Document:

Exhibit 4.3 - Reuters Group PLC Discretionary Stock Option Plan Rules

	

kpmg

Deposit Copy : 14 March 2001

Reuters Group PLC

Discretionary Stock Option Plan Rules

Adopted by Board resolution on 5 October 2000 and

amended by the Board on 12 February 2001

[Approved at the Extraordinary General Meeting of

Shareholders 24 April 2001]

The Board of Reuters Group
PLC reserves the right up to the time of the Extraordinary General Meeting on 24
April 2001 to make such amendments to the Rules of this Plan as it may consider
necessary or desirable, provided that such amendments or additions do not
conflict in any material respect with the details of the Plan set out in the
circular dated 14 March 2001 to the Shareholders of Reuters Group plc. 

THIS DOCUMENT IS AVAILABLE FOR INSPECTION ONLY, AND MAY

NOT BE REMOVED FROM THE OFFICES OF

REUTERS, 85 FLEET STREET, LONDON EC4P 4AJ

OR, AS THE CASE MAY BE, THE OFFICES OF

THE US DEPOSITARY, 60 WALL STREET, NEW YORK 10260

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	

Contents

	1 		Definitions		1

	2		Grant of Options		8

	3		Limitations on Grant		11

	4		Exercise of Options		12

	5		Trade sales, Reconstructions, Liquidations and Option Exchanges		15

	6		Variation of Share Capital		19

	7		Manner of Exercise of Options		20

	8		Administration and Amendment		23

	9		Miscellaneous		25

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	1 		Definitions

	1.1		In
these Rules the following words and expressions shall have, where the context so admits,
the following meanings: 

	 	“Adoption Date”		the date on which  the Plan is  adopted  by  resolution  of the Board;

	 	“Associated Company”		a company is to be treated as another company’s associated company if
at that time one of the two has Control of the other, or both are
under the Control of the same person or persons;

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

	 	“Board”		the board of Directors of the Company or a duly constituted committee
thereof at which a quorum is present;

	 	“the Company”		Reuters Group PLC or, save for Rules 1, 2, 3 and 8.3, such company as
shall be at any time the “Acquiring Company” as defined in
Rule 5.5;

	 	“Compromise or Arrangement”		a compromise or arrangement (including a reorganisation of the
Company’s share capital by the consolidation of shares of
different classes or by the division of shares into shares of
different classes or by both of those methods) between the Company and
its members or creditors or any class of either which has been
approved by not less than 75% in value of the creditors or members
(based on the value of the interests as at the last record date) or
such class of either who vote on such compromise or arrangement and
which has been sanctioned by the Court;

	 	“Control”		in relation to a body corporate the power of a person which is a
member of that Body Corporate (“the Body Corporate”) to
secure:

	 			(a)		by the holding of shares or the possession of voting power in or in
relation to the Body Corporate or any other body corporate; or

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	 			(b)		by virtue of its right to appoint or remove a majority of the board of
directors of that Body Corporate; or

	 			(c)		by virtue of any power conferred by the certificate of incorporation,
articles of association, bye laws, membership agreement or other
document regulating the Body Corporate or any other body corporate

	 			that the affairs of the Body Corporate are conducted in accordance
with the wishes of that person;

	 	“Date of Grant”		the date on which an Option is granted to an Eligible Employee under
the Plan or which is treated as being granted pursuant to Rule 2.6;

	 	“Director”		any person occupying the office of director of the Company, by
whatever name called;

	 	“Eligible Employee”		an  employee  (whether  contracted  to work  full  time or part
time)  of any  Participating  Company  but  not  including  any
Director  of the  Company  unless  and until this Plan has been
approved  by  the   shareholders  of  the  Company  in  general
meeting and not including any non Executive Director;

	 	“Exercise Price”		the
amount as determined by the Company which an Option Holder shall pay to acquire a Share
on the exercise of an Option being, subject to Rule 2.6 and Rule 6, in the case of an
Option to Subscribe not less than the higher of:

	 			(a)		Market Value; and

	 			(b)		the nominal value of a Share on the Date of Grant;

	 			and in the case of an  Option  to  Purchase  not less  than the
Market Value of a Share on the Date of Grant

	 	“Form of Renunciation”		the form of renunciation in the form agreed by the Board or the Plan
Committee from time to time;

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	 	“Grantor”		in the case of an Option to Subscribe, the Company and in the case of
an Option to Purchase, the Trustee;

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

	 	“Ill Health or Disability”		the cessation of employment or office by reason of ill health or
disability provided the Group Company which employs the relevant
individual is satisfied, on production of such evidence as it may
reasonably require:

	 			(a)		that that individual has ceased to exercise and, by reason of ill
health or disability, is incapable of exercising that office or
employment; and

	 			(b)		that that individual is likely to remain so incapable for the
foreseeable future and is unlikely to return to employment with the
Group.

