Document:

<PAGE>

                                                                   EXHIBIT (iii)
                                                                   -------------

                               PITNEY BOWES INC.
                         DEFERRED INCENTIVE SAVINGS PLAN
                           FOR THE BOARD OF DIRECTORS

            As Amended and Restated Effective as of October 11, 1999
<PAGE>

                                PITNEY BOWES INC.
                         DEFERRED INCENTIVE SAVINGS PLAN
                           FOR THE BOARD OF DIRECTORS
           As Amended and Restated Effective as of October 11, 1999

                                    ARTICLE 1

                           PURPOSE AND EFFECTIVE DATE

     The purpose of the Pitney Bowes Inc. Deferred Incentive Savings Plan for
the Board of Directors (hereinafter referred to as the "Plan") is to aid Pitney
Bowes Inc. in retaining and attracting capable outside directors by providing
them with savings and tax deferral opportunities. The Plan shall be effective
for deferral elections made hereunder on or after April 1, 1997. The Plan has
been amended from time to time and was amended and restated effective as of
October 11, 1999, unless otherwise indicated.

                                       2
<PAGE>

                                    ARTICLE 2

                                   DEFINITIONS

     For the purposes of this Plan, the following words and phrases shall have
the meanings indicated, unless the context clearly indicates otherwise:

     SECTION 2.01. Beneficiary. "Beneficiary" means the person, persons or
entity designated by the Participant to receive any benefits payable under the
Plan pursuant to Article VIII.

     SECTION 2.02. Board. "Board" means the Board of Directors of Pitney Bowes

     SECTION 2.03. Change of Control. For purposes of this Plan, a "Change of
Control" shall be deemed to have occurred if:

     (i) there is an acquisition, in any one transaction or a series of
transactions, other than from Pitney Bowes Inc., by any individual, entity or
group (within the meaning of Section 1 3(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), of beneficial ownership
(within the meaning of Rule 1 3(d)(3) promulgated under the Exchange Act) of 20%
or more of either the then outstanding shares of Common Stock or the combined
voting power of the then outstanding voting securities of Pitney Bowes Inc.
entitled to vote generally in the election of directors, but excluding, for this
purpose, any such acquisition by Pitney Bowes Inc. or any of its subsidiaries,
or any employee benefit plan (or related trust) of Pitney Bowes Inc. or its
subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by the individuals
and entities who were the beneficial owners, respectively, of the common stock
and voting securities of Pitney Bowes Inc. immediately prior to such acquisition
in substantially the same proportion as their ownership, immediately prior to
such acquisition, of the then outstanding shares of Common Stock or the combined
voting power of the then outstanding voting securities of Pitney Bowes Inc.
entitled to vote generally in the election of directors, as the case may be; or

     (ii) individuals who, as of October 11, 1999, constitute the Board (as of
such date, the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to such date, whose election, or nomination for election by Pitney
Bowes' shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of Pitney Bowes Inc. (as such terms are used in Rule 14(a)(11) or
Regulation 14A promulgated under the Exchange Act); or

                                       3
<PAGE>

     (iii) there occurs either (A) the consummation of a reorganization, merger
or consolidation, in each case, with respect to which the individuals and
entities who were the respective beneficial owners of the common stock and
voting securities of Pitney Bowes Inc. immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation, or (B) an approval
by the shareholders of Pitney Bowes Inc. of a complete liquidation of
dissolution of Pitney Bowes Inc. or of the sale or other disposition of all or
substantially all of the assets of Pitney Bowes Inc.

     SECTION 2.04. Committee. "Committee" means the Governance Committee of the
Board of Directors. Any action authorized hereunder to be taken by the Committee
is also authorized to be taken by the Board.

     SECTION 2.05. Common Stock. "Common Stock" means the common stock of Pitney
Bowes Inc.

     SECTION 2.06. Company. "Company" means Pitney Bowes Inc., its successors,
and any organization into which or with which Pitney Bowes Inc. may merge or
consolidate or to which all or substantially all of its assets may be
transferred.

     SECTION 2.07. Deferral Account. "Deferral Account" means the account
maintained on the books of the Company by the Committee for each Participant to
reflect deferral of Eligible Compensation, adjusted for hypothetical gains,
earnings, dividends, losses, distributions, withdrawals and other similar
activity.

     SECTION 2.08. Deferral Period. "Deferral Period" means the period beginning
on the date the Eligible Compensation would otherwise have been paid and ending
on the earlier of (i) the Participant's Termination of Service and (ii) the last
day of the period during which the Participant elected to defer current
enjoyment and distribution of the Eligible Compensation.

     SECTION 2.09. Deferred Amount. "Deferred Amount" means the amount of
Eligible Compensation for the Plan Year or performance period to which the
Participation Agreement relates that is to be deferred under the Plan.

     SECTION 2.10 Disability. "Disability" means eligibility for disability
benefits under the terms of the Company's Long-Term Disability Plan as in effect
from time to time based on the plan's "own occupation" standard for determining
eligibility for benefits thereunder.

      SECTION 2.11. Eligible Compensation. "Eligible Compensation" means any
cash compensation payable by the Company to a Participant for service on the
Board or any Committee thereof.

      SECTION 2.12. Fair Market Value. "Fair Market Value" of a share of Common
Stock means the definition of "Fair Market Value" used in the Pitney Bowes Inc.
Directors' Stock Plan.

                                       4
<PAGE>

     SECTION 2.13 Form of Payment. "Form of Payment" means payment in one lump
sum or in installments of 5, 10 or 15 years.

     SECTION 2.13. Option. "Option" means an option to acquire shares of Common
Stock granted pursuant to the Pitney Bowes Inc. Directors' Stock Plan or any
successor thereto.

     SECTION 2.14. Participant. "Participant" means any director who is eligible
to participate in this Plan and who elects to participate by filing a
Participation Agreement as provided in Article 4.

     SECTION 2.15. Participation Agreement. "Participation Agreement" means an
agreement filed by a Participant in accordance with Article 4.

     SECTION 2.16. Plan Year. "Plan Year" means a twelve-month period beginning
January 1 and ending the following December 31; provided, however that the first
Plan Year shall consist of the period from April 1, 1997 through December 31,
1997.

     SECTION 2.17. Termination of Service. "Termination of Service" means the
cessation of a Participant's service as a director of the Company for any
reason.

     SECTION 2.19. Valuation Date. Valuation Date" means the last day of each
calendar month or such other date as the Committee in its sole discretion may
determine.

                                       5
<PAGE>

                                    ARTICLE 3

                                 ADMINISTRATION

     SECTION 3.01. Committee. (a) This Plan shall be administered by the
Committee. A majority of the members of the Committee shall constitute a quorum
for the transaction of business. All resolutions or other action taken by the
Committee shall be by a vote of a majority of its members present at any meeting
or, without a meeting, by an instrument in writing signed by all its members.
Members of the Committee may participate in a meeting of such committee by means
of a conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other, and such participation
in a meeting shall constitute presence in person at the meeting.

