into account, where relevant, any adjustment to the related holding of Investment Shares under Rule 3.4 (Variation of share capital – Investment Shares).

 

13.2                  Method of adjustment

 

An adjustment made under this Rule shall be to one or more of the following:

 

(a)                          the number of Shares comprised in an Award;

 

(b)                          subject to Rule 13.3 (Adjustment below nominal value), the Option Price; and

 

(c)                           where any Award has Vested or Option has been exercised but no Shares have been transferred or allotted after such Vesting or exercise, the number of Shares which may be so transferred or allotted and (if relevant) the price at which they may be acquired.

 

13.3                  Adjustment below nominal value

 

An adjustment under Rule 13.2 may have the effect of reducing the price at which Shares may be subscribed for on the exercise of an Option to less than their nominal value, but only if and to the extent that the Board is authorised:

 

(a)                          to 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 exercised and which are

 

18

 

to be allotted after such exercise exceeds the price at which the Shares may be subscribed for; and

 

(b)                          to apply that sum in paying up such amount on such Shares

 

so that on exercise of any Option in respect of which such a reduction shall have been made the Board shall capitalise that sum (if any) and apply it in paying up that amount.

 

14.                         ALTERATIONS

 

14.1                  General rule on alterations

 

Except as described in Rule 14.2 (Shareholder approval) and Rule 14.4 (Alterations to disadvantage of Participants), the Committee may at any time alter the Plan or the terms of any Award.

 

14.2                  Shareholder approval

 

Except as described in Rule 14.3 (Exceptions to shareholder approval), no alteration to the advantage of an individual to whom an Award has been or may be granted shall be made under Rule 14.1 to the provisions concerning:

 

(a)                          the individual limits on participation;

 

(b)                          the overall limits on the issue of Shares or the transfer of treasury Shares; and

 

(c)                           the terms of this Rule 14.2

 

without the prior approval by ordinary resolution of the members of the Company in general meeting.

 

14.3                  Exceptions to shareholder approval

 

Rule 14.2 (Shareholder approval) shall not apply to:

 

(a)                          any minor alteration to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Participants or any Group Member; or

 

(b)                          any alteration relating to the Performance Condition made under Rule 14.5.

 

14.4                  Alterations to disadvantage of Participants

 

No alteration to the material disadvantage of Participants (other than a change to any Performance Condition) shall be made under Rule 14.1 unless:

 

(a)                          the Board shall have invited every relevant Participant to indicate whether or not he approves the alteration; and

 

(b)                          the alteration is approved by a majority of those Participants who have given such an indication.

 

19

 

14.5                  Alterations to a Performance Condition

 

The Committee may amend any Performance Condition without prior shareholder approval(3) if:

 

(a)                          an event has occurred which causes the Committee reasonably to consider that it would be appropriate to amend the Performance Condition; and

 

(b)                          the Committee shall act fairly and reasonably in making the alteration.

 

15.                         MISCELLANEOUS

 

15.1                 Employment

 

The rights and obligations of any individual under the terms of his office or employment with any Group Member shall not be affected by his participation in the Plan or any right which he may have to participate in it.  An individual who participates in the Plan waives any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever insofar as those rights arise or may arise from him ceasing to have rights under an Award as a result of such termination.  Participation in the Plan shall not confer a right to continued employment upon any individual who participates in it.  The grant of any Award does not imply that any further Award will be granted nor that a Participant has any right to receive any further Award.

 

15.2                  Disputes

 

In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or relating to the Plan, the decision of the Committee shall be final and binding upon all persons.

 

15.3                  Exercise of powers and discretions

 

The exercise of any power or discretion by the Committee shall not be open to question by any person and a Participant or former Participant shall have no rights in relation to the exercise of or omission to exercise any such power or discretion.

 

15.4                  Share rights

 

All Shares allotted under the Plan shall rank equally in all respects with Shares then in issue except for any rights attaching to such Shares by reference to a record date before the date of the allotment.

 

Where Vested Shares are transferred to Participants (or their nominee) they shall be entitled to all rights attaching to such Shares by reference to a record date on or after the date of such transfer.

 

15.5                  Notices

 

Any notice or other communication under or in connection with the Plan may be given:

 

(a)                          by personal delivery or by post, in the case of a company to its registered office, and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, 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;

 

(3)    The Company has undertaken to consult with major shareholders prior to altering any existing performance conditions — see the letter from Hans Schram to major shareholders dated 18 January 2008 and the circular to shareholders relating to the introduction of the Plan dated . ·  · 2008.

 

20

 

(b)                          in an electronic communication to their usual business address or such other address for the time being notified for that purpose to the person giving the notice; or

 

(c)                           by such other method as the Board determines.

 

15.6                  Third parties

 

No third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan.

 

15.7                  Benefits not pensionable

 

Benefits provided under the Plan shall not be pensionable.

 

15.8                  Data Protection

 

Each Participant consents to the collection, processing and transfer of his personal data for any purpose relating to the operation of the Plan.  This includes:

 

(a)                          providing personal data to any Group Member and any third party such as trustees of any employee benefit trust, administrators of the Plan, registrars, brokers and any of their respective agents;

 

(b)                          processing of personal data by any such Group Member or third party;

 

(c)                           transferring personal data to a country outside the European Economic Area (including a country which does not have data protection laws equivalent to those prevailing in the European Economic Area); and

 

(d)                          providing personal data to potential purchasers of the Company, the Participant’s employer or the business in which the Participant works.

 

15.9                  Governing law

 

The Plan and all Awards shall be governed by and construed in accordance with the law of England and Wales and the Courts of England and Wales have exclusive jurisdiction to hear any dispute.

 

21

 

SCHEDULE 1

 

CASH CONDITIONAL AWARDS

 

The Rules of the GW Pharmaceuticals plc Performance Share Plan shall apply to a right (a “Cash Conditional Award”) to receive a cash sum granted or to be granted under this Schedule as if it was a Conditional Award, except as set out in this Schedule.  Where there is any conflict between the Rules and this Schedule, the terms of this Schedule shall prevail.

 

1.                                The Committee may grant or procure the grant of a Cash Conditional Award.

 

2.                                Each Cash Conditional Award shall relate to a given number of notional Shares.

 

3.                                On the Vesting of the Cash Conditional Award the holder of that Award shall be entitled to a cash sum which shall be equal to the “Cash Value” of the notional Vested Shares, where the Cash Value of a notional Share is the market value of a Share on the date of Vesting of the Cash Conditional Award.  For the purposes of this Schedule, the market value of a Share on any day shall be determined in accordance with Rule 9.3 (Cash equivalent).

 

4.                                The cash sum payable under paragraph 3 above shall be paid by the employer of the Participant as soon as practicable after the Vesting of the Cash Conditional Award, net of any deductions (on account of tax or similar liabilities) as may be required by law or as the Board may reasonably consider to be necessary or desirable.

 

5.                                For the avoidance of doubt, a Cash Conditional Award shall not confer any right on the holder of such an Award to receive Shares or any interest in Shares.

 

22

 

SCHEDULE 2

 

EMI AWARDS

 

1.         INTERACTION WITH PLAN

 

The provisions of this Schedule 2 and the Rules shall govern the terms of the EMI Awards granted under this schedule and, for this purpose, references to the Plan shall include references to this Schedule 2.  Where there is any conflict between the Rules and this Schedule 2, the terms of this Schedule 2 shall prevail.

