Document:

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                                                                   Exhibit 10.39

                                     FORM OF
                         RIGHT OF FIRST OFFER AGREEMENT

                                    (SOLANA)

            THIS RIGHT OF FIRST OFFER AGREEMENT (this "Agreement") is made on
__________, 2003, by and among Maguire Partners - Solana Limited Partnership, a
Texas limited partnership ("Solana Development Owner"), Maguire Partners -
Solana Land, L.P., a Texas limited partnership ("Solana Land Owner") and Maguire
Properties, L.P., a Maryland limited partnership ("Optionee"). Each of Solana
Development Owner and Solana Land Owner may be referred to herein as an
"Optionor."

                                    RECITALS

            A. Solana Development Owner is the owner of that certain real
property described in Exhibit A hereto and the buildings, structures, and other
improvements situated or hereinafter constructed or acquired on such real
property (collectively, the "Solana Development") and that certain adjacent
undeveloped land parcel described in Exhibit B hereto (the "Solana Land" and,
together with the Solana Development, "Solana").

            B. Solana Development Owner and Solana Land Owner have agreed that,
contemporaneously with the execution of this Agreement, Solana Development Owner
will transfer to Solana Land Owner all of its right, title and interest in the
Solana Land.

            C. Optionee desires to acquire, and each of Solana Development Owner
and Solana Land Owner desires to grant to Optionee, a right of first offer with
respect to Solana Development and Solana Land.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Optionor and Optionee agree as follows:

      1. Grants of Rights of First Offer. Each Optionor hereby grants to
Optionee a right of first offer to acquire all, or any applicable portion, of
such Optionor's right, title and interest in Solana (each, a "Right of First
Offer"), on the terms and conditions set forth herein.

            1.1 Effectiveness of Right of First Offer. This Agreement and the
Rights of First Offer granted hereby shall become effective only upon, and
concurrently with, the closing (the "Closing") of the initial public offering of
the common stock (the "Public Offering") of Maguire Properties, Inc., a Maryland
corporation and the general partner of Optionee (the "Company").

<PAGE>

            1.2 Commencement of Rights of First Offer. Optionee shall have the
right to exercise either or both of the Rights of First Offer at any time after
the Closing until the expiration of the Rights of First Offer pursuant to
Section 1.3 below.

            1.3 Term of Rights of First Offer. Except for assignments effected
in accordance with Section 3 below, this Agreement and the Rights of First Offer
granted hereunder shall remain in effect and binding on each Optionor and each
of their successors and assigns until the expiration or earlier termination of
that certain Noncompetition Agreement by and between Maguire Properties, Inc.
and Robert F. Maguire, III dated as of ______, 2003.

            1.4 Subordination. The Rights of First Offer granted by this
Agreement and the rights of the Optionee hereunder are and shall be subordinate
to any unaffiliated third party financing or mortgage on the Solana Development
and/or the Solana Land, as applicable, whether already or hereafter existing. To
effectuate the purposes of the foregoing, Optionee agrees, upon request by any
lender under any such financing or mortgage, to execute one or more commercially
reasonable subordination agreements in forms reasonably satisfactory to
Optionee.

      2. Exercise of Rights of First Offer.

            2.1 Right of First Offer Notice. If at any time during the Term, an
Optionor intends to offer its interests in Solana or any portion thereof (as to
each such Optionor, the "Subject Property") for sale to third parties or to
accept an offer of a third party to purchase the Subject Property, then such
Optionor shall first give written notice to Optionee (the "Right of First Offer
Notice"). If an Optionor is in receipt of an offer from a third party that such
Optionor intends to accept, the Right of First Offer Notice shall contain the
purchase price and other material economic and other terms (including allocation
of closing costs) of such offer (the "Third Party Terms").

            2.2 Optionee's Notice. Optionee shall have thirty (30) days after
receipt of any Right of First Offer Notice from an Optionor (each, an "Optionee
Election Date") to deliver a written notice to such Optionor of its election to
acquire the Subject Property ("Optionee's Election Notice") for units of limited
partnership of Optionee ("OP Units") with a "Market Value" (as defined below)
equal to the purchase price set forth in Optionee's Election Notice or, if
mutually agreed upon by Optionee and such Optionor, cash. If a Right of First
Offer Notice includes Third Party Terms which such Optionor is prepared to
accept, Optionee's Election Notice shall accept such terms, without condition or
contingency, or Optionee's Election Notice will be deemed an election by
Optionee not to acquire the Subject Property. If a Right of First Offer Notice
does not include Third Party Terms which such Optionor is prepared to accept,
Optionee's Election Notice must contain the proposed purchase price and other
material economic and other terms (including allocation of closing costs) under
which Optionee is prepared to purchase the Subject Property. In either event,
Optionee's Election Notice shall constitute a written offer by Optionee to
purchase the Subject Property on the terms contained therein.

     (a)  Market Value of OP Units. The term "Market Value" as used herein shall
          mean the average of the daily market price of the common stock of the
          Company (or any successor thereto) (the "Common Stock") for the ten
          (10) consecutive trading days immediately preceding the closing of the
          transactions pursuant to Optionee's Election Notice. For purposes of
          determining Market Value, one (1) OP Unit shall equal one (1) share of
          Common Stock, subject to any adjustments required under the

     (b)  Rights Associated with OP Units. Pursuant to the limited partnership
          agreement of the Optionee, the OP Units are exchangeable into shares
          of the Common Stock. It is currently anticipated that such shares of
          common stock will be entitled to certain rights consistent with the
          Company's practice at the time such OP Units are issued and subject to
          any restrictions or agreements affecting such rights to which the
          Company or the Operating Partnership is bound.

                                       2
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partnership agreement in effect for the Optionee or to reflect stock splits,
reclassifications, dividends in-kind, and the like.

            2.3 Optionor's Election. An Optionor shall have thirty (30) days
from its receipt of an Optionee's Election Notice (the "Optionor Election Date")
to determine whether to sell the Subject Property to Optionee on the terms
specified therein.

            2.4 Acceptance by Optionor. In the event an Optionor accepts an
Optionee's Election Notice and agrees to sell the Subject Property to Optionee
pursuant to its terms, Optionee shall deposit with such Optionor a nonrefundable
good faith deposit equal to five percent (5%) of the purchase price reflected in
Optionee's Election Notice within five (5) business days of such Optionor's
acceptance of Optionee's Election Notice and the acquisition of the Subject
Property shall close within ninety (90) days from the date upon which such
Optionor accepts Optionee's Election Notice in writing. The acquisition of the
Subject Property or any portion thereof shall be on an "as is" basis with no
representations, warranties or indemnities regarding the Subject Property's
physical condition, operations, development or management (an "As-Is Basis").
Any failure by Optionee to close on the acquisition of the Subject Property
(other than a failure resulting from a breach by such Optionor) following such
Optionor's acceptance of Optionee's Election Notice shall automatically and
permanently terminate this Agreement as to the Subject Property.

