Document:

Unassociated Document

    

    Exhibit
      10.2

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of October 31, 2006, by and between Modtech Holdings,
      Inc., a Delaware corporation (the “Company”),
      and
      Amphora Limited (the “Purchaser”).

     

    This
      Agreement is made pursuant to the Conversion and Repurchase Agreement, dated
      as
      of the date hereof, by and among the Purchaser and the Company (as amended,
      modified or supplemented from time to time, the “Repurchase
      Agreement”).

     

    The
      Company and the Purchaser hereby agree as follows:

     

    1.     Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have the
      following meanings:

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      the Company’s common stock, par value $0.01 per shares. 

     

    “Effectiveness
      Date”
      means,
      (i) with respect to the initial Registration Statement required to be filed
      hereunder, a date no later than one hundred eighty (180) days following the
      date
      hereof and (ii) with respect to each additional Registration Statement required
      to be filed hereunder (if any), a date no later than [sixty (60)] days following
      the applicable Filing Date.

     

    “Effectiveness
      Period”
      has the
      meaning set forth in Section 2(a).

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended, and any successor
      statute.

     

    “Filing
      Date”
      means,
      with respect to the Registration Statement required to be filed hereunder in
      respect of the Shares.

     

    “Holder”
      or
“Holders”
      means
      the Purchaser or any of its affiliates or transferees to the extent any of
      them
      hold Registrable Securities, other than those purchasing Registrable Securities
      in a market transaction.

     

    “Indemnified
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
      has the
      meaning set forth in Section 5(c).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    “Prospectus”
      means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by such Registration Statement,
      and all other amendments and supplements to the Prospectus, including
      post-effective amendments, and all material incorporated by reference or deemed
      to be incorporated by reference in such Prospectus.

     

    “Repurchase
      Agreement”
      has the
      meaning given to such term in the Preamble hereto.

     

    “Registrable
      Securities”
      means
      the Shares.

     

    “Registration
      Statement”
      means
      each registration statement required to be filed hereunder, including the
      Prospectus therein, amendments and supplements to such registration statement
      or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      415”
      means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and any successor statute.

     

    “Shares”
      means
      189,189 shares of the Company’s Common Stock issued to the Purchaser by the
      Company in connection with a partial conversion of the "Note" as defined in
      the
      Repurchase Agreement on May 4,2006.

     

    “Trading
      Market”
      means
      any of the NASD Over The Counter Bulletin Board, NASDAQ Capital Market, the
      NASDAQ National Markets System, the American Stock Exchange or the New York
      Stock Exchange

     

    
      
        
        

      

      
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    2.     Registration.

     

    (a) On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a Registration Statement covering the Registrable Securities for a selling
      stockholder resale offering to be made on a continuous basis pursuant to Rule
      415. The Registration Statement shall be on Form S-3 (except if the Company
      is
      not then eligible to register for resale the Registrable Securities on Form
      S-3,
      in which case such registration shall be on another appropriate form in
      accordance herewith). The Company shall cause each Registration Statement to
      become effective and remain effective as provided herein. The Company shall
      use
      its best efforts to cause each Registration Statement to be declared effective
      under the Securities Act as promptly as possible after the filing thereof,
      but
      in any event no later than the Effectiveness Date. The Company shall use its
      reasonable commercial efforts to keep each Registration Statement continuously
      effective under the Securities Act until the date which is the earlier date
      of
      when (i) all Registrable Securities covered by such Registration Statement
      have
      been sold or (ii) all Registrable Securities covered by such Registration
      Statement may be sold immediately without registration under the Securities
      Act
      and without volume restrictions pursuant to Rule 144(k), as determined by the
      counsel to the Company pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Company’s transfer agent and the affected
      Holders (the “Effectiveness
      Period”).

     

    (b) If:
      (i)
      the Registration Statement is not filed on or prior to the Filing Date; (ii)
      the
      Registration Statement is not declared effective by the Commission by the
      Effectiveness Date; (iii) after the Registration Statement is filed with and
      declared effective by the Commission, the Registration Statement ceases to
      be
      effective (by suspension or otherwise) as to all Registrable Securities to
      which
      it is required to relate at any time prior to the expiration of the
      Effectiveness Period (without being succeeded immediately by an additional
      registration statement filed and declared effective) for a period of time which
      shall exceed thirty (30) days in the aggregate per year (defined as a period
      of
      365 days commencing on the date the Registration Statement is declared
      effective) or more than twenty (20) consecutive calendar days; or (iv) the
      Common Stock is not listed or quoted, or is suspended from trading on any
      Trading Market for a period of three (3) consecutive Trading Days (provided
      the
      Company shall not have been able to cure such trading suspension within thirty
      (30) days of the notice thereof or list the Common Stock on another Trading
      Market); (any such failure or breach being referred to as an “Event,” and for
      purposes of clause (i) or (ii) the date on which such Event occurs, or for
      purposes of clause (iii) the date which such thirty (30) day or twenty (20)
      consecutive day period (as the case may be) is exceeded, or for purposes of
      clause (v) the date on which such three (3) Trading Day period is exceeded,
      being referred to as “Event Date”), then until the applicable Event is cured,
      the Company shall pay to each Holder an amount in cash, as liquidated damages
      and not as a penalty, equal to 1.0% for each thirty (30) day period (prorated
      for partial periods) on a daily basis of the Fair Market Value (as hereinafter
      defined) of the Shares; provided that, the maximum aggregate amount of
      liquidated damages that may be charged to the Company pursuant to this Section
      2(b) shall not exceed 10% of the Fair Market Value of the Shares. For purposes
      of the preceding sentence, "Fair Market Value" shall mean shall mean the average
      of the closing price of the Common Stock for the ten (10) trading days
      immediately prior to the Event. While such Event continues, such liquidated
      damages shall be paid not less often than each thirty (30) days. Any unpaid
      liquidated damages as of the date when an Event has been cured by the Company
      shall be paid within three (3) days following the date on which such Event
      has
      been cured by the Company. At its option, the Company may pay up to fifty
      percent (50%) of the liquidated damages (the “Equity Damage Amount”) by
      delivering from time to time to the Holder, which such deliveries shall occur
      simultaneously with delivery to the Holder of the cash portion of the liquidated
      damage amounts as required by this Section 2(b), that number of shares of Common
      Stock whose aggregate Fair Market Value (as hereafter defined) equals the Equity
      Damage Amount (the "Additional Shares"). For purposes of the preceding sentence,
      “Fair Market Value” shall mean the average of the closing price of the Common
      Stock for the ten (10) trading days immediately prior to issuance of the
      Additional Shares. The Additional Shares shall be included within the definition
      of Registrable Securities and shall be included within (I) the initial
      Registration Statement if the liquidated damages arise from an Event occurring
      prior to the date such initial Registration Statement is declared effective
      by
      the SEC and (II) a new Registration Statement to be filed on or prior to the
      applicable Filing Date and declared effective by the SEC on or prior to the
      applicable Effectiveness Date, in the event the liquidated damages arise from
      an
      Event occurring after the date the initial Registration Statement is declared
      effective by the SEC.

     

    
      
        
        

      

      
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    (c) Within
      three (3) business days of the Effectiveness Date, the Company shall cause
      its
      counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
      to
      the transfer agent stating that the Shares are subject to an effective
      registration statement and can be reissued free of restrictive legend upon
      notice of a sale by the Purchaser and confirmation by the Purchaser that it
      has
      complied with the prospectus delivery requirements, provided that the Company
      has not advised the transfer agent orally or in writing that the opinion has
      been withdrawn. Copies of the blanket opinion required by this Section 2(c)
      shall be delivered to the Purchaser within the time frame set forth
      above.

     

    3.     Registration
      Procedures.
      If and
      whenever the Company is required by the provisions hereof to effect the
      registration of any Registrable Securities under the Securities Act, the Company
      will, as expeditiously as possible:

     

    (a) prepare
      and file with the Commission a Registration Statement with respect to such
      Registrable Securities, respond as promptly as possible to any comments received
      from the Commission, and use its best efforts to cause the Registration
      Statement to become and remain effective for the Effectiveness Period with
      respect thereto, and promptly provide to the Purchaser copies of all filings
      and
      Commission letters of comment relating thereto;

     

    (b) prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the Prospectus used in connection therewith as may
      be
      necessary to comply with the provisions of the Securities Act with respect
      to
      the disposition of all Registrable Securities covered by such Registration
      Statement and to keep such Registration Statement effective until the expiration
      of the Effectiveness Period applicable to such Registration
      Statement;

     

    (c) furnish
      to the Purchaser such number of copies of the Registration Statement and the
      Prospectus included therein (including each preliminary Prospectus) as the
      Purchaser reasonably may request to facilitate the public sale or disposition
      of
      the Registrable Securities covered by the Registration Statement;

     

    (d) use
      its
      best efforts to register or qualify the Purchaser’s Registrable Securities
      covered by such Registration Statement under the securities or “blue sky” laws
      of such jurisdictions within the United States as the Purchaser may reasonably
      request, provided, however, that the Company shall not for any such purpose
      be
      required to qualify generally to transact business as a foreign corporation
      in
      any jurisdiction where it is not so qualified or to consent to general service
      of process in any such jurisdiction;

     

    
      
        
        

      

      
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    (e) list
      the
      Registrable Securities covered by such Registration Statement with any
      securities exchange on which the Common Stock of the Company is then
      listed;

     

    (f) promptly
      (and in any event within three (3) Business Days following such occurrence)
      notify the Purchaser at any time when a Prospectus relating thereto is required
      to be delivered under the Securities Act, of the happening of any event of
      which
      the Company has knowledge as a result of which the Prospectus contained in
      such
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing; and

     

    (g) make
      available for inspection by the Purchaser and any attorney, accountant or other
      agent retained by the Purchaser, all publicly available, non-confidential
      financial and other records, pertinent corporate documents and properties of
      the
      Company, and cause the Company’s officers, directors and employees to supply all
      publicly available, non-confidential information reasonably requested by the
      attorney, accountant or agent of the Purchaser.