     The Committee shall be responsible for the administration of this Plan and
shall have all powers necessary to administer this Plan, including discretionary
authority to determine eligibility for benefits and to decide claims under the
terms of this Plan. The Committee may from time to time establish rules for the
administration of this Plan, and it shall have the exclusive right to interpret
this Plan and to decide any matters arising in connection with the
administration and operation of this Plan. All rules, interpretations and
decisions of the Committee shall be conclusive and binding on the Company,
Participants and Beneficiaries.

     The Committee may delegate responsibility for performing certain
administrative and ministerial functions under this Plan, including without
limitation, issues related to eligibility, investment choices, distribution of
Deferred Amounts, determination of account balances, crediting of hypothetical
earnings and of Deferred Amounts and debiting of hypothetical losses and of
distributions, in-service withdrawals, deferral elections and any other duties
concerning the day-to-day operation of this Plan.

     No member of the Board nor any member of the Committee shall be liable for
any act or action hereunder, whether of omission or commission, by any other
member or employee or by any agent to whom duties in connection with the
administration of this Plan have been delegated or for anything done or omitted
to be done in connection with this Plan. The Committee shall keep records of all
of its proceedings and shall keep records of all payments made to Participants
or Beneficiaries and payments made for expenses or otherwise. The Company shall,
to the fullest extent permitted by law, indemnify each director, officer or
employee of the Company (including the heirs, executors, administrators and
other personal representatives of such person) and each member of the Committee
against expenses (including attorneys' fees), judgments, fines, amounts paid in
settlement, actually and reasonably incurred by such person in connection with
any threatened, pending or actual suit, action or proceeding (whether civil,
criminal, administrative or investigative in nature or otherwise) in which such
person may be involved by reason of the fact that he or she is or was serving
this Plan in any capacity at the request of the Company.

     Any expense incurred by the Company or the Committee relative to the
administration of this Plan shall be paid by the Company.

                                       6
<PAGE>

                                    ARTICLE 4

                                  PARTICIPATION

     SECTION 4.01. Participation. Participation in the Plan shall be limited to
members of the Board who (i) are not employees of the Company or meet such
eligibility criteria as the Committee shall establish from time to time, and
(ii) elect to participate in this Plan by filing a Participation Agreement with
the Committee. A Participation Agreement must be filed prior to the beginning of
the Plan Year with respect to services in which the Eligible Compensation
relates.

     SECTION 4.02. Contents of Participation Agreement. Subject to Article 7,
each Participation Agreement shall set forth:  (i) the Deferred Amount,
expressed as either a dollar amount or a percentage of the total Eligible
Compensation for such Plan Year or performance period; provided, that the
                                                       --------
minimum Deferred Amount for any Plan Year or performance period shall not be
less than $2,000; (ii) the Deferral Period, which is not to be less than three
years, (iii) the Form of Payment; (iv) investment selections made by the
Participant in hypothetical investment funds under the Plan; and (v) and any
other item determined to be appropriate by the Committee.

     SECTION 4.03. Changes to Participation Agreement. A Participation Agreement
may not be amended or revoked after December 31st of the Plan Year in which it
is made, except that the Deferral Period may be extended and the form of payment
may be altered if an amended Participation Agreement is filed with the Committee
at least one full calendar year before the Deferral Period (as in effect before
such amendment) ends; provided, that only one such amended Participation
Agreement may be filed with respect to each Participation Agreement. Upon a
Participant's Termination of Service, the most recent Participation Agreement
received by the Committee prior to Termination of Service shall supersede all
previous Participation Agreements on file with regard to Termination of Service
elections and the entire amount in the Participant's Deferral Account shall be
distributed at Termination of Service in accordance with such elections.

                                       7
<PAGE>

                                    ARTICLE 5

                         DEFERRED INCENTIVE COMPENSATION

     SECTION 5.01. Elective Deferred Incentive Compensation. Except as provided
in Section 6.02(c), the Deferred Amount of a Participant with respect to each
Plan Year of participation in the Plan shall be credited by the Committee to the
Participant's Deferral Account as and when such Deferred Amount would otherwise
have been paid to the Participant. To the extent that the Company is required to
withhold any taxes or other amounts from the Deferred Amount pursuant to any
state, Federal or local law, such amounts shall first be taken out of
compensation to the Participant that is not deferred under this Plan, if any.

     SECTION 5.02. Vesting of Deferral Account. Except as provided in Section
7.04, a Participant shall be 100% vested in his/her Deferral Account at all
times.

                                       8
<PAGE>

                                    ARTICLE 6

                     MAINTENANCE AND INVESTMENT OF ACCOUNTS

     SECTION 6.01. Maintenance of Accounts. Separate Deferral Accounts shall be
maintained for each Participant. More than one Deferral Account may be
maintained for a Participant as necessary to reflect (a) various investment
choices and/or (b) separate Participation Agreements specifying different
Deferral Periods and/or forms of payment. A Participant's Deferral Account(s)
shall be utilized solely as a device for the measurement and determination of
the amounts to be paid to the Participant pursuant to this Plan, and shall not
constitute or be treated as a trust fund of any kind. The Committee shall
determine the balance of each Deferral Account, as of each Valuation Date, by
adjusting the balance of such Deferral Account as of the immediately preceding
Valuation Date to reflect changes in the value of the deemed investments
thereof, credits and debits pursuant to Section 5.01 and Section 6.02 and
distributions pursuant to Article 7 with respect to such Deferral Account since
the preceding Valuation Date.

     SECTION 6.02. Investment Choices. (a) Subject to Section 6.02(d), the
Committee shall permit the Participant to elect to have his/her Deferral Account
deemed to be invested in one or more of the deemed investment funds offered
under the Plan, as amended by the Committee from time to time, and in accordance
with such rules, regulations and procedures as the Committee may establish from
time to time. Notwithstanding anything to the contrary herein, earnings and
losses based on a Participant's investment elections shall begin to accrue as of
the date such Participant's Deferral Amounts are credited to his/her Deferral
Accounts.

      (b) Notwithstanding any other provision of this Plan, the Committee may
adopt such procedures as it may determine are desirable to ensure that, with
respect to any Participant who is subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, the crediting of deemed shares to, or the
distribution of amounts from, his or her Deferral Account is not deemed to be a
non-exempt purchase or sale for purposes of such Section 16(b).

      (c) The Committee may authorize Options as an investment choice under the
Plan. The terms and conditions under which Options may be made available as an
investment choice shall be determined and communicated by the Committee to
Participants from time to time.

      (d) No deemed investment return under the Plan shall be allocated to
Deferred Amounts related to the granting of Options, as described in Section
6.02(c), prior to the last day of the Option term, subject to Section 7.02(b)
hereof. Following such Option term expiration, the Participant shall be entitled
to elect to have his/her Deferred Amounts related to the granting of such
Options deemed to be invested in one or more of the hypothetical investment
funds offered under the Plan effective as soon as practicable following such
Option term expiration, provided that under applicable provisions of the Plan
the Participant is permitted to defer distribution of the Deferred Amounts other
than for a de minimis period.