            2.5 Rejection by Optionor. In the event an Optionor elects not to
accept an Optionee's Election Notice, Optionee's rights under this Agreement
with respect to the Subject Property shall expire and be of no further force or
effect; provided, however, that such rights shall be revived and reinstated in
favor of Optionee in the event such Optionor does not consummate a sale of the
Subject Property to a third party during the 120 day period following the
Optionor Election Date at a purchase price equal to or greater than the purchase
price set forth in Optionee's Election Notice and otherwise on terms which are
as good or more favorable to such Optionor than the terms set forth in
Optionee's Election Notice (including the sale of the Subject Property on an
As-Is Basis).

            2.6 Failure to Make Election. If an Optionee fails to deliver an
Optionee's Election Notice on a timely basis or an Optionee's Election Notice
does not satisfy the requirements set forth above, it shall be deemed an
election by such Optionee not to acquire the Subject Property and, in such
event, such Optionee's rights under this Agreement with respect to the Subject
Property shall expire and be of no further force or effect; provided, however,
that such rights shall be revived and reinstated in favor of Optionee in the
event such Optionor has not consummated a sale of the Subject Property during
the 120 day period following the Optionee Election Date.

      3. Assignment. Neither this Agreement nor the Rights of First Offer
granted hereunder shall be assignable by Optionee except to an affiliate of
Optionee or the Company. Upon any non-permitted assignment, each Optionor shall
have the immediate right to terminate this Agreement as between it and Optionee
and/or terminate the Right of First Offer granted by it hereunder.

                                       3
<PAGE>

      4. Notices; Exercise of Rights of First Offer. Any notice or demand which
must or may be given under this Agreement (including the exercise by the
Optionee of a Right of First Offer) or by law shall, except as otherwise
provided, be in writing and shall be deemed to have been given (i) when
physically received by personal delivery (which shall include the confirmed
receipt of a telecopied facsimile transmission), or (ii) three business days
after being deposited in the United States certified or registered mail, return
receipt requested, postage prepaid, or (iii) one business day after being
deposited with a nationally known commercial courier service providing next day
delivery service (such as Federal Express).

            Any such notice shall be addressed and delivered or telecopied (a)
in the case of a notice to the Optionee at the following address and facsimile
number:

                     Maguire Properties, L.P.
                     555 West Fifth Street
                     Suite 5000
                     Los Angeles, California 90013
                     Phone: (213) 626-3300
                     Facsimile: (213) 533-5100
                     Attn: Mark Lammas

and (b), in the case of a notice to an Optionor, to the address and facsimile
number set forth on the applicable Signature Page hereof.

      5. Dispute Resolution. The parties hereby agree that, in order to obtain
prompt and expeditious resolution of any disputes under this Agreement, each
claim, dispute or controversy of whatever nature, arising out of, in connection
with, or in relation to the interpretation, performance or breach of this
Agreement (or any other agreement contemplated by or related to this Agreement
or any other agreement between the parties), including without limitation any
claim based on contract, tort or statute, or the arbitrability of any claim
hereunder (an "Arbitrable Claim"), shall, subject to Section 5.1 below, be
settled by final and binding arbitration conducted in Los Angeles, California.
The arbitrability of any Arbitrable Claims under this Agreement shall be
resolved in accordance with a two-step dispute resolution process administered
by Judicial Arbitration & Mediation Services, Inc. ("JAMS") involving, first,
mediation before a retired judge from the JAMS panel, followed, if necessary, by
final and binding arbitration before the same, or if requested by either party,
another JAMS panelist. Such dispute resolution process shall be confidential and
shall be conducted in accordance with California Evidence Code Section 1119.

            5.1 Mediation. In the event any Arbitrable Claim is not resolved by
an informal negotiation between the parties within fifteen (15) days after
either party receives written notice that a Arbitrable Claim exists, the matter
shall be referred to the Los Angeles, California office of JAMS, or any other
office agreed to by the parties, for an informal, non-binding mediation
consisting of one or more conferences between the parties in which a retired
judge will seek to guide the parties to a resolution of the Arbitrable Claims.
The parties shall select a mutually acceptable neutral arbitrator from among the
JAMS panel of mediators. In the event the parties cannot agree on a mediator,
the Administrator of JAMS will appoint a mediator. The mediation process shall
continue until the earliest to occur of the following: (i) the

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Arbitrable Claims are resolved, (ii) the mediator makes a finding that there is
no possibility of resolution through mediation, or (iii) thirty (30) days have
elapsed since the Arbitrable Claim was first scheduled for mediation.

            5.2 Arbitration. Should any Arbitrable Claims remain after the
completion of the mediation process described above, the parties agree to submit
all remaining Arbitrable Claims to final and binding arbitration administered by
JAMS in accordance with the then existing JAMS Arbitration Rules. Neither party
nor the arbitrator shall disclose the existence, content, or results of any
arbitration hereunder without the prior written consent of all parties. Except
as provided herein, the California Arbitration Act shall govern the
interpretation, enforcement and all proceedings pursuant to this subparagraph.
The arbitrator is without jurisdiction to apply any substantive law other than
the laws selected or otherwise expressly provided in this Agreement. The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Such award may include reasonable attorneys' fees to the prevailing
party. Judgment upon the award may be entered in any court having jurisdiction
thereof.

            5.3 Costs. The parties shall bear their respective costs incurred in
connection with the procedures described in this Section 5, except that the
parties shall equally share the fees and expenses of the mediator or arbitrator
and the costs of the facility for the hearing.

            5.4 Survivability. This dispute resolution process contained in this
Section 5 shall survive the expiration or earlier termination of this Agreement.
The parties expressly acknowledge that by signing this Agreement, they are
giving up their respective right to a jury trial.

      6. Miscellaneous.

            6.1 Amendments and Waivers. This Agreement may not be amended nor
any of its provisions waived except by an instrument in writing signed by each
of the parties; provided, however, that an Optionor and Optionee may amend the
Right of First Offer granted by such Optionor to Optionee, or waive any
provision of such Right of First Offer, by mutual written consent of such
Optionor to Optionee without the consent of the other Optionor.

            6.2 Entire Agreement; Counterparts; Applicable Law. This Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof, (b) may be executed in one or more counterparts, each of
which will be deemed an original and all of which shall constitute but one and
the same instrument and (c) shall be governed in all respects by the laws of
California without giving effect to the conflict of law provisions thereof.

            6.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of

                                       5
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the void or unenforceable provision and to execute any amendment, consent or
agreement deemed necessary or desirable by the Optionee to effect such
replacement.

            6.4 Binding Effect. This Agreement shall be binding upon, and shall
be enforceable by and inure to the benefit of, each Optionor and the Optionee
and their respective successors and permitted assigns.

            6.5 Equitable Remedies. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any federal or state court located in the California (as to
which the parties agree to submit to jurisdiction for the purposes of such
action), this being in addition to any other remedy to which they are entitled
at law or in equity.