	 	“Letter of Grant”		the letter or other communication (which may include electronic
communication) in the form agreed by the Board or the Plan Committee
from time to time;

	 	“Market Value”		on any day, the average closing middle market quotation of a Share as
derived from the Daily Official List of the London Stock Exchange plc
on the three dealing days which immediately precede that day;

	 	“Model Code”		the Model Code for transactions in securities by Directors issued from
time to time by the UK Listing Authority and/or any code of practice
adopted by the Board in addition to or replacement of such
publication;

	 	“New Option”		an option over shares in the Acquiring Company (as defined in Rule
5.5) granted in consideration of the release of a Subsisting Option
and which shall satisfy the following conditions:

	 			(a)		that it is a right to acquire such number of shares in the Acquiring
Company as has on the acquisition of the New Option an aggregate
Market Value equal to the aggregate Market Value of the Shares subject
to the Subsisting Option on its release; and

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	 			(b)		that it has an exercise price per share such that the aggregate
price payable on the complete exercise equals the aggregate price
which would have been payable on complete exercise of the Subsisting
Option;

	 	“Notice of Exercise”		the notice of exercise in the form agreed by the Board or the Plan
Committee from time to time;

	 	“Option”		a right to acquire Shares granted or to be granted pursuant to Rules
2.1 or 2.6 and the term “Option” shall be construed to mean
either “Option to Purchase” or “Option to
Subscribe” or both as the context requires;

	 	“Option Certificate”		the option certificate in the form agreed by the Board or the Plan
Committee from time to time;

	 	“Option Holder”		an Eligible Employee who has been granted and remains entitled to a
Subsisting Option or (where the context admits) his legal personal
representative(s) or transferee;

	 	“Option to Purchase”		an Option to acquire Shares granted by the Trustee with the intention
that it be satisfied by the transfer of Shares by or at the direction
of the Trustee;

	 	“Option to Subscribe”		an Option to acquire Shares granted by the Company, with the intention
that it be satisfied by the issue of new Shares by the Company;

	 	“Other Plan”		any plan (other than this Plan and Plan 2000 and its sub-plans adopted
on 21 April 1998) which provides for the subscription of Shares by or
on behalf of employees of a Group Company;

	 	“Participating Companies”		the Company and any other Group Company wherever incorporated except
for those Group Companies which are designated from time to time by
the Plan Committee as non Participating Companies for the purposes of
the Plan;

	 	“Performance Condition”		any condition imposed by the Plan Committee in its discretion pursuant
to Rule 2.3.2 whereby an Option is granted on the basis that it may
not be exercised in whole or in part until and to the extent that the
condition has been satisfied;

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	 	“Plan”		this Plan constituted and governed by the Rules with and subject to
any amendments thereto properly effected;

	 	“Plan Committee”		the Board or a duly authorised committee appointed by the Board to
oversee the operation of this Plan, provided that in the case of
options granted or to be granted to executive Directors, this
committee shall be the Remuneration Committee;

	 	“Redundancy”		the cessation of office or employment by reason of:

	 			(a)		the cessation or intended cessation by an employing company of the
business in which the relevant individual was employed; or

	 			(b)		the cessation or reduction in the requirements of an employing company
for employees to carry out work of a particular kind (including
carrying out work in a particular location)

	 	“Remuneration Committee”		the Board or a duly constituted committee of the Board delegated with
the authority to consider the remuneration of Directors and senior
employees of the Group in accordance with any prevailing code of
practice operated by the Company;

	 	“Retirement”		the cessation of employment or office by reason of retirement at
normal retirement age or at such other age as may be agreed by the
Group Company which employs the relevant individual provided that a
cessation of employment or office at an age less than 50 years shall
not for the purposes of this Plan be or be considered to be
Retirement;

	 	“Rules”		the rules of this Plan as amended from time to time and
“Rule” shall be construed accordingly;

	 	“Share”		an Ordinary Share in the capital of the Company which is, was or will
be fully paid on issue;

	 	“Subsidiary”		a company which is under the Control of another company;

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	 	“Subsisting Option”		an Option which has been granted and which has not been surrendered,
renounced, or exercised in full nor otherwise lapsed;

	 	“Trust”		any employee share ownership trust which has been or may be
established from time to time by the Company or any other Group
Company to operate in conjunction with this Plan;

	 	“Trustees”		the trustee or trustees for the time being of the Trust;

	 	“UK Listing Authority”		the Financial Services Authority acting in its capacity as the
competent authority for the purposes of Part IV of the Financial
Services Act 1986 and in the exercise of its functions in respect of
admission to the Official List.