 

2.         DEFINITIONS AND INTERPRETATIONS

 

“EMI Award” means an Award granted under this Schedule 2 which is a qualifying option to acquire Shares for the purposes of Schedule 5;

 

“Qualifying Subsidiary” means a Subsidiary which meets the conditions of paragraph 11 of Schedule 5;

 

“Schedule 5” means Schedule 5 to ITEPA;

 

“Shares”  means ordinary shares in the capital of the Company which are fully paid up and are not redeemable;

 

and, for the purposes of this Schedule 2, expressions not otherwise defined in the Plan shall have the same meaning as they have in Schedule 5.

 

3.         ELIGIBILITY

 

A person is eligible to be granted an EMI Award if (and only if) he is an employee within the meaning of paragraph 25 of Schedule 5 and if his committed time to the Company or a Qualifying Subsidiary amounts to at least 25 hours a week or, if less, 75% of his working time, in each case within the meaning of and in compliance with paragraph 26 of Schedule 5.

 

A person is not eligible to be granted an EMI Award at any time when he is not eligible to receive such an award by virtue of paragraph 28 of Schedule 5 (no material interest requirement). Further an EMI Award shall not be granted unless the requirements of paragraph 4 of Schedule 5 (commercial reasons for grant) are satisfied.

 

4.         GRANT OF EMI AWARDS

 

EMI Awards may only be granted at such time as the provisions of Schedule 5 are met.

 

When granting an Award under the Plan, the Committee shall specify whether the Award is intended to be an EMI Award and, if so, shall enter into a written agreement with the Participant on such terms as it may determine, provided that such agreement meets the requirements of paragraph 37 of Schedule 5.

 

5.         IMPACT OF NON-COMPLIANCE WITH SCHEDULE 5

 

Notwithstanding any other provision of this Schedule 2 and/or the Rules, an EMI Award shall not be treated as an unapproved award by reason only of any minor deviation(s) from the requirements of Schedule 5 and, in the event of such minor deviation(s), the terms of the EMI Awards shall be amended so as to satisfy the provisions of Schedule 5.

 

If, however, any Award granted as an EMI Award does not meet the requirements of Schedule 5 on its Grant Date or thereafter and cannot be so amended then, to the extent that it does not

 

23

 

meet the requirements of Schedule 5, it shall continue to subsist as an Award granted under the Plan.

 

6.         LIMITS

 

No person shall be granted an EMI Award which would, at the time it is granted, result in:

 

(a)                       that person exceeding the maximum entitlement as prescribed in paragraph 5 of Schedule 5 (currently £100,000 worth of subsisting EMI options and/or HMRC approved options); or

 

(b)                       a breach of paragraph 6 of Schedule 5 (further three-year limit).

 

The maximum value of Shares over which unexercised EMI Awards may subsist at any one time shall be limited to the amount prescribed in paragraph 7 of Schedule 5 (currently £3 million).

 

7.         DIVIDEND EQUIVALENT

 

Any Dividend Equivalent paid in connection with an EMI Award shall be deemed to be provided in connection with a non-EMI Award of equivalent size and outside the scope of Schedule 5.  A Dividend Equivalent may, however, only be paid in connection with an EMI Award to the extent that the making of such a payment would not, in the reasonable opinion of the Committee, prejudice the tax-favoured status of any EMI Award.

 

8.         MISCELLANEOUS

 

Notwithstanding the generality of Rule 15.1, a Participant will not be entitled to any compensation or damages in respect of:

 

(b)                       an EMI Award losing its tax favoured status by reason of the requirements of Schedule 5 not being met, including the occurrence of a disqualifying event within the meaning of Schedule 5, or otherwise; or

 

(c)                        an Award purportedly granted as an EMI Award never having satisfied the requirements of Schedule 5 and/or never having otherwise qualified for tax favoured status.

 

24Exhibit 10.43

 

 

CONFORMED COPY OF THE

 

TRUST DEED AND RULES

 

of the

 

GW PHARMACEUTICALS ALL EMPLOYEE SHARE SCHEME

 

 

Adopted by the company on 16th August 2000

 

Approved by the Inland Revenue under schedule 8 to the Finance Act 2000
 on 25 August 2000

 

Trust Deed and Rules amended with Inland Revenue approval
 with effect from                            2001

 

 

Rowe & Maw
 20 Black Friars Lane
 London EC4V 6HD

 

Tel 020 7248 4282
 Fax 020 7248 2009

 

Ref: 520/29851.00001

 

 

GW PHARMACEUTICALS ALL EMPLOYEE SHARE SCHEME
 TRUST DEED

 

DATE:                   16 August 2000

 

PARTIES:

 

(1)                                 GW PHARMA LIMITED(1) whose registered office is at Porton Down Science Park, Salisbury, Wiltshire SP4 0JQ (“the Company”); and

 

(2)                                 GWP TRUSTEE COMPANY LIMITED whose registered office is at Porton Down Science Park, as above (“the Trustees”).

 

THIS DEED WITNESSES that:

 

1.                                      PURPOSE

 

The purpose of this Deed is to establish a trust for the employee share ownership plan known as GW Pharmaceuticals All Employee Share Scheme (“the Plan”) which satisfies Schedule 8 Finance Act 2000.

 

2.                                      STATUS

 

The Plan consists of this Deed and the attached Rules and Appendices.  The definitions in the Rules apply to this Deed.  The Company shall from time to time determine which of parts A to D of the Rules shall have effect.  Where the Company determines that part B shall have effect it shall also specify whether there is to be an Accumulation Period of up to 12 months, which shall apply equally to all Qualifying Employees in the Plan.

 

3.                                      DECLARATION OF TRUST

 

3.1                               Assets held on trust

 

The Company and the Trustees have agreed that all the Shares and other assets which are issued to or transferred to the Trustees are to be held on the trusts declared by this Deed, and subject to the terms of the Rules.  When Shares or

 

(1)  GW Pharmaceuticals Limited changed its name to GW Pharma Limited on 1 June 2001.

 

 

assets are transferred to the Trustees by the Company with the intention of being held as part of the Plan they shall be held upon the trusts and provisions of this Deed and the Rules.

 

3.2                               Assets other than income

 

The Trustees shall hold the Trust Fund upon the following trusts namely:

 

(a)                                 as to Shares which have not been awarded to Participants (“Unawarded Shares”) upon trust during the Trust Period and subject to any exercise of the powers given to the Trustees in Clause 8.4 below to allocate those Shares in accordance with the terms of this Deed and the Rules,

 

(b)                                 as to Shares which have been awarded to a Participant (“Plan Shares”) upon trust for the benefit of that Participant on the terms and conditions set out in the Rules,

 

(c)                                  as to Partnership Share Money upon trust to purchase Shares for the benefit of the contributing Qualifying Employee in accordance with the Rules, and

 

(d)                                 as to other assets (“Surplus Assets”) upon trust to use them to purchase further Shares to be held on the trusts declared in (a) above, at such time during the Trust Period and on such terms as the Trustees in their absolute discretion think fit.

 

3.3                               Income: Unawarded Shares and Surplus Assets

 

The income of Unawarded Shares and Surplus Assets shall be accumulated by the trustees and added to, and held upon the trusts applying to, Surplus Assets.

 

3.4                               Income: Plan Shares and Partnership Share Money

 

The income of Plan Shares and Partnership Share Money shall be dealt with in accordance with the Rules.

 

3.5                               Perpetuity Period

 

The perpetuity period in respect of the trusts and powers declared by this Deed and the Rules shall be the period of 80 years from the date of this Deed.