            6.6 Books and Records. Each Optionor shall maintain a copy or other
evidence of this Agreement in its books and records relating to such Optionor
and the Property.

            6.7 Reliance. Each party to this Agreement acknowledges and agrees
that it is not relying on tax advice or other advice from the other party to
this Agreement, and that it has or will consult with its own advisors.

            6.8 Survival. Except as otherwise provided in this Agreement, it is
the intention of the parties hereto that the provisions of this Agreement that
contemplate performance after the Closing and the obligations of the parties not
fully performed on the Closing shall survive the Closing and shall not be deemed
to be merged into or waived by the instruments executed as of the Closing.

                            (Signature Page Follows)

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<PAGE>
                         RIGHT OF FIRST OFFER AGREEMENT
                                 SIGNATURE PAGE

            IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of this ___ day of _________, 2003.

SOLANA DEVELOPMENT OWNER:

MAGUIRE PARTNERS - SOLANA LIMITED PARTNERSHIP
a Texas limited partnership

By:   MAGUIRE PARTNERS - SOLANA GP LIMITED LIABILITY COMPANY
      a Delaware limited liability company
      Its General Partner

      By:   MAGUIRE PARTNERS - SOLANA BUSINESS TRUST
            a Delaware business trust
            Its sole member and manager

            By:_____________________________
            Name:___________________________
            Title:__________________________

SOLANA DEVELOPMENT OWNER'S NOTICE ADDRESS

c/o Maguire Partners
555 West Fifth Street
Suite 5000
Los Angeles, California 90013
Attn:  Robert F. Maguire III
Phone:  (213) 626-3300
Facsimile:  (213) 533-5100

                                       S-1
<PAGE>

STATE OF CALIFORNIA
COUNTY OF ______________________________________} SS.

On _________________________before me,
_____________________________________________________________, personally
appeared ____________________________________________________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and official seal.

Signature_______________________________________________________

                                       S-2
<PAGE>

SOLANA LAND OWNER:

MAGUIRE PARTNERS - SOLANA LAND, L.P.
a Texas limited partnership

By:  MAGUIRE PARTNERS - SOLANA LAND GP, LLC
     a Delaware limited liability company
     Its General Partner

     By:   MAGUIRE PARTNERS - SOLANA LAND BUSINESS TRUST
           a Delaware business trust
           Its sole member and manager

           By:______________________________
           Name:____________________________
           Title:___________________________

SOLANA LAND OWNER'S NOTICE ADDRESS

c/o Maguire Partners
555 West Fifth Street
Suite 5000
Los Angeles, California 90013
Attn:  Robert F. Maguire III
Phone:  (213) 626-3300
Facsimile:  (213) 533-5100

                                       S-3
<PAGE>

STATE OF CALIFORNIA
COUNTY OF ______________________________________} SS.

On _________________________before me,
_____________________________________________________________, personally
appeared ____________________________________________________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and official seal.

Signature_______________________________________________________

                                       S-4
<PAGE>
OPTIONEE

MAGUIRE PROPERTIES, L.P.
a Maryland limited partnership

By:  MAGUIRE PROPERTIES, INC.
     a Maryland corporation
     Its General Partner

     By:__________________________
     Name:________________________
     Title:_______________________

                                       S-5
<PAGE>
STATE OF CALIFORNIA
COUNTY OF ______________________________________} SS.

On _________________________before me,
_____________________________________________________________, personally
appeared ____________________________________________________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and official seal.

Signature_______________________________________________________

                                       S-6
<PAGE>
                                    EXHIBIT A
                                       TO
                         RIGHT OF FIRST OFFER AGREEMENT

                     Legal Description of Solana Development

<PAGE>
                                    EXHIBIT B
                                       TO
                         RIGHT OF FIRST OFFER AGREEMENT

                        Legal Description of Solana Land<PAGE>

                                                                    Exhibit 4(c)

--------------------------------------------------------------------------------

                               THE TIMKEN COMPANY

                                       AND

                                TIMKEN UK LIMITED

                                       AND

                          MOURANT ECS TRUSTEES LIMITED

--------------------------------------------------------------------------------

                              TRUST DEED AND RULES

                                     OF THE

                           TIMKEN SHARE INCENTIVE PLAN

                                  OCTOBER 2002

--------------------------------------------------------------------------------

                         INLAND REVENUE REFERENCE A1654

<PAGE>

                         THE TIMKEN SHARE INCENTIVE PLAN

 1. PURPOSE
 2. STATUS
 3. DECLARATION OF TRUST
 4. NUMBER OF TRUSTEES
 5. INFORMATION
 6. RESIDENCE OF TRUSTEES
 7. CHANGE OF TRUSTEES
 8. INVESTMENT AND DEALING WITH TRUST ASSETS
 9. LOANS TO TRUSTEES
10. SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS
11. TRUSTEES' OBLIGATIONS UNDER THE PLAN
12. POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE
13. POWER TO AGREE MARKET VALUE OF SHARES
14. PERSONAL INTEREST OF TRUSTEES
15. TRUSTEES' MEETINGS
16. SUBSIDIARY COMPANIES
17. EXPENSES OF PLAN
18. TRUSTEES' LIABILITY, INDEMNITY AND FEES
19. COVENANT BY THE PARTICIPATING COMPANIES
20. ACCEPTANCE OF GIFTS
21. TRUSTEES' LIEN
22. AMENDMENTS TO THE PLAN
23. TERMINATION OF THE PLAN
24. NOTICES
25. PROPER LAW

RULES OF THE TIMKEN SHARE INCENTIVE PLAN

<PAGE>

THIS DEED made on the           day of           2002

BETWEEN

THE TIMKEN COMPANY whose principal place of business is situated at 1835 Dueber
Avenue S W Canton, State of Ohio, USA, being a company incorporated under the
laws of the State of Ohio, USA ("the Company")

and

TIMKEN UK LIMITED (registered number 3392504) whose registered office is
situated at P.O. Box 667, Upper Villiers Street, Wolverhampton, West Midlands,
WV2 4UH (together with the Company called "the Participating Companies")

and

MOURANT ECS TRUSTEES LIMITED (registered number 576832) whose registered office
is situated at 4th Floor, 35 New Bridge Street, London EC4V 6BW ("the
Trustees").

1.    PURPOSE

      The purpose of this Deed is to establish a trust for an employee share
      ownership plan which satisfies Schedule 8 to the Finance Act 2000.

2.    STATUS

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

<PAGE>

3.    DECLARATION OF TRUST

3.1   The Participating Companies and the Trustees have agreed that all the
      Shares and other assets which are issued to or transferred to the Trustees
      are to be held on the trusts declared by this Deed, and subject to the
      terms of the Rules. When Shares or assets are transferred to the Trustees
      by the Participating Companies with the intention of being held as part of
      the Plan they shall be held upon the trusts and provisions of this Deed
      and the Rules.