	 	“Vesting”		an Option becoming, subject to Rule 4, capable of exercise in
accordance with the Vesting Schedule specified in its Option
Certificate and, the Performance Condition (if any) having been
satisfied and the expression “Vest and “Vested” shall
have a corresponding meaning;

	1.2 		In
these Rules, except insofar as the context otherwise requires:

	(i) 		words
denoting the singular shall include the plural and vice versa;

	(ii) 		words
importing a gender shall include every gender and references to a person shall include
bodies corporate and unincorporated and vice versa;

	(iii) 		reference
to any enactment shall be construed as a reference to that enactment as from time to time
amended, modified, extended or re-enacted and shall include any orders, regulations,
instruments or other sub-ordinate legislation made under the relevant enactment; and

	(iv) 		headings
and captions are provided for reference only and shall not be considered as part of the
Plan.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	2		Grant of Options

	2.1		The
Plan Committee may in its absolute discretion select any number of individuals who shall
at the intended Date of Grant be Eligible Employees and recommend the grant of Options to
them.  

	2.2		Options may be granted at any time when it is permitted to do so in accordance
with the Model Code. Options shall not be granted later than the tenth anniversary of the
Adoption Date. 

	2.3.1 		The
exercise of any Option shall be made subject to a Vesting Schedule as determined by the
Plan Committee prior to the Date of Grant and specified on or in a schedule referred to
in the Option Certificate relating to that Option.

	2.3.2		(a)		
The exercise of an Option granted pursuant to Rule 2.1 may also be made subject to the
satisfaction of a Performance Condition determined by the Plan Committee prior to the
Date of Grant.

			(b)		Any such Performance Condition must be based on objective conditions and shall be:

					(i)		set out in full in the Option Certificate or in a schedule referred to
in the Option Certificate;

					(ii)		such that rights to exercise an Option after the fulfilment or
attainment of such objective conditions shall not be dependent upon
the further discretion of any person; and

					(iii)		not capable of amendment or waiver unless events happen which cause
the Plan Committee to consider that the Performance Condition has
ceased to be appropriate whereupon the Plan Committee may at any time
amend, relax or waive the Performance Condition provided that in the
reasonable opinion of the Plan Committee the varied Performance
Condition is materially no more difficult to satisfy than when
originally imposed or last amended as the case may be.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

			(c)		For the avoidance of any doubt the Plan Committee when granting an
Option shall have complete discretion on whether or not to impose a
Performance Condition.

	2.4 		To
the extent that it is, or becomes lawful to do so, an Option may be granted subject to a
condition (including a requirement that an Option Holder enter into an irrevocable
election in a form agreed by the Inland Revenue with the relevant Group Company) that any
liability of a Group Company to pay employer social security contributions or secondary
National Insurance contributions in respect of the exercise of that Option shall be a
liability of the relevant Option Holder and payable by or recoverable from that Option
Holder in accordance with Rule 7.6.

	2.5 		Any
Option may be renounced in whole or in part by the Option Holder by completing and
returning the appropriate Form of Renunciation together with the Option Certificate to
the Company within 90 days of the Date of Grant in which case the Option shall for all
purposes be taken never to have been granted.

	2.6 		Where
the circumstances noted in Rule 5.5 apply, New Options may be granted in consideration
for the release of Subsisting Options granted under the Plan. Such New Options are deemed
to be equivalent to the old Options and to have been granted within the terms of this
Plan.