     

    4.     Registration
      Expenses.
      All
      expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including reasonable counsel fees) incurred
      in connection with complying with state securities or “blue sky” laws, fees of
      the NASD, transfer taxes, fees of transfer agents and registrars, fees of,
      and
      disbursements incurred by, one counsel for the Holders are called “Registration
      Expenses”. All selling commissions applicable to the sale of Registrable
      Securities, including any fees and disbursements of any special counsel to
      the
      Holders beyond those included in Registration Expenses, are called “Selling
      Expenses.” The Company shall only be responsible for all Registration
      Expenses.

     

    5.     Indemnification.

     

    (a) In
      the
      event of a registration of any Registrable Securities under the Securities
      Act
      pursuant to this Agreement, the Company will indemnify and hold harmless the
      Purchaser, and its officers, directors and each other person, if any, who
      controls the Purchaser within the meaning of the Securities Act, against any
      losses, claims, damages or liabilities, joint or several, to which the
      Purchaser, or such persons may become subject under the Securities Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in any Registration Statement
      under which such Registrable Securities were registered under the Securities
      Act
      pursuant to this Agreement, any preliminary Prospectus (unless connected in
      the
      final sale prospectus) or final Prospectus contained therein, or any amendment
      or supplement thereof, or arise out of or are based upon the omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein not misleading, and will reimburse
      the
      Purchaser, and each such person for any reasonable legal or other expenses
      incurred by them in connection with investigating or defending any such loss,
      claim, damage, liability or action; provided,
      however,
      that
      the Company will not be liable in any such case if and to the extent that any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished by or on behalf of the Purchaser or any
      such person in writing specifically for use in any such document.

     

    
      
        
        

      

      
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    (b) In
      the
      event of a registration of the Registrable Securities under the Securities
      Act
      pursuant to this Agreement, the Purchaser will indemnify and hold harmless
      the
      Company, and its officers, directors and each other person, if any, who controls
      the Company within the meaning of the Securities Act, against all losses,
      claims, damages or liabilities, joint or several, to which the Company or such
      persons may become subject under the Securities Act or otherwise, insofar as
      such losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact which was furnished in writing by the Purchaser to the
      Company expressly for use in (and such information is contained in) the
      Registration Statement under which such Registrable Securities were registered
      under the Securities Act pursuant to this Agreement, any preliminary Prospectus
      or final Prospectus contained therein, or any amendment or supplement thereof,
      or arise out of or are based upon the omission or alleged omission to state
      therein a material fact required to be stated therein or necessary to make
      the
      statements therein not misleading, and will reimburse the Company and each
      such
      person for any reasonable legal or other expenses incurred by them in connection
      with investigating or defending any such loss, claim, damage, liability or
      action, provided,
      however,
      that
      the Purchaser will be liable in any such case if and only to the extent that
      any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished in writing to the Company by or on behalf
      of the Purchaser specifically for use in any such document. Notwithstanding
      the
      provisions of this paragraph, the Purchaser shall not be required to indemnify
      any person or entity in excess of the amount of the aggregate net proceeds
      received by the Purchaser in respect of Registrable Securities in connection
      with any such registration under the Securities Act.

     

    (c) Promptly
      after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified
      Party”)
      of
      notice of the commencement of any action, such Indemnified Party shall, if
      a
      claim for indemnification in respect thereof is to be made against a party
      hereto obligated to indemnify such Indemnified Party (an “Indemnifying
      Party”),
      notify the Indemnifying Party in writing thereof, but the omission so to notify
      the Indemnifying Party shall not relieve it from any liability which it may
      have
      to such Indemnified Party other than under this Section 5(c) and shall only
      relieve it from any liability which it may have to such Indemnified Party under
      this Section 5(c) if and to the extent the Indemnifying Party is prejudiced
      by
      such omission. In case any such action shall be brought against any Indemnified
      Party and it shall notify the Indemnifying Party of the commencement thereof,
      the Indemnifying Party shall be entitled to participate in and, to the extent
      it
      shall wish, to assume and undertake the defense thereof with counsel
      satisfactory to such Indemnified Party, and, after notice from the Indemnifying
      Party to such Indemnified Party of its election so to assume and undertake
      the
      defense thereof, the Indemnifying Party shall not be liable to such Indemnified
      Party under this Section 5(c) for any legal expenses subsequently incurred
      by
      such Indemnified Party in connection with the defense thereof; if the
      Indemnified Party retains its own counsel, then the Indemnified Party shall
      pay
      all fees, costs and expenses of such counsel, provided,
      however,
      that,
      if the defendants in any such action include both the Indemnified Party and
      the
      Indemnifying Party and counsel for the Indemnified Party shall have reasonably
      concluded that there may be reasonable defenses available to the Indemnified
      Party which are different from or additional to those available to the
      Indemnifying Party or if counsel for the Indemnified Party shall have reasonably
      concluded that the interests of the Indemnified Party may reasonably be deemed
      to conflict with the interests of the Indemnifying Party, the Indemnified Party
      shall have the right to select one separate counsel and to assume such legal
      defenses and otherwise to participate in the defense of such action, with the
      reasonable expenses and fees of such separate counsel and other expenses related
      to such participation to be reimbursed by the Indemnifying Party as
      incurred.

     

    
      
        
        

      

      
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    (d) In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the Securities Act in any case in which either (i) the Purchaser, or
      any
      officer, director or controlling person of the Purchaser, makes a claim for
      indemnification pursuant to this Section 5 but it is judicially determined
      (by
      the entry of a final judgment or decree by a court of competent jurisdiction
      and
      the expiration of time to appeal or the denial of the last right of appeal)
      that
      such indemnification may not be enforced in such case notwithstanding the fact
      that this Section 5 provides for indemnification in such case, or (ii)
      contribution under the Securities Act may be required on the part of the
      Purchaser or such officer, director or controlling person of the Purchaser
      in
      circumstances for which indemnification is provided under this Section 5; then,
      and in each such case, the Company and the Purchaser will contribute to the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that the Purchaser is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the Registration Statement bears
      to
      the public offering price of all securities offered by such Registration
      Statement, provided,
      however,
      that,
      in any such case, (A) the Purchaser will not be required to contribute any
      amount in excess of the public offering price of all such securities offered
      by
      it pursuant to such Registration Statement; and (B) no person or entity guilty
      of fraudulent misrepresentation (within the meaning of Section 10(f) of the
      Act)
      will be entitled to contribution from any person or entity who was not guilty
      of
      such fraudulent misrepresentation.

     

    6.     Representations
      and Warranties.

     

    (a) The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
      Act and, except with respect to certain matters which the Company has disclosed
      to the Purchaser on Schedule
      4.21
      to the
      Purchase Agreement, the Company has filed all proxy statements, reports,
      schedules, forms, statements and other documents required to be filed by it
      under the Exchange Act. The Company has filed (i) its Annual Report on Form
      10-K
      for its fiscal year ended December 31, 2005 and (ii) its Quarterly Report on
      Form 10-Q for the fiscal quarters ended March 31, 2006, and June 30, 2006
      (collectively, the “SEC
      Reports”).
      Each
      SEC Report was, at the time of its filing, in substantial compliance with the
      requirements of its respective form and none of the SEC Reports, nor the
      financial statements (and the notes thereto) included in the SEC Reports, as
      of
      their respective filing dates, contained any untrue statement of a material
      fact
      or omitted to state a material fact required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which they
      were made, not misleading. The financial statements of the Company included
      in
      the SEC Reports comply as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the
      Commission or other applicable rules and regulations with respect thereto.
      Such
      financial statements have been prepared in accordance with generally accepted
      accounting principles (“GAAP”)
      applied on a consistent basis during the periods involved (except (i) as may
      be
      otherwise indicated in such financial statements or the notes thereto or (ii)
      in
      the case of unaudited interim statements, to the extent they may not include
      footnotes, customary year-end adjustments, or may be condensed) and fairly
      present in all material respects the financial condition, the results of
      operations and the cash flows of the Company and its subsidiaries, on a
      consolidated basis, as of, and for, the periods presented in each such SEC
      Report.

