Document:

Rules of the Innospec Inc. Performance Related Stock Option Plan

 EXHIBIT 10.1 

 

 

  
  

RULES 
 of the

 INNOSPEC INC. PERFORMANCE RELATED STOCK OPTION PLAN 
 AS AMENDED BY THE FIRST AMENDMENT 
  

 

  
 1 

 CONTENTS 
  

							
	 1.
	  	DEFINITIONS	  	 	5	  
			
	 2.
	  	GRANT OF OPTIONS	  	 	7	  
			
	 2.1.
	  	 Procedure for Grant of Options
	  	 	7	  
			
	 2.2.
	  	 Requirement to Issue Option Certificate
	  	 	8	  
			
	 2.3.
	  	 Right to Disclaim Option
	  	 	8	  
			
	 2.4.
	  	 Options may not be transferred
	  	 	8	  
			
	 3.
	  	CONDITIONS RELATING TO THE GRANT OF OPTIONS	  	 	8	  
			
	 3.1.
	  	 Performance Conditions
	  	 	8	  
			
	 3.2.
	  	 Variation of Performance Conditions
	  	 	9	  
			
	 3.3.
	  	 Modified Terms and Conditions
	  	 	9	  
			
	 3.4.
	  	 Additional Requirements
	  	 	9	  
			
	 3.5.
	  	 Maximum Aggregate Number of Shares
	  	 	9	  
			
	 3.6.
	  	 United States Securities Act of 1933
	  	 	9	  
			
	 3.7.
	  	 Plan Approval Required
	  	 	10	  
			
	 4.
	  	RIGHTS OF EXERCISE	  	 	10	  
			
	 4.1.
	  	 Earliest Date of Exercise
	  	 	10	  
			
	 4.2.
	  	 Requirement to remain in Employment
	  	 	10	  
			
	 4.3.
	  	 Death of Option Holder
	  	 	10	  
			
	 4.4.
	  	 Right to Exercise Prematurely irrespective of Performance Conditions
	  	 	10	  
			
	 4.5.
	  	 Right to Exercise if Performance Conditions Achieved
	  	 	11	  
			
	 4.6.
	  	 Incentive Stock Options
	  	 	11	  
			
	 4.7.
	  	 Transfer of Employment within Group
	  	 	11	  
			
	 4.8.
	  	 Transfer of Employment Overseas
	  	 	11	  

  
 2 

							
	 4.9.
	  	 Section 409A
	  	 	12	  
			
	 4.10.
	  	 Lapse of Options
	  	 	12	  
			
	 5.
	  	TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION	  	 	13	  
			
	 5.1.
	  	 Take-over pursuant to General Offer
	  	 	13	  
			
	 5.2.
	  	 Voluntary Winding-Up of the Company
	  	 	13	  
			
	 5.3.
	  	 Meaning of Obtaining Control
	  	 	13	  
			
	 5.4.
	  	 Rollover of Options
	  	 	13	  
			
	 5.5.
	  	 Meaning of “appropriate period”
	  	 	13	  
			
	 6.
	  	MANNER OF EXERCISE	  	 	13	  
			
	 6.1.
	  	 Actions Required of the Option Holder
	  	 	13	  
			
	 6.2.
	  	 Actions Required of the Company
	  	 	14	  
			
	 6.3.
	  	 Partial Exercise
	  	 	14	  
			
	 6.4.
	  	 Indemnity against Taxation of the Option Holder
	  	 	14	  
			
	 7.
	  	ISSUE OF SHARES	  	 	14	  
			
	 7.1.
	  	 Ranking of Shares
	  	 	14	  
			
	 7.2.
	  	 Admission to Official List of NASDAQ
	  	 	14	  
			
	 8.
	  	ADJUSTMENTS	  	 	15	  
			
	 8.1.
	  	 General Power of Adjustment
	  	 	15	  
			
	 8.2.
	  	 Notification of Option Holder
	  	 	15	  
			
	 8.3.
	  	 Certain Adjustments Requiring Shareholder Approval
	  	 	15	  
			
	 9.
	  	ADMINISTRATION	  	 	15	  
			
	 9.1.
	  	 Delivery of Notices or Documents
	  	 	15	  
			
	 9.2.
	  	 Copies of Shareholder Communications
	  	 	15	  
			
	 9.3.
	  	 Maintenance of Unissued Share Capital
	  	 	15	  

  
 3 

							
	 9.4.
	  	 The Committee’s Power to Administer Plan
	  	 	15	  
			
	 9.5.
	  	 The Committee’s Decision is Final and Conclusive
	  	 	16	  
			
	 9.6.
	  	 Costs of Administering Plan
	  	 	16	  
			
	 10.
	  	ALTERATIONS	  	 	16	  
			
	 10.1.
	  	 Power to alter Rules
	  	 	16	  
			
	 10.2.
	  	 Alteration which affects subsisting rights of Option Holders
	  	 	16	  
			
	 10.3.
	  	 Notification to Option Holders
	  	 	16	  
			
	 10.4.
	  	 Stockholder Approval
	  	 	16	  
			
	 11.
	  	GENERAL	  	 	16	  
			
	 11.1.
	  	 Termination of the Plan
	  	 	16	  
			
	 11.2.
	  	 No Compensation for loss of Option Rights
	  	 	17	  
			
	 11.3.
	  	 Governing Law
	  	 	17	  
			
	 12.
	  	DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION	  	 	17	  
			
	 13.
	  	SECTION 162(M) OF THE CODE	  	 	17	  
			
	 14.
	  	SECTION 409A OF THE CODE	  	 	18	  

  
 4 

	1.	DEFINITIONS 

 In this Plan, the following words and
expressions shall, where the context so permits, have the meanings set forth below: 
  

	 “Acquiring Company” 
	the person mentioned in Rule 5.1; 

  

	 “Adopted” 
	with respect to the Plan, or any adjustment to the Plan described in Rule 8.3, means the date on which the Committee approves the Plan, or any such adjustment, as the case may be;

  

	 “the Code” 
	the United States Internal Revenue Code of 1986 (as amended); 

  

	 “the Committee” 
	the Innospec Inc. Compensation Committee; 

  

	 “the Company” 
	save as provided in Rule 5.4, Innospec Inc. a Delaware Corporation, registered in the United States; 

  

	 “Control” 
	the meaning ascribed by Section 995 of the Income Tax Act 2007; 

  

	 “Date of Grant” 
	the date on which the Committee resolves to grant an Option under the Plan pursuant to Rule 2; 

  

	 “Dealing Day” 
	a day on which NASDAQ is open for business; 

  

	 “Eligible Employee” 
	any person who 

  

	 	(1)	is an employee of a Member of the Group at the Date of Grant, and 

  

	 	(2)	in relation to any Option which is intended to qualify as an Incentive Stock Option, does not own, within the meaning of Section 422(b)(6) of the Code, Shares possessing
more than ten per cent of the total combined voting power of all classes of share of the Company (or its Parent or any of its Subsidiaries); 

  

	 “Fair Market Value” 
	in relation to a Share on any day: 

  

	 	(1)	if and so long as the Shares are listed on NASDAQ, the reported closing price of Innospec Inc. common stock on NASDAQ for the Dealing Day; 

 

	 	(2)	save as mentioned in (1) above, its market value as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with the
Shares Valuation Division of HMRC where possible; 

  
 5 

	 “Grant Period” 
	a period of 180 days commencing on the Dealing Day following any of: 

  

	 	(1)	any anniversary of the date of the admission of the Company’s share capital to NASDAQ or any date that the Committee shall determine; or 

 

	 	(2)	a day on which the Company makes an announcement of its results for any year, quarter year or other period or issues any prospectus, listing particulars or other document
containing equivalent information relating to Shares; 

  

	 “Group” 
	the Company and its Subsidiaries and “Member of the Group” shall be construed accordingly; 

  

	 “Incentive Stock Option” 
	an option which qualifies for special tax treatment under Section 422 of the Code; 

  

	 “NASDAQ” 
	the NASDAQ stock market including its three market tiers: NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ Capital Market and their successors; 

 

	 “Option” 
	a right to acquire Shares for an amount determined by the board of directors of the Company pursuant to the Plan; 

 

	 “Option Certificate” 
	a certificate issued under Rule 2.2; 

  

	 “Option Holder” 
	a person to whom an Option has been granted (or, as the context requires, his personal representatives); 

  

	 “the Parent” 
	a parent corporation within the meaning of Section 424(e) of the Code; 

  

	 “Performance-Based Compensation” 
	has the meaning ascribed to such term under Section 162(m) of the Code and the regulations thereunder; 

  

	 “Performance Measures” 
	 means performance goals based on any one or more of the following Company, Subsidiary, operating unit or division performance measures: (i) earnings, including, but not limited to, operating
income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income;
(iii) earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity;
(vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow(s); (xi) implementation or completion of critical projects or processes; (xii) economic value created;
(xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; and
(xvii) any combination of any of the foregoing. Each goal may be expressed on 

  
 6 

	 	 
an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other
companies or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, and in the case of earnings-based measures, may use or employ comparisons relating to capital,
shareholders equity and/or shares outstanding, investments or to assets or net assets, and may (but need note) provide for adjustments for restructurings, extraordinary, and any other unusual, non-recurring, or similar changes;

  

	 “the Plan” 
	the Innospec Inc. Performance Related Stock Option Plan in its present form, or as from time to time altered in accordance with the Rules; 

 

	 “Rules” 
	the Rules of the Plan and “Rule” shall be construed accordingly; 

  

	 “Securities Act” 
	the United States Securities Act of 1933 as amended; 

  

	 “Share” 
	save as provided in Rule 5.4, a share in the Company; 

  

	 “Subsidiary” 
	a subsidiary corporation within the meaning of Section 424(f) of the Code; 

  

	 “Vested Option” 
	an Option or part of an Option in respect of which the conditions specified in accordance with Rule 3.1 have been satisfied in whole or in part (whether as originally provided or as subsequently amended,
relaxed, waived or substituted pursuant to Rule 3.2) and “Vest” shall be construed accordingly; 

 References to any
statutory provision are to that provision as amended or re-enacted from time to time, and, unless the context otherwise requires, words in the singular shall include the plural (and vice versa) and words importing the masculine the feminine
(and vice versa). 
  