                                       9
<PAGE>

     (e) Any Participant who incurs a Termination of Service without completing
at least 10 years of service with the Company, who had not attained the
Company's mandatory retirement age for directors at termination or whose
termination is not on account of death or Disability shall have his or her
Deferred Amounts that are related to Options distributed without any deemed
investment return if such Deferred Amounts were credited to the Participant's
Deferral Account for less than three years as of the termination date.

     (f) Any Participant electing Options as a deemed investment return who (i)
incurs a Termination of Service after having completed 10 years of service with
the Company, (ii) dies, (iii) incurs a Disability or (iv) terminates service
after having attained the Company's mandatory retirement age for directors shall
have the value of such exercised Options, if any, as the deemed investment
return under the Plan even if the deferral of Deferral Amounts related to the
Options has been less than three years at the time of the Termination of
Service.

     SECTION 6.03. Statement of Accounts. The Committee shall submit to each
Participant quarterly statements of his/her Deferral Account(s), in such form as
the Committee deems desirable, setting forth the balance to the credit of such
Participant in his/her Deferral Account(s) as of the end of the most recently
completed quarter.

                                       10
<PAGE>

                                    ARTICLE 7

                                    BENEFITS

     SECTION 7.01. Time and Form of Payment. At the end of the Deferral Period
for each Deferral Account, the Company shall pay to the Participant the balance
of such Deferral Account at the time or times elected by the Participant in the
applicable Participation Agreement; provided that if the Participant has elected
to receive payments from a Deferral Account in a lump sum, the Company shall pay
the balance in such Deferral Account (determined as of the most recent Valuation
Date preceding the end of the Deferral Period) in a lump sum in cash as soon as
practicable after the end of the Deferral Period. If the Participant has elected
to receive payments from a Deferral Account in installments, the Company shall
make annual cash only payments from such Deferral Account, each of which shall
consist of an amount equal to (i) the balance of such Deferral Account as of the
most recent Valuation Date preceding the payment date times (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
remaining installments (including the installment being paid). The first such
installment shall be paid as soon as practicable after the end of the Deferral
Period and each subsequent installment shall be paid on or about the anniversary
of such first payment. Each such installment shall be deemed made on a pro rata
basis from each of the different deemed investments of the Deferral Account (if
there is more than one such deemed investment).

     SECTION 7.02. Termination of Service. (a) If a Participant has elected to
have the balance of his/her Deferral Account distributed upon Termination of
Service, the account balance of the Participant (determined as of the most
recent Valuation Date preceding such Termination of Service) shall be
distributed upon Termination of Service in installments or a lump sum in
accordance with the Plan and as elected in the Participation Agreement.

     (b) Notwithstanding Section 7.02 (a) hereof to the contrary, a Participant
who incurs a Termination of Service following the completion of at least 10
years of service with the Company or the attainment of the Company's mandatory
retirement age for directors and who has been granted Options pursuant to
Section 6.02(c) hereof in connection with Deferred Amounts shall have that
portion of his/her Deferral Account that relates to the granting of such Options
distributed no earlier than (i) the date of exercise of such Options and (ii)
the last day of the Option term, whichever occurs first; provided, however, that
any such Participant who has been granted Options pursuant to Section 6.02(c)
hereof and whose Termination of Service occurs as a result of death or
Disability shall have his or her Deferred Amounts related to such Options
distributed as soon as practicable following the occurrence of such Disability
or death, as the case may be. Such Deferred Amounts shall be distributed in
accordance with the Form of Payment elected by the Participant in his/her
Participation Agreement or with applicable provisions of the Plan; provided,
however, that if the Deferred Amounts are to be distributed in installments, the
Deferred Amounts related to the granting of Options shall be entirely
distributed over the remaining installment schedule commencing with the next
following installment payment due under the installment schedule. Any lump sum
payment shall be paid as soon as practicable following the date of exercise of
the Options or the last day of the Option term, as the case may be.

                                       11
<PAGE>

     SECTION 7.03. In-Service Distributions. Subject to Section 7.02 hereof, if
a Participant has elected to defer Eligible Compensation under the Plan for a
stated number of years, the account balance of the Participant (determined as of
the most recent Valuation Date preceding such Deferral Period) shall be
distributed in installments or a lump sum in accordance with the Plan and as
elected in the Participation Agreement.

     SECTION 7.04. Voluntary Early Withdrawal. Notwithstanding the provisions of
Section 7.01 and any Participation Agreement, a Participant shall be entitled to
elect to withdraw all of the balance in his/her Deferral Account(s) in
accordance with this Section 7.04 by filing with the Committee such form, in
accordance with such procedures, as the Committee shall determine from time to
time. As soon as practicable after receipt of such form by the Committee, the
Company shall pay an amount equal to ninety percent of the balance in such
Participant's Deferral Account(s) (determined as of the most recent Valuation
Date preceding the date such election is filed) to the electing Participant in a
lump sum in cash, and the Participant shall forfeit the remainder of such
Deferral Account(s). All Participation Agreements previously filed by a
Participant who elects to make a withdrawal under this Section 7.04 shall be
null and void after such election is filed (including without limitation
Participation Agreements with respect to Plan Years or performance periods that
have not yet been completed), and such a Participant shall not thereafter be
entitled to file any Participation Agreements under the Plan with respect to the
first Plan Year that begins after such election is made.

     SECTION 7.05. Payments in Connection with Change of Control.
Notwithstanding anything contained in this Plan to the contrary, upon a Change
of Control, the Company shall immediately pay to each Participant in a lump sum
in cash the balance in his/her Deferral Account(s) (determined as of the most
recent Valuation Date preceding the Change of Control).

     SECTION 7.06. Withholding of Taxes. Notwithstanding any other provision of
this Plan, the Company shall withhold from payments made hereunder any amounts
required to be so withheld by any applicable law or regulation.

                                       12
<PAGE>

                                    ARTICLE 8

                             BENEFICIARY DESIGNATION

     SECTION 8.01. Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person, persons or entity as his
Beneficiary or Beneficiaries. A Beneficiary designation shall be made, and may
be amended, by the Participant by filing a written designation with the
Committee, on such form and in accordance with such procedures as the Committee
shall establish from time to time.

     SECTION 8.02. No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided above, or if all designated Beneficiaries
predecease the Participant, then the Participant's Beneficiary shall be deemed
to be the Participant's estate.

                                       13
<PAGE>

                                    ARTICLE 9

                        AMENDMENT AND TERMINATION OF PLAN

     SECTION 9.01. Amendment. The Board or the Committee may at any time amend
this Plan in whole or in part, provided, however, that no amendment shall be
effective to decrease the balance in any Deferral Account as accrued at the time
of such amendment, nor shall any amendment. otherwise have a retroactive effect.

     SECTION 9.02. Company 's Right to Terminate. The Board or the Committee may
at any time terminate the Plan with respect to future Participation Agreements.
The Board or the Committee may also terminate the Plan in its entirety at any
time for any reason, including without limitation if, in its judgment, the
continuance of the Plan, the tax, accounting, or other effects thereof, or
potential payments thereunder would not be in the best interests of the Company,
and upon any such termination, the Company shall immediately pay to each
Participant in a lump sum the accrued balance in his Deferral Account
(determined as of the most recent Valuation Date preceding the termination
date).