 

 

4.                                      NUMBER OF TRUSTEES

 

Unless a corporate Trustee is appointed, there shall always be at least 2 Trustees.  Where there is no corporate Trustee, and the number of Trustees falls below 2, the continuing Trustee has the power to act only to achieve the appointment of a new Trustee.

 

5.                                      INFORMATION

 

The Trustees shall be entitled to rely on information supplied by the Company in respect of the eligibility of any person to become or remain a Participant in the Plan.

 

6.                                      RESIDENCE OF TRUSTEES

 

Every Trustee shall be resident in the United Kingdom.  The Company shall immediately remove any Trustee who ceases to be so resident and, if necessary, appoint a replacement.

 

7.                                      CHANGE OF TRUSTEES

 

The Company has the power to appoint or remove any Trustee for any reason.  The change of Trustee shall be effected by executing a deed. Any Trustee may resign on one month’s notice given in writing to the Company, provided that there will be at least two Trustees or a corporate Trustee immediately after the retirement.

 

8.                                      INVESTMENT AND DEALING WITH TRUST ASSETS

 

8.1                               Plan Shares

 

Save as otherwise provided for by the Plan the Trustees shall not sell or otherwise dispose of Plan Shares.

 

8.2                               Participant’s Directions

 

The Trustees shall obey any directions given by a Participant in accordance with the Rules in relation to his Plan Shares and any rights and income relating to those Shares. In the absence of any such direction, or provision by the Plan, the Trustees shall take no action.

 

 

8.3                               Partnership Share Money

 

The Company and Participating Companies shall, as soon as practicable after deduction from Salary, pass the Partnership Share Money to the Trustees who will put the money into an account with:

 

(a)                                 an institution authorised under the Banking Act 1987;

 

(b)                                 a building society; or

 

(c)                                  a relevant European institution, until it is either used to acquire Partnership Shares on the Acquisition Date, or, in accordance with the Plan, returned to the individual from whose Salary the Partnership Share Money has been deducted.

 

The Trustees shall pass on any interest arising on this invested money to the individual from whose Salary the Partnership Share money has been deducted.

 

8.4                               Unawarded Shares

 

(1)                                 The Trustees may either retain or sell Unawarded Shares at their absolute discretion.  The proceeds of any sale of Unawarded Shares shall form part of Surplus Assets.

 

(2)                                 The Trustees may also, with the prior consent of the Company, at any time during the Trust Period transfer Unawarded Shares to the trustees of any other trust provided that:

 

(a)                                 the transfer shall not offend any applicable rules against perpetuities or excessive accumulations; and

 

(b)                                 in the opinion of the Trustees the provisions of the other trust are such that the transfer would be beneficial to one or more Qualifying Employees, whether or not other persons may be capable of taking a benefit under those provisions.

 

8.5                               Surplus Assets

 

The Trustees shall have all the powers of investment of a beneficial owner in relation to Surplus Assets.

 

 

8.6                               Diversification

 

The Trustees shall not be under any liability to the Participating Companies or to current or former Qualifying Employees by reason of a failure to diversify investments, which results from the retention of Plan or Unawarded Shares.

 

8.7                               Delegation

 

The Trustees may delegate powers, duties or discretions to any persons and on any terms.  No delegation made under this clause shall divest the Trustees of their responsibilities under this Deed or under the Schedule.

 

The Trustees may allow any Shares to be registered in the name of an appointed nominee provided that such Shares shall be registered in a designated account.  Such registration shall not divest the Trustees of their responsibilities under this Deed or the Schedule.

 

The Trustees may at any time, and shall if the Company so directs, revoke any delegation made under this clause or require any Plan assets held by another person to be returned to the Trustees, or both.

 

9.                                      LOANS TO TRUSTEES

 

The Trustees shall have the power to borrow money for the purpose of:

 

(a)                                 acquiring Shares; and

 

(b)                                 paying any other expenses properly incurred by the Trustees in administering the Plan.

 

10.                               SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS

 

Where Shares are transferred to the Trustees in accordance with paragraph 76 of the Schedule, they shall award such Shares only as Free and Matching Shares, and in priority to other available Shares.

 

11.                               TRUSTEES’ OBLIGATIONS UNDER THE PLAN

 

11.1                        Notice of Award of Free and Matching Shares

 

As soon as practicable after Free and Matching Shares have been awarded to a Participant, the Trustees shall give the Participant a notice stating:

 

 

(a)                                 the number and description of those Shares;

 

(b)                                 their Initial Market Value; and

 

(c)                                  the Holding Period applicable to them.

 

11.2                        Notice of Award of Partnership Shares

 

As soon as practicable after any Partnership Shares have been acquired for a Participant, the Trustees shall give the Participant a notice stating:

 

(a)                                 the number and description of those Shares;

 

(b)                                 the amount of money applied by the Trustees in acquiring those shares on behalf of the Participant; and

 

(c)                                  the Market Value at the Acquisition Date.

 

11.3                        Notice of acquisition of Dividend Shares

 

As soon as practicable after Dividend Shares have been acquired on behalf of a Participant, the Trustees shall give the Participant a notice stating:

 

(a)                                 the number and description of those shares;

 

(b)                                 their Market Value on the Acquisition Date,

 

(c)                                  the Holding Period applicable to them; and

 

(d)                                 any amount not reinvested and carried forward for acquisition of further Dividend Shares.

 

11.4                        Notice of any foreign tax deducted before dividend paid

 

Where any foreign cash dividend is received in respect of Plan Shares held on behalf of a Participant, the Trustees shall give the Participant notice of the amount of any foreign tax deducted from the dividend before it was paid.

 

11.5                        Restrictions during the Holding Period

 

During the Holding Period the Trustees shall not dispose of any Free, Matching or Dividend Shares (whether by transfer to the employee or otherwise) except as allowed by the following paragraphs of the Schedule:

 

 

(a)                                 paragraph 32 (power of Trustees to accept general offers etc.);

 

(b)                                 paragraph 72 (power of Trustees to raise funds to subscribe for rights issue);

 

(c)                                  paragraph 73 (meeting PAYE obligations); and

 

(d)                                 paragraph 121(5) (termination of plan: early removal of shares with participant’s consent).

 

11.6                        PAYE liability etc.

 

The Trustees may dispose of a Participant’s Shares or accept a sum from the Participant in order to meet any PAYE liability in the circumstances provided in paragraph 95 of the Schedule (PAYE: shares ceasing to be subject to the plan).

 

Where the Trustees receive a sum of money which constitutes a Capital Receipt in respect of which a Participant is chargeable to income tax under Schedule E, the Trustees shall pay to the employer a sum equal to that on which income tax is so payable.

 

The Trustees shall maintain the records necessary to enable them to carry out their PAYE obligations, and the PAYE obligations of the employer company so far as they relate to the Plan.

 

Where the Participant becomes liable to income tax under Schedule E, Case V of Schedule D, or Schedule F, the Trustees shall inform the Participant of any facts which are relevant to determining that liability.

 

11.7                        Money’s worth received by Trustees

 

The Trustees shall pay over to the Participant as soon as is practicable, any money or money’s worth received by them in respect of or by reference to any shares, other than new shares within paragraph 115 of the Schedule (company reconstructions).

 

This is subject to:

 

(a)                                 the provisions of Part VII of the Schedule (dividend reinvestment);

 

(b)                                 the Trustees obligations under paragraphs 95 and 96 of the Schedule (PAYE: obligations to make payments to employer etc); and

 

 

(c)                                  the Trustees’ PAYE obligations.

 

11.8                        General offers etc.

 

If any offer, compromise, arrangement or scheme is made which affects the Plan Shares the Trustees shall notify Participants.  Each Participant may direct how the Trustees shall act in relation to that Participant’s Plan Shares.  In the absence of any direction, the Trustees shall take no action.