     

    
      
        
        

      

      
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    (b) The
      Common Stock is listed or quoted, as applicable, for trading on the NASDAQ
      Global Market and satisfies all requirements for the continuation of such
      listing or quotation, as applicable, and the Company shall do all things
      necessary for the continuation of such listing or quotation, as applicable.
      The
      Company has not received any notice that its Common Stock will be delisted
      from
      or no longer be quoted on, as applicable, the NASDAQ Global Market (except
      for
      prior notices which have been fully remedied) or that the Common Stock does
      not
      meet all requirements for the continuation of such listing or quotation, as
      applicable.

     

    (c) Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to the Purchase Agreement to be
      integrated with prior offerings by the Company for purposes of the Securities
      Act which would prevent the Company from selling the Common Stock pursuant
      to
      Rule 506 under the Securities Act, or any applicable exchange-related
      stockholder approval provisions, nor will the Company or any of its affiliates
      or subsidiaries take any action or steps that would cause the offering of the
      Securities to be integrated with other offerings.

     

    (d) The
      Shares are all restricted securities under the Securities Act as of the date
      of
      this Agreement. The Company will not issue any stop transfer order or other
      order impeding the sale and delivery of any of the Registrable Securities at
      such time as such Registrable Securities are registered for public sale or
      it
      has received an opinion of counsel that an exemption from registration is
      available, except as required by federal or state securities laws.

     

    (e) Except
      for agreements made in the ordinary course of business, there is no agreement
      that has not been filed with the Commission as an exhibit to a registration
      statement or to a form required to be filed by the Company under the Exchange
      Act, the breach of which could reasonably be expected to have a material and
      adverse effect on the Company and its subsidiaries, or would prohibit or
      otherwise interfere with the ability of the Company to enter into and perform
      any of its obligations under this Agreement in any material
      respect.

     

    (f) The
      Company shall provide written notice to each Holder of (i) the occurrence of
      each Discontinuation Event (as defined below) and (ii) the declaration of
      effectiveness by the SEC of each Registration Statement required to be filed
      hereunder, in each case within one (1) business day of the date of each such
      occurrence and/or declaration.

     

    
      
        
        

      

      
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    7.     Miscellaneous.

     

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, will be entitled to
      specific performance of its rights under this Agreement.

     

    (b) No
      Piggyback on Registrations.
      Except
      as and to the extent set forth on Schedule 7(b) hereto, neither the Company
      nor
      any of its security holders (other than the Holders in such capacity pursuant
      hereto) may include securities of the Company in any Registration Statement
      other than the Registrable Securities, and the Company shall not after the
      date
      hereof enter into any agreement providing any such right for inclusion of shares
      in the Registration Statement to any of its security holders. Except as and
      to
      the extent specified in Schedule
      7(b)
      hereto,
      the Company has not previously entered into any agreement granting any
      registration rights with respect to any of its securities to any person or
      entity that have not been fully satisfied.

     

    (c) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to each Registration Statement.

     

    (d) Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of a Discontinuation
      Event (as defined below), such Holder will forthwith discontinue disposition
      of
      such Registrable Securities under the applicable Registration Statement until
      such Holder’s receipt of the copies of the supplemented Prospectus and/or
      amended Registration Statement or until it is advised in writing (the
“Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph. For purposes of this Agreement, a
      “Discontinuation
      Event”
shall
      mean (i) when the Commission notifies the Company whether there will be a
“review”
of
      such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement (the Company shall provide true and complete copies
      thereof and all written responses thereto to each of the Holders); (ii) any
      request by the Commission or any other Federal or state governmental authority
      for amendments or supplements to such Registration Statement or Prospectus
      or
      for additional information; (iii) the issuance by the Commission of any stop
      order suspending the effectiveness of such Registration Statement covering
      any
      or all of the Registrable Securities or the initiation of any Proceedings for
      that purpose; (iv) the receipt by the Company of any notification with respect
      to the suspension of the qualification or exemption from qualification of any
      of
      the Registrable Securities for sale in any jurisdiction, or the initiation
      or
      threatening of any Proceeding for such purpose; and/or (v) the occurrence of
      any
      event or passage of time that makes the financial statements included in such
      Registration Statement ineligible for inclusion therein or any statement made
      in
      such Registration Statement or Prospectus or any document incorporated or deemed
      to be incorporated therein by reference untrue in any material respect or that
      requires any revisions to such Registration Statement, Prospectus or other
      documents so that, in the case of such Registration Statement or Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (e) Piggy-Back
      Registrations.
      If at
      any time after the date hereof there is not an effective Registration Statement
      covering all of the Registrable Securities required to be covered hereunder
      and
      the Company shall determine to prepare and file with the Commission a
      registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the
      Securities Act) or their then equivalents relating to equity securities to
      be
      issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall send to each Holder written notice of
      such
      determination and, if within fifteen (15) days after receipt of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Holder requests to be registered, to the extent the Company may do so without
      violating registration rights of others which exist as of the date of this
      Agreement, subject to customary underwriter cutbacks applicable to all holders
      of registration rights and subject to obtaining any required consent of any
      selling stockholder(s) to such inclusion under such registration
      statement.

     

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of the then outstanding Registrable
      Securities. Notwithstanding the foregoing, a waiver or consent to depart from
      the provisions hereof with respect to a matter that relates exclusively to
      the
      rights of certain Holders and that does not directly or indirectly affect the
      rights of other Holders may be given by Holders of at least a majority of the
      Registrable Securities to which such waiver or consent relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the immediately preceding
      sentence.

     

    (g) Notices.
      Any
      notice or request hereunder may be given to the Company or the Purchaser at
      the
      respective addresses set forth below or as may hereafter be specified in a
      notice designated as a change of address under this Section 7(g). Any notice
      or
      request hereunder shall be given by registered or certified mail, return receipt
      requested, hand delivery, overnight mail, Federal Express or other national
      overnight next day carrier (collectively, “Courier”)
      or
      telecopy (confirmed by mail). Notices and requests shall be, in the case of
      those by hand delivery, deemed to have been given when delivered to any party
      to
      whom it is addressed, in the case of those by mail or overnight mail, deemed
      to
      have been given three (3) business days after the date when deposited in the
      mail or with the overnight mail carrier, in the case of a Courier, the next
      business day following timely delivery of the package with the Courier, and,
      in
      the case of a telecopy, when confirmed. The address for such notices and
      communications shall be as follows:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    
      	 	
              If
                to the Company:

            	
              Modtech
                Holdings, Inc.

              2830
                Barrett Avenue

              Perris,
                California 92571

              Attention: Chief
                Financial Officer

              Facsimile:

            
	 	 	 
	 	
              with
                a copy to:

            	
              Haddan
                & Zepfel LLP

              500
                Newport Center Drive 

              Suite
                580

              Newport
                Beach, California 92660

              Attention:
                Robert J. Zepfel, Esq.

              Facsimile:
                (949) 706-6060

            
	 	 	 
	 	
              If
                to a Purchaser:

            	
              To
                the address set forth under such Purchaser 

              name
                on the signature pages hereto.

            
	 	 	 
	 	
              If
                to any other Person who is then 

              the
                registered Holder:

            	
              To
                the address of such Holder as it appears in 

              the
                stock transfer books of the Company

            

    

     

    or
      such
      other address as may be designated in writing hereafter in accordance with
      this
      Section 7(g) by such Person.

     

    (h) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights or obligations hereunder without
      the prior written consent of each Holder. Each Holder may assign their
      respective rights hereunder in the manner and to the persons and entities as
      permitted under the Purchase Agreement.

     

    (i) Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (j) Governing
      Law, Jurisdiction and Waiver of Jury Trial.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
      THE
      LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
      SUCH
      STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
      consents and agrees that the state or federal courts located in the County
      of
      New York, State of New York shall have exclusion jurisdiction to hear and
      determine any Proceeding between the Company, on the one hand, and the
      Purchaser, on the other hand, pertaining to this Agreement or to any matter
      arising out of or related to this Agreement; provided,
      that
      the Purchaser and the Company acknowledge that any appeals from those courts
      may
      have to be heard by a court located outside of the County of New York, State
      of
      New York, and further provided,
      that
      nothing in this Agreement shall be deemed or operate to preclude the Purchaser
      from bringing a Proceeding in any other jurisdiction to collect the obligations,
      to realize on the Collateral or any other security for the obligations, or
      to
      enforce a judgment or other court order in favor of the Purchaser. The Company
      expressly submits and consents in advance to such jurisdiction in any Proceeding
      commenced in any such court, and the Company hereby waives any objection which
      it may have based upon lack of personal jurisdiction, improper venue or
forum
      non conveniens.
      The
      Company hereby waives personal service of the summons, complaint and other
      process issued in any such Proceeding and agrees that service of such summons,
      complaint and other process may be made by registered or certified mail
      addressed to the Company at the address set forth in Section 7(g) and that
      service so made shall be deemed completed upon the earlier of the Company’s
      actual receipt thereof or three (3) days after deposit in the U.S. mails, proper
      postage prepaid. The parties hereto desire that their disputes be resolved
      by a
      judge applying such applicable laws. Therefore, to achieve the best combination
      of the benefits of the judicial system and of arbitration, the parties hereto
      waive all rights to trial by jury in any Proceeding brought to resolve any
      dispute, whether arising in contract, tort, or otherwise between the Purchaser
      and/or the Company arising out of, connected with, related or incidental to
      the
      relationship established between then in connection with this Agreement. If
      either party hereto shall commence a Proceeding to enforce any provisions of
      this Agreement, the Purchase Agreement or any other Related Agreement, then
      the
      prevailing party in such Proceeding shall be reimbursed by the other party
      for
      its reasonable attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such Proceeding.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (k) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (l) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of the
      parties that they would have executed the remaining terms, provisions, covenants
      and restrictions without including any of such that may be hereafter declared
      invalid, illegal, void or unenforceable.