                                       14
<PAGE>

                                   ARTICLE 10

                                  Miscellaneous

     SECTION 10.01. Unfunded Plan. This Plan is intended to be an unfunded plan.
All payments pursuant to the Plan shall be made from the general funds of the
Company and no special or separate fund shall be established or other
segregation of assets made to assure payment. No Participant or other person
shall have under any circumstances any interest in any particular property or
assets of the Company as a result of participating in the Plan. Notwithstanding
the foregoing, the Company may (but shall not be obligated to) create one or
more grantor trusts, the assets of which are subject to the claims of the
Company's creditors, to assist it in accumulating funds to pay its obligations
under the Plan.

     SECTION 10.02. Nonassignabiliy. Except as specifically set forth in the
Plan, neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and non-transferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

     SECTION 10.03. Validity and Severability. The invalidity or
unenforceability of any provision of this Plan shall not affect the validity or
enforceability of any other provision of this Plan, which shall remain in full
force and effect, and any prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

     SECTION 10.04. Governing Law. The validity, interpretation, construction
and performance of this Plan shall in all respects be governed by the laws of
the State of Connecticut, without reference to principles of conflict of law,
except to the extent preempted by federal law.

     SECTION 10.05. Status as a Director. This Plan does not constitute a
contract of employment or impose on the Participant or the Company any
obligation for the Participant to remain a director of the Company or change the
policies of the Company and its affiliates regarding termination of service as a
director.

     SECTION 10.06. Underlying Compensation Arrangements. Nothing in this Plan
shall prevent the Company or the Board from modifying, amending or terminating
the compensation arrangements for directors of the Company.

                                       15<PAGE>

                                                                    EXHIBIT (iv)
                                                                    ------------

                                  RULES OF THE
                                  ------------

                                PITNEY BOWES U.K.
                               ------------------

                                STOCK OPTION PLAN
                               ------------------

              Amended and Restated: Effective as of January 1, 1999
<PAGE>

                     THE PITNEY BOWES U.K. STOCK OPTION PLAN
                     ---------------------------------------

                                TABLE OF CONTENTS
                                -----------------

                                                                            PAGE

PURPOSE AND INTRODUCTION...................................................... 4

1.    INTERPRETATION.......................................................... 5

      Committee .............................................................. 5
      Company ................................................................ 5
      Date of Grant .......................................................... 5
      Directors .............................................................. 5
      Eligible Employee ...................................................... 5
      Fair Market Value ...................................................... 5
      Issue or Reorganization ................................................ 5
      Option ................................................................. 5
      Participant ............................................................ 5
      Participating Company .................................................. 5
      Plan ................................................................... 6
      Share .................................................................. 6
      Subscription Price ..................................................... 6
      Termination of Employment .............................................. 6

2.    ELIGIBILITY ............................................................ 6

3.    GRANT OF OPTIONS ....................................................... 6

4.    OPTION CASH OUT ........................................................ 7

5.    TERMS AND CONDITIONS OF OPTIONS ........................................ 8

      (a)  Non-Transferability ............................................... 8
      (b)  Exercise of Options
          (i)   Times and Meth8d of Exercise ................................. 8
          (ii)  Period of Exercise ........................................... 8
               (A)  Death, Disability or Retirement........................... 8
               (B)  Termination for Reasons Other Than Death,
                    Disability and Retirement ................................ 9
               (C)  Sale of Business ......................................... 9
               (D)  Conditions Imposed on Unvested Options....................10
               (E)  Forfeiture for Gross Misconduct ..........................10
               (F)  Vesting ..................................................10
               (G)  Rights on Dismissal ......................................11

                                       1
<PAGE>

                                                                            PAGE

6.    ISSUE OR REORGANIZATION...............................................  11

7.    CHANGE OF CONTROL.....................................................  11

8.    ADMINISTRATION........................................................  13

9.    AMENDMENT OF OPTIONS..................................................  13

10.   AMENDMENT AND TERMINATION OF PLAN.....................................  14

11.   CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES..................  14

12.   GOVERNING LAW.........................................................  14

13.   GENERAL PROVISIONS....................................................  14

APPENDIX A - APPROVED OPTIONS ..............................................  16

I.    PURPOSE AND SCOPE.....................................................  16

II.   INTERPRETATION
      Act...................................................................  16
      Approved Option.......................................................  16
      Company Share.........................................................  16
      Eligible Employee.....................................................  16
      Participating Company.................................................  16

III.  APPROVED OPTIONS......................................................  16

IV.   NON APPLICABILITY OF CERTAIN PROVISIONS...............................  16

V.    RESTRICTIONS ON THE EXERCISE OF OPTIONS...............................  17

VI.   EXERCISE OF APPROVED OPTIONS IN THE CASE OF DEATH ....................  17

VII.  ISSUE OR REORGANIZATION...............................................  17

VIII. AMENDMENT OF PLAN.....................................................  18

IX.   APPLICABILITY OF PRIOR PLAN UNTIL INLAND REVENUE
      APPROVAL OF NEW PLAN .................................................  18

                                       2
<PAGE>

                                                                            PAGE

X.    ISSUE OR TRANSFER OF SHARES .........................................   18

      APPROVED STOCK OPTION AWARD .........................................   19

                                       3
<PAGE>

                    THE PITNEY BOWES U.K. STOCK OPTION PLAN
                    ---------------------------------------

                            PURPOSE AND INTRODUCTION
                            ------------------------

The purpose of the Pitney Bowes U.K. Stock Option Plan is (i) to make Options
available to certain employees of Pitney Bowes Ltd, Pitney Bowes Finance plc and
Pitney Bowes Management Services Ltd. and related companies who can make a
substantial contribution to the success of one or more of the above companies
and (ii) to enhance the ability of the above companies to attract and retain
exceptionally qualified individuals upon whom, in large measure, the sustained
progress, growth and profitability of the business of Pitney Bowes depend.

The Plan was established in 1986 and has been amended from time to time over the
years. The Plan was originally established as an Approved Scheme but was amended
on 22nd January, 1997 to permit the granting of Unapproved Options, along with
Approved Options. The current plan restatement continues to permit the Company
in its discretion to grant Approved Options and Unapproved Options under the
Plan. Appendix A of the Plan contains rules specifically applicable to Approved
Options. The plan name was changed in 1998 from the Pitney Bowes Inc. U.K.
Executive Stock Option Plan (1986) to the current plan name to reflect that the
group of eligible employees had been broadened to include non-executives.

The effective date of the restatement is January 1, 1999, meaning that the
provisions of the restatement apply to all outstanding options as of January 1,
1999 unless otherwise indicated. The restated Plan shall not be effective as to
any outstanding or future grants of Approved Options until the restated Plan has
been approved by Inland Revenue.