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

      (a) as to Shares which have not been awarded to Participants ("Unawarded
          Shares") upon trust during the Trust Period to allocate those Shares
          in accordance with the terms of this Deed and the Rules;

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

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

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

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

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

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

<PAGE>

4.    NUMBER OF TRUSTEES

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

5.    INFORMATION

5.1   The Trustees shall be entitled to rely without further enquiry on all
      information supplied to them by the Participating Companies with regard to
      their duties as Trustees and in particular, but without prejudice to the
      generality of the foregoing, any notice given by a Participating Company
      to the Trustees in respect of the eligibility of any person to become or
      remain a Participant shall be conclusive in favour of the Trustees.

5.2   Except as otherwise provided, the Trustees may in their discretion agree
      with the Committee, the Company or any of the Participating Companies
      matters relating to the operation and administration of the Trust as they
      may consider advisable in the interest of the Trust and so that no person
      claiming an interest under this Trust shall be entitled to question the
      legality or correctness of any arrangement or agreement made between the
      Committee, the Company or any of the Participating Companies and the
      Trustees in relation to such operation or administration.

5.3   The decision of the Committee in any dispute affecting Participants or
      Participating Companies shall be final and conclusive.

5.4   The Trustees may employ on such terms as the Committee may agree as to
      remuneration, any agent or agents to transact all or any business of
      whatsoever nature required to be done in the proper administration of the
      Trust.

6.    RESIDENCE OF TRUSTEES

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

7.    CHANGE OF TRUSTEES

      The Company has the power to appoint or remove any Trustee for any reason.
      The change of Trustee shall be effected by deed and shall take effect from
      the date that written notice of such appointment or removal is delivered
      to the Trustees, or such later

<PAGE>

      date as the Committee and the Trustees shall agree. Any Trustee may resign
      on three months notice given in writing to the Company, provided that
      there will be at least two Trustees or a corporate Trustee immediately
      after the retirement.

8.    INVESTMENT AND DEALING WITH TRUST ASSETS

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

8.2   The Trustees shall obey any directions given by a Participant in
      accordance with the Rules in relation to his Plan Shares and any rights
      and income relating to those Shares. In the absence of any such direction,
      or provision in the Plan, the Trustees shall take no action. If no
      directions are received from Participants in relation to the action they
      wish the Trustees to take in voting their Plan Shares, those Shares will
      not be voted.

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

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

      (b) a building society; or

      (c) a relevant European institution,

      until it is either used to acquire Partnership Shares on the Acquisition
      Date, or, in accordance with the Plan, returned to the individual from
      whose Salary the Partnership Share Money has been deducted. The Trustees
      shall pass on any interest arising on this invested money to the
      individual from whose Salary the Partnership Share Money has been deducted
      at least once in each calendar year. The Trustees are, however, not
      obliged to keep monies in an interest bearing account.

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

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

8.6   The Trustees shall not be under any liability to the Participating
      Companies or to current or former Qualifying Employees by

<PAGE>

      reason of a failure to diversify investments, which results from the
      retention of Plan Shares or Unawarded Shares.

8.7   The Trustees are not required to interfere in the management or conduct of
      the business of the Company regardless of the size of the Trustees'
      holding of Shares, and will not be obliged to seek information about the
      affairs of the Company and may leave the conduct of the Company's business
      wholly to the directors or management of the Company.

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

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

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

9.    LOANS TO TRUSTEES

      The Trustees shall have the power to borrow money, with the written
      consent of the Company, for the purpose of:

      (a) acquiring Shares; and

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

      Where a loan is to be provided by the Company or an Associated Company
      then it shall be made pursuant to a written loan agreement.

10.   SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS

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

<PAGE>

11.   TRUSTEES' OBLIGATIONS UNDER THE PLAN

NOTICE OF AWARD OF FREE SHARES AND MATCHING SHARES

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

      (a) the number and description of those Shares;

      (b) their Initial Market Value on the date of Award; and

      (c) the Holding Period applicable to them.

NOTICE OF AWARD OF PARTNERSHIP SHARES

11.2  As soon as practicable after any Partnership Shares have been acquired for
      a Participant and at least once in every six months, the Trustees shall
      give the Participant a notice stating:

      (a) the number and description of those Shares;

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

      (c) the Market Value at the Acquisition Date.

NOTICE OF ACQUISITION OF DIVIDEND SHARES

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

      (a) the number and description of those Shares;

      (b) their Market Value on the Acquisition Date;

      (c) the Holding Period applicable to them; and

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

NOTICE OF ANY FOREIGN TAX DEDUCTED BEFORE DIVIDEND PAID

11.4  Where any foreign cash dividend is received in respect of Plan Shares held
      on behalf of a Participant, the Trustees shall give the

<PAGE>

      Participant notice of the amount of any foreign tax deducted from the
      dividend before it was paid.

RESTRICTIONS DURING THE HOLDING PERIOD

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

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

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

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

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

PAYE AND OTHER TAX LIABILITIES

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

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

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

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

MONEY'S WORTH RECEIVED BY TRUSTEES

11.10 The Trustees shall pay over to the Participant as soon as is practicable,
      any money or money's worth received by them in

<PAGE>

      respect of or by reference to any shares, other than new shares within
      paragraph 115 of the Schedule (company reconstructions).

      This is subject to:

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

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

      (c) the Trustees' PAYE obligations.

GENERAL OFFERS

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

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

      If instructed by a Participant in respect of his Plan Shares the Trustees
      may dispose of some of the rights under a rights issue arising from those
      Shares to obtain enough funds to exercise the remaining rights. The rights
      referred to are the rights to buy additional shares or rights in the same
      company.

13.   POWER TO AGREE MARKET VALUE OF SHARES

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

14.   PERSONAL INTEREST OF TRUSTEES

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

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

<PAGE>

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

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

15.   TRUSTEES' MEETINGS

      If and so long as there is more than one Trustee, the Trustees shall hold
      meetings as often as is necessary for the administration of the Plan.
      There shall be at least two Trustees present at a meeting and the Trustees
      shall give due notice to all the Trustees of such a meeting. Decisions
      made at such a meeting by a majority of the Trustees present shall be
      binding on all the Trustees. A written resolution signed by all the
      Trustees shall have the same effect as a resolution passed at a meeting.

16.   SUBSIDIARY COMPANIES

16.1  Any Subsidiary in addition to those Subsidiaries which are parties to this
      Deed may with the agreement of the Committee become a party to this Deed
      and the Plan by executing a deed of adherence agreeing to be bound by the
      Deed and Rules.

16.2  A Participating Company that ceases to be a Subsidiary shall cease to be a
      Participating Company.

17.   EXPENSES OF PLAN

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

18.   TRUSTEES' LIABILITY, INDEMNITY AND FEES

18.1  The Participating Companies shall jointly and severally indemnify each of
      the Trustees, and the directors, officers and employees of a corporate
      Trustee, against any expenses and liabilities which are incurred through
      acting as a Trustee of the Plan and which cannot be recovered from the
      Trust Fund and in respect of indemnities conferred upon the Trustees by
      law and the Trustee Act 1925. This does not apply to expenses and
      liabilities which are incurred through fraud, wilful wrongdoing or
      negligence or are covered by insurance under Clause 18.3.