 

12.                               POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE

 

If instructed by Participants in respect of their Plan Shares the Trustees may dispose of some of the rights under a rights issue arising from those Shares to obtain enough funds to exercise the remaining rights.

 

The rights referred to are the rights to buy additional shares or rights in the same company.

 

13.                               POWER TO AGREE MARKET VALUE OF SHARES

 

Where the Market Value of Shares falls to be determined for the purposes of the Schedule, the Trustees may agree with the Inland Revenue that it shall be determined by reference to such date or dates, or to an average of the values on a number of dates, as specified in the agreement.

 

14.                               PERSONAL INTEREST OF TRUSTEES

 

Trustees, and directors, officers or employees of a corporate Trustee, shall not be liable to account for any benefit accruing to them by virtue of their:

 

(a)                                 participation in the Plan as a Qualifying Employee;

 

(b)                                 ownership, in a beneficial or fiduciary capacity, of any shares or other securities in any Participating Company;

 

(c)                                  being a director or employee of any Participating Company, being a creditor, or being in any other contractual relationship with any such Company.

 

 

15.                               TRUSTEES’ MEETINGS

 

The Trustees shall hold meetings as often as is necessary for the administration of the Plan.  There shall be at least two Trustees present at a meeting except where the sole Trustee is a corporate Trustee and the Trustees shall give due notice to all the Trustees of such a meeting. Decisions made at such a meeting by a majority of the Trustees present shall be binding on all the Trustees.  A written resolution signed by all the Trustees shall have the same effect as a resolution passed at a meeting.

 

16.                              SUBSIDIARY COMPANIES

 

Any Subsidiary may with the agreement of the Company become a party to this Deed and the Plan by executing a deed of adherence agreeing to be bound by the Deed and Rules.

 

Any company which ceases to be a Subsidiary shall cease to be a Participating Company.

 

17.                              EXPENSES OF PLAN

 

The Participating Companies shall meet the costs of the preparation and administration of this Plan.

 

18.                              TRUSTEES’ LIABILITY AND INDEMNITY

 

18.1                       Indemnity

 

The Participating Companies shall jointly and severally indemnify each of the Trustees (except a remunerated Trustee) against any expenses and liabilities which are incurred through acting as a Trustee of the Plan and which cannot be recovered from the Trust Fund.  This does not apply to expenses and liabilities which are incurred through fraud or wilful wrongdoing or are covered by insurance under clause 18.3.

 

18.2                       Restriction of liability

 

No Trustee except a remunerated Trustee shall be personally liable for any breach of trust (other than through fraud or wilful wrongdoing) over and above the extent to which the Trustee is indemnified by the Participating Companies in accordance with clause 18.1 above.

 

 

18.3                       Insurance

 

A non-remunerated Trustee may insure the Plan against any loss caused by him or any of his employees, officers, agents or delegates.  A non-remunerated Trustee may also insure himself and any of these persons against liability for breach of trust not involving fraud or wilful wrongdoing or negligence of the Trustee or the person concerned.

 

18.4                       Charging

 

A Trustee who carries on a profession or business may charge for services rendered on a basis agreed with the Company.  A firm or company in which a Trustee is interested or by which he is employed may also charge for services rendered on this basis.

 

19.                              COVENANT BY THE PARTICIPATING COMPANIES

 

The Participating Companies hereby jointly and severally covenant with the Trustees that they shall pay to the Trustees all sums which they are required to pay under the Rules and shall at all times comply with the Rules.

 

20.                              ACCEPTANCE OF GIFTS

 

The Trustees may accept gifts of Shares and other assets which shall be held upon the trusts declared by clause 3(1) or 3(4) as the case may be.

 

21.                              TRUSTEES’ LIEN

 

The Trustees’ lien over the Trust Fund in respect of liabilities incurred by them in the performance of their duties (including the repayment of borrowed money and tax liabilities) shall be enforceable subject to the following restrictions:

 

(a)                                 the Trustees shall not be entitled to resort to Partnership Share Money for the satisfaction of any of their liabilities; and

 

(b)                                 the Trustees shall not be entitled to resort to Plan Shares for the satisfaction of their liabilities except to the extent that this is permitted by the Plan.

 

 

 

22.                               AMENDMENTS TO THE PLAN

 

The Company may, with the Trustees’ written consent, from time to time amend the Plan provided that:

 

(a)                                 no amendment which would adversely prejudice to a material extent the rights attaching to any Plan Shares awarded to or acquired by Participants may be made nor may any alteration be made giving to Participating Companies a beneficial interest in Plan Shares,

 

(b)                                 no amendment which may increase the limits contained in Rule 11 may be made without the prior approval of the Parent Company in general meeting; and

 

(c)                                  if the Plan is approved by the Inland Revenue at the time of an amendment or addition, any amendment or addition to a “key feature” (as defined in paragraph 118(3)(a) of the Schedule) of the Plan shall not have effect unless and until the written approval of the Inland Revenue has been obtained in accordance with paragraph 4 of the Schedule.

 

23.                               TERMINATION OF THE PLAN

 

23.1                        Termination

 

The Plan shall terminate:

 

(a)                                 in accordance with a Plan Termination Notice issued by the Company to the Trustees under paragraph 120 of the Schedule, or

 

(b)                                 if earlier, on the expiry of the Trust Period.

 

23.2                        Plan Termination Notice

 

The Company shall immediately upon executing a Plan Termination Notice provide a copy of the notice to the Trustees, the Inland Revenue and each individual who has Plan Shares or who has entered into a Partnership Share Agreement which was in force immediately before the Plan Termination Notice was issued.

 

 

23.3                        Effect of Plan Termination Notice

 

Upon the issue of a Plan Termination Notice or upon the expiry of the Trust Period paragraph 121 of the Schedule shall have effect.

 

23.4                        Assets undisposed of

 

Any Shares or other assets which remain undisposed of after the requirements of paragraph 121 of the Schedule have been complied with shall be held by the Trustees upon trust to pay or apply them to or for the benefit of the Participating Companies as at the termination date in such proportion, having regard to their respective contributions, as the Trustees shall in their absolute discretion think appropriate.

 

EXECUTION:

 

The parties have shown their acceptance of the terms of this Deed by executing it as a deed at the end of the Rules and the Appendices.

 

 

GW PHARMACEUTICALS ALL EMPLOYEE SHARE SCHEME
 RULES

 

1.                                     DEFINITIONS

 

2.                                     PURPOSE OF THE PLAN

 

3.                                     ELIGIBILITY OF INDIVIDUALS

 

4.                                     PARTICIPATION ON SAME TERMS

 

5.                                     PART A:  FREE SHARES

 

6.                                     PART B:  PARTNERSHIP SHARES

 

7.                                     PART C:  MATCHING SHARES

 

8.                                     PART D:  DIVIDEND SHARES

 

9.                                     COMPANY RECONSTRUCTIONS

 

10.                              RIGHTS ISSUES

 

11.                              LIMITS ON OVERALL NUMBER OF SHARES AWARDED

 

 

1.             DEFINITIONS AND INTERPRETATION

 

1.1          Defined Terms

 

In these Rules and the Deed:

 

“Accumulation Period” means  in relation to Partnership Shares, the period during which the Trustees accumulate a Qualifying Employee’s Partnership Share Money before acquiring Partnership Shares or repaying it to the employee;

 