                                       4
<PAGE>

                    THE PITNEY BOWES U.K. STOCK OPTION PLAN
                    ---------------------------------------

1. INTERPRETATION

     (a)  The following words and expressions have the following meanings.
          Certain capitalized but undefined terms appearing in this Rule 1 shall
          have the meanings defined in Appendix A of the Plan:

          "Committee"         A committee of not less than three Directors who
                              shall be appointed, from time to time, by the
                              Directors;

          "Company"           Pitney Bowes Inc., a company incorporated under
                              the laws of the State of Delaware, U.S.A.;

          "Date of Grant"     The date on which the Directors resolve to grant
                              an Option in accordance with applicable terms of
                              the Plan;

          "Directors"         The Board of Directors of the Company for the
                              time being;

          "Eligible
           Employee"          Any person holding employment who is an employee
                              or full-time director of the Company or any
                              Participating Company provided that no Termination
                              of Employment has occurred. For purposes of this
                              definition, "full-time" shall mean that the
                              director is required to work for not less than 25
                              hours per week;

          "Fair Market
           Value"             The mean of the high and low price of a Share on
                              the date as of which the value is to be
                              determined, as reported in the New York Stock
                              Exchange Composite Transactions listing in the
                              Wall Street Journal;

          "Issue or
           Reorganization"    Any capitalization issue or rights issue, stock
                              dividend or stock split, or any consolidation,
                              sub-division or reduction of capital by the
                              Company (other than the redemption or purchase by
                              the Company of any capital);

          "Option"            The right granted or to be granted hereunder to a
                              Participant on any particular Date of Grant to
                              subscribe for Shares in accordance with the Rules
                              of the Plan;

          "Participant"       Any person who has been granted an Option which
                              has not lapsed in accordance with the provisions
                              of

                                       5
<PAGE>

                              Rule 5(b)(ii) hereof and includes, where the
                              context so permits, the legal personal
                              representatives of any such person;

          "Participating
           Company"           Any company which the Directors from time to time
                              determine shall participate in the Plan;

          "Plan"              This plan, being the Pitney Bowes U.K. Stock
                              Option Plan, in its present form or with and
                              subject to any amendment thereto effected in
                              accordance with the Rules;

          "Share"             A unit of Common Stock in the capital of the
                              Company.

          "Subscription
           Price"             The price for the subscription of a Share
                              comprised in any Option which is not less than the
                              higher of:

                             (i)  the nominal value of a Share, and

                             (ii) 100% of the Fair Market Value of a Share on
                                  the Date of Grant of such Option.

                              The Subscription Price shall be expressed in
                              United States dollars in the Option award
                              agreement.

          "Termination of
           Employment"        The last day on which the Participant actively
                              perform services (whether voluntarily or
                              involuntarily) for the Company and any
                              Participating Company

          (b)  Words importing the singular shall include the plural and vice
               versa and words importing the masculine shall include the
               feminine;

 2. ELIGIBILITY
    -----------

     No person shall be entitled as of right to participate in the Plan. Subject
     to applicable law and provisions of the Plan, the Committee shall in their
     absolute discretion decide from time to time which Eligible Employee shall
     have the opportunity to participate in the Plan and the extent of the
     participation.

3.  GRANT OF OPTIONS
    ----------------

     (a)  The Committee shall select those Eligible Employees to whom Options
          will be granted, and shall determine for such Options the number of
          Shares which may be subscribed for, the Subscription Price, the
          vesting schedule and any other terms of such Options. The Directors
          shall have the final

                                       6
<PAGE>

          authority to grant Options. A Participant who accepts the grant of an
          Option and the terms thereof shall send written notice of such
          acceptance to the Company, if the Company has indicated that it
          requires such written acceptance.

     (b)  All Options granted under the Plan shall be subject to the terms and
          conditions of the Plan contained herein and shall be in such form as
          the Committee may determine.

4. OPTION CASH OUT
   ---------------

(a)  If a Participant tenders a notice of exercise of an Option, a cash sum may
     be paid to the Participant in lieu of allotment and issue or transfer of
     Shares. Such cash sum shall be equal to the amount by which the Fair Market
     Value of the Shares as of the date of exercise for which the notice of
     exercise was given exceeds the aggregate Subscription Price of those
     Shares. For purposes of this Rule 4, the Fair Market Value of Shares on
     which an Option is granted shall first be determined in United States
     Dollars on the exercise date and shall then be converted to British Pounds
     Sterling using the World Rate published in the Wall Street Journal as
     reported on or most recently before the exercise date to determine the cash
     sum amount, prior to withholding taxes. If payment is made pursuant to this
     clause to a Participant, he shall have no further rights in respect of the
     Shares for which the notice of exercise was given.

(b)  The Company and any Participating Company shall be entitled to deduct
     and/or withhold and/or account to the proper authorities for any tax,
     national insurance contributions or other social security contribution
     which it is required to deduct and/or withhold and/or account for under any
     system for deduction of tax or such contributions at source (such as
     pay-as-you earn). The Company and Participating Company shall ensure that
     the amount of tax to which this sub-clause applies shall be the amount
     which is properly attributable, to and does not exceed, the tax liability
     on the benefit(s) to the Participant from participation in the Plan.

                                       7
<PAGE>

5.  TERMS AND CONDITIONS OF OPTIONS
    -------------------------------
     (a)  Non-transferability
          -------------------

          No Option granted under the Plan may be transferred, assigned, charged
          or otherwise alienated other than due to death.

     (b)  Exercise of Options
          -------------------

          With respect to Options granted hereunder, the Committee shall take
          the following actions:

          (i)  Times and Method of Exercise. The Committee shall determine the
               time or times at which an Option may be exercised in whole or in
               part; in no event, however, shall the period for exercising an
               Option extend more than 10 years from the Date of Grant. The
               Committee shall also determine the method or methods by which
               options may be exercised, and the form or forms (`including
               without limitation, cash, Shares, or other property, or any
               combination thereof, having a Fair Market Value on the exercise
               date equal to the relevant exercise price), in which payment of
               the exercise price with respect thereto may be made or deemed to
               have been made.

          (ii) Period of Exercise. Options granted hereunder shall be
               exercisable only as specified below:

          (A)  Disability, Death and Retirement. Options Granted On Or After
               ---------------------------------
               January 1, 1999. If a Participant becomes disabled, dies or
               retires, any outstanding Option granted to such a Participant on
               or after January 1, 1999, whether or not full or partial vesting
               has occurred with respect to such Option at the time of the
               disability, death or retirement, shall be exercisable during the
               ten (10) year period beginning on the Date of Grant (or during
               such shorter period if the original term is less than ten (10)
               years) even though the disability, death or retirement occurs
               prior to the last day of such option term. Any vesting
               requirements under the Option shall be deemed to be satisfied as
               of the date of disability, death or retirement.

               Options Granted Prior To January 1, 1999. If a Participant
               becomes disabled, dies or retires, any outstanding Option granted
               to a Participant prior to January 1, 1999, whether or not full or
               partial vesting has occurred with respect to such Option at the
               time of the disability, death or retirement, shall be exercisable
               for four (4) years (or during such shorter period if the
               remaining term of the Option is less than four (4) years)
               following the disability, death or retirement unless the
               Committee has in its sole discretion established a special
               exercise period following the occurrence of

                                       8
<PAGE>

               such events. Any vesting requirements under the Option shall
               remain in effect during the exercise period following the
               Participant's disability, death or retirement.