18.2  No Trustee shall be personally liable for any breach of trust (other than
      through fraud, wilful wrongdoing or negligence) over and

<PAGE>

      above the extent to which the Trustee, and the directors, officers and
      employees of a corporate Trustee, are indemnified by the Participating
      Companies in accordance with Clause 18.1 above.

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

18.4  A Trustee who carries on a profession or business may charge for services
      rendered on a basis agreed with the Participating Companies. A firm or
      company in which a Trustee is interested or by which he is employed may
      also charge for services rendered on this basis and may, unless otherwise
      agreed, act in accordance with its general terms and conditions from time
      to time in force.

19.   COVENANT BY THE PARTICIPATING COMPANIES

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

20.   ACCEPTANCE OF GIFTS

      The Trustees may accept gifts of Shares and other assets which shall be
      held upon the trusts declared by Clause 3.1 or 3.2 as the case may be.

21.   TRUSTEES' LIEN

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

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

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

<PAGE>

22.   AMENDMENTS TO THE PLAN

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

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

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

      (c) any amendment to the Deed shall be made by supplemental deed; and

      (d) any amendment to the Rules may be made by supplemental deed or
          resolution of the Committee.

23.   TERMINATION OF THE PLAN

23.1  The Company shall have absolute discretion to terminate the Plan.

23.2  The Plan shall terminate:

      (a) in accordance with a Plan Termination Notice issued by the Committee
          acting on behalf of the Company to the Trustees under paragraph 120 of
          the Schedule; or

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

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

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

<PAGE>

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

24.   NOTICES

      Each advice, request, or other communication to be given or made under the
      Plan shall be in writing and delivered or sent to the relevant party at
      its address as notified to the other party. To the extent agreed by the
      Company and the Trustees, communications between the parties to this Deed
      and to Participants may also be by electronic means.

25.   PROPER LAW

      This Deed and the Rules of the Plan shall be governed by and construed in
      accordance with the laws of England and Wales.

IN WITNESS whereof this deed has been executed and delivered the day and year
first above written.

      Executed as a Deed on behalf of
      THE TIMKEN COMPANY
      by:

                                        Director................................

                                        Director/Secretary......................

      Executed as a Deed on behalf of
      TIMKEN UK LIMITED
      by:

                                        Director................................

                                        Director/Secretary......................

<PAGE>

      Executed as a Deed on behalf of
      MOURANT ECS TRUSTEES LIMITED
      by:

                                        Authorised Signatory....................

                                        Authorised Signatory....................

<PAGE>

                                      RULES
                                     OF THE
                           TIMKEN SHARE INCENTIVE PLAN

 1. DEFINITIONS
 2. PURPOSE OF THE PLAN
 3. ELIGIBILITY OF INDIVIDUALS
 4. PARTICIPATION ON SAME TERMS
 5. PARTNERSHIP SHARES (PART A)
 6. MATCHING SHARES (PART B)
 7. FREE SHARES (PART C)
 8. DIVIDEND SHARES (PART D)
 9. ACQUISITION OF SHARES
10. COMPANY RECONSTRUCTIONS
11. RIGHTS ISSUES
12. LEAVERS

<PAGE>

                                      RULES
                                     OF THE
                           TIMKEN SHARE INCENTIVE PLAN

1.    DEFINITIONS

1.1   The following words and expressions have the following meanings:

"ACCUMULATION PERIOD"           in relation to Partnership Shares, the period
                                during which the Trustees accumulate a
                                Qualifying Employee's Partnership Share Money
                                before acquiring Partnership Shares or repaying
                                it to the employee

"ACQUISITION DATE"              (a) in relation to Partnership Shares, where
                                there is no Accumulation Period, the meaning
                                given by paragraph 40(2) of the Schedule;

                                (b) in relation to Partnership Shares, where
                                there is an Accumulation Period, the meaning
                                given by paragraph 42(3) of the Schedule; and

                                (c) in relation to Dividend Shares, the meaning
                                given by paragraph 56(3) of the Schedule

"ASSOCIATED COMPANY"            the meaning given by paragraph 126 of the
                                Schedule

"AWARD DATE"                    in relation to Free Shares or Matching Shares,
                                the date on which such Shares are awarded

"AWARD"                         (a) in relation to Free Shares and Matching
                                Shares, the appropriation of Free Shares and
                                Matching Shares in accordance with the Plan; and

                                (b) in relation to Partnership Shares, the
                                acquisition of Partnership Shares on behalf of
                                Qualifying Employees in accordance with the Plan

<PAGE>

"CAPITAL RECEIPT"               the same meaning as in paragraph 79 of the
                                Schedule

"CLOSE COMPANY"                 the same meaning as in section 414 of ICTA 1988

"COMMITTEE"                     the committee appointed and authorised by the
                                board of directors of the Company to operate the
                                Plan

"COMPANY"                       The Timken Company

"CONNECTED COMPANY"             the same meaning as in paragraph 16(4) of the
                                Schedule

"CONTROL"                       the same meaning as in section 840 of ICTA 1988

"DEALING DAY"                   a day on which the Stock Exchange is open for
                                the transaction of business

 "DEED"                         the trust deed constituting the Plan with any
                                subsequent amendment thereto

"DIVIDEND SHARES"               Shares acquired on behalf of a Participant from
                                reinvestment of dividends under Part D of the
                                Plan and which are subject to the Plan

"FREE SHARE AGREEMENT"          an agreement in such form as is acceptable to
                                the Inland Revenue

"FREE SHARES"                   Shares awarded under Part C of the Plan which
                                are subject to the Plan

"GROUP PLAN"                    the Plan as established by the Company and
                                extending to its Subsidiaries which are
                                Participating Companies

"HOLDING PERIOD"                (a) in relation to Free Shares, the period
                                specified by the Committee as mentioned in Rule
                                7.12;

                                (b) in relation to Matching Shares, the period
                                specified by the Committee as mentioned in Rule
                                6.5; and

<PAGE>

                                (c) in relation to Dividend Shares, the period
                                of 3 years from the Acquisition Date

"ICTA 1988"                     the Income and Corporation Taxes Act 1988

"INITIAL MARKET VALUE"          the Market Value of a Share on an Award Date.
                                Where the Share is subject to a restriction or
                                risk of forfeiture, the Market Value shall be
                                determined without reference to that restriction
                                or risk

"MARKET VALUE"                  (a) where the Shares are listed on the Stock
                                Exchange

                                (i) if, and only if, all the Shares acquired for
                                Award on an Acquisition Date or an Award Date
                                are purchased and awarded to all Participants on
                                the same day, the average of the prices paid by
                                the Trustees for those Shares in Sterling

                                or

                                (ii) if all the Shares acquired for Award are
                                not purchased and awarded to all Participants on
                                the same day, the Sterling equivalent of the
                                closing price of a Share on the immediately
                                preceding Dealing Day (as derived from the Stock
                                Exchange)