     

    (m) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    [Balance
      of Page Intentionally Left Blank; Signature Page Follows]

     

     

     

     

     

    

 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

     

    
      
        	 	MODTECH TECH,
                INC.
	 	 
	 	
                By:

              	 
	 	
                Name:

              	 
	 	
                Title:

              	 
	 	 
	 	AMPHORA
                LIMITED
	 	 
	 	
                Name:

              	 
	 	
                Title:

              	 
	 	 
	 	Address for Notices:
	 	 
	 	
                Amphora
                  Limited

                c/o
                  Amaranth Advisors L.L.C.

                One
                  American Lane

                Greenwich,
                  CT 06831

                Attention:
                  General Counsel

                Telephone:
                  (203) 422-3340

                Facsimile:
                  (203) 422-3540

              
	 	 
	 	with a copy (for informational
                purposes only) to:
	 	 
	 	
                Schulte
                  Roth & Zabel LLP 

                919
                  Third Avenue

                New
                  York, New York 10022

                Attention:      
                  Eleazer
                  N. Klein, Esq.

                Telephone:    
                  (212)
                  756-2000

                Facsimile:       (212)
                  593-5955

              

      

    

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

                      ____________,
      200___

    [Continental
      Stock Transfer

    &
      Trust Company

    Two
      Broadway

    New
      York,
      New York 10004

    Attn:
      William Seegraber]

     

    
      	 	
              Re:

            	
              Modtech
                Holdings, Inc. Registration Statement on Form
                [S-3]

            

    

     

    Ladies
      and Gentlemen:

     

    As
      counsel to Modtech Holdings, Inc., a Delaware corporation (the “Company”),
      we
      have been requested to render our opinion to you in connection with the resale
      by the individuals or entitles listed on Schedule
      A
      attached
      hereto (the “Selling
      Stockholders”),
      of an
      aggregate of __________ shares (the “Shares”)
      of the
      Company’s Common Stock.

     

    A
      Registration Statement on Form [S-3]
      under
      the Securities Act of 1933, as amended (the “Act”),
      with
      respect to the resale of the Shares was declared effective by the Securities
      and
      Exchange Commission on [date].
      Enclosed is the Prospectus dated [date].
      We
      understand that the Shares are to be offered and sold in the manner described
      in
      the Prospectus.

     

    This
      letter shall serve as our notice to you that the Shares are, as of this date,
      freely transferable by the Selling Stockholders pursuant to the Registration
      Statement. Unless you receive separate notice or instructions from us following
      the date hereof, you need not require further letters from us to effect any
      future legend-free issuance or re-issuance of the Shares.

     

                     Very
      truly yours,

     

                     [Company
      counsel]

     

     

     

    
 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    Schedule
      A to Exhibit A

    
      	
              Selling
                Stockholder

            	 	
              R/N/O

            	 	
              Shares

              Being
                Offered

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

     

     

     

     

     

     

     

    

 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    SCHEDULE
      7(b)

     

    Registration
      Rights Agreement entered into with Laurus Master Fund, Ltd. dated the date
      hereof.

     

    Amended
      and Restated Registration Rights Agreement entered into with the Purchaser
      and
      others, dated August 5, 2005.

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        16NDS GROUP PLC

                                  RULES OF THE
                                    NDS 2006
                            LONG-TERM INCENTIVE PLAN

               Adopted by the Board of Directors on 7 August 2006
                   Approved by shareholders on 30 October 2006

<PAGE>

CONTENTS

Rule                                                                        Page

1.    Definitions and interpretation ........................................  1
2.    How the Plan will operate .............................................  1
3.    Limit on the number of Shares which can be issued and individual
      limit on participation ................................................  3
4.    Rights in relation to Shares under Awards .............................  4
5.    Vesting of Awards .....................................................  5
6.    Lapse of Awards .......................................................  6
7.    Change of Control - General offer or scheme of arrangement ............  7
8.    Consequences of vesting of Awards .....................................  8
9.    Manner of exercise of an Option .......................................  9
10.   Adjustment of Awards .................................................. 11
11.   Exchange of Awards .................................................... 11
12.   Ranking of Shares ..................................................... 12
13.   Withholding for tax ................................................... 12
14.   Administration ........................................................ 12
15.   Amending the Plan ..................................................... 13
16.   General ............................................................... 14
17.   Data protection ....................................................... 16
18.   Governing law ......................................................... 16

Appendix

1.    Definitions ........................................................... 17
<PAGE>

                 RULES OF THE NDS 2006 LONG-TERM INCENTIVE PLAN

1.    DEFINITIONS AND INTERPRETATION

1.1   Definitions

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

1.2   Interpretation

      The headings in the Rules are for convenience and should be ignored when
      construing them. Unless the context otherwise requires, words in the
      singular include the plural and vice versa and words importing either
      gender include both genders. Reference in the Rules to any statutory
      provisions is to those provisions as amended, extended or re-enacted from
      time to time, and includes any regulations or other subordinate
      legislation made under them.

2.    HOW THE PLAN WILL OPERATE

2.1   Eligible Employees and Awards

      The Board may grant an Award to any Eligible Employee it selects and will
      determine the type of Award to be granted, the number of Shares subject to
      the Award, the Grantor and the terms and conditions (not inconsistent with
      these Rules) of the Award. The grant of an Award to an Eligible Employee
      will not, for that Employee, create any right to or the expectation of the
      grant of a subsequent Award.

2.2   How Awards are granted

      The Grantor will grant an Award so that it constitutes a binding contract
      between the Participant and the Grantor and in a form that indicates to
      the Participant what type of Award the Award is (and if the Award is an
      Option whether, if appropriate, Rule 9.4 or 9.5 will apply to that Option
      from the Date of Grant). If an Award is granted by deed, a single deed of
      grant may be executed in favour of any number of Participants. There will
      be no payment for the grant of an Award. The grant of an Award will be
      subject to the Rules and to obtaining any approval or consent required
      under any applicable regulations or enactments.

2.3   When an Award may be granted

      Awards may only be granted:

      (a)   within 42 days following the announcement by the Company of its
            results for any period; or

      (b)   at any other time that the Board considers that exceptional
            circumstances exist.

      An Award may not be granted to an Eligible Employee when the Company is
      prohibited from granting Awards under any regulations or enactments
      applicable to it or the Eligible Employee.

                                       1
<PAGE>

2.4   Performance target(s)

      The vesting of an Award may be made subject to the satisfaction of any
      performance target selected by the Board; provided that, in the case of an
      Award that is intended to qualify for the Section 162(m) Exception, the
      performance target selected by the Board will be selected from among the
      Section 162(m) Performance Targets. If vesting of an Award is made subject
      to a performance target, the performance target must be measured over at
      least one year. The vesting of an Award can also be subject to any
      additional terms and conditions that the Board considers appropriate. Any
      performance target and any additional terms and conditions to which an
      Award is subject will be specified at the Date of Grant. The Board will
      have discretion to decide whether and to what extent any performance
      target to which an Award is subject has been met. If an event occurs which
      causes the Board, acting fairly and reasonably, to believe that a
      performance target is no longer appropriate, it can amend or waive the
      performance target accordingly.

2.5   Awards personal to Participants

      An Award may not, nor may any rights in respect of it, be sold,
      transferred, assigned, charged or otherwise encumbered or disposed of to
      any person, other than on a Participant's death when an Award may be
      transmitted to the Participant's personal representatives.

2.6   Social security contributions

      The Company may require an Eligible Employee to enter into an agreement
      under paragraph 3A of Schedule 1 to the Social Security Contributions and
      Benefits Act 1992 (as amended by the National Insurance Contributions and
      Statutory Payments Act 2004) or to make an election under paragraph 3B of
      Schedule 1 to that Act in relation to any secondary class 1 National
      Insurance contributions arising in respect of an Award.

2.7   Option Price

      (a)   Subject to Rule 2.7(b) with respect to Incentive Stock Options, the
            Board will decide the Option Price of an Option which will be stated
            at the Date of Grant. The Option Price cannot be less than the
            higher of:

            (i)   the Market Value of a Share; and

            (ii)  the nominal value of a Share if the Shares are to be
                  subscribed,

            but subject to any adjustment under Rule 10.