               For purposes of the Plan, a Participant shall be considered to be
               "disabled' on the date he or she is determined to be totally
               disabled under the procedures and provisions of the Pitney Bowes
               U.K. Pension Fund, irrespective of whether the Participant is
               eligible for disability benefits under the Pension Plan. In
               addition, for purposes of the Plan, a Participant shall be
               considered to retire on the date he terminates employment on or
               after attainment of age 55 with at least 10 years of completed
               service with the Company and its subsidiaries. In the case of
               death, an Option may be transferred to the executor or personal
               representative of the Participant's estate or the Participant's
               heirs by will or the laws of descent and distribution.

          (B)  Termination for Reasons Other Than Death, Disability
               ----------------------------------------------------
               or Retirement. If a Participant incurs a Termination of
               -------------
               Employment for reasons other than death, disability or
               retirement, any vested, unexercised portion of an Option that is
               at least partially vested at the time of the Termination of
               Employment shall lapse in its entirety if not exercised by the
               Participant within three (3) months of the Termination of
               Employment, unless the Committee has in its sole discretion
               established an additional exercise period (but in any case not
               longer than the original option term). Any portion of such
               partially vested Option that is not vested at the time of
               Termination of Employment shall lapse unless the Committee has in
               its sole discretion established that a Participant may continue
               to satisfy the vesting requirements beyond the date of his
               Termination of Employment. Any outstanding Option granted to a
               Participant who incurs a Termination of Employment other than for
               death, disability or retirement, for which no vesting has
               occurred at the time of the termination shall lapse on the date
               of termination and the Committee shall have no discretion to
               extend the exercise period of such Option.

          (C)  Sale of Business.   In the event the "business unit," (defined as
               -----------------
               a division, subsidiary, unit or other delineation that the
               Committee in its sole discretion may determine) for which the
               Participant performs substantially all of his or her services is
               assigned, sold, outsourced or otherwise transferred, including an
               asset, stock or joint venture transaction, to an unrelated third
               party such that after such transaction the Company owns or
               controls directly or indirectly less than 51% of the business
               unit, the affected Participant shall become 100% vested in all
               outstanding Options as of the date of the closing of such
               transaction, whether or not fully or partially vested, and such
               Participant shall be entitled to exercise

                                       9
<PAGE>

               such Options during the three (3) months following the closing of
               such transaction, unless the Committee has in its sole discretion
               established an additional exercise period (but in any case not
               longer than the original option term). All Options which are
               unexercised at the end of such three (3) months shall
               automatically lapse.

          (D)  Conditions Imposed on Unvested Options.  Notwithstanding the
               --------------------------------------
               foregoing provisions describing the additional exercise periods
               for Options upon Termination of Employment, the Committee may in
               its sole discretion condition the right of a Participant to
               exercise any portion of a partially vested Option for which the
               Committee has established an additional exercise period on the
               Participant's agreement to adhere to such conditions and
               stipulations which the Committee may impose, including, but not
               limited to, restrictions on the solicitation of employees or
               independent contractors, disclosure of confidential information,
               covenants not to compete, refraining from denigrating through
               adverse or disparaging communication, written or oral, whether or
               not true, the operations, business, management, products or
               services of the Company and any related companies or entities or
               its current or former employees and directors, including without
               limitation, the expression of personal views, opinions or
               judgments. The unvested Options of any Participant for whom the
               Committee has given an additional exercise period subject to such
               conditions subsequent as set forth in this Rule 5(b)(ii)(D) shall
               immediately lapse upon a breach of such conditions.

          (E)  Forfeiture for Gross Misconduct.  Notwithstanding anything to the
               --------------------------------
               contrary herein, any Participant who engages in Gross Misconduct,
               as defined herein, (including any Participant who may otherwise
               qualify for disability or retirement status) shall forfeit all
               outstanding, unexercised Options, whether vested or unvested, as
               of the date such Gross Misconduct occurs. For purposes of the
               Plan, Gross Misconduct shall be defined to mean (i) the
               Participant's conviction of a serious crime in connection with
               the performance or nonperformance of the Participant's duties or
               (ii) the Participant's willful and gross misconduct in the
               performance of his duties of employment or willful act or failure
               to act in a way that results in material injury to the business
               or reputation of the Company and any related companies or
               entities or employees of the Company and any related companies or
               entities.

          (F)  Vesting. For purposes of the Plan, any reference to the "vesting"
               -------
               of an Option shall mean any events or conditions which, if
               satisfied, entitle a Participant to exercise an Option with
               respect to all or a portion of the shares covered by the Option.
               The complete vesting of an Option shall be subject to Rule
               5(b)(ii)(E) hereof.

                                       10
<PAGE>

               Such vesting events or conditions may be set forth in the notice
               of grant or determined by the Committee.

          (G)  Rights on Dismissal.  In the event of his being dismissed by the
               -------------------
               Company or any Participating Company, a Participant shall not be
               entitled to damages by reason of any cessation of or alteration
               to his rights or expectations under the Plan arising from such
               dismissal.

6.  ISSUE OR REORGANIZATION
    -----------------------

     In the event of any Issue or Reorganization the number and/or class of
     Shares subject to Options and/or the relevant Subscription Prices shall be
     appropriately adjusted in such manner as the Committee shall determine to
     be appropriate to prevent dilution or enlargement of the benefits or
     potential benefits intended to be made available under the Plan provided
     that the Subscription Price of a Share shall never be less than its nominal
     value.

7.  CHANGE OF CONTROL
    -----------------

     Notwithstanding anything in the Plan to the contrary, the following shall
     apply:

     (a)  In the event of a Change of Control (as defined below), all Options
          outstanding immediately before such Change of Control shall become
          immediately exercisable to their fullest extent regardless of any
          vesting schedule, including Options granted less than one year prior
          to such Change of Control.

     (b)  If a Participant incurs a Termination of Employment within two years
          after a Change of Control, all outstanding Options held by him, even
          if granted less than one year before termination, and including those
          accelerated upon Change of Control, shall continue to be exercisable
          for a period of two years after such Termination of Employment,
          provided that nothing contained in this Paragraph shall extend any
          stock option granted beyond the expiration date pursuant to Rule 5
          (b)(i) hereof.