                                (b) on any day where (a) above does not apply,
                                the market value of a Share determined in
                                accordance with the provisions of Part VIII of
                                the Taxation of Chargeable Gains Act 1992 and
                                agreed for the purposes of the Plan with Inland
                                Revenue Shares Valuation on or before that day

<PAGE>

"MATCHING SHARES"               Shares awarded under Part B of the Plan and
                                which are subject to the Plan

"MATERIAL INTEREST"             the same meaning as in paragraph 15 of the
                                Schedule

"NICS"                          Employees' Class 1 National Insurance
                                Contributions

"PARTICIPANT"                   an individual who has received under the Plan an
                                Award of Free Shares, Matching Shares or
                                Partnership Shares, or on whose behalf Dividend
                                Shares have been acquired

"PARTICIPATING COMPANY"         the Company and such of its Subsidiaries as are
                                parties to this Deed or have executed deeds of
                                adherence to the Plan under Clause 16 of the
                                Trust Deed

"PARTNERSHIP SHARE AGREEMENT"   an agreement in such form as is acceptable to
                                the Inland Revenue

"PARTNERSHIP SHARES"            Shares awarded under Part A of the Plan and
                                which are subject to the Plan

"PARTNERSHIP SHARE MONEY"       money deducted from a Qualifying Employee's
                                Salary pursuant to a Partnership Share Agreement
                                and held by the Trustees to acquire Partnership
                                Shares or to be returned to such a person

"PAYE"                          pay as you earn (in relation to income tax
                                assessable under Schedule E) as described in
                                section 203 of ICTA 1988

"PERFORMANCE ALLOWANCES"        The criteria for an Award of Free Shares where:

                                (a) whether Shares are awarded; or

                                (b) the number or value of Shares awarded

<PAGE>

                                is conditional on performance targets being met

"PLAN"                          this plan, being the Timken Share Incentive Plan

"PLAN SHARES"                   (a) Free Shares, Matching Shares or Partnership
                                Shares awarded to Participants;

                                (b) Dividend Shares acquired on behalf of
                                Participants; and

                                (c) shares in relation to which paragraph 115(5)
                                (company reconstructions: new shares) of the
                                Schedule applies

                                that remain subject to the Plan

"PLAN TERMINATION NOTICE"       a notice issued under paragraph 120 of the
                                Schedule

"PROFIT SHARING SCHEME"         a profit sharing scheme approved by the Board of
                                Inland Revenue under Schedule 9 of ICTA 1988

"QUALIFYING COMPANY"            the same meaning as in paragraph 14 of the
                                Schedule

"QUALIFYING CORPORATE BOND"     the same meaning as in section 117 of the
                                Taxation of Chargeable Gains Act 1992

"QUALIFYING EMPLOYEE"           an employee who must be invited to participate
                                in an Award in accordance with Rule 3.6 and any
                                employee who the Committee has invited in
                                accordance with Rule 3.7

<PAGE>

"QUALIFYING PERIOD"             a period as the Committee shall in their
                                absolute discretion so decide being:

                                (a) in the case of Free Shares a period not
                                exceeding 18 months before the Award is made;

                                (b) in the case of Partnership Shares and
                                Matching Shares where there is an Accumulation
                                Period a period not exceeding six months before
                                the start of the Accumulation Period; and

                                (c) in the case of Partnership Shares and
                                Matching Shares where there is no Accumulation
                                Period a period not exceeding 18 months before
                                the deduction of Partnership Share Money
                                relating to the Award

"REDUNDANCY"                    the same meaning as in the Employment Rights Act
                                1996

"RELEVANT EMPLOYMENT"           employment by the Company or any Associated
                                Company

"RETIREMENT AGE"                for the purposes of this Plan, age 50

"RULES"                         these Rules together with any amendments thereto
                                effected in accordance with Clause 22 of the
                                Deed

"SALARY"                        the same meaning as in paragraph 48 of the
                                Schedule

"SCHEDULE"                      Schedule 8 to the Finance Act 2000

"SHARES"                        shares of common stock in the capital of the
                                Company which comply with the conditions set out
                                in paragraph 59 of the Schedule

"STOCK EXCHANGE"                the New York Stock Exchange (or such successor
                                organisation)

<PAGE>

"SUBSIDIARY"                    any company which is for the time being under
                                the Control of the Company

"TAX YEAR"                      a year beginning on 6 April and ending on the
                                following 5 April

"TRUSTEES"                      the trustees or trustee for the time being of
                                the Deed or any subsequent trustee or trustees
                                as provided for in accordance with Clause 7 of
                                the Deed

"TRUST FUND"                    all assets transferred to the Trustees to be
                                held on the terms of the Deed and the assets
                                from time to time representing such assets,
                                including any accumulations of income

"TRUST PERIOD"                  the period of 80 years beginning with the date
                                of the Deed

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

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

2.    PURPOSE OF THE PLAN

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

3.    ELIGIBILITY OF INDIVIDUALS

3.1   Subject to Rule 3.4, individuals are eligible to participate in an Award
      only if:

      (a) they are employees of a Participating Company;

      (b) they have been employees of a Qualifying Company at all times during
          any Qualifying Period;

<PAGE>

      (c) they are eligible on the date(s) set out in paragraph 13(1) of the
          Schedule; and

      (d) they do not fail to be eligible under either or both Rule 3.2 or Rule
          3.3

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

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

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

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

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

      (b) they have received (or are to receive at the same time) an award under
          another plan established by the Company or a Connected Company and
          approved under the Schedule, or if they would have received such an
          award but for their failure to meet a performance target (see Rule
          7.5).

3.4   Individuals are not eligible to participate in an Award of Partnership
      Shares or Matching Shares in any Tax Year if in that Tax Year they have
      received (or are to receive at the same time) an award under another plan
      established by the Company or a Connected Company (as defined in paragraph
      16(4) of the Schedule) and approved under the Schedule, or if they would
      have received such an award but for their failure to meet a performance
      target (see Rule 7.5).

3.5   Notwithstanding any provision of any other of these Rules whatsoever:

      (a) the Plan shall not form part of any contract of employment between the
          Company, a Subsidiary or any Associated Company and any Participant
          and it shall not confer on any Participant any legal or equitable
          rights (other than those constituted by the grant of Awards
          themselves) whatsoever

<PAGE>

          against the Company, a Subsidiary or an Associated Company directly or
          indirectly or give rise to any cause of action at law or in equity
          against the Company, a Subsidiary or any Associated Company;

      (b) participation in an Award is a matter entirely separate from any
          pension right or entitlement a Participant may have and from his terms
          or conditions of employment and participation in the Plan shall in no
          respect whatever affect his pension rights or entitlements or terms or
          conditions of employment and in particular (but without limiting the
          generality of the foregoing) any Participant who ceases to be an
          employee of any Company, Subsidiary or Associated Company shall not be
          entitled to any compensation for any loss of any right or benefit or
          prospective right or benefit under the Plan which he might otherwise
          have enjoyed whether such compensation is claimed by way of damages
          for wrongful dismissal or other breach of contract or by way of
          compensation for loss of office or otherwise howsoever and
          notwithstanding that he may have been dismissed wrongfully or unfairly
          (within the meaning of the Employment Rights Act 1996).