            The Option Price may not be determined on the basis of the Market
            Value of a Share on a day which is earlier than the first trading
            day of the periods referred to in Rules 2.3(a) or 2.3(b).

      (b)   At the time of its grant the Board may designate that an Option will
            be an Incentive Stock Option. Any Option designated as an Incentive
            Stock Option:

            (i)   will have an Option Price that is (1) not less than 100% of
                  the Market Value of a Share on the Date of Grant; or (2) in
                  the case of a 10% stock holder, not less than 110% of the
                  Market Value of a Share on the Date of Grant;

                                       2
<PAGE>

            (ii)  will not be exercisable after the expiration of 10 years from
                  its Date of Grant and will be subject to earlier lapse under
                  the Rules;

            (iii) will not have an aggregate Market Value (determined at its
                  Date of Grant) of the Shares with respect to which Incentive
                  Stock Options are exercisable for the first time by the
                  Participant during any calendar year (under the Plan and any
                  other Employees' Share Scheme of the Company), determined in
                  accordance with the provisions of section 422 of the Code,
                  which exceeds $100,000; and

            (iv)  will be granted within 10 years from the earlier of the date
                  the Plan is adopted or the date the Plan is approved by the
                  shareholders of the Company.

            Notwithstanding this Rule 2.7 and Rule 14.1, the Board may, without
            the consent of the Participant at any time before the exercise of an
            Option (whether or not an Incentive Stock Option), take any action
            necessary to prevent the Option from being treated as an Incentive
            Stock Option.

      (c)   To comply with section 409A of the Code, the Option Price of an
            Option granted to a Participant subject to US taxation will not be
            less than 100% of the Market Value of a Share on the Date of Grant.

2.8   Stock Appreciation Rights (Share or cash settled)

      The Board may determine at or after the Date of Grant of an Award that is
      an Option (but not an Incentive Stock Option) that Rule 9.4 or Rule 9.5
      will apply to that Option.

2.9   Currency conversion

      Any amount calculated for the purposes of or payable under the Plan in a
      currency other than US Dollars will be converted into US Dollars or the
      other currency (as appropriate) at the average of the spot buying and
      selling rates for US Dollars and the relevant currency published by the
      New York Federal Reserve Bank for customs purposes on an appropriate date
      selected by the Board.

3.    LIMIT ON THE NUMBER OF SHARES WHICH CAN BE ISSUED AND INDIVIDUAL LIMIT ON
      PARTICIPATION

3.1   The limit for all Shares issued under the Plan

      The total number of unissued Shares that may be allocated under the Plan
      and any other Employees' Share Scheme of the Company at any time will not
      exceed 10 percent of the ordinary share capital of the Company in issue at
      that time. Any Shares issued by the Company to satisfy any Awards granted
      by the Trustee will be included for the purpose of this limit. The total
      number of Shares that may be allocated under the Plan:

      (a)   cannot exceed 10,000,000; and

      (b)   in any 12 month period under Options or rights under Rule 9.4 cannot
            exceed 5,000,000.

                                       3
<PAGE>

3.2   Meaning of allocation and exclusion from the limit

      The reference in this Rule 3 to the allocation of Shares means, in the
      case of any share option plan, the placing of unissued Shares under option
      and, in the case of any other type of share plan, the issue and allotment
      of Shares. For the purposes of the limits in this Rule 3:

      (a)   Shares where the right to acquire them was released, cancelled or
            lapsed without being exercised will be ignored

3.3   Adjustment to Shares to be taken into account

      Where Shares issued under the Plan or any other Employees' Share Scheme of
      the Company are to be taken into account for the purposes of the limits in
      Rule 3.1 and a Variation has taken place between the date of issue of the
      Shares and the date on which the limit is to be calculated, the number of
      Shares to be taken into account for the purposes of the limit will be
      adjusted in the manner the Board considers appropriate to take account of
      the Variation.

3.4   The individual limit

      The maximum Market Value (determined at the Date of Grant) of Shares which
      may in respect of an Eligible Employee in any financial year normally be
      put under (i) a Conditional Award and/or a Restricted Award will be 150
      per cent. of the Eligible Employee's basic salary; and (ii) an Option will
      be 300 per cent. of the Eligible Employee's basic salary. However, if the
      Board determines that exceptional circumstances exist, for example, to
      assist the recruitment or retention of a senior employee, Awards may be
      granted over Shares with a maximum Market Value determined by the Board
      that exceeds these respective limits.

3.5   Purported grant of an Award in excess of limits

      If an Award is purported to be granted in breach of the limits in:

      (a)   Rule 3.1, the number of Shares over which the Award is purported to
            have been granted will, with the number of Shares over which all
            other Awards have been granted on the same Date of Grant, be reduced
            pro rata to the largest lower number that complies with Rule 3.1; or

      (b)   Rule 3.4, the number of Shares over which the Award is purported to
            have been granted will be reduced to the largest lower number that
            complies with Rule 3.4.

      When the number of Shares under an Award is adjusted under this Rule 3.5,
      the Award will take effect from the Date of Grant as if it had been
      granted on the adjusted terms. If the Award is a Restricted Award and
      Shares have been allocated to a Participant in breach of the limits in
      Rules 3.1 or 3.4, the Shares in respect of which the Restricted Award is
      reduced will be transferred by the Participant to or at the direction of
      the Company following any adjustment under this Rule 3.5.

4.    RIGHTS IN RELATION TO SHARES UNDER AWARDS

4.1   Subject to Rule 4.3 a Participant holding a Conditional Award or an Option
      will have no voting, dividend or other rights attaching to the Shares
      under that Award before the Award vests (in the case of a Conditional
      Award) or is exercised (in the case of an Option).

                                       4
<PAGE>

4.2   A Participant holding a Restricted Award will have beneficial ownership of
      the Shares subject to that Award from its Date of Grant and will have
      voting but, subject to Rule 4.3, no dividend rights in respect of those
      Shares. A Participant may not sell, transfer, assign, charge or otherwise
      encumber or dispose of any Shares subject to a Restricted Award until the
      Restricted Award vests. The Board may take any action it considers
      necessary to give effect to the provisions of this Rule including
      retaining the certificates for the Shares or the ADRs evidencing the
      entitlement to the Shares/ADSs subject to a Restricted Award. Rule 8.2
      will apply to any Shares in respect of which a Restricted Award does not
      vest.

4.3   The Board may determine at the Date of Grant that a Participant holding a
      Conditional Award or a Restricted Award will be entitled to receive:

      (a)   in the case of a Restricted Award, any dividend paid or payable by
            reference to a record date from the Date of Grant until the
            Restricted Award vests on such number of the Shares subject to the
            Restricted Award as the Board decides at the Date of Grant. Any
            dividend payable will be paid to the Participant on the payment date
            for the relevant dividend;

      (b)   in the case of a Conditional Award, an amount equal to any dividend
            paid or payable (or, if Shares to satisfy the Conditional Award are
            not in issue at the relevant record date, that would have been paid
            or payable) by reference to a record date from the Date of Grant
            until the Conditional Award vests on such number of the Shares
            subject to the Conditional Award as the Board decides at the Date of
            Grant. Any amount payable under this Rule 4.3(b) will be paid as
            soon as practicable after the payment date for the relevant dividend
            and may be paid in cash or in Shares and, if in Shares, the number
            of Shares delivered will have a Market Value at the date of payment
            as nearly as possible equal to the net amount of the payment; or

      (c)   in the case of either a Restricted Award or a Conditional Award, an
            amount equal to any dividend paid or payable (or, as regards a
            Conditional Award where Shares to satisfy it are not in issue at the
            relevant record date, that would have been paid or payable) by
            reference to a record date from the Date of Grant until the Award
            vests on the number of Shares in respect of which the Award has
            vested (or, if fewer, the number of Shares as decided by the Board
            at the Date of Grant). Any amount payable under this Rule 4.3(c)
            will be paid as soon as practicable after the Award has vested and
            may be paid in cash or in Shares and, if in Shares, the number of
            Shares delivered will have a Market Value at the date of payment as
            nearly as possible equal to the net amount of the payment.

5.    VESTING OF AWARDS

5.1   Normal vesting

      Subject to Rules 5.2, 5.3, 5.4 and 7, the satisfaction of any performance
      target to which it is subject under Rule 2.4 and any additional terms and
      conditions that apply to the Award, an Award will vest, unless the Board
      determines otherwise, as to 25 per cent. of the shares subject to it on
      each anniversary of its Date of Grant. If a Conditional Award would vest
      on a day when the Participant holding that Award is prohibited from
      dealing in Shares, the Award will vest on the first day on which that
      Participant ceases to be so prohibited.

                                       5
<PAGE>

5.2   Cessation of Employment

      If a Participant ceases to be in Employment for any reason then the
      Participant's unvested Award(s) will lapse immediately unless the Board
      determines to preserve or vest all or part of the Participant's Award(s)
      on any terms it thinks fit.