	2.	GRANT OF OPTIONS 

  

	2.1.	Procedure for Grant of Options 

  

	 	(a)	Within a Grant Period, the Committee may, at its absolute discretion, grant Options under the Plan to Eligible Employees. The aggregate Fair Market Value of shares with respect
to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Group) shall not exceed $100,000. The maximum aggregate number of shares which may be issued under the Plan to
Eligible Employees with respect to Incentive Stock Options shall be 1,000,000 shares. The maximum number of Options that may granted to any one Eligible Employee during any one calendar-year period pursuant to this Plan shall be
500,000 shares 

  

	 	(b)	The Committee may adopt such procedure as they think fit for granting Options, whether by invitation to Eligible Employees to apply for Options or by granting Options without
issuing invitations. 

  
 7 

	 	(c)	All options will be granted, if at all, within ten years of the date the Plan is adopted or the date the Plan is approved by the shareholders, whichever is earlier.

  

	 	(d)	Options intended to qualify as Incentive Stock Options must be issued at an exercise price not less than the Fair Market Value of the underlying Shares on the Date of Grant.

  

	2.2.	Requirement to Issue Option Certificate 

 The
Company shall issue to each Option Holder an Option Certificate which shall be in such a form as the Committee shall from time to time determine. The Option Certificate shall include details of: 

 

	 	(a)	the number of Shares subject to the Option; 

  

	 	(b)	the term of the Option, which shall not exceed 10 years from the Date of Grant; 

  

	 	(c)	the Date of Grant of the Option; 

  

	 	(d)	the maximum number of Shares subject to the Option; 

  

	 	(e)	any date or dates determined by the Committee in accordance with Rule 3.1 upon which the Option is first exercisable in whole and/or part and, where on any date only part is
first exercisable, the number of Shares over which such partial exercise may be made; 

  

	 	(f)	the performance targets or conditions to be satisfied as a condition of the exercise of the Option in accordance with Rule 3.1 and any other restrictions on the exercise of the
Option; and 

  

	 	(g)	the exercise price. 

 The Option Certificate shall
include a statement of the limitations provided in Section 2.4 of this Plan. 
  

	2.3.	Right to Disclaim Option 

 Each Eligible
Employee to whom an Option is granted may by notice in writing within 30 days of the Date of Grant disclaim in whole or in part his rights under the Option in which case the Option shall for all purposes be deemed never to have been granted.

  

	2.4.	Options may not be transferred 

 Subject to
the rights of an Option Holder’s personal representatives to exercise an Option as provided in Rule 4.3, every Option shall be personal to the Eligible Employee to whom it is granted and shall not be capable of being transferred, assigned or
charged. Each Option Certificate shall carry a statement to this effect. 
  

	3.	CONDITIONS RELATING TO THE GRANT OF OPTIONS 

  

	3.1.	Performance Conditions 

 Every Option shall
be granted subject to the condition that (save as provided in Rules 4.3, 4.4 and 5) it shall only be exercisable in whole or in part following the attainment of the performance conditions 

  
 8 

 
as advised at the Date of Grant of the Option. Performance criteria will be set at the absolute discretion of the Committee. The Committee, when granting an Option that is intended to be an
Incentive Stock Option, may not impose a condition or limitation upon the exercise of such Option if it would result in such Option failing to qualify as an Incentive Stock Option. 

 

	3.2.	Variation of Performance Conditions 

 In the
application of Rule 3.1, when events have happened which cause the Committee to consider that the existing constraints and/or conditions (as the case may be) have become unfair or impractical, it may, in its discretion (provided such discretion is
exercised fairly and reasonably), amend, relax, waive or substitute such constraints or conditions so that such constraints or conditions so amended, relaxed, waived or substituted would, in the reasonable opinion of the Committee, be no more or
less difficult to abide by or satisfy than when they were originally imposed or last amended or relaxed (as the case may be). After any such amendment, relaxation, waiver or substitution the Committee shall issue to the Option Holder a replacement
Option Certificate or other notice including the details specified in Rule 2.2. 
  

	3.3.	Modified Terms and Conditions 

 The Committee
may determine that any Option shall be subject to additional and/or modified terms and conditions relating to the grant and terms of exercise as may be necessary to comply with or take account of any securities, exchange control or taxation laws,
regulations or practice of any territory which may have application to the relevant Eligible Employee, Option Holder or Member of the Group. 
  

	3.4.	Additional Requirements 

 In exercising their
discretion under Rule 3.3, the Committee may: 
  

	 	(a)	require an Option Holder to make such declarations or take such other action (if any) as may be required for the purpose of any securities, taxes or other laws of any territory
which may be applicable to him at the Date of Grant or on exercise; and 

  

	 	(b)	adopt any supplemental rules or procedures governing the grant or exercise of Options as may be required for the purpose of any securities, tax or other laws of any territory
which may be applicable to an Eligible Employee or Option Holder. 

  

	3.5.	Maximum Aggregate Number of Shares 

 The
present maximum aggregate number of Shares which may be issued under the Plan is 1,175,000 subject to any future increase in this limit which may be substituted at the discretion of the Committee upon approval by the shareholders of the Company
(which number includes all shares available for delivery under this Rule 3.5 since the establishment of the Plan in February 2008). For the purposes of the limit in this Rule 3.5 any Shares subject to an Option or other rights granted under the Plan
which have lapsed, been renounced or otherwise become incapable of being exercised or Vesting shall not be treated as issued. 
  

	3.6.	United States Securities Act of 1933 

 The
grant of any Option under the Plan to any person subject to United States securities laws shall be subject to fulfilling the requirements (including obtaining any required approval or consent) of the provision of the Securities Act or of any
applicable regulation or enactment. The Options have not 

  
 9 

 
been, and will not be, registered under the Securities Act, or under any other securities laws in any other jurisdiction in the United States. Shares issued pursuant to the exercise of an Option
may be registered on Form S-8. Until so registered, any transfer of such Shares may be restricted. 
  

	3.7.	Plan Approval Required 

 This Plan shall not
take effect and no Options or rights will be granted hereunder unless the Plan is approved by the Company’s shareholders within 12 months before or after the date the Plan is adopted. 

 

	4.	RIGHTS OF EXERCISE 

  

	4.1.	Earliest Date of Exercise 

 Save as provided
in Rules 4.3, 4.4 and 5, an Option may not be exercised before whichever is the latest of: 
  

	 	(a)	the second anniversary of the Date of Grant; and 

  

	 	(b)	any date or dates which may have been specified in accordance with Rule 2.2 in the relevant Option Certificate; and 

 

	 	(c)	the date on which the Option Vests, 

 but in any
event may not be exercised later than the tenth anniversary of the Date of Grant. 
  

	4.2.	Requirement to remain in Employment 

 Subject
to Rule 4.7 and save as provided in Rules 4.3, 4.4, 4.5 and 5, an Option may only be exercised by an Option Holder while he is an employee of a Member of the Group. 
  

	4.3.	Death of Option Holder 

 An Option may be
exercised by the personal representatives of a deceased Option Holder during the period of one year following the date of death. 
  

	4.4.	Right to Exercise Prematurely irrespective of Performance Conditions 

 Where an Option Holder ceases to hold office or employment with a Member of the Group on account of: 
  

	 	(a)	injury, ill health or disability; or 

  

	 	(b)	redundancy (within the meaning of the Employment Rights Act 1996); or 

  

	 	(c)	the transfer of the undertaking or part undertaking in which the Option Holder is employed to a person other than a Member of the Group; or 

 

	 	(d)	the Company by which the Option Holder is employed ceasing to be under the Control of the Company; or 

  
 10 

	 	(e)	retirement at normal retirement age including late retirement; or 

  

	 	(f)	early retirement by agreement with his employer; or 

  

	 	(g)	any other reason in the absolute discretion of the Committee; 

 Options will lapse and will only be exercisable at the absolute discretion of the Committee, in which circumstances Options will be exercisable by the Option Holder within a period of one year following the date of
termination of any office or employment with a Member of the Group. 
  

	4.5.	Right to Exercise if Performance Conditions Achieved 

 A Vested Option may be exercised by an Option Holder within the period of one year following the date on which he ceases to hold any office or employment with a Member of the Group on account of: 

 

	 	(a)	retirement at normal retirement age including late retirement; or 

  

	 	(b)	early retirement by agreement with his employer; or 

  

	 	(c)	any other reason in the absolute discretion of the Committee. 

  

	4.6.	Incentive Stock Options 

 Notwithstanding the
provisions of Rules 4.2, 4.3, 4.4, 4.5, 5.1 and 5.2, with respect to any Option Holder granted an Incentive Stock Option hereunder, an Option may be exercised by such Option Holder only within the period of three months following the date on which
he ceases to hold any office or employment with a Member of the Group, except in the event that the termination of employment is on account of permanent and total disability within the meaning of Section 422(e)(3) of the Code, in which case
such Option Holder may exercise his Options within a period of one year following the date on which he ceases to hold any office or employment with a Member of the Group. 

 

	4.7.	Transfer of Employment within Group 

 An
Option Holder shall not be treated for the purposes of Rules 4.4, 4.5 and 4.10, as ceasing to hold an office or employment with a Member of the Group until such time as he is no longer an employee of any Member of the Group and an Option Holder
(being a woman) who ceases to be such an employee by reason of pregnancy or confinement and who exercises her right to return to work before exercising an Option, shall be treated for those purposes as not having ceased to hold such an office or
employment. 
  