EMPLOYEES WHO MUST BE INVITED TO PARTICIPATE IN AWARDS

3.6   Individuals shall be eligible to receive an Award of Shares under the Plan
      if they meet the requirements in Rule 3.1 and are chargeable to income tax
      in respect of their employment under Case I of Schedule E. In this case
      they shall be invited to participate in any Awards of Free Shares,
      Partnership Shares or Matching Shares, and acquisitions of Dividend
      Shares, as are set out in the Plan.

EMPLOYEES WHO MAY BE INVITED TO PARTICIPATE IN AWARDS

3.7   The Committee may also invite, at their discretion, any employee who meets
      the requirements in Rule 3.1 to participate in any Award of Free Shares,
      Partnership Shares or Matching Shares, and acquisitions of Dividend
      Shares, as are set out in the Plan. The Committee shall notify the
      Trustees of employees who participate under this Rule.

<PAGE>

4.    PARTICIPATION ON SAME TERMS

4.1   Every Qualifying Employee shall be invited to participate in an Award on
      the same terms. All who do participate in an Award shall do so on the same
      terms.

4.2   The Committee may make an Award of Free Shares to Qualifying Employees by
      reference to their remuneration, length of service or hours worked.

4.3   The Committee may make an Award of Free Shares to Qualifying Employees by
      reference to their performance as set out in Rule 7.5.

4.4   The Participating Companies shall make contributions to the Trustees to
      finance any purchase by the Trustees of Free and/or Matching Shares for
      award on an Award Date.

<PAGE>

                                     PART A

5.    PARTNERSHIP SHARES

5.1   The Committee may at any time invite every Qualifying Employee to enter
      into a Partnership Share Agreement, should the Committee decide to offer
      Partnership Shares, in accordance with this Part of the Rules. The
      Committee shall determine whether there is to be an Accumulation Period.
      An Accumulation Period may be up to 12 months and shall apply equally to
      all Qualifying Employees in the Plan.

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

MAXIMUM AMOUNT OF DEDUCTIONS

5.3   The amount of Partnership Share Money deducted from an employee's Salary
      shall not exceed (pound sterling)125 in any month (or such other amount as
      may from time to time be permitted under paragraph 36(1) of the Schedule
      and approved by the Committee). If the Salary is not paid monthly, the
      applicable limit shall be calculated proportionately.

5.4   The amount of Partnership Share Money deducted from an employee's Salary
      over an Accumulation Period shall not exceed 10% (or such other percentage
      as may from time to time be permitted under paragraph 36(2) of the
      Schedule and approved by the Committee) of the total of the payments of
      Salary made to such employee over that Accumulation Period or if there is
      no Accumulation Period, 10% (or such other percentage as may be permitted
      under paragraph 36(2) of the Schedule) of the Salary payment from which
      the deduction is made.

5.5   Any amount deducted in excess of that allowed by Rule 5.3 or Rule 5.4
      shall be paid over to the employee, subject to both deduction of income
      tax under PAYE and NICs, as soon as practicable.

MINIMUM AMOUNT OF DEDUCTIONS

5.6   The minimum amount to be deducted under the Partnership Share Agreement in
      any month shall be the same in relation to all Partnership Share
      Agreements entered into in response to invitations issued on the same
      occasion. It shall not be greater than (pound sterling)10.

<PAGE>

NOTICE OF POSSIBLE EFFECT OF DEDUCTIONS ON BENEFIT ENTITLEMENT

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

RESTRICTION IMPOSED ON NUMBER OF SHARES AWARDED

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

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

5.10  The notification in Rule 5.9 above shall be given:

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

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

PLAN WITH NO ACCUMULATION PERIOD

5.11  The Trustees shall acquire Shares on behalf of the Qualifying Employee
      using the Partnership Share Money. They shall acquire the Shares on the
      Acquisition Date. The number of Shares awarded to each employee shall be
      determined in accordance with the Market Value of the Shares on that date.

PLAN WITH ACCUMULATION PERIOD

5.12  If there is an Accumulation Period, the Trustees shall acquire Shares on
      behalf of the Qualifying Employee, on the Acquisition Date, using the
      Partnership Share Money.

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

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

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

5.14  If a transaction occurs during an Accumulation Period which results in a
      new holding of shares being equated for the purposes of capital gains tax
      with any of the Shares to be acquired under the

<PAGE>

      Partnership Share Agreement, the employee may agree that the Partnership
      Share Agreement shall have effect after the time of that transaction as if
      it were an agreement for the purchase of shares comprised in the new
      holding.

SURPLUS PARTNERSHIP SHARE MONEY

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

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

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

SCALING DOWN

5.16  If the Company receives applications for Partnership Shares exceeding the
      Award maximum determined in accordance with Rule 5.8 then the following
      steps shall be taken in sequence until the excess is eliminated.

      Step 1. the excess of the monthly deduction chosen by each applicant over
              (pound)5 or any other minimum amount included in the Partnership
              Share Agreement shall be reduced pro rata;

      Step 2. all monthly deductions shall be reduced to(pound)5 or any other
              minimum amount included in the Partnership Share Agreement;

      Step 3. applications shall be selected by lot, each based on a monthly
              deduction of (pound)5 or any other minimum amount included in the
              Partnership Share Agreement.

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

STOPPING AND RE-STARTING DEDUCTIONS

5.17  An employee may stop and re-start deductions under a Partnership Share
      Agreement at any time by notice in writing to

<PAGE>

      their employing company. Unless a later date is specified in the notice,
      such notice shall take effect as soon as practicable but in any event no
      later than 30 days after their employing company receives it.

WITHDRAWAL FROM PARTNERSHIP SHARE AGREEMENT

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

REPAYMENT OF PARTNERSHIP SHARE MONEY ON WITHDRAWAL OF APPROVAL OR TERMINATION

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

<PAGE>

                                     PART B

6.    MATCHING SHARES

6.1   The Partnership Share Agreement sets out the basis on which a Participant
      is entitled to Matching Shares, should the Committee decide to offer
      Matching Shares, in accordance with this Part of the Rules.

GENERAL REQUIREMENTS FOR MATCHING SHARES

6.2   Matching Shares shall:

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

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

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

RATIO OF MATCHING SHARES TO PARTNERSHIP SHARES

6.3   The Partnership Share Agreement shall specify the ratio of Matching Shares
      to Partnership Shares for the time being offered by the Company and that
      ratio shall not exceed 2:1 (or such other ratio as may from time to time
      be permitted under paragraph 51(2) of the Schedule and approved by the
      Committee). The Committee may vary the ratio before Partnership Shares are
      acquired. Employees shall be notified of the terms of any such variation
      before the Partnership Shares are awarded under the Partnership Share
      Agreement.