5.3   Exercise of Options

      An Option may only be exercised to the extent that it is vested. An Option
      may normally be exercised, to the extent vested, at any time before the
      tenth anniversary of its Date of Grant or such earlier date as the Board
      specifies at the Date of Grant. However, an Option held by a Participant
      (or the Participant's personal representatives, if appropriate) who has
      ceased to be employed by the Group, whether the Participant's Option was
      vested as of the date of cessation of employment or was preserved or
      vested by the Board under Rule 5.2, must be exercised, if at all, within
      the period of six months (twelve months in the case of death) following
      the later of the date of vesting of the Option or the date of the
      Participant's cessation of Employment (or by any other date determined by
      the Board under Rule 5.2).

6.    LAPSE OF AWARDS

6.1   Lapsing of Awards

      An Award will lapse and cease to be capable of (further) vesting and/or
      exercise, as appropriate, on the earliest of:

      (a)   the Participant ceasing to be in Employment and where no portion of
            the Award is vested as of such date and the Board has not preserved
            or vested any of the Award under Rule 5.2. If a portion of the Award
            is vested as of the date the Participant ceases to be in Employment,
            the portion that is not vested will lapse immediately; provided,
            that if the Board preserves or vests any portion only of an Award
            under Rule 5.2 that is not vested as of the date of cessation of
            Employment, only the part that is not preserved or vested will lapse
            immediately;

      (b)   the Participant being deprived of the legal or beneficial ownership
            of the Award by operation of law, or doing or omitting to do
            anything which causes him to be so deprived or being declared
            bankrupt;

      (c)   the Participant attempting to breach Rule 2.5;

      (d)   in respect of an Option held by a Participant who ceases to be in
            Employment and where Option was either vested as of cessation of
            employment or the Option was preserved or vested under Rule 5.2, the
            expiry of six months (twelve months in the case of death) following
            the later of the date of vesting and the date of cessation of
            Employment (or on any other date determined by the Board under Rule
            5.2); and

      (e)   in respect of an Option, the tenth anniversary of its Date of Grant
            or any earlier date for its lapse determined by the Board at its
            Date of Grant.

                                       6
<PAGE>

6.2   Lapse where no or only partial vesting

      Where, after testing of any performance target to which it is subject, an
      Award has not vested or only vested in part under the performance target,
      the unvested part of the Award will lapse with immediate effect.

6.3   Participants on extended leave of absence (including maternity leave)

      For the purposes of this Rule 6, a Participant on approved extended leave
      of absence (including maternity leave) will not cease to be in Employment
      until the earlier of the date on which the Participant notifies the
      Participant's employer of the Participant's intention not to return to
      work or the date on which the Participant ceases to have statutory or
      contractual rights to return to work.

7.    CHANGE OF CONTROL - GENERAL OFFER OR SCHEME OF ARRANGEMENT

7.1   Circumstances in which this Rule applies

      Subject to Rule 11, this Rule applies where:

      (a)   an offeror (either alone or with any party acting in concert with
            the offeror) obtains Control of the Company as a result of making an
            offer to acquire the whole of the issued ordinary share capital of
            the Company (or such part of it which is not at the time owned by
            the offeror and any party acting in concert with the offeror); or

      (b)   the court sanctions a compromise or arrangement affecting the Shares
            under section 425 of the Companies Act 1985.

7.2   The date and extent of vesting of an Award

      Where Rule 7.1 applies or is likely to apply, an Award will vest, subject
      to Rule 6, to the extent determined by the Board and on the date on which
      the relevant event described in Rule 7.1 occurs. The Board will have
      discretion to take into account any factors it believes to be relevant in
      determining the extent to which an Award will vest in the circumstances.
      The Board will confirm as soon as practicable the extent (if any) to which
      an Award will vest and this confirmation may be before, but conditional
      on, the relevant event described in Rule 7.1 occurring.

7.3   Exercise of Options and lapse of Awards following an event in Rule 7.1

      An Option may be exercised to the extent it has vested in accordance with
      Rule 7.2 and will lapse:

      (a)   following an event described in Rule 7.1(a), on the earlier of the
            date (i) falling six months after the offeror obtains Control and
            (ii) on which any person who has become bound or entitled to acquire
            Shares under sections 428 to 430F of the Act ceases to be so bound
            or entitled; and

      (b)   following an event described in Rule 7.1(b), on the compromise or
            arrangement becoming effective.

                                       7
<PAGE>

      An Award will lapse on the occurrence of an event described in Rule 7.1 to
      the extent it does not vest in accordance with Rule 7.2. For the avoidance
      of doubt, an Option will lapse in accordance with this Rule 7.3 whether or
      not it became exercisable in accordance with Rule 7.2.

7.4   Voluntary winding-up of Company

      If a voluntary winding-up of the Company is proposed to shareholders, each
      Award which has not vested will vest conditionally on the resolution for
      the winding-up of the Company being passed in respect of the number of
      Shares determined in accordance with Rule 7.2 as if the proposal to
      shareholders were the relevant event referred to in Rule 7.2. Any Option
      (whether it becomes exercisable as a result of this Rule 7.4 or is already
      exercisable) will lapse immediately on the resolution being passed. Any
      Award will lapse on the resolution being passed to the extent it does not
      vest in accordance with this Rule 7.4.

7.5   De-listing of the Company

      If the Shares cease to be listed on any stock exchange without any change
      of Control occurring an Award will, subject to Rule 6, vest to the extent
      determined by the Board and on the date on which the Shares cease to be
      listed. The Board will have discretion to take into account any factors it
      believes to be relevant in determining the extent to which an Award will
      vest in these circumstances. Following its determination each Participant
      will be entitled to receive an amount in cash equal to the amount they
      would have received if they had, in accordance with the rules of the Plan
      acquired all of the Shares subject to their Award to the extent vested and
      immediately disposed of those Shares at the average Market Value of those
      Shares in the five days before the date of the de-listing of the Shares or
      at such other value as the Board may determine.

8.    CONSEQUENCES OF VESTING OF AWARDS

8.1   Conditional Awards

      Within 30 days of the date that a Conditional Award vests, the Company
      will, subject to Rule 13, either:

      (a)   arrange (at its expense) for an ADR or ADRs to be issued in respect
            of the Shares in respect of which it has vested. Unless the
            Participant otherwise directs, the acceptance of a Conditional Award
            will constitute an authorisation by the Participant to the Secretary
            of the Company or any other employee nominated by the Company on
            behalf of the Participant to sign, execute and do all such
            documents, acts and things as may be necessary or incidental to
            effect the deposit of the relevant Shares with the Depositary and
            the issue to, or to the order of, the Participant of an ADR or ADRs
            in respect of the Shares so deposited; or

      (b)   make or procure the making of a payment to the Participant as nearly
            as possible equal to the Market Value on the date on which the Award
            vests of the Shares subject to the Conditional Award in respect of
            which it has vested.

                                       8
<PAGE>

8.2   Restricted Awards

      If an Award takes the form of a Restricted Award any Shares subject to it
      in respect of which it has not vested will be transferred by the
      Participant to or at the direction of the Company as soon as practicable
      and permissible following the vesting of the Restricted Award.

8.3   Options

      If an Award takes the form of an Option it may be exercised following the
      vesting of the Award in accordance with Rule 9 and subject to Rules 5.3,
      6, 7.3, 7.4 and 7.5.

8.4   All Awards

      The delivery of Shares and issue of ADRs under the Plan is subject to the
      obtaining of any approval or consent required.

9.    MANNER OF EXERCISE OF AN OPTION

9.1   Exercise in whole or in part

      Subject to Rules 5.3, 6, 7.3, 7.4 and 7.5, an Option may be exercised in
      whole or in part to the extent that it has vested.

9.2   Manner of exercise

      To exercise an Option, a Participant must deliver to the address specified
      in the notice of exercise the notice of exercise in the prescribed form,
      properly completed and signed by the Participant and, subject to the
      Company deciding that Rules 9.4 or 9.5 will apply, payment of the Option
      Price for the Shares over which the Option is exercised or an undertaking
      in a form satisfactory to the Company to pay to the Company the Option
      Price for the Shares over which the Option is exercised.

9.3   Issue or transfer of Shares

      Subject to Rules 9.4, 9.5 and 13, within 30 days of the Option Exercise
      Date the Company will arrange (at its expense) for an ADR or ADRs to be
      issued in respect of the Shares in respect of which the Option is
      exercised. Unless the Participant otherwise directs, the exercise of an
      Option will constitute an authorisation by the Participant to the
      Secretary of the Company or any other employee nominated by the Company on
      behalf of that Participant to sign, execute and do all such documents,
      acts and things as may be necessary or incidental to effect the deposit of
      the relevant Shares with the Depositary and the issue to, or to the order
      of, the Participant of an ADR or ADRs in respect of the Shares so
      deposited.