“Acquisition Date” (a) in relation to Partnership Shares, where there is no Accumulation Period, has the meaning given by paragraph 40(2) of the Schedule; (b) in relation to Partnership Shares, where there is an Accumulation Period, has the meaning given by paragraph 42(3) of the Schedule; and (c) in relation to Dividend Shares, has the meaning given by paragraph 56(3) of the Schedule;

 

“Associated Company” has  the same meaning as in section 416 of ICTA 1988;

 

“Award Date” means in relation to Free Shares or Matching Shares, the date on which such Shares are awarded;

 

“Award” means  (a) in relation to Free Shares and Matching Shares, the appropriation of Free Shares and Matching Shares in accordance with the Plan; and (b) in relation to Partnership Shares, the acquisition of Partnership Shares on behalf of Qualifying Employees in accordance with the Plan;

 

“Capital Receipt” has the same meaning as in paragraph 79 of the Schedule;

 

“Close Company” has the same meaning as in section 414 of ICTA 1988;

 

“the Company” means GW Pharma Limited;

 

“Connected Company” has  the same meaning as in paragraph 16(4) of the Schedule;

 

“Control” has the same meaning as in section 840 of ICTA 1988;

 

“Dealing Day” means a day on which the Stock Exchange is open for the transaction of business;

 

 

“the Deed” means the deed entered into between GW Pharma Limited and GWP Trustee Company Limited establishing the GW Pharmaceuticals All Employee Share Scheme;

 

“Dividend Shares” means Shares acquired on behalf of a Participant from reinvestment of dividends under Part D of the Plan and which are subject to the Plan;

 

“Free Share Agreement” means an agreement in the terms set out in Appendix A;

 

“Free Shares” means Shares awarded under Part A of the Plan which are subject to the Plan;

 

“Group Plan” means the Plan as established by GW Pharma Limited and extending to its Subsidiaries which are Participating Companies;

 

“Holding Period” means  (a) in relation to Free Shares, the period specified by the Company as mentioned in Rule 5.12; (b) in relation to Matching Shares, the period specified by the Company as mentioned in Rule 7.5; and (c) in relation to Dividend Shares, the period of 3 years from the Acquisition Date;

 

“ICTA 1988” means  the Income and Corporation Taxes Act 1988;

 

“Initial Market Value” means the Market Value of a Share on an Award Date.  Where the Share is subject to a restriction or risk of forfeiture, the market value shall be determined without reference to that restriction or risk

 

“Market Value” means where Shares have been admitted to the Daily Official List of the Stock Exchange the average of the middle market quotations of a Share as derived from the Daily Official List of the Stock Exchange for the 5 immediately preceding Dealing Days and on any day when Shares are not admitted to the Daily Official List of the Stock Exchange  the Market Value of a Share determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed for the purposes of the Plan with the Inland Revenue Shares Valuation Division on or before that day;

 

“Matching Shares” means Shares awarded under Part C of the Plan and which are subject to the Plan;

 

 

“Material Interest” has the same meaning as in paragraph 15 of the Schedule;

 

“NICs” means National Insurance Contributions;

 

“the Parent Company” means GW Pharmaceuticals plc, company number 4160917;

 

“Participant” means an individual who has received under the Plan an Award of Free Shares, Matching Shares or Partnership Shares, or on whose behalf Dividend Shares have been acquired ;

 

“Participating Company” means the Company and such of its Subsidiaries as have executed deeds of adherence to the Plan under clause 16 of the Trust Deed;

 

“Partnership Shares” means Shares awarded under Part B of the Plan and which are subject to the Plan;

 

“Partnership Share Agreement” means an agreement in the terms set out in Appendix B;

 

“Partnership Share Money” means money deducted from a Qualifying Employee’s Salary pursuant to a Partnership Share Agreement and held by the Trustees to acquire Partnership Shares or to be returned to such a person;

 

“Performance Allowances” means  the criteria for an Award of Free Shares where (a) whether Shares are awarded or (b) the number or value of Shares awarded is conditional on performance targets being met;

 

“the Plan” means the GW Pharmaceuticals All Employee Share Scheme;

 

“Plan Shares” means (a) Free Shares, Matching Shares or Partnership Shares awarded to Participants, (b) Dividend Shares acquired on behalf of Participants, and (c) shares in relation to which paragraph 115(5) (company reconstructions: new shares) of the Schedule applies, in each case  that remain subject to the Plan;

 

“Plan Termination Notice” means a notice issued under paragraph 120 of the Schedule;

 

 

“Profit Sharing Scheme” means a profit-sharing scheme approved by the Board of Inland Revenue under Schedule 9 of ICTA 1988;

 

“Qualifying Corporate Bond” has the same meaning as in section 117 of the Taxation of Chargeable Gains Act 1992;

 

“Qualifying Employee” means  an employee who must be invited to participate in an award in accordance with Rule 3.5 and any employee who the Company has invited in accordance with Rule 3.6;

 

“Redundancy” has the same meaning as in the Employment Rights Act 1996;

 

“Relevant Employment” means employment by the Company or any Associated Company;

 

“Retirement Age” means age 60;

 

“Salary” has the same meaning as in paragraph 48 of the Schedule;

 

“the Schedule” means Schedule 8 to the Finance Act 2000;

 

“Shares” means ordinary shares in the capital of the Parent Company which comply with the conditions set out in paragraph 59 of the Schedule;

 

“the Stock Exchange” means the London Stock Exchange Limited;

 

“Subsidiary” means any company which is for the time being under the Control of the Company;

 

“Tax Year” means a year beginning on 6 April and ending on the following 5 April;

 

“the Trustees” means the trustees or trustee of the Plan;

 

“the Trust Fund” means all assets transferred to the Trustees to be held on the terms of the Trust Deed and the assets from time to time representing such assets, including any accumulations of income;

 

“the Trust Period” means the period of 80 years beginning with the date of the Deed

 

 

1.2                               Reference to Statutes

 

References to any Act, or Part, Chapter, or section (including ICTA 1988) shall include any statutory modification, amendment or re-enactment of that Act, for the time being in force.

 

1.3                               Miscellaneous

 

Words of the feminine gender shall include the masculine and vice versa and words in the singular shall include the plural and vice versa unless, in either case, the context otherwise requires or it is otherwise stated.

 

2.                                      PURPOSE OF THE PLAN

 

The purpose of the Plan is to enable employees of Participating Companies to acquire shares in a company which give them a continuing stake in that company.

 

3.                                      ELIGIBILITY OF INDIVIDUALS

 

3.1                               Requirements for eligibility

 

Individuals are eligible to participate in an Award only if they are employees of a Participating Company and they do not fail to be eligible under Rules 3.2, 3.3 or 3.4 at the times set out in paragraph 13(1) of the Schedule.

 

3.2                               Exclusion for Material Interest

 

Individuals are not eligible to participate in an Award of Shares if they have, or within the preceding twelve months have had, a Material Interest in:

 

(a)                                a Close Company whose Shares may be appropriated or acquired under the Plan; or

 

(b)                                 a company which has Control of such a company or is a member of a consortium which owns such a company.

 

3.3                               Exclusion for benefit under another scheme: Free Shares

 

Individuals are not eligible to participate in an Award of Free Shares in any Tax Year if in that Tax Year:

 

 

(a)                                 they have been awarded shares under a Profit-Sharing Scheme established by the Company or a Connected Company, or are to be awarded such shares at the same time; or

 

(b)                                 they have received (or are to receive at the same time) an Award under another plan established by the Company or a Connected Company and approved under the Schedule, or if they would have received such an Award but for their failure to meet a performance target (see Rule 5.5).