HOLDING PERIOD FOR MATCHING SHARES

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

6.5   The Holding Period shall, in relation to each Award, be a specified period
      of not less than 3 years nor more than 5 years (or such other periods as
      may be from time to time be specified under paragraph 52 of the Schedule
      and approved by the Committee), beginning with the Award Date and shall be
      the same for all Participants who receive an Award at the same time. The
      Holding

<PAGE>

      Period shall not be increased in respect of Matching Shares awarded under
      the Plan.

6.6   A Participant may during the Holding Period direct the Trustees:

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

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

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

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

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

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

<PAGE>

                                     PART C

7.    FREE SHARES

7.1   The Committee may at any time invite every Qualifying Employee to enter
      into a Free Share Agreement, should the Committee decide to offer Free
      Shares, in accordance with this Part of the Rules.

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

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

MAXIMUM ANNUAL AWARD

7.4   The Initial Market Value of the Shares awarded to a Qualifying Employee in
      any Tax Year shall not exceed (pound sterling)3,000 (or such other amount
      as may be permitted under paragraph 24 of the Schedule and approved by the
      Committee).

ALLOCATION OF FREE SHARES BY REFERENCE TO PERFORMANCE

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

7.6   If Performance Allowances are used, they shall apply to all Qualifying
      Employees.

7.7

      (a) Performance Allowances shall be determined by reference to such fair
          and objective criteria (performance targets) relating to business
          results as the Committee shall determine over such period as the
          Committee shall specify;

      (b) performance targets must be set for performance units of one or more
          employees; and

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

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

<PAGE>

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

      (b) notify all Qualifying Employees of the Company or, in the case of a
          Group Plan, of any Participating Company, in general terms, of the
          performance targets and measures to be used to determine the number or
          value of Free Shares to be awarded to each Participant in the Award.

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

PERFORMANCE ALLOWANCES: METHOD 1

7.10  By this method:

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

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

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

      If this method is used:

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

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

      PERFORMANCE ALLOWANCES: METHOD 2

7.11  By this method:

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

<PAGE>

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

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

HOLDING PERIOD FOR FREE SHARES

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

7.13  The Holding Period shall, in relation to each Award, be a specified period
      of not less than 3 years nor more than 5 years (or such other periods as
      may from time to time be specified under paragraph 31(2) of the Schedule
      and approved by the Committee), beginning with the Award Date and shall be
      the same for all Participants who receive an Award at the same time. The
      Holding Period shall not be increased in respect of Free Shares already
      awarded under the Plan.

7.14  A Participant may during the Holding Period direct the Trustees:

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

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

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

      (d) to agree to a transaction affecting their Free Shares or such of them
          as are of a particular class, if the transaction would

<PAGE>

          be entered into pursuant to a compromise, arrangement or scheme
          applicable to or affecting:

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

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

7.15  The performance targets and measures referred to in this Rule 7 may be
      relaxed, waived, or amended if an event occurs which causes the Committee
      to consider that any of the existing targets or measures have become
      unfair or impractical. Provided that any such relaxation, waiver or
      amendment shall be fair and reasonable and any amended target or measure
      shall not be any more difficult or any less difficult to satisfy than the
      original target or measure.

<PAGE>

                                     PART D

8.    DIVIDEND SHARES

REINVESTMENT OF CASH DIVIDENDS

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

8.2   The Committee may decide to direct the Trustees to:

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

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

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

8.3   Dividend Shares shall be Shares:

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

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

8.4   The Committee may revoke any direction for reinvestment of cash dividends.

8.5   The amount applied by the Trustees in acquiring Dividend Shares shall not
      exceed (pound sterling)1,500 (or such other amount as may be permitted
      under paragraph 54(1) of the Schedule) in each Tax Year in respect of any
      Participant. For the purposes of this Rule, the Dividend Shares are those
      acquired under this Plan and those acquired under any other plan approved
      under the Schedule. In exercising their powers in relation to the
      acquisition of Dividend Shares the Trustees must treat Participants fairly
      and equally.

8.6   If the amounts received by the Trustees exceed the limit in Rule 8.5, the
      balance shall be paid to the participant as soon as practicable.

8.7   If dividends are to be reinvested, the Trustees shall apply all the cash
      dividend to acquire Shares on behalf of the Participant on the Acquisition
      Date. The number of Dividend Shares acquired on

<PAGE>

      behalf of each Participant shall be determined by the Market Value of the
      Shares on the Acquisition Date.

CERTAIN AMOUNTS NOT REINVESTED TO BE CARRIED FORWARD

8.8   Subject to Rule 8.6, any amount that is not reinvested:

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

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

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

8.9   If, during the period of 3 years (or such other period as may from time to
      time be specified under paragraph 57 of the Schedule) beginning with the
      date on which the dividend was paid:

      (a) it is not reinvested; or

      (b) the Participant ceases to be in Relevant Employment; or

      (c) a Plan Termination Notice is issued

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

HOLDING PERIOD FOR DIVIDEND SHARES

8.10  The Holding Period shall be a period of 3 years (or such other period as
      may from time to time be specified under paragraph 57 of the Schedule),
      beginning with the Acquisition Date.

8.11  A Participant may during the Holding Period direct the Trustees:

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

      (b) to accept an offer of a Qualifying Corporate Bond (whether alone or
          with other assets or cash or both) for their Dividend

<PAGE>

          Shares if the offer forms part of such a general offer as is mentioned
          in paragraph (c) below; or

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

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

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

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

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

<PAGE>

9.    ACQUISITION OF SHARES

Awards under the Plan may be satisfied by existing Shares which are purchased by
the Trustees on the open market or at arms length from any shareholder. The
Trustees shall not have the right to subscribe to the Company for newly issued
Shares in order to satisfy an Award and the Trustees may not acquire treasury
shares from the Company to satisfy an Award. The Trustees may purchase the
beneficial interest in Shares at the best consideration in money that can
reasonably be obtained at the time of sale from a Participant who has submitted
a sale request.

10.   COMPANY RECONSTRUCTIONS

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

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

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

10.2  If an issue of shares of any of the following description (in respect of
      which a charge to income tax arises) is made as part of a company
      reconstruction, those shares shall be treated for the purposes of this
      Rule as not forming part of the New Holding:

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

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

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

10.3  In this Rule:

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

<PAGE>

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

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

10.5  For the purposes of the Plan:

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

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

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

11.   RIGHTS ISSUES

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

11.2  Rule 11.1 does not apply:

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

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

<PAGE>

12.   LEAVERS

Unless the Participant provides the requisite funds to the Company or the
Trustees to cover any income tax and employee's NICs liability that may arise
due to his Shares ceasing to be subject to the Plan, the Trustees shall have the
discretion to dispose of sufficient of the Participant's Shares to meet such
liabilities on behalf of the Participant.

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