	4.8.	Transfer of Employment Overseas 

 Subject to
the satisfaction of the conditions imposed pursuant to Rule 3.1 if an Option Holder, whilst remaining an employee of a Member of the Group, is transferred to work in another country and as a result of that transfer will either: 

 

	 	(a)	become subject to tax on his remuneration in the country to which he is transferred and the Committee is satisfied that as a result he will suffer a tax disadvantage upon
exercising an Option; or 

  
 11 

	 	(b)	become subject to restrictions on his ability to exercise his Option or to hold or deal in the shares or the proceeds of the sale of the shares he may acquire on exercise of that
Option by reason of or in consequence of the securities laws or exchange control laws of the country to which he is transferred; 

 the Option Holder may exercise that Option in the period commencing three months before and ending three months after the transfer takes place. If he chooses not to exercise his Option at that time, it will not
thereby lapse. 
  

	4.9.	Section 409A 

 Notwithstanding any other
provisions of these Rules, if an Option is granted to someone who is or would otherwise be subject to Section 409A of the Code and such Option is granted with an exercise price less than the Fair Market Value of the Shares on the Date of Grant,
it must be exercised (if at all) no later than 15 March of the calendar year immediately following the calendar year in which it is first capable of exercise under the Plan. 

 

	4.10.	Lapse of Options 

 An Option shall lapse on
the occurrence of the earliest of the following: 
  

	 	(a)	the tenth anniversary of the Date of Grant; or 

  

	 	(b)	the expiry of the period (if any) allowed for the satisfaction of any condition of exercise specified in the Option Certificate pursuant to Rule 3.1 without such condition having
been satisfied or the date on which it becomes apparent that any such condition has become incapable of being satisfied, in which case such Option shall lapse in whole or in part as appropriate; or 

 

	 	(c)	subject to Rule 5.4, the expiry of any of the applicable periods specified in Rules 4.3, 4.4, 4.5, 5.1 and 5.2, but where an Option Holder dies while time is running under Rules
4.4 or 4.5, the Option shall not lapse until the expiry of the period in Rule 4.3; or 

  

	 	(d)	the date on which an Option Holder ceases to be an employee of any Member of the Group for any reason other than his death or those specified in Rules 4.4 and 4.5; or

  

	 	(e)	the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company; or 

 

	 	(f)	the date on which the Option Holder becomes bankrupt or does or attempts or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the
Option; or 

  

	 	(g)	in the case of an Option which is subject to Section 409A of the Code, at the end of the period for exercise specified at Rule 4.9. 

  
 12 

	5.	TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION 

  

	5.1.	Take-over pursuant to General Offer 

 If any
company (“the Acquiring Company”) becomes a Parent of the Company as a result of making either a general offer to acquire the whole of the Company’s issued share capital (other than any shares already owned by the Acquiring
Company or any Subsidiary of the Acquiring Company) and which is made on a condition that if it is satisfied the Acquiring Company will become the Parent, or a general offer to acquire all the Shares in the Company which are of the same class as the
Shares then an Option may, subject to Rule 4.6, be exercised within the period of six months of the date on which the Acquiring Company becomes the Parent, and any condition subject to which the offer is made is satisfied. 

 

	5.2.	Voluntary Winding-Up of the Company 

 If a
resolution is passed for the voluntary winding-up of the Company, an Option may, subject to Rule 4.6, be exercised during the period of six months starting on commencement of such winding-up provided that any issue of shares pursuant to such
exercise is authorised by the liquidator or the Court (if appropriate) upon the application of and at the sole cost and expense of the Option Holder. 
  

	5.3.	Meaning of Obtaining Control 

 For the
purpose of this Rule 5, a person shall be deemed to have obtained Control of the Company if he and others acting in concert with him have together obtained Control. 
  

	5.4.	Rollover of Options 

 Notwithstanding
anything to the contrary in these Rules, where any person mentioned in Rule 5.1 applies, an Option Holder may, by agreement with the Acquiring Company and within the appropriate period release his Option under the Plan (“the Old
Option”) in consideration of the grant to him of a new option (“the New Option”) which is equivalent to the Old Option but relates to shares in a different company (whether the Acquiring Company or some other company). With
effect from the date of release references in Rules 4, 5, 6, 7, 8, 9, 10, 11 and 12 (and, in relation to expressions used in those Rules, in Rule 1) to “the Company” and “Shares” shall, in relation to the New
Option, be construed as references to the Acquiring Company and Shares in the Acquiring Company or that other company as the case may be. 
  

	5.5.	Meaning of “appropriate period” 

For the purpose of Rule 5.4, the “appropriate period” is the period mentioned in Rule 5.1 or Rule 5.2 as the case may be.

  

	6.	MANNER OF EXERCISE 

  

	6.1.	Actions Required of the Option Holder 

 An
Option may be exercised, in whole or in part, by the delivery to the secretary of the Company, or his duly appointed agent, of an Option Certificate covering not less than all the Shares over which the Option is then to be exercised, with the notice
of exercise in the prescribed form duly completed and signed by the Option Holder. 

  
 13 

	6.2.	Actions Required of the Company 

 The
relevant Shares shall be allotted or transferred (as the case may be) within 28 days following such delivery and, accordingly in cases where Shares are to be transferred, the Company shall use its best endeavours to ensure due transfer thereof. At
the request of the Option Holder, the Shares may be allotted or transferred (as the case may be) to a nominee provided the Option Holder has beneficial ownership of the Shares at the time of such allotment and transfer. 

 

	6.3.	Partial Exercise 

 Where an Option is
exercised in part the minimum number of Shares which may be exercised is 100 Shares and the Company shall issue a balancing Option Certificate to the Option Holder. 
  

	6.4.	Indemnity against Taxation of the Option Holder 

 The Option Holder shall indemnify the Company (and, where relevant, any Member of the Group) against any tax arising in respect of the exercise of the Option which is a liability of the Option Holder but for which
such company is required to account under the laws of any relevant territory (including for the avoidance of doubt, employee’s national insurance contributions, employer’s national insurance contributions if so determined by the Committee
and other relevant social security contributions). Such company may recover the tax from the Option Holder in such manner as the Committee thinks fit including (but without prejudice to the generality of the foregoing):- 

 

	 	(a)	withholding shares when the Option is exercised and selling the same; or 

  

	 	(b)	deducting the necessary amount from the Option Holder’s remuneration; or 

  

	 	(c)	requiring the Option Holder to account directly to such company for such tax. 

  

	7.	ISSUE OF SHARES 

  

	7.1.	Ranking of Shares 

 All Shares issued
pursuant to the exercise of Options under the Plan shall as to voting, dividend, transfer and other rights (including those arising on a liquidation) rank pari passu in all respects with the Shares then in issue, except that they shall not
rank for any dividend or other rights declared by reference to a record date preceding the date of such exercise. 
  

	7.2.	Admission to Official List of NASDAQ 

 If and
so long as the Shares are listed on NASDAQ the Company shall use its best endeavours to procure that as soon as practicable after the allotment of any Shares pursuant to the Plan application shall be made to NASDAQ for permission to deal in these
shares unless such application has already been made. 

  
 14 

	8.	ADJUSTMENTS 

  

	8.1.	General Power of Adjustment 

 The number of
Shares over which an Option is granted shall be proportionately adjusted following any capitalisation issue, sub-division, consolidation or reduction of share capital and in respect of any discount element in any rights issue or other variation of
share capital. With respect to Options that it is intended will be Incentive Stock Options; no adjustment made pursuant to Rule 8.1 shall have the effect of reducing the aggregate exercise price below the aggregate Fair Market Value on the Date of
Grant. 
  

	8.2.	Notification of Option Holder 

 The Committee
may take such steps as they may consider necessary to notify Option Holders of any adjustments made under Rule 8.1 and to call in, cancel, endorse, issue or re-issue any Option Certificate consequent upon such adjustment. 

 

	8.3.	Certain Adjustments Requiring Shareholder Approval 

 Any adjustment to (i) the maximum aggregate number of shares issuable under the Plan (other than an increase merely reflecting a change in the number of outstanding shares, such as stock dividend or stock
split), (ii) the definition of Eligible Employee, (iii) the company granting options, or (iv) the shares available under the Plan, shall require shareholder approval within 12 months before or after such adjustment is Adopted.

  

	9.	ADMINISTRATION 

  

	9.1.	Delivery of Notices or Documents 

 Notices or
documents required to be given to an Eligible Employee or to an Option Holder shall either be delivered to him by hand or sent to him by post at his last known home or business address according to the information provided by him. Notices sent by
post shall be deemed to have been given on the day following the date of posting. 
  

	9.2.	Copies of Shareholder Communications 

 The
Company may distribute to Option Holders copies of any notices or document sent by the Company to its shareholders generally. 
  

	9.3.	Maintenance of Unissued Share Capital 

 The
Company shall at all times either keep available sufficient unissued Shares to satisfy the exercise of all Options which have neither lapsed nor been exercised (taking account of any other obligations of the Company to allot unissued Shares) or
shall ensure that sufficient issued Shares will be available to satisfy the exercise of such Options. 
  

	9.4.	The Committee’s Power to Administer Plan 

The Committee may make such regulations for the administration of the Plan as they deem fit, provided that no regulation shall be valid to the
extent it is inconsistent with the Rules. 

  
 15 

	9.5.	The Committee’s Decision is Final and Conclusive 

 The decision of the Committee in any dispute relating to an Option, or the due exercise thereof, or any other matter in respect of the Plan, shall be final and conclusive subject to the determination of the
Auditors when so required by Rule 8.1. 
  

	9.6.	Costs of Administering Plan 

 The costs of
introducing and administering the Plan shall be borne by the Company. 
  

	10.	ALTERATIONS 

  

	10.1.	Power to alter Rules 

 Subject to Rules 10.2
and 10.4, the Committee may in its discretion alter the Rules in any way it thinks fit. 
  

	10.2.	Alteration which affects subsisting rights of Option Holders 

 Subject to Rule 10.4, no alteration may be made which would abrogate or adversely affect the subsisting rights of Option Holders save that the Committee may make such alterations to the provisions of Rule 4.5 as it
in its discretion sees fit to take account of legal developments or advice or changes in market practice. 
  

	10.3.	Notification to Option Holders 

 Written
notice of any amendment made in accordance with this Rule 10 shall be given to all Option Holders. 
  