 

3.4                               Exclusion for benefit under another scheme: Partnership and Matching Shares

 

Individuals are not eligible to participate in an Award of Partnership Shares or Matching Shares in any Tax Year if in that Tax Year they have received (or are to receive at the same time) an Award under another plan established by the Company or a Connected Company (as defined in paragraph 16(4) of the Schedule) and approved under the Schedule, or if they would have received such an Award but for their failure to meet a performance target (see Rule 5.5).

 

3.5                               Employees who must be invited to participate in Awards

 

Any individual who meets the requirements in Rule 3.1 in respect of an Award and is chargeable to income tax under Case I of Schedule E in respect of their employment by which they satisfy those requirements must be invited to participate in that Award.

 

3.6                               Employees who may be invited to participate in Awards

 

The Company may also invite any other individual who meets the requirements in Rule 3.1 in respect of an Award to participate in that Award.

 

4.                                      PARTICIPATION ON SAME TERMS

 

4.1                               Invitation and participation on same terms

 

Subject to Rule 4.3, every Qualifying Employee  shall be invited to participate in an Award  on the same terms, and all who do participate in an Award shall do so on the same terms.

 

 

4.2                               Same terms: remuneration, length of service and hours worked

 

The Company may make an Award of Free Shares to Qualifying Employees which varies by reference to their remuneration, length of service or hours worked.  This will not prevent participation in the Award being on the “same terms” provided that if the Award is made by reference to more than one of these factors, each factor must give rise to a separate entitlement, and the total entitlement is the sum of those individual entitlements.

 

4.3                               Performance

 

The Company may make an Award of Free Shares to Qualifying Employees by reference to their performance as set out in Rule 5.5, in which case the provisions of Rule 4.1 shall not apply.

 

5.                                      PART A: FREE SHARES

 

5.1                               Free Share Agreement

 

Every Qualifying Employee shall enter into an agreement with the Company (a “Free Share Agreement”) in the terms of the draft in Appendix A to these Rules.

 

5.2                               Award of Free Shares

 

The Trustees, acting with the prior consent of the Company, may from time to time award Free Shares.

 

5.3                               Number of Free Shares

 

The number of Free Shares to be awarded by the Trustees to each Qualifying Employee on an Award Date shall be determined by the Company in accordance with this Rule.

 

5.4                               Maximum annual award

 

The Initial Market Value of the Free Shares awarded to a Qualifying Employee in any Tax Year shall not exceed £3,000.

 

 

5.5                               Allocation of Free Shares by reference to performance

 

The Company may stipulate that the number of Free Shares (if any) to be awarded to each Qualifying Employee on a given Award Date shall be determined by reference to Performance Allowances.

 

5.6                               Application of Performance Allowances

 

(1)                                If Performance Allowances are used, they shall apply to all Qualifying Employees.

 

(2)                                Performance targets must be set for performance units of one or more employees.

 

(3)                                For the purposes of an Award of Free Shares an employee must not be a member of more than one performance unit.

 

(4)                                The performance measures used for Performance Allowances must be based on business results or other objective criteria, as determined by the Company over such period as the Company shall specify.  The performance measures must be fair and objective measures of the performance of the performance units to which they are or may be applied.

 

5.7                              Notification of Performance Allowances

 

Where the Company decides to use Performance Allowances it shall, as soon as reasonably practicable:

 

(a)                                notify each employee participating in the Award  of the performance targets and measures which, under the Plan, shall be used to determine the number or value of Free Shares awarded to him; and

 

(b)                                notify all Qualifying Employees of the Company or, in the case of a Group Plan, of any Participating Company, in general terms, of the performance targets and measures to be used to determine the number or value of Free Shares to be awarded to each Participant in the Award (save that the Company may exclude from any such notice any information which it reasonably considers would prejudice commercial confidentiality).

 

 

5.8                               Choice of method for Performance Allowances

 

The Company shall determine the number of Free Shares (if any) to be awarded to each Qualifying Employee by reference to performance using Method 1 or Method 2.  The same method shall be used for all Qualifying Employees for each Award.

 

5.9                               Performance Allowances: method 1

 

By this method:

 

(a)                                at least 20% of Free Shares awarded in any performance period shall be awarded without reference to performance;

 

(b)                                the remaining Free Shares shall be awarded by reference to performance; and

 

(c)                                 the highest Award made to an individual by reference to performance in any period shall be no more than four times the highest Award to an individual without reference to performance.

 

If this method is used:

 

·                  the Free Shares awarded without reference to performance (paragraph (a) above) shall be awarded on the same terms mentioned in Rule 4; and

 

·                  the Free Shares awarded by reference to performance (paragraph (b) above) need not be allocated on the same terms mentioned in Rule 4.

 

5.10                        Performance Allowances: method 2

 

By this method:

 

(a)                                some or all Free Shares shall be awarded by reference to performance;

 

(b)                                the Award of Free Shares to Qualifying Employees who are members of the same performance unit shall be made on the same terms, as mentioned in Rule 4; and

 

(c)                                 Free Shares awarded for each performance unit shall be treated as separate Awards.

 

 

5.11                       Holding Period for Free Shares

 

The Company shall, in relation to each Award Date, specify a Holding Period throughout which a Participant shall be bound by the terms of the Free Share Agreement.

 

5.12                        Length of Holding Period

 

The Holding Period shall, in relation to each Award, be a specified period of not less than 3 years nor more than 5 years, beginning with the Award Date and shall be the same for all Participants who receive an Award at the same time. The Holding Period shall not be increased in respect of Free Shares already awarded under the Plan.

 

5.13                        Directions to Trustees during Holding Period

 

A Participant may during the Holding Period direct the Trustees:

 

(a)                                to accept an offer for any of their Free Shares if the acceptance or agreement shall result in a new holding being equated with those shares for the purposes of capital gains tax; or

 

(b)                                to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Free Shares if the offer forms part of such a general offer as is mentioned in paragraph (c); or

 

(c)                                 to accept an offer of cash, with or without other assets, for their Free Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their shares, or to holders of shares in the same company and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 ICTA 1988; or

 

(d)                                to agree to a transaction affecting their Free Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting;

 

(i)                                   all of the ordinary share capital of the company or, as the case may be, all the shares of the class in question; or

 

 

(ii)                                all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule.

 

6.                                      PART B: PARTNERSHIP SHARES

 

6.1                               Partnership Share Agreement

 

The Company may at any time invite every Qualifying Employee to enter into an agreement with the Company (a “Partnership Share Agreement”) in the terms of the draft in Appendix B to these Rules.

 

6.2                               No forfeiture

 

Partnership Shares shall not be subject to any provision under which they may be forfeit.

 

6.3                               Maximum monthly deductions

 

The amount of Partnership Share Money deducted from an employee’s Salary shall not exceed £125 in any month or such lower figure as the Company may specify for all Qualifying Employees in respect of an Award.  If the Salary is not paid monthly, the £125 limit shall be calculated proportionately.

 

6.4                               10% salary limit

 

The amount of Partnership Share Money deducted from an employee’s Salary over an Accumulation Period shall not exceed 10% of the total of the payments of Salary made to such employee over that Accumulation Period or if there is no Accumulation Period, 10% of the Salary payment from which the deduction is made.

 

6.5                               Excess deductions

 

Any amount deducted in excess of that allowed by Rule 6.3 or 6.4 shall be paid over to the employee, subject to both deduction of income tax under PAYE and NICs, as soon as practicable.