9.4   Share Settled Stock Appreciation Rights

      The Company may decide that this Rule 9.4 will apply to satisfy the
      exercise of an Option, in which case:

      (a)   Rule 9.3 will apply in respect of such whole number of Shares
            (rounded down):

            (i)   if the Option is to be satisfied by the transfer of Shares,
                  whose aggregate Market Value on the Option Exercise Date is as
                  close as reasonably possible equal to (but not more than) the
                  amount by which the aggregate Market Value on the Option
                  Exercise Date of the Shares over which Rule 9.3 would, but for
                  the application of this Rule 9.4, apply exceeds the Option
                  Price that would otherwise be payable under Rule 9.2, the
                  "Exercise Gain"; or

                                       9
<PAGE>

            (ii)  if the Option is to be satisfied by the issue of new Shares,
                  determined by the application of the formula:

                                          Exercise Gain
                  --------------------------------------------------------------

                  Market Value of a Share at  -  the nominal value of a Share
                  the Option Exercise Date       (or, if less, the Option Price)

      (b)   subject to Rule 8.4, the number of Shares determined under Rule
            9.4(a) will be issued or transferred in accordance with Rule 9.3 and
            any cash balance arising as a result of the rounding down will be
            paid to the Participant at the same time as Shares are delivered;

      (c)   the Option will lapse immediately following the exercise in respect
            of the Shares over which the Participant exercised the Option;

      (d)   subject to Rule 9.4(e) if new Shares are issued, sufficient will be
            sold on behalf of the Participant to realise an amount equal to the
            nominal value of the Shares issued and the proceeds of their sale
            will be remitted to the Company to pay the nominal value of the
            Shares issued; and

      (e)   if the Participant has paid to the Company the Option Price in
            accordance with Rule 9.2, the Option Price will be returned to the
            Participant subject to deduction, where the Option is satisfied by
            the issue of new Shares, of the nominal value of the Shares issued.

9.5   Cash Settled Stock Appreciation Rights

      The Company may decide that this Rule 9.5 will apply to satisfy the
      exercise of an Option, in which case:

      (a)   the Participant will receive within 30 days following the Option
            Exercise Date a payment equal to the amount by which the Market
            Value of the Shares over which the Option is exercised exceeds the
            aggregate Option Price that would otherwise be payable under rule
            9.2;

      (b)   the Option will lapse immediately following the exercise in respect
            of the Shares over which the Participant exercised the Option; and

      (c)   if the Participant has paid to the Company the Option Price in
            accordance with Rule 9.2, the Option Price will be returned to the
            Participant.

      For the avoidance of doubt, any payment made under this Rule 9.5 will be
      subject to Rule 2.6 and 13.

                                       10
<PAGE>

10.   ADJUSTMENT OF AWARDS

10.1  Variation in equity share capital

      (a)   If there is a Variation in the equity share capital of the Company
            the number and/or the nominal value of the Shares over which an
            Award is granted or the Option Price of any an Option may be
            adjusted in the manner the Board determines.

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

            (i)   capitalise from the reserves of the Company a sum equal to the
                  amount by which the nominal value of the Shares in respect of
                  which the Option is exercisable exceeds the aggregate adjusted
                  Option Price for those Shares; and

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

10.2  Notifying Participants of adjustments

      The Grantor will take the steps it considers necessary to notify
      Participants of any adjustment under Rule 10.

11.   EXCHANGE OF AWARDS

11.1  Circumstances in which Awards are exchanged

      This Rule applies when:

      (a)   a company (the Acquiring Company) has obtained Control of the
            Company;

      (b)   the shareholders of the Acquiring Company immediately after it has
            obtained Control of the Company are substantially the same as the
            shareholders of the Company immediately before that event; and

      (c)   the Acquiring Company consents to the exchange of Awards under this
            Rule.

11.2  The Exchange

      When this Rule 11 applies Participants' Awards (Old Awards) will not vest
      but will be exchanged for awards (New Awards) in respect of shares in the
      Acquiring Company. A New Award will be equivalent to the Old Award for
      which it is exchanged before the change of Control so that:

      (a)   it is governed by the Rules in effect immediately before the release
            of the Old Award;

                                       11
<PAGE>

      (b)   the total Market Value of the Shares the subject of the Old Award
            immediately before the exchange is equal to the total Market Value
            immediately after the exchange of the shares the subject of the New
            Award; and

      (c)   in the case of an Option, the aggregate Option Price payable to
            exercise the New Award is equal to the total Option Price payable to
            exercise the Old Award.

      The provisions of the Plan will, for this purpose, be construed as if the
      New Award was granted under the Plan at the same time as the Old Award.

11.3  The New Awards

      References to Shares will, in relation to the New Awards, be taken as
      references to shares of the Acquiring Company. References to the Company
      will be taken to be references to the Acquiring Company, where
      appropriate. The New Awards will not vest or lapse if Rule 7 applies in
      respect of the change of Control which lead to the grant of the New
      Awards.

12.   RANKING OF SHARES

      Subject to Rule 4.3, Shares allotted, deemed allotted or transferred to a
      Participant under the Plan will rank equally in all respects with Shares
      of the same class, except that they will not rank for any right attaching
      to them by reference to a record date preceding the date of their
      acquisition by the Participant.

13.   WITHHOLDING FOR TAX

      The Grantor or any person which is a Participant's employer may withhold
      any amount and make any arrangements it considers necessary to meet any
      liability of the Participant to taxation or social security contributions
      in connection with the benefits delivered under the Plan. These
      arrangements may include the sale on behalf of a Participant of any Shares
      acquired by the Participant under the Plan.

14.   ADMINISTRATION

14.1  Administration of the Plan

      The Plan will be administered by the Board or any committee appointed by
      the Board. The Board, or any committee appointed by the Board, has full
      authority, consistent with these Rules to administer the Plan, including
      authority to interpret and construe any provision of the Plan and to adopt
      any regulations or policies for operating or administering the Plan and
      any documents it thinks necessary or appropriate. The decision of the
      Board on any matter concerning the Plan will be final and binding on all
      parties, notwithstanding any delegation of authority to a sub-committee.

14.2  Notices

      Any notice or other communication in connection with the Plan can be given
      by electronic mail or by personal delivery, by facsimile, by first-class
      post or airmail, (in the case of a company, to its registered office and
      in the case of an individual to the individual's last known address) or by
      any other means which a Participating Company and its employees use to
      communicate with each other.

                                       12
<PAGE>

14.3  When notice is given

      Any notice under the Plan will be given:

      (a)   if delivered personally, at the time of delivery;

      (b)   if posted, at 10.00 a.m. on the third business day after it was put
            into the post; or

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

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

14.4  Documents sent to shareholders

      Participants may, but are not entitled to, receive copies of any notice or
      document sent by the Company to the holders of Shares.

14.5  Records

      The Company will maintain a record of Awards outstanding under the Plan
      which will be conclusive as to the Awards included in it.

14.6  Costs of introducing and administering the Plan

      The costs of introducing and administering the Plan will be borne by the
      Company. However, the Company may require any Participating Company or
      Associated Company to enter into an agreement which obliges that company
      to reimburse the Company for any costs borne and the value of any benefits
      delivered by the Company, directly or indirectly, in respect of that
      company's officers or employees.

15.   AMENDING THE PLAN

15.1  The Company has discretion to amend the Rules

      Subject to the remainder of this Rule 15, the Company (acting through the
      Board) can amend the Rules at any time.

15.2  Additional sections

      The Company can adopt additional sections of the Rules applicable in any
      jurisdiction under which Awards may be subject to additional and/or
      modified terms and conditions, having regard to any securities, exchange
      control or taxation laws, which may apply to a Participant, the Company,
      any Participating Company or Associated Company. Any additional sections
      must conform to the basic principles of the Plan and must not exceed the
      limits set out in the Rules.

                                       13
<PAGE>

15.3  No abrogation of existing rights

      No amendment will be made under Rule 15.1 which would adversely and
      materially affect the existing rights of a Participant unless it is made
      with the Participant's written consent or with the written consent of a
      majority of the Participants affected by the amendment. For these
      purposes, majority may, at the discretion of the Board, mean the majority
      by number of Participants affected by the amendment or by number of Shares
      under Awards held by Participants affected by the amendment.

15.4  Shareholder approval

      No amendment to the advantage of Participants (except for an amendment
      which could be included in an additional section adopted under Rule 15.2)
      can be made to the provisions in the Rules (if any) relating to:

      (a)   who can be a Participant;

      (b)   the number of Shares which can be allocated under the Plan; and

      (c)   the basis for determining a Participant's entitlement to and the
            terms of the Shares and any adjustment in the event of a Variation,

      without the approval by ordinary resolution of the Company in general
      meeting, except for amendments (i) that are minor and to benefit the
      administration of the Plan; (ii) to take account of a change in
      legislation; or (iii) to obtain or maintain favourable tax, exchange
      control or regulatory treatment for Participants, Eligible Employees or
      for any member of the Group in any jurisdiction.

16.   GENERAL

16.1  Termination of the Plan

      The Plan will terminate at the end of the Plan Period or at any earlier
      time the Company decides. Termination of the Plan will not affect the
      subsisting rights of Participants.