     (c)  "Change of Control. shall mean the following events:

          (i)  there is an acquisition, in any one transaction or a series of
               transactions, other than from Pitney Bowes Inc., by any
               individual, entity or group (within the meaning of Section
               13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
               amended (the "Exchange Act")), of beneficial ownership (within
               the meaning of Rule 13(d)(3) promulgated under the Exchange Act)
               of 20% or more of either the then outstanding shares of Common
               Stock or the combined voting power of the then outstanding voting
               securities of Pitney Bowes Inc. entitled to vote generally in the
               election of directors, but excluding, for this purpose, any such
               acquisition by Pitney Bowes Inc. or any of its subsidiaries, or
               any employee

                                       11
<PAGE>

                benefit plan (or related trust) of Pitney Bowes Inc. or its
                subsidiaries, or any corporation with respect to which,
                following such acquisition, more than 50% of the then
                outstanding shares of common stock of such corporation and the
                combined voting power of the then outstanding voting securities
                of such corporation entitled to vote generally in the election
                of directors is then beneficially owned, directly or indirectly,
                by the individuals and entities who were the beneficial owners,
                respectively, of the common stock and voting securities of
                Pitney Bowes Inc. immediately prior to such acquisition in
                substantially the same proportion as their ownership,
                immediately prior to such acquisition, of the then outstanding
                shares of Common Stock or the combined voting power of the then
                outstanding voting securities of Pitney Bowes Inc. entitled to
                vote generally in the election of directors, as the case may be;
                or

         (ii)   individuals who, as of September 9, 1996, constitute the Board
                (as of such date, the "Incumbent Board") cease for any reason to
                constitute at least a majority of the Board, provided that any
                individual becoming a director subsequent to September 9, 1996,
                whose election, or nomination for election by Pitney Bowes'
                shareholders, was approved by a vote of at least a majority of
                the directors then comprising the Incumbent Board shall be
                considered as though such individual were a member of the
                Incumbent Board, but excluding, for this purpose, any such
                individual whose initial assumption of office is in connection
                with an actual or threatened election contest relating to the
                election of the directors of Pitney Bowes Inc. (as such terms
                are used in Rule 14(a)(11) or Regulation 14A promulgated under
                the Exchange Act); or

          (iii) there occurs either (A) a reorganization, merger or
                consolidation, in each case, with respect to which the
                individuals and entities who were the respective beneficial
                owners of the common stock and voting securities of Pitney Bowes
                Inc. immediately prior to such reorganization, merger or
                consolidation do not, following such reorganization, merger or
                consolidation, beneficially own, directly or indirectly, more
                than 50% of, respectively, the then outstanding shares of common
                stock and the combined voting power of the then outstanding
                voting securities entitled to vote generally in the election of
                directors, as the case may be, of the corporation resulting from
                such reorganization, merger or consolidation, or (B) an approval
                by the shareholders of Pitney Bowes Inc. of a complete
                liquidation or dissolution of Pitney Bowes Inc. or of the sale
                or other disposition of all or substantially all of the assets
                of Pitney Bowes Inc.

                                       12
<PAGE>

     These "Change of Control" provisions only apply if Pitney Bowes Inc. is
     subject to a "Change of Control". They do not apply to employees of a
     Pitney Bowes subsidiary if that subsidiary is subject to a "Change of
     Control".

8.  ADMINISTRATION
    --------------

     (a)  The Plan shall be administered by the Committee. Subject to the terms
          of the Plan and applicable law, the Committee shall have full power
          and authority to:

          (i)   designate Eligible Employees;

          (ii)  determine the terms and conditions under which Options are to be
                granted;

          (iii) determine whether, to what extent, and under what circumstances
                Options may be settled or exercised in cash, Shares, other
                securities, or other property, or to what extent, and under what
                circumstances options may lapse or may be canceled, forfeited,
                or suspended, and the method or methods by which Options may be
                settled, exercised, canceled, forfeited, or suspended;

          (iv)  interpret and administer the Plan and any instrument or
                agreement relating to the Plan, including any notice of grant;

          (v)   establish, amend, suspend, or reconcile such rules and
                regulations and appoint such agents as it shall deem appropriate
                for the proper administration of the Plan;

          (vi)  carry out such additional duties or exercise such additional
                rights as may be delegated to the Committee by the Directors;
                and

          (vii) make any other determination and take any other action that the
                Committee may deem necessary or desirable for the administration
                of the Plan.

     (b)  Unless otherwise expressly provided in the Plan, all designations,
          determinations, interpretations, and other decisions under or with
          respect to the Plan, shall be within the sole discretion of the
          Committee, may be made at any time, and shall be final, conclusive,
          and binding upon all persons, including the Company, Participating
          Companies, any Participant, any holder or beneficiary of any Option
          and any employee or director of the Company or Participating Company.

9.  AMENDMENT OF OPTIONS
    --------------------

     (a)  Subject to (b) below, the Committee may at any time and from time to
          time by resolution signed by the Committee and without other formality

                                       13
<PAGE>

          amend any terms or, waive any conditions or rights under, alter,
          suspend, discontinue, cancel or terminate any Option granted hereunder
          in any respect except to reduce the Subscription Price below the
          Subscription Price at the time of grant, without the consent of the
          stockholders of the Company and of the Participant;

     (b)  No amendment shall operate to prejudice materially any rights already
          acquired by a Participant under the Plan or under a particular Option
          grant.

10.  AMENDMENT AND TERMINATION OF PLAN
     ----------------------------------

     The Committee may at any time amend, alter, suspend, discontinue or
     terminate the Plan without the consent of any stockholder or Participant;
     provided that any such amendment, alteration, suspension, discontinuation
     or termination that would operate to prejudice materially the rights of any
     affected Participant shall not be effective without the approval of the
     Participant; and provided further that the Plan may not be amended to
     provide for repricing of Options previously issued under the Plan without
     stockholder approval. In the event the Plan is suspended, discontinued or
     terminated, no further grants will be made hereunder.

11.  CORRECTION OF DEFECTS, OMISSIONS, AND INCONSISTENCIES
     -----------------------------------------------------

     The Committee may correct any defect, supply any omission, or reconcile any
     inconsistency in any Option grant or Plan rule in the manner and to the
     extent it shall deem desirable to carry the Plan into effect.

12.  GOVERNING LAW
     -------------

     The Rules shall be governed by the laws of England.

13.  GENERAL PROVISIONS
     ------------------

     (a)  No Right to Option. No Employee, Participant or other Person shall
          have any claim to be granted any Option under the Plan, and there is
          no obligation for uniformity of treatment of Eligible Employees,
          Participants, or holders or beneficiaries of Options under the Plan.
          The terms and conditions of Options need not be the same with respect
          to each recipient.

     (b)  Withholding. The Company or any Participating Company shall be
          authorized to withhold from any Option granted or any payment due or
          transfer made under any Option, an amount (in cash, Shares, other
          securities, or other property) of taxes, national insurance
          contributions or other social security contribution due in respect of
          an Option, its exercise, or any payment or transfer under such Option
          or under the Plan and to take such other action as may be necessary in
          the opinion of the Company to satisfy all obligations for the payment
          of such taxes.

     (c)  No Limit on Other Compensation Agreements. Nothing contained in the
          Plan shall prevent the Company or any Participating Company from
          adopting or continuing in effect other or additional compensation

                                       14
<PAGE>

          arrangements and such arrangements may be either generally applicable
          or applicable only in specific cases.

     (d)  No Right to Employment. The grant of an Option shall not be construed
          as giving a Participant the right to be retained in the employ of the
          Company and further grants of Options under the Plan are made on a
          purely discretionary basis and Eligible Employees and Participants
          shall not have a vested right to receive Option grants hereunder.