 

6.6                               Minimum amount of deductions

 

The minimum amount to be deducted under the Partnership Share Agreement in any month shall be the same in relation to all Partnership Share Agreements

 

 

entered into in response to invitations issued on the same occasion. It shall not be greater than £10.

 

6.7                               Notice of possible effect of deductions on benefit entitlement

 

Every Partnership Share Agreement shall contain a notice under paragraph 38 of the Schedule.

 

6.8                               Restriction imposed on number of Shares awarded

 

The Company may specify the maximum number of Shares to be included in an Award of Partnership Shares.

 

6.9                               Notification of restrictions

 

The Partnership Share Agreement shall contain an undertaking by the Company to notify each Qualifying Employee of any restriction on the number of Shares to be included in an Award.

 

6.10                        Timing of notification

 

The notification in Rule 6.9 above shall be given:

 

(a)                                 if there is no Accumulation Period, before the deduction of the Partnership Share Money relating to the Award; and

 

(b)                                 if there is an Accumulation Period, before the beginning of the Accumulation Period relating to the Award.

 

6.11                        Award with no Accumulation Period

 

For an Award where the Partnership Share Agreement does not contain an Accumulation Period the Trustees shall acquire Shares on behalf of the Qualifying Employee using the Partnership Share Money. They shall acquire the Shares on the Acquisition Date. The number of Shares awarded to each employee shall be determined in accordance with the Market Value of the Shares on that date.

 

6.12                        Award with Accumulation Period

 

For an Award where the Partnership Share Agreement contains an Accumulation Period, the Trustees shall acquire Shares on behalf of the

 

 

Qualifying Employee, on the Acquisition Date, using the Partnership Share Money.

 

6.13                        Accumulation Period: number of Shares

 

The number of Shares acquired on behalf of each Participant shall be determined by reference to the lower of:

 

(a)                                 the Market Value of the Shares at the beginning of the Accumulation Period; and

 

(b)                                 the Market Value of the Shares on the Acquisition Date.

 

6.14                       Accumulation Period: New Holding

 

If a transaction occurs during an Accumulation Period which results in a new holding of Shares being equated for the purposes of capital gains tax with any of the Shares to be acquired under the Partnership Share Agreement, the employee may agree that the Partnership Share Agreement shall have effect after the time of that transaction as if it were an agreement for the purchase of shares comprised in the new holding.

 

6.15                       Surplus Partnership Share Money

 

Any surplus Partnership Share Money remaining after the acquisition of Shares by the Trustees:

 

(a)                                 may, with the agreement of the Participant, be carried forward to the next Accumulation Period or the next deduction as appropriate; and

 

(b)                                 in any other case, shall be paid over to the Participant, subject to both deduction of income tax under PAYE and NICs, as soon as practicable.

 

6.16                       Scaling down

 

If the Company receives applications for Partnership Shares exceeding the Award maximum determined in accordance with Rule 6.8 then the following steps shall be taken in sequence until the excess is eliminated.

 

Step 1.           the excess of the monthly deduction chosen by each applicant over £10 shall be reduced pro rata;

 

Step 2.           all monthly deductions shall be reduced to £10;

 

 

Step 3.           applications shall be selected by lot, each based on a monthly deduction of £10.

 

Each application shall be deemed to have been modified or withdrawn in accordance with the foregoing provisions, and each employee who has applied for Partnership Shares shall be notified of the change.

 

6.17                        Withdrawal from Partnership Share Agreement

 

An employee may withdraw from a Partnership Share Agreement at any time by notice in writing to the Company. Unless a later date is specified in the notice, such a notice shall take effect 30 days after the Company receives it. Any Partnership Share Money then held on behalf of an employee shall be paid over to that employee as soon as practicable. This payment shall be subject to income tax under  PAYE and NICs.

 

6.18                        Repayment of Partnership Share Money on withdrawal of approval or Termination

 

If approval to the Plan is withdrawn or a Plan Termination Notice is issued in respect of the Plan, any Partnership Share Money held on behalf of employees shall be repaid to them as soon as practicable, subject to deduction of income tax under PAYE, and NICs.

 

7.             PART C: MATCHING SHARES

 

7.1                               Entitlement to Matching Shares

 

The Partnership Share Agreement sets out the basis on which a Participant is entitled to Matching Shares in accordance with this Part of the Rules

 

7.2                               General requirements for Matching Shares

 

Matching Shares shall:

 

(a)                                 be Shares of the same class and carrying the same rights as the Partnership Shares to which they relate;

 

(b)                                 subject to Rule 7.4, be awarded on the same day as the Partnership Shares to which they relate are acquired on behalf of the Participant; and

 

(c)                                  be awarded to all Participants on exactly the same basis.

 

 

7.3                               Ratio of Matching Shares to Partnership Shares

 

The Partnership Share Agreement shall specify the ratio of Matching Shares to Partnership Shares for the time being offered by the Company and that ratio shall not exceed 2:1. The Company may vary the ratio before Partnership Shares are acquired.  Employees shall be notified of the terms of any such variation before the Partnership Shares are awarded under the Partnership Share Agreement.

 

7.4                               Less than one Matching Share

 

If the Partnership Shares on that day are not sufficient to produce a Matching Share, the match shall be made when sufficient Partnership Shares have been acquired to allow at least one Matching Share to be appropriated.

 

7.5                               Holding Period for Matching Shares

 

The Company shall, in relation to each Award Date, specify a Holding Period throughout which a Participant shall be bound by the terms of the Partnership Share Agreement.

 

7.6                               Length of Holding Period

 

The Holding Period shall, in relation to each Award, be a specified period of not less than 3 years nor more than 5 years, beginning with the Award Date and shall be the same for all Participants who receive an Award at the same time. The Holding Period shall not be increased in respect of Matching Shares awarded under the Plan.

 

7.7                               Directions to Trustees during Holding Period

 

A Participant may during the Holding Period direct the Trustees:

 

(a)                                 to accept an offer for any of their Matching Shares if the acceptance or agreement shall result in a new holding being equated with those original Shares for the purposes of capital gains tax; or

 

(b)                                 to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Matching Shares if the offer forms part of such a general offer as is mentioned in paragraph (c); or

 

 

(c)                                  to accept an offer of cash, with or without other assets, for their Matching Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their Shares or to the holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 of ICTA 1988; or

 

(d)                                 to agree to a transaction affecting their Matching Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting;

 

(i)                                     all of the ordinary share capital of the company or, as the case may be, all the shares of the class in question; or

 

(ii)                                  all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule.

 

8.             PART D: DIVIDEND SHARES

 

8.1                               Dividend Shares: rights and obligations

 

The Free Share Agreement or Partnership Share Agreement, as appropriate, shall set out the rights and obligations of Participants receiving Dividend Shares under the Plan.

 

8.2                               Dividend direction

 

The Company may direct that any cash dividend in respect of Plan Shares held on behalf of Participants may be applied in acquiring further Plan Shares on their behalf.

 

8.3          Dividend Shares

 

Dividend Shares shall be Shares:

 

(a)                                 of the same class and carrying the same rights as the Shares in respect of which the dividend is paid; and

 

 

(b)                                 which are not subject to any provision for forfeiture.

 

8.4          Company’s choices

 

The Company may decide to:

 

(a)                                 apply all Participants’ dividends, up to the limit specified in Rule 8.6, to acquire Dividend Shares;

 

(b)                                 to pay all dividends in cash to all Participants; or

 

(c)                                  to offer Participants the choice of either (a) or (b) above.

 

8.5                               Revocation of direction

 

The Company may revoke any direction  for reinvestment of cash dividends.