	10.4.	Stockholder Approval 

 Except as otherwise
provided herein, the Committee may from time to time amend the rules of the Plan, provided, however, no amendment shall result in the failure of the Plan or any provision thereof to comply with applicable rules under the Securities Exchange Act of
1934, or (where relevant) to qualify under Section 422 of the Code. In addition, to the extent necessary to comply with applicable rules of the Securities Exchange Act, of 1934 or (where relevant) Section 422 of the Code (or any successor
rule or provision or applicable law or regulation), the Company shall obtain stockholder approval with respect to any amendment in such a manner and to such a degree as so required. 

 

	11.	GENERAL 

  

	11.1.	Termination of the Plan 

 The Plan shall
terminate on the tenth anniversary of the earlier of the date on which it is approved by the Company’s shareholders in a general meeting or the date on which the Plan is Adopted, or at any earlier time by the passing of a resolution by the
Committee. Termination of the Plan shall be without prejudice to the subsisting rights of Option Holders. 

  
 16 

	11.2.	No Compensation for loss of Option Rights 

The rights and obligations of any individual under the terms of his office or employment with any Member of the Group shall not be affected by his
participation in the Plan or any right which he may have to participate therein and the Plan does not form part of any contract of employment between the individual and any Member of the Group. If an Eligible Employee shall cease for any reason
(including termination, whether lawful or otherwise) to be in the employment of a Member of the Group, he shall not be entitled, by way of compensation for loss of office or otherwise howsoever, to any sum or any benefit to compensate him for the
loss of any right or benefit accrued or in prospect under the Plan. 
  

	11.3.	Governing Law 

 This Plan and all Options
shall be governed by and construed in accordance with English Law. 
  

	12.	DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION 

 If an Option Holder exercises an Option the Committee may in lieu of allotting or procuring the transfer of Shares in accordance with Rule 6.2 pay to such Option Holder a cash sum equal to the value of the Shares
in respect of which the notice of exercise was given (calculated as the average of the middle market quotations on NASDAQ for the three Dealing Days prior to the date of exercise). 

If payment is made pursuant to this Rule to an Option Holder, he shall have no further rights in respect of the Shares for which the notice of
exercise was given. The Company may make any deductions in respect of such payment which it is required to make under the laws of any territory which laws are applicable to the Option Holder and the Company. 

 

	13.	SECTION 162(M) OF THE CODE. 

 The Committee
at the time of grant may designate an Option granted to any Eligible Employee as Performance-Based Compensation. To the extent required by Section 162(m) of the Code, the vesting of any Option so designated shall be conditioned on the
achievement of one or more performance objectives based upon such Performance Measures as determined by the Committee. For Options intended to be Performance-Based Compensation subject to performance objectives, the grant of the Options and the
establishment of the performance objectives shall be made during the period required under Section 162(m) of the Code. 
 The
Committee may also grant Cash Incentive Awards designated at the time of grant as Performance-Based Compensation. Cash Incentive Awards so designated shall be conditioned on the achievement of one or more Performance Measures, as selected by the
Committee. A Cash Incentive Award is the grant of a right to receive a payment of cash that is contingent on achievement of performance objectives over a specified period established by the Committee. The grant of Cash Incentive Awards may also be
subject to such other conditions, restrictions and contingencies, as determined by the Committee. For Cash Incentive Awards intended to be Performance-Based Compensation, the grant of the Awards and the establishment of the Performance Measures
shall be made during the period required under Code section 162(m). No more than $2,000,000 may be paid to any Eligible Employee for Cash Incentive Awards intended to constitute Performance-Based Compensation for performance periods beginning in any
one calendar year, regardless of whether the applicable performance period during which the Cash Incentive Award is earned ends in the same year in which it begins or in a later calendar year. 

  
 17 

 The satisfaction of each of the performance objectives for Performance-Based Compensation shall be
determined in accordance with generally accepted accounting principles and shall be subject to certification in writing by the Committee. 
  

	14.	SECTION 409A OF THE CODE 

 To the extent that
the Committee determines that any Option granted under the Plan is subject to Section 409A or Section 457A of the Code, the Option Certificate evidencing such Option shall incorporate the terms and conditions required by Section 409A
or Section 457A of the Code. To the extent applicable, the Plan and Option Certificate shall be interpreted in accordance with Section 409A or Section 457A of the Code and Department of Treasury regulations and other interpretive
guidance issued thereunder. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Option may be subject to Section 409A or Section 457A of the Code and related Department of Treasury
guidance, the Committee may adopt such amendments to the Plan and the applicable Option Certificate or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the
Committee determines are necessary or appropriate to (i) exempt the Option from Section 409A or Section 457A of the Code or (ii) comply with the requirements of Section 409A or Section 457A of the Code and related
Department of Treasury guidance. 

  
 18Rules of the Innospec Inc. Company Share Option Plan

 EXHIBIT 10.2 

 

 

  
  

RULES 
 of the

 INNOSPEC INC. COMPANY SHARE OPTION PLAN 
 AS AMENDED BY THE FIRST AMENDMENT 
  

 