16.2  The Plan and funding the purchase of Shares

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

16.3  Rights of Participants and Eligible Employees

      Participation in the Plan is not pensionable and does not form part of any
      Participant's employment contract. Nothing in the Plan or in any document
      executed under it will give any officer or employee of any Participating
      Company or Associated Company any right to participate in the Plan. The
      rights and obligations of any individual under the terms of the
      individual's office or Employment with any member of the Group will not be
      affected by the individual's participation in the Plan, nor any right
      which the individual may have to participate under it. A Participant
      holding an Award which takes the form of a Conditional Award or an Option
      will not have any rights of a shareholder of the Company with respect to
      that Award or the Shares subject to it, until the Award vests.

                                       14
<PAGE>

16.4  No rights to compensation or damages

      A Participant waives all and any rights to compensation or damages under
      the Plan in consequence of the termination of the Participant's office or
      Employment with a member of the Group for any reason. Nothing in the Plan
      or in any document executed under it will (a) give any person any right to
      continue in Employment; (b) affect the right of any member of the Group to
      terminate the Employment of any person without liability at any time with
      or without cause; or (c) impose on any member of the Group, the Grantor or
      the Board or their respective agents and employees any liability in
      connection with the loss of a Participant's benefits or rights under the
      Plan, the failure or refusal of any person to exercise a discretion under
      the Plan, and/or a Participant ceasing to be a person who has the status
      or relationship of an employee or director of any member of the Group for
      any reason as a result of the termination of the Participant's Employment.

16.5  The benefit of Rules 16.3 and 16.4

      The benefit of Rules 16.3 and 16.4 is given for the Company, for itself
      and as trustee and agent of all its Subsidiaries and Associated Companies.
      The Company will hold the benefit of those Rules on trust and as agent for
      each of them and may assign the benefit of this Rule 16.5 to any of them.

16.6  Articles of Association

      Any Shares acquired under the Plan will be subject to the articles of
      association of the Company as amended from time to time.

16.7  Claims for relief under the Taxation of Chargeable Gains Act 1992

      If Shares are transferred to a Participant under an Award, the Participant
      will, if required by the person making the transfer, join that person in
      making a claim for relief under section 165 of the Taxation of Chargeable
      Gains Act 1992 in respect of the disposal made by the person making that
      transfer.

16.8  Severability

      The invalidity or non-enforceability of one or more provisions of the Plan
      will not affect the validity or enforceability of the other provisions of
      the Plan, which will remain in full force and effect.

16.9  Third party rights

      Unless expressly provided in the Plan, nothing in this Plan confers any
      benefit, right or expectation on a person who is not an Eligible Employee
      and no third party has any rights under the Contracts (Rights of Third
      Parties) Act 1999 to enforce any term of this Plan. This does not affect
      any other right or remedy of a third party which may exist.

16.10 No restriction on Company

      The Plan will not affect the right or power of the Company to make or
      authorise any change in the Company's capital structure or business, or
      any merger or consolidation of the Company, or any issue of Shares or of
      options, warrants or rights to purchase shares or of bonds, debentures,
      preferred shares or shares where rights are superior to or affect the
      Shares or their rights, or any sale or transfer of all or any part of the
      Company's assets or business or any other corporate act or proceeding.

                                       15
<PAGE>

16.11 Section 409A of the Code

      If it is determined that a Participant would be subject to the additional
      20 per cent. tax imposed on certain deferred compensation arrangements
      under section 409A of the Code as a result of any provision of any Award
      granted under this Plan, that provision will be deemed to be amended to
      the minimum extent necessary to avoid the imposition of that additional
      tax. The nature of the amendment will be determined by the Board.

17.   DATA PROTECTION

      By participating in the Plan, a Participant consents to the collection,
      processing, transmission (including to countries or territories outside
      the European Economic Area) and storage in any form whatsoever by the
      Company of any data of a professional or personal nature which is
      necessary for operating and administering the Plan. This may include
      providing information to trustees of an employee benefit trust, or to
      registrars, or brokers, or third party administrators of the Plan, or to
      future purchasers of the company or the business in which the Participant
      works.

18.   GOVERNING LAW

      These Rules will be governed by and construed in accordance with the law
      of England. All Participants, the Company and any other Participating
      Company or Associated Company will submit to the jurisdiction of the
      English courts in relation to anything arising under the Plan. The Board
      may determine that another law will apply to the operation of the Plan
      outside the United Kingdom.

                                       16
<PAGE>

                                   APPENDIX 1

                                   DEFINITIONS

      Act means the Companies Act 1985;

      ADR means an American Depositary Receipt issued by the Depository
      evidencing an entitlement to an ADS;

      ADS means a Share or Shares for the time being evidenced by an ADR;

      Associated Company means in relation to the Company:

      (a)   any company which has Control of the Company; and

      (b)   any company (other than a Participating Company) which is under the
            Control of any company referred to in (a) above;

      Award means a Restricted Award, a Conditional Award or an Option granted
      under the Plan;

      Board means the board of directors of the Company or a duly authorised
      committee of that board appointed or designated by the Board to administer
      the Plan;

      Code means the US Internal Revenue Code of 1986 as amended from time to
      time;

      Conditional Award means a contingent right to acquire Shares granted or
      proposed to be granted under Rule 2;

      Company means NDS Group plc (registered number 1950437) which, for the
      purposes of the Rules, may act through the Board;

      Control has the meaning given to that word by section 840 of the Taxes
      Act;

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

      Depositary means the Bank of New York in its capacity as Depositary under
      a Deposit Agreement between the Company, the Bank of New York and
      beneficial owners of ADRs or any successor Depositary and includes any
      custodian for the Depositary or any successor Depositary;

      Eligible Employee means any person who at the relevant Date of Grant is an
      employee or a director (which includes non-executive directors for the
      purpose of the grant of Options) of a Participating Company;

      Employees' Share Scheme has the meaning given by section 743 of the Act;

      Employment means employment as an employee of a Participating Company or
      an Associated Company;

      GAAP means generally accepted accounting principles in the [United
      States];

      Grantor means in relation to an Award, the Person who granted that Award
      which may be the Company, the trustee of an employee benefit trust or any
      other person;

                                       17
<PAGE>

      Group means the Company and each Subsidiary of the Company over which the
      Company has control and member of the Group will be construed accordingly;

      Incentive Stock Option means an option within the meaning of section 422
      of the Code;

      Market Value means, in relation to a Share an amount equal to the closing
      price of an ADS on the Nasdaq Stock Market on the trading day immediately
      before the Date of Grant;

      Option means a subsisting right to acquire Shares or cash in accordance
      with the Rules. Options may be (i) granted as or settled as share or cash
      settled share appreciation rights in accordance with Rule 9.4 or 9.5; or
      (ii) granted as Incentive Stock Options or non-qualified stock options
      which do not meet the requirements of section 422 of the Code;

      Option Exercise Date means the date when the exercise of an Option is
      effective because it complies with Rule 9.2;

      Option Price means the price per Share determined by the Board under Rule
      2.7 payable by a Participant to acquire Shares on the exercise of an
      Option;

      Participant means any Eligible Employee to whom an Award has been granted,
      or (where the context requires) that Eligible Employee's personal
      representatives;

      Participating Company means:

      (a)   the Company; and

      (b)   any other company which is under the Control of the Company, is a
            Subsidiary of the Company and is for the time being designated by
            the Board as a Participating Company;

      Plan means the NDS 2006 Long-Term Incentive Plan constituted by the Rules;

      Plan Period means the period starting on [31 October] 2006 and ending on
      [30 October] 2016;

      Restricted Award means an appropriation of Shares granted or proposed to
      be granted under Rule 2;

      Rules means these rules as amended from time to time;

      Section 162(m) means Section 162(m) of the Code and the rules and
      regulations promulgated thereunder from time to time;

      Section 162(m) Exception means the exception under Section 162(m) and the
      regulations thereunder for "qualified performance-based compensation";

      Section 162(m) Performance Targets means the following performance goals,
      on a GAAP or non-GAAP basis: Net income, adjusted net income, EBITDA,
      adjusted EBITDA, OIBDA, adjusted OIBDA, operating income, adjusted
      operating income, free cash flow, net earnings, net earnings from
      continuing operations, earnings per share, adjusted earnings per share,
      revenue, net revenue, operating revenue, total stockholder return, share
      price, return on equity, return in excess of cost of capital, profit in
      excess of cost of capital, return on assets, return on invested capital,
      net operating profit after tax, operating margin, profit margin or any
      combination thereof. A Section 162(m) Performance Target may also be
      stated as a combination of one or more goals (e.g., free cash flow return
      on invested capital), and on an absolute or relative basis;

                                       18
<PAGE>

      Share means a fully paid and irredeemable Series A ordinary share of
      US$0.01 in the capital of the Company;

      Subsidiary has the meaning given in section 736 of the Act;

      Taxes Act means the Income and Corporation Taxes Act 1988;

      Trustee means the trustee from time to time of an employee benefit trust
      established by the Company as an Employees' Share Scheme; and

      Variation means in relation to the equity share capital of the Company a
      capitalisation issue, an offer or invitation made by way of rights, a
      subdivision, a consolidation or a reduction, or any other variation which
      the Board believes justifies an adjustment to Awards.

                                       19

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