 

8.6                              Dividend Share maximum

 

The amount applied by the Trustees in acquiring Dividend Shares shall not exceed £1,500 in each Tax Year.  For the purposes of this Rule, the Dividend Shares are those acquired under this Plan and those acquired under any other plan approved under the Schedule. In exercising their powers in relation to the acquisition of Dividend Shares the Trustees must treat Participants fairly and equally.

 

8.7                              Excess over limit

 

If the amounts received by the Trustees exceed the limit in Rule 8.6, the balance shall be paid to the participant as soon as practicable.

 

8.8                              Acquisition of Dividend Shares

 

The Trustees shall apply all the cash dividend to acquire Shares on behalf of the Participant on the Acquisition Date. The number of Dividend Shares acquired on behalf of each Participant shall be determined by the Market Value of the Shares on the Acquisition Date.

 

8.9                               Certain amounts not reinvested to be carried forward

 

Subject to Rule 8.7, any amount that is not reinvested:

 

(a)                                 because the amount of the cash dividend is insufficient to acquire a Share; or

 

 

(b)                                 because there is an amount remaining after acquiring the Dividend Shares;

 

may be retained by the Trustees and carried forward to be added to the amount of the next cash dividend to be reinvested.

 

8.10        Payment to Participant

 

If, during the period of three years beginning with the date on which the dividend was paid:

 

(a)                                 it is not reinvested; or

 

(b)                                 the Participant ceases to be in relevant employment; or

 

(c)                                  a Plan Termination Notice is issued

 

the amount shall be repaid to the Participant as soon as practicable. On making such a payment, the Participant shall be provided with the information specified in paragraph 90 of the Schedule.

 

8.11                        Holding Period for Dividend Shares

 

The Holding Period shall be a period of 3 years, beginning with the  Acquisition Date.

 

8.12        Directions to Trustees during Holding Period

 

A Participant may during the Holding Period direct the Trustees:

 

(a)                                 to accept an offer for any of their Dividend Shares if the acceptance or agreement shall result in a new holding being equated with those shares for the purposes of capital gains tax; or

 

(b)                                 to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Dividend Shares if the offer forms part of such a general offer as is mentioned in paragraph (c); or

 

(c)                                  to accept an offer of cash, with or without other assets, for their Dividend Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their shares or to holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer

 

 

shall have control of that company, within the meaning of section 416 of ICTA 1988; or

 

(d)                                 to agree to a transaction affecting their Dividend Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting;

 

(i)                                     all of the ordinary share capital of the company or, as the case may be, all the shares of the class in question; or

 

(ii)                                  all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule.

 

8.13                        Information on tax charges

 

Where a Participant is charged to tax in the event of their Dividend Shares ceasing to be subject to the Plan, they shall be provided with the information specified in paragraph 93(4) of the Schedule.

 

9.             COMPANY RECONSTRUCTIONS

 

9.1                               Relevant transactions

 

The following provisions of this Rule apply if there occurs in relation to any of a Participant’s Plan Shares (referred to in this Rule as “the Original Holding”):

 

(a)                                 a transaction which results in a new holding (referred to in this Rule as “the New Holding”) being equated with the Original Holding for the purposes of capital gains tax; or

 

(b)                                 a transaction which would have that result but for the fact that what would be the new holding consists of or includes a Qualifying Corporate Bond.

 

9.2                               Issues of shares not included in New Holding

 

If an issue of shares of any of the following description (in respect of which a charge to income tax arises) is made as part of a company reconstruction,

 

 

those shares shall be treated for the purposes of this Rule as not forming part of the New Holding:

 

(a)                                 redeemable shares or securities issued as mentioned in section 209(2)(c) of ICTA 1988;

 

(b)                                 share capital issued in circumstances such that section 210(1) of ICTA 1988 applies; or

 

(c)                                  share capital to which section 249 of ICTA 1988 applies.

 

9.3                               Corresponding and New Shares

 

In this Rule:

 

“Corresponding Shares” in relation to any New Shares, means the Shares in respect of which the New Shares are issued or which the New Shares otherwise represent;

 

“New Shares” means shares comprised in the New Holding which were issued in respect of, or otherwise represent, shares comprised in the Original Holding.

 

9.4                               References to Plan Shares

 

Subject to the following provisions of this Rule, references in this Plan to a Participant’s Plan Shares shall be respectively construed, after the time of the company reconstruction, as being or, as the case may be, as including references to any New Shares.

 

9.5          Application of Plan to reconstruction

 

For the purposes of the Plan:

 

(a)                                 a company reconstruction shall be treated as not involving a disposal of Shares comprised in the Original Holding; and

 

(b)                                 the date on which any New Shares are to be treated as having been appropriated to or acquired on behalf of the Participant shall be that on which Corresponding Shares were so appropriated or acquired.

 

 

9.6                               Extended definition of “shares”

 

In the context of a New Holding, any reference in this Rule to shares includes securities and rights of any description which form part of the New Holding for the purposes of Chapter II of Part IV of the Taxation of Chargeable Gains Act 1992.

 

10           RIGHTS ISSUES

 

10.1                        Treatment of rights issue shares

 

Any shares or securities allotted under clause 12 of the Trust Deed shall be treated as Plan Shares identical to the shares in respect of which the rights were conferred.  They shall be treated as if they were awarded to or acquired on behalf of the Participant under the Plan in the same way and at the same time as those shares.

 

10.2        Exceptions

 

Rule 10.1 does not apply:

 

(a)                                 to shares and securities allotted as the result of taking up a rights issue where the funds to exercise those rights were obtained otherwise than by virtue of the Trustees disposing of rights in accordance with this rule; or

 

(b)                                 where the rights to a share issue attributed to Plan Shares are different from the rights attributed to other ordinary shares of the company.

 

11.          LIMITS ON OVERALL NUMBERS OF SHARES AWARDED

 

11.1        10% Limit

 

No Shares shall be issued for the purposes of the Plan if such issue would result in the aggregate of the number of Shares which have been allocated under the Plan, any other employees’ share scheme adopted by the Company or any other share incentive arrangements for employees, directors, officers and consultants of Participating Companies during the period of 10 years ending on the relevant Date of Grant exceeding 10% of the number of Shares then in issue.

 

 

11.2                        Meaning of “allocated”

 

For the purposes of this Rule 11 the references to Shares being “allocated” shall mean the placing under option of Shares which may be issued by the Company upon exercise of such option, the issue of warrants to subscribe for Shares and, in relation to other types of employees’ share scheme or share incentive arrangements, the issue of Shares to or for the benefit of employees, directors, officers or consultants of Participating Companies provided that:

 

(a)                                 Shares allocated before Shares were first admitted to listing on the Alternative Investment Market of the London Stock Exchange; and

 

(b)                                 Shares which were the subject of options or warrants which have lapsed, been surrendered or otherwise become incapable of being exercised (other than by reason of the exercise thereof),

 

shall not be taken into account for the purposes of this Rule 11.

 

 

EXECUTION:

 

	
SIGNED AND DELIVERED as a deed
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
by Dr Geoffrey Guy,
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
Director, and Justin Gover,
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
Director/Secretary, duly
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
Authorised for and on behalf of
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
GW PHARMA LIMITED
    	
 
    	
)
    

 

	
SIGNED AND DELIVERED as a deed
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
by Dr Geoffrey Guy,
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
Director, and Justin Gover,
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
Director/Secretary, duly
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
authorised for and on behalf of
    	
 
    	
)
    
	
 
    	
 
    	
 
    
	
GWP TRUSTEE COMPANY LIMITED
    	
 
    	
)

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