  
 1 

 CONTENTS 
  

							
	1.	  	DEFINITIONS FOR THE PURPOSE OF PART A	  	 	6	  
			
	2.	  	GRANT OF OPTIONS	  	 	9	  
			
	2.1.	  	 Procedure for Grant of Options
	  	 	9	  
			
	2.2.	  	 Requirement to Issue Option Certificate
	  	 	9	  
			
	2.3.	  	 Right to Disclaim Option
	  	 	9	  
			
	2.4.	  	 Options may not be transferred
	  	 	10	  
			
	3.	  	CONDITIONS RELATING TO THE GRANT OF OPTIONS	  	 	10	  
			
	3.1.	  	 Statutory Limit
	  	 	10	  
			
	3.2.	  	 Interpretation of Individual Limits
	  	 	10	  
			
	3.3.	  	 Maximum Aggregate Number of Shares
	  	 	10	  
			
	3.4.	  	 United States Securities Act of 1933
	  	 	10	  
			
	3.5.	  	 Additional Conditions
	  	 	11	  
			
	4.	  	RIGHTS OF EXERCISE	  	 	11	  
			
	4.1.	  	 Earliest Date of Exercise
	  	 	11	  
			
	4.2.	  	 Requirement to remain in Employment
	  	 	11	  
			
	4.3.	  	 Death of Option Holder
	  	 	11	  
			
	4.4.	  	 Right to Exercise Prematurely irrespective of Additional Conditions
	  	 	12	  
			
	4.5.	  	 Transfer of Employment within Group
	  	 	12	  
			
	4.6.	  	 Transfer of Employment Overseas
	  	 	12	  
			
	4.7.	  	 Lapse of Options
	  	 	13	  
			
	4.8.	  	 Compliance with the United States Securities Law
	  	 	13	  
			
	4.9.	  	 Shares to be held for Investment Purposes
	  	 	13	  
			
	4.10.	  	 Shareholder Approval
	  	 	13	  

  
 2 

					
	4.11.	  	 Option Holder with Material Interest
	  	14
			
	5.	  	TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION	  	14
			
	5.1.	  	 Take-over pursuant to Tender Offer
	  	14
			
	5.2.	  	 Take-over pursuant to Scheme of Arrangement
	  	14
			
	5.3.	  	 Scheme of Arrangement without Change of Control
	  	14
			
	5.4.	  	 Compulsory Acquisition of Shares
	  	14
			
	5.5.	  	 Voluntary Winding-Up of the Company
	  	14
			
	5.6.	  	 Meaning of Obtaining Control
	  	15
			
	5.7.	  	 Rollover of Options
	  	15
			
	5.8.	  	 Meaning of “appropriate period”
	  	15
			
	6.	  	MANNER OF EXERCISE	  	15
			
	6.1.	  	 Actions Required of the Option Holder
	  	15
			
	6.2.	  	 Actions Required of the Company
	  	15
			
	6.3.	  	 Partial Exercise
	  	15
			
	7.	  	ISSUE OF SHARES	  	16
			
	7.1.	  	 Ranking of Shares
	  	16
			
	7.2.	  	 Admission to NASDAQ
	  	16
			
	8.	  	ADJUSTMENTS	  	16
			
	8.1.	  	 General Power of Adjustment
	  	16
			
	8.2.	  	 Requirement to Capitalise Reserves
	  	16
			
	8.3.	  	 Notification of Option Holder
	  	16
			
	9.	  	ADMINISTRATION	  	16
			
	9.1.	  	 Delivery of Notices or Documents
	  	16
			
	9.2.	  	 Copies of Shareholder Communications
	  	17

  
 3 

							
	9.3.	  	 Maintenance of Unissued Share Capital
	  	 	17	  
			
	9.4.	  	 Directors’ Power to Administer Plan
	  	 	17	  
			
	9.5.	  	 Directors’ Decisions are Final and Conclusive
	  	 	17	  
			
	9.6.	  	 Costs of Administering Plan
	  	 	17	  
			
	10.	  	ALTERATIONS	  	 	17	  
			
	10.1.	  	 Power to alter Rules prior to HMRC approval
	  	 	17	  
			
	10.2.	  	 Power to alter Rules following HMRC approval
	  	 	17	  
			
	10.3.	  	 Alterations which affect Share Price and subsisting rights of Option Holders
	  	 	17	  
			
	10.4.	  	 Notification to Option Holders
	  	 	17	  
			
	10.5.	  	 Stockholder Approval
	  	 	18	  
			
	11.	  	EMPLOYMENT AND SOCIAL TAXES	  	 	18	  
			
	12.	  	GENERAL	  	 	18	  
			
	12.1.	  	 Termination of the Plan
	  	 	18	  
			
	12.2.	  	 No Compensation for loss of Option Rights
	  	 	18	  
			
	12.3.	  	 Governing Law
	  	 	18	  
			
	13.	  	DEFINITIONS FOR PURPOSES OF PART B	  	 	19	  
			
	13.1.	  	 Part B not Approved by HMRC
	  	 	19	  
			
	13.2.	  	 Incentive Stock Options
	  	 	19	  
			
	13.3.	  	 Terms of Part A apply except as amended
	  	 	19	  
			
	14.	  	GRANT OF UNAPPROVED OPTIONS	  	 	20	  
			
	14.1.	  	 Specification of Unapproved Options
	  	 	20	  
			
	14.2.	  	 Modified Terms and Conditions
	  	 	20	  
			
	14.3.	  	 Additional Requirements
	  	 	20	  
			
	15.	  	CONDITIONS RELATING TO THE GRANT OF UNAPPROVED OPTIONS	  	 	20	  

  
 4 

							
	15.1.	  	 No Statutory Limit
	  	 	20	  
			
	15.2.	  	 Plan Approval Required
	  	 	20	  
			
	15.3.	  	 Additional Conditions
	  	 	20	  
			
	15.4.	  	 Calendar Year Limitation
	  	 	20	  
			
	16.	  	EXERCISE OF UNAPPROVED OPTIONS	  	 	21	  
			
	16.1.	  	 Right to Exercise Prematurely irrespective of Additional Conditions
	  	 	21	  
			
	16.2.	  	 Requirement to Remain in Employment
	  	 	21	  
			
	16.3.	  	 No Material Interest
	  	 	21	  
			
	16.4.	  	 Limitation on Adjustments
	  	 	21	  
			
	17.	  	DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION	  	 	21	  
			
	18.	  	EMPLOYMENT AND SOCIAL TAXES	  	 	22	  
			
	19.	  	SECTION 162(M) OF THE CODE	  	 	22	  
			
	20.	  	SECTION 409A OF THE CODE	  	 	22	  

  
 5 

	PART A	APPROVED BY HER MAJESTY’S REVENUE AND CUSTOMS UNDER THE INCOME TAX (EARNINGS AND PENSIONS) ACT 2003 ON 21 JANUARY 2009 UNDER REFERENCE X103009/AJS

  

	1.	DEFINITIONS FOR THE PURPOSE OF PART A 

 In this Plan, the
following words and expressions shall, where the context so permits, have the meanings set forth below: 
  

	“Acquiring  Company”	the person mentioned in Rule 5.1, being a company within the meaning of Section 832 of the Act; 

 

	“Acquisition  Price”	in relation to an Option, the total amount payable on any exercise being an amount equal to the relevant Share Price multiplied by the number of Shares in respect of which
the Option is exercised; 

  

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

  

	“Associated  Company”	the meaning ascribed by paragraph 35(1) of Schedule 4 to ITEPA; 

  

	“the  Auditors”	the auditors for the time being of the Company acting as experts and not as arbitrators; 

 

	“the  Code”	the United States Internal Revenue Code of 1986 (as amended); 

  

	“the  Company”	save as provided in Rule 5.7, Innospec Inc., a Delaware corporation; 

  

	“Control”	the meaning ascribed by Section 995 of ITA; 

  

	“Date  of  Grant”	the date on which the Directors resolve to grant an Option under the Plan pursuant to Rule 2; 

 

	“Dealing  Day”	a day on which NASDAQ is open for business; 

  

	“the  Directors”	the board of directors of the Company, or a duly authorised committee thereof; 

 

	“Eligible  Employee”	any person who as of the Date of Grant: 

  

	 	(1)    (a)	is a director of a Participating Company required to work for not less than 25 hours a week (exclusive of meal breaks); or 

 

	 	(b)	if not a director, is employed by a Participating Company on terms which require him to work for not less than 20 hours a week (exclusive of meal breaks); and

  

	 	(2)	is not ineligible to participate in the Plan by virtue of paragraph 9 of Schedule 4 to ITEPA (material interest in a close company); 

  
 6 

	“Grant  Period”	a period of 20 days commencing on the Dealing Day following any of: 

  

	 	(1)	a day on which the Plan is approved by HMRC; or 

  

	 	(2)	a day on which the Company makes an announcement of its results for any year, half year or other period or issues any prospectus, listing particulars or other document containing
equivalent information relating to Shares; or 

  

	 	(3)	a day on which the Directors resolve that exceptional circumstances have arisen which justify the grant of Options; or 

 

	 	(4)	a day on which any announcement is made of modifications to be made to the Act, ITA or ITEPA or a day on which any such modifications come into force; 

 

	“Group”	the Company and its Subsidiaries; 

  

	“HMRC”	Her Majesty’s Revenue and Customs; 

  

	“Holding  Company”	a company as referred to in Section 1159 of the Companies Act 2006; 

  

	“Incentive  Stock  Option”	an option which qualifies for special tax treatment under Section 422 of the Code; 

 

	“ITA”	the Income Tax Act 2007; 

  

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

  

	“Key  Feature”	a provision of the Plan which is necessary in order to meet the requirements of Schedule 4 to ITEPA; 

 

	“Market  Value”	in relation to a Share on any day: 

  

	 	(1)	if and so long as the Shares are listed on NASDAQ, the reported closing price of Innospec Inc. common stock on NASDAQ for that day, or the last Dealing Day prior to that day if
that day is not a Dealing Day. 

  

	 	(2)	save as mentioned in (1) above, its market value as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with the
Shares Valuation Division of HMRC; 

  

	“NASDAQ”	the Nasdaq stock market including its three market tiers: NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ Capital Market and their successors;

  

	“Option”	a right to acquire Shares pursuant to the Plan; 

  
 7 

	“Option  Certificate”	a certificate issued under Rule 2.2; 

  

	“Option  Holder”	a person to whom an Option has been granted (or, as the context requires, his personal representatives); 

 

	“Parent”	any company which is a parent corporation of the Company within the meaning of Section 424(e) of the Code; 

 

	“Participating  Company”	the Company and any other company for the time being designated by the Directors as a Participating Company being a company which is both a Subsidiary of the Company and
under the Control of the Company; 

  

	“the  Plan”	the Innospec Inc. Company Share Option Plan in its present form, or as from time to time altered in accordance with the Rules; 

 

	“Relevant  Share  Option  Scheme”	any other share option scheme (except a Savings Related Share Option Scheme) established by the Company or any Associated Company; 

 

	“Rules”	the Rules of the Plan and “Rule” shall be construed accordingly; 

  

	“Savings  Related  Share  Option  	

	Scheme”	a savings related share option scheme approved by the HMRC; 

  

	“Securities  Act”	the United States Securities Act of 1933 as amended; 

  

	“Share”	save as provided in Rule 5.7, a share in the Company satisfying paragraphs 15 to 20 inclusive of Schedule 4 to ITEPA; 

 

	“Share  Price”	the price per Share, as determined by the Directors, at which an Eligible Employee may acquire Shares in respect of which an Option has been granted to him, being not less
than: 

  

	 	(1)	the Market Value of a Share on the Date of Grant (or where in accordance with Rule 2.1, the Directors issue invitations to apply for Options the Dealing Day by reference to which
the Market Value is calculated); or 

  

	 	(2)	if greater and Shares are to be subscribed, the nominal value of a Share; 

 subject to any adjustment pursuant to Rule 8.1; 
  

	“Statutory  Limit”	£30,000 or any other limit from time to time specified under paragraph 6 of Schedule 4 to ITEPA; 

 

	“Subsidiary”	any company which is both a subsidiary within the meaning ascribed by Section 1159 of the Companies Act 2006 and a subsidiary corporation within the meaning of
Section 424(f) of the Code; 

  
 8 

 References to any statutory provision are to that provision as amended or re-enacted from time to time, and, unless
the context otherwise requires, words in the singular shall include the plural (and vice versa) and words importing the masculine the feminine (and vice versa). 

 

	2.	GRANT OF OPTIONS 

  

	2.1.	Procedure for Grant of Options 

  

	 	(a)	Within a Grant Period, the Directors may, at their absolute discretion, grant Options under the Plan to Eligible Employees. 

 

	 	(b)	The Directors may adopt such procedure as they think fit for granting Options, whether by invitation to Eligible Employees to apply for Options or by granting Options without
issuing invitations, PROVIDED THAT to the extent required by HMRC any documentation used in such procedure is approved in advance by HMRC in accordance with Rule 10.2. 

 

	 	(c)	Where any Option is to be granted pursuant to an invitation and the Share Price is determined at the date of the invitation, the Option must be granted no later than the
twenty-ninth day in the period commencing with the Dealing Day by reference to which the Share Price was calculated. 

  

	2.2.	Requirement to Issue Option Certificate 

 The
Company shall issue to each Option Holder an Option Certificate which shall be executed in such manner as shall take effect as a binding contractual obligation of the Company and which shall be in such a form as the Directors from time to time
determine (subject to the approval of HMRC). The Option Certificate shall include details of: 
  

	 	(a)	the Date of Grant of the Option; 

  

	 	(b)	the term of the Option which shall not exceed ten years from the Date of Grant; 

  

	 	(c)	the Share Price; 

  

	 	(d)	the number of Shares subject to the Option; 

  

	 	(e)	any date or dates determined by the Directors in accordance with Rule 4.1 upon which the Option is first exercisable in whole and/or part and, where on any date only part is
first exercisable, the number of Shares over which such partial exercise may be made; and 

  

	 	(f)	the performance targets or conditions to be satisfied as a condition of the exercise of the Option in accordance with Rule 3.5 and any other restrictions on the exercise of the
Option. 

 The Option Certificate shall include a statement of the limitations provided in section 2.4 of this Plan.

  

	2.3.	Right to Disclaim Option 

 Each Eligible
Employee to whom an Option is granted may by notice in writing within 30 days of the Date of Grant disclaim in whole or in part his rights under the Option in which case the Option shall for all purposes be deemed never to have been granted.

  
 9 

	2.4.	Options may not be transferred 

 Subject to
the rights of an Option Holder’s personal representatives to exercise an Option as provided in Rule 4.3, every Option shall be personal to the Eligible Employee to whom it is granted and shall not be capable of being transferred, assigned or
charged. Each Option Certificate shall carry a statement to this effect. 
  