     (e)  Severability. If any provision of the Plan or any Option is or becomes
          or is deemed to be invalid, illegal, or enforceable in any
          jurisdiction, or as to any optionee or Option or would disqualify the
          Plan or any Option under any law deemed applicable by the Committee,
          such provision shall be construed or deemed amended to conform to
          applicable laws, or if it cannot be so construed or deemed amended
          without, in the determination of the Committee, materially altering
          the intent of the Plan or the Option, such provision shall be stricken
          as to such jurisdiction, optionee, or Award and the remainder of the
          Plan and any such Option shall remain in full force and effect.

     (f)  No Fractional Shares. No fractional Shares shall be issued or
          delivered pursuant to the Plan or any Option, and the Committee shall
          determine whether cash, other securities, or other property shall be
          paid or transferred in lieu of any fractional Shares or any rights
          thereto shall be canceled, terminated, or otherwise eliminated.

     (g)  Headings. Headings are given to the sections and subsections of the
          Plan solely as a convenience to facilitate reference. Such headings
          shall not be deemed in any way material or relevant to the
          construction or interpretation of the Plan or any provision thereof.

     (h)  Plan Expenses. The cost of the operation of the Plan (including but
          not limited to the costs relating to the issue of Shares upon the
          exercise of Options) shall be borne by the Company.

     (i)  Term of Plan. No Option shall be granted under the Plan after May 31,
          2006. However, unless otherwise expressly provided in the Plan or in
          an applicable notice of grant, any Option theretofore granted may
          extend beyond such date, and the authority of the Committee hereunder
          to amend, alter, adjust, suspend, discontinue, or terminate any such
          Option, or waive any conditions or rights under any such Option in
          accordance with the terms of the Plan shall extend beyond such date.

                                       15
<PAGE>

                          APPENDIX A - APPROVED OPTIONS
                          -----------------------------

I.  PURPOSE AND SCOPE
    ------------------

The purpose of this Appendix A is to set forth Rules that apply specifically and
only to Approved Options. All other Rules of the Plan not appearing in Appendix
A shall also apply to Approved Options, except where expressly superseded by a
specific Rule in Appendix A.

II.  INTERPRETATION
     --------------

     (a)  For purposes of this Appendix A, the following words and expressions
          have the indicated meanings. Capitalized terms not defined in Appendix
          A are already defined in Rule 1 of the Plan and shall have the
          meanings set forth in such Rule 1. References to legislation shall be
          to legislation enacted in the United Kingdom:

     "Act"          The Income and Corporation Taxes Act of 1988;

     "Approved
      Option"       An Option granted under a share option scheme approved under
                    Schedule 9 of the Act;

     "Company       Share" A Share which satisfies the conditions of paragraphs
                    10 to 14 of Schedule 9 of the Act.

     "Eligible      Employee" Has the same meaning set forth in the Rules except
                    that for the purposes of Appendix A, it excludes any person
                    precluded from participating by paragraph 8 of Schedule 9.

     "Participating
      Company"      The Company and all "subsidiaries" incorporated in United
                    Kingdom which are under the "control" of the Company, the
                    terms subsidiaries" and "control" having the same respective
                    meanings as defined in the Act.

     (b)  Words importing the singular shall include the plural and vice versa
          and words importing the masculine shall include the feminine;

     (c)  Other words or expressions, so far as not inconsistent with the
          context, shall have the same meanings as in Schedule 9 of the Act.

III.  APPROVED OPTIONS
      ----------------

     (a)  Any Option granted as an Approved Option shall specifically be made
          subject to paragraphs (b) & (c) of this Rule III.

     (b)  The aggregate market value of shares which an Eligible Employee may
          acquire in pursuance of rights obtained (and not exercised) under an
          Approved Option granted under the Plan or under any other Approved

                                       16
<PAGE>

          Scheme (other than a savings-related share option scheme) established
          by the Company or by any other associated company of the Company
          (within the meaning of s. 187 (2) of the Act), such aggregate market
          value being determined at the time the rights are obtained, shall not
          exceed (Pounds)30,000 or such other amount as may from time to time be
          the appropriate limit for the purpose of paragraph (28)(1) of Schedule
          9 of the Act.

     (c)  In order to calculate the amount set out in Rule III(b) hereof, the
          Subscription Price of each Option shall be converted by the Committee
          from United States Dollars into British Pounds Sterling by reference
          to the World Rate published in the Wall Street Journal as reported on
          or most recently before the Date of Grant.

IV.  NON APPLICABILITY OF CERTAIN PROVISIONS
     ---------------------------------------

Rule 4 and 13(b) of the Plan shall not apply to Approved Options. Rules
5(b)(ii)(C) and (E) shall only apply to Approved Options granted on or after
January 1, 1999 and only after approval of the restated Plan by Inland Revenue.
Rule 5(b)(F) applies to Options granted under this Appendix A, except that the
last sentence of the Rule shall be replaced by the following:

     "Such vesting events or conditions must be set forth in the notice of
grant."

V.  RESTRICTIONS ON THE EXERCISE OF OPTIONS
    ---------------------------------------

Notwithstanding anything to the contrary in Rule 5(b)(ii) of the Plan, an
Approved Option granted under the Plan shall not be exercised by a Participant
at any time when he is ineligible to participate by virtue of paragraph 8 of
Schedule 9 of the Act.

VI.  EXERCISE OF APPROVED OPTIONS IN THE CASE OF DEATH
     -------------------------------------------------

Notwithstanding anything to the contrary in Rule 5(b)(ii)(A) of the Plan, an
Approved Option shall only be exercisable by the Participant's personal
representative during the one year period following the Participant's death.

VII.  ISSUE OR REORGANIZATION
      -----------------------

     Rule 6 of the Plan shall be modified with respect to Approved Options such
     that;

     (1)  no adjustment to an Approved Option on account of an Issue or
          Reorganization shall be made without the prior approval of the Board
          of the Inland Revenue;

     (2)  and the class of shares subject to Approved Options shall not be
          altered unless following such alteration, the shares would comply with
          paragraphs 10 to 14 of Schedule 9 of the Act.

                                       17
<PAGE>

VIII.  AMENDMENT OF PLAN
       -----------------

Notwithstanding anything to the contrary in Rules 9 and 10 of the Plan, no
material amendment of the Plan affecting Approved Options shall become effective
without the prior approval of the Board of Inland Revenue and the Committee may
at any time and from time to time by resolution and without other formality
amend the Plan so as to secure or maintain approval under Schedule 9 of the Act.

IX.  APPLICABILITY OF PRIOR PLAN UNTIL INLAND REVENUE APPROVAL OF NEW PLAN
     ---------------------------------------------------------------------

Approved Options granted under the Prior Plan document which was to expire on
December 31, 2001 shall be governed by the terms and conditions of such Prior
Plan document until the current restated plan document is approved by Inland
Revenue. The provisions of the restated plan document governing Approved Options
shall be adopted by the Board as soon as practicable following approval by
Inland Revenue. For purposes of this Rule IX, the term "Prior Plan" shall mean
the plan document (as amended and restated) in effect prior to January 1, 1999.

X.  ISSUE OR TRANSFER OF SHARES
    ---------------------------

Within 30 days if the date of exercise, the Shares in respect of which the
Option has been exercised, shall be allotted and issued or, if appropriate,
transferred to the Participant or as he may direct.

                                       18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]