	3.	CONDITIONS RELATING TO THE GRANT OF OPTIONS 

  

	3.1.	Statutory Limit 

 Any Option granted to an
Eligible Employee shall be limited and take effect so that immediately following such grant, the aggregate Market Value of all the Shares which he may acquire on the exercise of all options which he then holds and which are or may become capable of
being exercised and which were granted under: 
  

	 	(a)	Part A of the Plan; and 

  

	 	(b)	any Relevant Share Option Scheme approved by HMRC under the Act or ITEPA; 

 shall not exceed the Statutory Limit. 
  

	3.2.	Interpretation of Individual Limits 

  

	 	(a)	For the purposes of Rule 3.1, the Market Value of an Option shall be taken as at its Date of Grant and in relation to options granted under any Relevant Share Option Scheme the
Market Value of an option shall be taken as being the fair market value of the Shares subject to that option at its date of grant determined in accordance with the Rules of such other scheme. 

 

	 	(b)	For the purposes of determining the application of the Statutory Limit in Rule 3.1, the rate of exchange for US dollars into sterling shall be the noon fixed rate of the US
dollars in the Wall Street Journal (or such other reporting service as may be selected by the Directors and approved in advance by HMRC) on the Date of Grant of the Option. 

 

	3.3.	Maximum Aggregate Number of Shares 

 The
present maximum aggregate number of Shares which may be issued under both Part A and Part B of the Plan is 390,000 subject to any future increase in this limit which may be substituted at the discretion of the Directors upon approval by the
shareholders of the Company (which number includes all shares available for delivery under this Rule 3.3 since the establishment of the Plan in February 2008). For the purposes of the limit in this Rule 3.3 any Shares subject to an Option or other
rights granted under the Plan which have lapsed, been renounced or otherwise become incapable of being exercised or vesting shall not be treated as issued. 
  

	3.4.	United States Securities Act of 1933 

 The
grant of any Option under the Plan to any person subject to United States securities laws shall be subject to fulfilling the requirements (including obtaining any required approval or consent) of the provision of the Securities Act or of any
applicable regulation or enactment. The Options have not been, and will not be, registered under the Securities Act, or under any other securities laws in any other jurisdiction in the United States. Shares issued pursuant to the exercise of an
Option may be registered on Form S-8. Until so registered, any transfer of such Shares may be restricted. 

  
 10 

	3.5.	Additional Conditions 

 The Directors when
granting any Option may in their absolute discretion impose any conditions and limitations (additional to any conditions and limitations contained in any other of these Rules) upon the exercise of any Option provided that such additional conditions
and limitations shall: 
  

	 	(i)	be objective, specified at the Date of Grant and set out in full, or details given with, the Option Certificate; and 

 

	 	(ii)	be such that the right to exercise any Option after the fulfilment or attainment of the conditions and limitations so specified shall not be dependent upon the further discretion
of any person; and 

  

	 	(iii)	not be capable of amendment, variation or waiver unless an event occurs which causes the Directors to consider that a waived, varied or amended condition would be a fairer
measure of performance and would be no more difficult to satisfy. When such conditions or limitations have been imposed and have ceased to be capable of being satisfied or being satisfied in full except as a result of an event to which Rules 4.3,
4.4 or 5 apply that Option shall lapse in whole or in part as the case may be. 

  

	4.	RIGHTS OF EXERCISE 

  

	4.1.	Earliest Date of Exercise 

 Save as provided
in Rules 4.3, 4.4 and 5 an Option may not be exercised before whichever is the latest of: 
  

	 	(a)	the third anniversary of the Date of Grant; and 

  

	 	(b)	any date or dates which may have been specified in accordance with Rule 2.2 in the relevant Option Certificate; and 

 

	 	(c)	the date on which any additional conditions and limitations imposed on the Option (and which have not been waived) in accordance with Rule 3.5 have been fulfilled;

 but in any event may not be exercised later than the day preceding the tenth anniversary of the Date of Grant.

  

	4.2.	Requirement to remain in Employment 

 Save as
provided in Rules 4.3, 4.4 and 5, an Option may only be exercised by an Option Holder while he is a director or employee of a Participating Company or an Associated Company of a Participating Company. 

 

	4.3.	Death of Option Holder 

 An Option may be
exercised by the personal representatives of a deceased Option Holder during the period of one year following the date of death. 

  
 11 

	4.4.	Right to Exercise Prematurely irrespective of Additional Conditions 

 An Option may be exercised by an Option Holder (irrespective of whether any additional conditions and limitations imposed on the Option in accordance with Rule 3.6 have been fulfilled) within the period of one year
following the date on which he ceases to hold any office or employment with a Participating Company or an Associated Company of a Participating Company on account of: 
  

	 	(a)	injury, ill-health or disability; or 

  

	 	(b)	redundancy (within the meaning of the Employment Rights Act 1996); or 

  

	 	(c)	the transfer of the undertaking or part-undertaking in which the Option Holder is employed to a person other than a Participating Company or an Associated Company of a
Participating Company; or 

  

	 	(d)	the Company by which the Option Holder is employed ceasing to be under the Control of the Company; or 

 

	 	(e)	retirement at normal retirement age including late retirement; or 

  

	 	(f)	early retirement by agreement with his employer. 

If conditions (a) to (f) above are not satisfied an Option will lapse when an Option Holder ceases to hold the office or employment,
unless otherwise determined by the Directors at their absolute discretion. 
  

	4.5.	Transfer of Employment within Group 

 An
Option Holder shall not be treated for the purposes of Rules 4.4 and 4.7, as ceasing to hold an office or employment with a Participating Company until such time as he is no longer a director or employee of any Participating Company or an Associated
Company of a Participating Company and an Option Holder (being a woman) who ceases to be such a director or employee by reason of pregnancy or confinement and who exercises her right to return to work under section 79 of the Employment Rights Act
1996 before exercising an Option, shall be treated for those purposes as not having ceased to hold such an office or employment. 
  

	4.6.	Transfer of Employment Overseas 

 Subject to
the satisfaction of any additional conditions and limitations imposed pursuant to Rule 3.5 if an Option Holder, whilst remaining a director or employee of a Participating Company or an Associated Company of a Participating Company, is transferred to
work in another country and as a result of that transfer will either: 
  

	 	(a)	become subject to tax on his remuneration in the country to which he is transferred and the Directors are satisfied that as a result he will suffer a tax disadvantage upon
exercising an Option; or 

  

	 	(b)	become subject to restrictions on his ability to exercise his Option or to hold or deal in the shares or the proceeds of the sale of the shares he may acquire on exercise of that
Option by reason of or in consequence of the securities laws or exchange control laws of the country to which he is transferred; 

 the Option Holder may exercise that Option in the period commencing three months before and ending three months after the transfer takes place. If he chooses not to exercise his Option at that time, it will not
thereby lapse. 

  
 12 

	4.7.	Lapse of Options 

 An Option shall lapse on
the occurrence of the earliest of the following: 
  

	 	(a)	the tenth anniversary of the Date of Grant; or 

  

	 	(b)	the expiry of the period (if any) allowed for the satisfaction of any condition of exercise specified in the Option Certificate pursuant to Rule 3.5 without such condition having
been satisfied or the date on which it becomes apparent that any such condition has become incapable of being satisfied; or 

  

	 	(c)	subject to Rule 5.7, the expiry of any of the applicable periods specified in Rules 4.3, 4.4, 5.1, 5.2, 5.3, 5.4 and 5.5, but where an Option Holder dies while time is running
under Rule 4.4, the Option shall not lapse until the expiry of the period in Rule 4.3; or 

  

	 	(d)	except as provided in Rules 4.3, 4.4, 5.1, 5.2, 5.3, 5.4 and 5.5, the date on which an Option Holder ceases to be a director or employee of any Participating Company or any
Associated Company of a Participating Company; or 

  

	 	(e)	the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company; or 

 

	 	(f)	the date on which the Option Holder becomes bankrupt or does or attempts or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the
Option. 

  

	4.8.	Compliance with the United States Securities Law 

 Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the United States Securities Exchange Act of 1934, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of Counsel for the Company with respect to such compliance. 
  

	4.9.	Shares to be held for Investment Purposes 

As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of Counsel for the Company, such a representation is required in order to comply with any of
the aforementioned relevant provisions of law. 
  

	4.10.	Shareholder Approval 

 If any amendment
requiring the approval of the Company’s Shareholders is made subsequent to the first registration of any class of equity security by the Company under Section 12 of the Securities Exchange Act of 1934, such shareholder approval shall be:

  

	 	(a)	solicited substantially in accordance with Section 14(a) of that act and the rules and regulations promulgated thereunder; or 

  
 13 

	 	(b)	solicited after the Company has furnished in writing to the holders entitled to vote substantially the same information concerning the Plan as that which would be required by the
rules and regulations in effect under Section 14(a) of that act at the time such information is furnished. 

  

	4.11.	Option Holder with Material Interest 

 An
Option may not be exercised by an Option Holder at any time when he is prohibited from such exercise by virtue of the provisions of paragraph 9 of Schedule 4 to the ITEPA (material interest in a close company). 

 

	5.	TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION 

  

	5.1.	Take-over pursuant to Tender Offer 

 If any
person obtains Control of the Company as a result of making either a tender offer to acquire the whole of the Company’s issued share capital (other than any shares already owned by the Holding Company of an Acquiring Company or any Subsidiary
of such Holding Company) and which is made on a condition that if it is satisfied the offeror will have such Control, or a tender offer to acquire all the Shares in the Company which are of the same class as the Shares then an Option may be
exercised within the period of six months of the date on which Control is so obtained and any condition subject to which the offer is made is satisfied (or until the expiry of the period mentioned in Rule 5.4, if earlier). 

 

	5.2.	Take-over pursuant to Scheme of Arrangement 

If any person obtains Control of the Company in pursuance of a compromise or scheme of arrangement sanctioned by the Court under legislation which
HMRC has agreed is equivalent to Section 899 of the Companies Act 2006 then an Option may be exercised during the period which starts on the date the Court sanctions such scheme of arrangement and ends six months later or, if earlier, on the
day immediately preceding the date upon which the scheme shall become effective. 
  

	5.3.	Scheme of Arrangement without Change of Control 

 If, without any person obtaining Control of the Company, the Court sanctions a scheme of arrangement affecting the Shares under legislation which HMRC has agreed is equivalent to Section 899 of the Companies
Act 2006 then an Option may be exercised during the period which starts on the date the Court sanctions such scheme of arrangement and ends six months later or, if earlier, on the day immediately preceding the date upon which the scheme shall become
effective. 
  

	5.4.	Compulsory Acquisition of Shares 

 If any
person becomes bound or entitled to acquire Shares in the Company under legislation which HMRC has agreed is equivalent to Sections 979 to 982 of the Companies Act 2006 then an Option may be exercised during any period such person remains so bound
or entitled. 
  

	5.5.	Voluntary Winding-Up of the Company 

 If a
resolution is passed for the voluntary winding-up of the Company, an Option may be exercised during the period of six months starting on commencement of such winding-up provided that any issue of shares pursuant to such exercise is authorised by the
liquidator or the Court (if appropriate) upon the application of and at the sole cost and expense of the Option Holder. 

  
 14 

	5.6.	Meaning of Obtaining Control 

 For the
purpose of this Rule 5, a person shall be deemed to have obtained Control of the Company if he and others acting in concert with him have together obtained Control. 
  

	5.7.	Rollover of Options 

 Notwithstanding
anything to the contrary in these Rules, where any person mentioned in Rule 5.1 is a company an Option Holder may, by agreement with the Acquiring Company and within the appropriate period release his Option under the Plan (“the Old
Option”) in consideration of the grant to him of a new option (“the New Option”) which, within the meaning ascribed by paragraph 27(4) of Schedule 4 of ITEPA, is equivalent to the Old Option but relates to shares in a
different company (whether the Acquiring Company or some other company falling within sub-paragraph (b) or (c) of paragraph 16 of Schedule 4 to ITEPA). With effect from the date of release references in Rules 4, 5, 6, 7, 8, 9, 10, 11 and
12 (and, in relation to expressions used in those Rules, in Rule 1) to “the Company” and “Shares” shall, in relation to the New Option, be construed as references to the Acquiring Company and Shares in the Acquiring
Company or that other company as the case may be, but references to Participating Company shall continue to be construed as if references to the Company were references to Innospec Inc. 

 

	5.8.	Meaning of “appropriate period” 

For the purpose of Rule 5.7, the “appropriate period” is: 

 

	 	(a)	where Rule 5.1 and 5.4 apply, the periods mentioned in those Rules respectively; or 

 

	 	(b)	where Rule 5.2 applies, the period of six months beginning with the time when the Court sanctions the scheme of arrangement. 

 

	6.	MANNER OF EXERCISE 

  

	6.1.	Actions Required of the Option Holder 

 An
Option may be exercised, in whole or in part, by the delivery to the secretary of the Company, or his duly appointed agent, of an Option Certificate covering not less than all the Shares over which the Option is then to be exercised, with the notice
of exercise in the prescribed form duly completed and signed by the Option Holder together with a remittance of the Acquisition Price payable in respect of the Shares over which the Option is to be exercised. 

 

	6.2.	Actions Required of the Company 

 The
relevant Shares shall be allotted or transferred (as the case may be) within 28 days following such delivery and, accordingly in cases where Shares are to be transferred, the Company shall use its best endeavours to ensure due transfer thereof. At
the request of the Option Holder, the Shares may be allotted or transferred (as the case may be) to a nominee provided the Option Holder has beneficial ownership of the Shares at the time of such allotment and transfer. 

 

	6.3.	Partial Exercise 

 Where an Option is
exercised in part the minimum number of Shares which may be exercised is 100 Shares and the Company shall issue a balancing Option Certificate to the Option Holder. 

  
 15 

	7.	ISSUE OF SHARES 

  

	7.1.	Ranking of Shares 

 All Shares issued
pursuant to the exercise of Options under the Plan shall as to voting, dividend, transfer and other rights (including those arising on a liquidation) rank pari passu in all respects with the Shares then in issue, except that they shall not
rank for any dividend or other rights declared by reference to a record date preceding the date of such exercise. 
  

	7.2.	Admission to NASDAQ 

 If and so long as the
Shares are listed on NASDAQ the Company shall use its best endeavours to procure that as soon as practicable after the allotment of any Shares pursuant to the Plan application shall be made to NASDAQ for permission to deal in those shares unless
such application has already been made. 
  

	8.	ADJUSTMENTS 

  

	8.1.	General Power of Adjustment 

 The number of
Shares over which an Option has been granted and the Share Price thereof shall, subject to the prior approval of HMRC, be proportionately adjusted following any capitalisation issue, sub-division, consolidation or reduction of share capital and in
respect of any discount element in any rights issue or other variation of share capital to the intent that (as nearly as may be possible without involving fractions of a Share or a Share Price calculated to more than two places of decimals) the
Acquisition Price payable in respect of an Option shall remain unchanged PROVIDED that, save as provided in Rule 8.2, no adjustment made pursuant to this Rule 8.1 shall have the effect of reducing the Share Price below the par value of a
Share. 
  

	8.2.	Requirement to Capitalise Reserves 

 Any
adjustment made to the Share Price of unissued Shares which would have the effect of reducing the Share Price to less than the par value of the Share shall only be made if and to the extent that the Directors are authorised to capitalise from the
reserves of the Company a sum equal to the amount by which the par value of the Shares in respect of which the Option is exercisable exceeds the adjusted Share Price. The Directors may apply such sum in paying up such amount on such Shares so that
on the exercise of any Option in respect of which such a reduction shall have been made, the Directors shall capitalise such sum (if any) and apply the same in paying up such amount as aforesaid. 

 

	8.3.	Notification of Option Holder 

 The Directors
may take such steps as they may consider necessary to notify Option Holders of any adjustments made under Rule 8.1 and to call in, cancel, endorse, issue or re-issue any Option Certificate consequent upon such adjustment. 

 

	9.	ADMINISTRATION 

  

	9.1.	Delivery of Notices or Documents 

 Notice or
documents required to be given to an Eligible Employee or to an Option Holder shall either be delivered to him by hand or sent to him by post at his last known home or business address according to the information provided by him. Notices sent by
post shall be deemed to have been given on the day following the date of posting. 

  
 16 

	9.2.	Copies of Shareholder Communications 

 The
Company may distribute to Option Holders copies of any notices or document sent by the Company to its shareholders generally. 
  

	9.3.	Maintenance of Unissued Share Capital 

 The
Company shall at all times either keep available sufficient unissued Shares to satisfy the exercise of all Options which have neither lapsed nor been exercised (taking account of any other obligations of the Company to allot unissued Shares) or
shall ensure that sufficient issued Shares will be available to satisfy the exercise of such Options. 
  

	9.4.	Directors’ Power to Administer Plan 

The Directors may make such regulations for the administration of the Plan as they deem fit, provided that no regulation shall be valid to the
extent it is inconsistent with the Rules. 
  

	9.5.	Directors’ Decisions are Final and Conclusive 

 The decision of the Directors in any dispute relating to an Option, or the due exercise thereof, or any other matter in respect of the Plan, shall be final and conclusive. 

 

	9.6.	Costs of Administering Plan 

 The costs of
introducing and administering the Plan shall be borne by the Company. 
  

	10.	ALTERATIONS 

  

	10.1.	Power to alter Rules prior to HMRC approval 

Subject to Rule 10.5, the Directors may, prior to approval of Part A of the Plan by HMRC, alter the Rules of the Plan as may be necessary in order
to obtain such approval. 
  

	10.2.	Power to alter Rules following HMRC approval 

Subject to Rules 10.3 and 10.5, after the date on which Part A of the Plan is approved by HMRC, the Directors may in their discretion alter the
Rules provided that no such alteration to a Key Feature of Part A shall be effective until it has been approved by HMRC. 
  

	10.3.	Alterations which affect Share Price and subsisting rights of Option Holders 

 Subject to Rules 8.1 and 10.5, no adjustment may be made to the Share Price or the Acquisition Price and no alteration may be made which would abrogate or adversely affect the subsisting rights of Option Holders
save that the Directors may (subject to Rule 10.2) make such alterations to the provisions of Rule 4.4 as they in their discretion see fit to take account of legal developments or advice or changes in market practice. 

 

	10.4.	Notification to Option Holders 

 Written
notice of any amendment made in accordance with this Rule 10 shall be given to all Option Holders. 

  
 17 

	10.5.	Stockholder Approval 

 Except as otherwise
provided herein, the Directors may from time to time amend the rules of the Plan. Provided, however, no amendment shall result in the failure of the Plan or any provision thereof to comply with applicable rules under the Securities Exchange Act of
1934, or (where relevant) to qualify under Section 422 of the Code. In addition, to the extent necessary to comply with applicable rules of the Securities Exchange Act, of 1934 or (where relevant) Section 422 of the Code (or any successor
rule or provision or applicable law or regulation), the Company shall obtain stockholder approval with respect to any amendment in such a manner and to such a degree as so required. 

 

	11.	EMPLOYMENT AND SOCIAL TAXES 

 The Option
Holder shall indemnify the Company (and, where relevant, any Participating Company) against any tax arising in respect of the exercise of the Option which is a liability of the Option Holder but for which such company is required to account to HMRC
(including for the avoidance of doubt employee’s national insurance contributions and, if so determined by the Directors, employer’s national insurance contributions). Such company may recover the tax from the Option Holder in such manner
as the Directors think fit including (but without prejudice to the generality of the foregoing): 
  

	 	(a)	withholding sufficient shares when the Option is exercised and selling the same; 

  

	 	(b)	deducting the necessary amount from the Option Holder’s remuneration; or 

  

	 	(c)	requiring the Option Holder to account directly to such company for such tax. 

  

	12.	GENERAL 

  

	12.1.	Termination of the Plan 

 The Plan shall
terminate on the tenth anniversary of the earlier of the date on which it is approved by the Company’s shareholders in general meeting or the date on which the Plan is adopted, or at any earlier time by the passing of a resolution by the
Directors. Termination of the Plan shall be without prejudice to the subsisting rights of Option Holders. 
  

	12.2.	No Compensation for loss of Option Rights 

The rights and obligations of any individual under the terms of his office or employment with any Participating Company shall not be affected by
his participation in the Plan or any right which he may have to participate therein and the Plan does not form part of any contract of employment between the individual and any Participating Company. If an Option Holder shall cease for any reason
(including termination, whether lawful or otherwise) to be in the employment of a Participating Company or an Associated Company of a Participating Company, he shall not be entitled, by way of compensation for loss of office or otherwise howsoever,
to any sum or any benefit to compensate him for the loss of any right or benefit accrued or in prospect under the Plan. 
  

	12.3.	Governing Law 

 This Plan and all Options
shall be governed by and construed in accordance with English Law. 

  
 18 

 PART B 
  

	13.	DEFINITIONS FOR PURPOSES OF PART B 

  

	13.1.	Part B not Approved by HMRC 

 This Part B of
the Rules of the Plan is not approved by HMRC under the provisions of the Act or ITEPA and any requirement to obtain the approval of HMRC as set out in Part A of the Rules of the Plan shall not apply to this Part B of the Rules of the Plan.

  

	13.2.	Incentive Stock Options 

 This Part B of the
Rules of the Plan is intended to permit the grant of Incentive Stock Options if the Directors so determine. 
  

	13.3.	Terms of Part A apply except as amended 

 The
Rules as contained in Part A of the Plan shall apply to Options granted under this Part B unless amended in accordance with the provisions hereof. 
 For the purposes of Part B, “Eligible Employee” shall mean any person who as of the Date of Grant: 
  

	 	(a)    (i)	is a director of a Participating Company required to work for not less than 25 hours a week (exclusive of meal breaks) and who would be considered an employee of the
Participating Company for purposes of the Code; or 

  

	 	(ii)	if not a director, is employed by a Participating Company on terms which require him to work for not less than 20 hours a week (exclusive of meal breaks); and

  

	 	(b)	in relation to any Option which it is intended will qualify as an Incentive Stock Option, does not own, within the meaning of Section 422(b)(6) of the Code, Shares
possessing more than ten per cent of the total combined voting power of all classes of share of the Company (or its Parent or any of its subsidiaries). 

 For the purposes of Part B, the definition of “Share Price” shall be as follows: 
 the
price per Share, as determined by the Directors, at which an Eligible Employee may acquire Shares in respect of which an Option has been granted to him, being not less than: 

 

	 	(a)	the Market Value of a Share on the Date of Grant (or where in accordance with Rule 2.1, the Directors issue invitations to apply for Options the Dealing Day by reference to which
the Market Value is calculated); or 

  

	 	(b)	if greater and Shares are to be subscribed, the nominal value of a Share; 

 provided, however, with respect to any individual responsible for payment of income tax in the United States, the Share Price shall be the Market Value of a Share on the Date of Grant only, subject in all cases to
any adjustment pursuant to Rules 8.1 and 16.4. 

  
 19 

	14.	GRANT OF UNAPPROVED OPTIONS 

  

	14.1.	Specification of Unapproved Options 

 The
Directors shall specify when an Option is granted under this Part B of the Rules of the Plan and the relevant Option Certificate shall be written accordingly, and shall set forth all of the details provided for under Rule 2.2. The Share Price with
respect to any Option granted under Part B of the Rules which is intended to qualify as an Incentive Stock Option shall not be less than the Market Value on the Date of Grant. 

 

	14.2.	Modified Terms and Conditions 

 The Directors
may determine that any Option granted under this Part B of the Rules shall be subject to additional and/or modified terms and conditions relating to the grant and terms of exercise as may be necessary to comply with or take account of any
securities, exchange control or taxation laws, regulations or practice of any territory which may have application to the relevant Eligible Employee, Option Holder or Participating Company. 

 

	14.3.	Additional Requirements 

 In exercising their
discretion under Rule 14.2, the Directors may: 
  

	 	(a)	require an Option Holder to make such declarations to take such other action (if any) as may be required for the purpose of any securities, taxes or other laws of any territory
which may be applicable to him at the Date of Grant or on exercise; and 

  

	 	(b)	adopt any supplemental rules or procedures governing the grant or exercise of Options as may be required for the purpose of any securities, tax or other laws of any territory
which may be applicable to an Eligible Employee or Option Holder. 

  

	15.	CONDITIONS RELATING TO THE GRANT OF UNAPPROVED OPTIONS 

  

	15.1.	No Statutory Limit 

 Rules 3.1 and 3.2 of
Part A shall not apply to this Part B of the Plan. 
  

	15.2.	Plan Approval Required 

 Part B of the Plan
shall not take effect and no options or rights will be granted hereunder unless the Plan is approved by the stockholders of the Company within 12 months before or after the date the Plan is adopted. 

 

	15.3.	Additional Conditions 

 The Directors, when
granting an Option under this Part B which it is intended shall qualify as an Incentive Stock Option, may not impose a condition or limitation upon the exercise of such Option if it would result in such Option failing to qualify as an Incentive
Stock Option. 
  

	15.4.	Calendar Year Limitation 

 The aggregate
Market Value (determined at the Date of Grant) of Shares with respect to which Incentive Stock Options become exercisable for the first time by an individual Option Holder in any 

  
 20 

 
calendar year shall not exceed $100,000. The maximum aggregate number of shares which may be issued under Part B of the Plan to Eligible Employees with respect to Incentive Stock Options shall be
250,000 shares. The maximum number of Options that may granted to any one Eligible Employee during any one calendar-year period pursuant to this Plan shall be 150,000 shares. 

 

	16.	EXERCISE OF UNAPPROVED OPTIONS 

  

	16.1.	Right to Exercise Prematurely irrespective of Additional Conditions 

 Notwithstanding Rule 4.2, and except as otherwise provided in this Rule 16.1, an Option which it is intended shall qualify as an Incentive Stock Option may only be exercised by an Option Holder while he is an
Eligible Employee under the Code. 
 In relation to any Option which it is intended shall qualify as an Incentive Stock Option, Rule 4.4
of Part A shall not apply to Part B of the Plan and is hereby replaced, for purposes of such Option only, by the following provision: 

“An Option may be exercised by an Option Holder within the period of three months following the date on which he ceases to hold any office or
employment with a Participating Company or an Associated Company of a Participating Company, except in the event the termination of employment is on account of permanent and total disability within the meaning of section 422(e)(3) of the Code, in
which case such Option Holder may exercise his Options within a period of one year following the date on which he ceases to hold any office or employment with a Participating Company or an Associated Company of a Participating Company.”

  

	16.2.	Requirement to Remain in Employment 

Notwithstanding the provisions of Rule 4.2 and of Rule 5, an Option that qualifies as an Incentive Stock Option may only be exercised by an Option
Holder while such individual is an employee of any company in the Group or as otherwise provided in Rule 16.1. 
  

	16.3.	No Material Interest 

 Rule 4.11 of Part A
shall not apply to Part B of the Plan. 
  

	16.4.	Limitation on Adjustments 

 With respect to
Options granted under this Part B and intending to qualify as Incentive Stock Options, no adjustment made pursuant to Rule 8.1 shall have the effect of reducing the aggregate Share Price below the aggregate Market Value on the Date of Grant.

  

	17.	DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION 

 If an Option Holder exercises an Option the Directors may in lieu of allotting or procuring the transfer of Shares in accordance with Rule 6.2 of Part A pay to such Option Holder a cash sum equal to the amount by
which the value of the Shares in respect of which the notice of exercise was given (calculated as the average of the middle market quotations on NASDAQ for the three Dealing Days prior to the date of exercise) exceeds the Acquisition Price of those
Shares. 
 If payment is made pursuant to this Rule to an Option Holder, he shall have no further rights in respect of the Shares for
which the notice of exercise was given. The Company may make any deductions in respect of such payment which it is required to make under the laws of any territory which laws are applicable to the Option Holder and/or his employing Participating
Company. 

  
 21 

 No Option granted under Part B of the Plan will be paralleled with an Option granted under Part A of
the Plan. 
  

	18.	EMPLOYMENT AND SOCIAL TAXES 

 The Option
Holder shall indemnify the Company (and, where relevant, any Participating Company) against any tax arising in respect of the exercise of the Option which is a liability of the Option Holder but for which such company is required to account under
the laws of any relevant territory (including for the avoidance of doubt employee’s national insurance contributions, employer’s national insurance contributions if so determined by the Directors or other relevant social security
contributions). Such company may recover the tax from the Option Holder in such manner as the Directors think fit including (but without prejudice to the generality of the foregoing): 

 

	 	(a)	withholding shares when the Option is exercised and selling the same; or 

  

	 	(b)	deducting the necessary amount from the Option Holder’s remuneration; or 

  

	 	(c)	requiring the Option Holder to account directly to such company for such tax. 

  

	19.	SECTION 162(M) OF THE CODE 

 The compensation
committee of the Board of Directors of the Company shall have the authority to grant Options pursuant to Part B of the Plan to the extent Options granted pursuant to Part B are intended to satisfy the exception from Section 162(m) of the Code
for performance-based compensation. 
  

	20.	SECTION 409A OF THE CODE 

 To the extent that
the Directors determine that any Option granted under Part B of the Plan is subject to Section 409A or Section 457A of the Code, the Option Certificate evidencing such Option shall incorporate the terms and conditions required by
Section 409A or Section 457A of the Code. To the extent applicable, Part B of the Plan and the Option Certificate shall be interpreted in accordance with Section 409A or Section 457A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of Part B of the Plan to the contrary, in the event that the Directors determine that any Option may be subject to Section 409A or Section 457A of
the Code and related Department of Treasury guidance, the Directors may adopt such amendments to Part B of the Plan and the applicable Option Certificate or adopt other policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Directors determine are necessary or appropriate to (i) exempt the Option from Section 409A or Section 457A of the Code or (ii) comply with the requirements of
Section 409A or Section 457A of the Code and related Department of Treasury guidance. 

  
 22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]