	2.7 		Subject
to the proviso to this Rule 2.7 no Option may be transferred, assigned or charged and any
purported transfer, assignment or charge shall be void ab initio Each Option Certificate
shall carry a statement to this effect. For the avoidance of doubt, this Rule 2.7 shall
not prevent the Option of a deceased Option Holder being exercised by personal
representative(s) within the terms of these Rules. Provided that the Trustee and the Plan
Committee may agree that a particular Option is capable of being transferred and, in
giving any such agreement, the Trustee and the Plan Committee may also specify the person
or category of persons to whom the Option Holder may transfer the Option and the terms on
which it is capable of being transferred, including terms to ensure that any transferee
of the Option agrees to be bound by the terms of these Rules and terms to prohibit any
further transfer by that transferee of the Options in question.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	2.8 		Options
shall be granted to Eligible Employees by deed. A Letter of Grant and an Option
Certificate evidencing the grant shall be despatched as soon as practicable after the
Date of Grant to each Participant. The Option Certificate and the Letter of Grant shall
specify the Grantor, the Date of Grant, the number of Shares subject to the Option, the
Exercise Price and the Vesting Schedule (if any).

	2.9 		Options
may be granted by the Trustee only with the prior approval of the Company. Options to
Subscribe shall not be granted and/or the satisfaction of Options to Purchase by the
issue of new Shares in accordance with Rule 7.2 shall not take place unless and until
this Plan has been approved by the shareholders of the Company in general meeting.

	2.10 		Notwithstanding
anything to the contrary herein expressly or impliedly contained no Option shall be
granted to a person who is a Director unless and until the shareholders of the Company in
general meeting have approved and/or ratified the Plan.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	3 		Limitations
on Grant 

	3.1 		Subject
to Rule 2.9, Options may be granted pursuant to Rule 2 above provided that such grant
does not result in the aggregate of:

	3.1.1 		the
number of Shares which would remain issuable on the exercise of Subsisting Options to
Subscribe granted within the preceding ten years;

	3.1.2 		the
number of Shares which have been issued pursuant to the exercise of Options to Subscribe
granted within the preceding ten years; and

	3.1.3 		the
number of Shares which have been issued or which remain issuable pursuant to rights
granted under any Other Plan within the preceding ten years, exceeding 10% of the Shares
in issue on the working day immediately preceding the Date of Grant.

	3.2 		To
the extent that the Company has procured pursuant to Rule 7.3 that the Trustee transfers
Shares to satisfy an Option to Subscribe such Option shall not be treated as an Option to
Subscribe for the purposes of this Rule 3.

	3.3 		The
aggregate number of Shares held at any one time in Trusts shall not in aggregate exceed
10% of the Company’s issued share capital at that time.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	4 		Exercise
of Options

	4.1 		Subject
to each of the succeeding sections of this Rule 4, Rule 5 and Rule 7 below a Subsisting
Option may be exercised in whole or in part by the Option Holder or, if deceased, by his
personal representatives in whole or in part on or after Vesting 

	4.2 		A Subsisting Option
which has not yet Vested in accordance with its normal Vesting requirements or such part
thereof as shall not have so Vested shall:

	4.2.1 		Vest
in full immediately on the Option Holder ceasing to be a Director or employee of any
Group Company (so as to hold no office or employment with any Group Company) as a result
of death, Ill health or Disability, or Redundancy;  

	4.2.2 		not become capable of Vesting or
further Vesting (as the case may be) in the event of the cessation of the Option Holder’s
office or employment with any Group Company for any reason other than those specified in
Rule 4.2.1 above unless the Plan Committee shall, prior to such cessation otherwise
determine and in making such determination the Plan Committee shall specify whether the
whole or part of the Option which had not Vested prior to such cessation shall Vest.

	4.3 		An Option which has not Vested in accordance with its normal Vesting requirements or
Rule 4.2 above or such part thereof as shall not have so Vested shall lapse on the earliest of the
following dates: 

	4.3.1 		
the surrender of the Option by the Option Holder; 

	4.3.2 		the
date prior to Vesting on which the Option Holder ceases to be a Director or employee of
any Group Company (so as to hold no office or employment with any Group Company) unless

			(a)		Rule 4.2.1 applies; or

			(b)		the Plan Committee has exercised its discretion under Rule 4.2.2
above, provided that if the Plan Committee has specified that an
Option shall Vest in part only then the balance of the Option shall
lapse on the date of cessation of office or employment.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	4.3.3 		on
the date (if any) specified in the Performance Condition relating to that Option as being
the lapse date in the event that the Performance Condition had not been achieved (or, as
the case may be, achieved in part) by that stated lapse date; and

	4.3.4 		the
date of lapse determined in accordance with Rule 5.

	4.4 		A
Vested Subsisting Option or such part thereof as shall have Vested shall lapse on the
earliest of the following:

	4.4.1 		the
tenth anniversary of the Date of Grant or such earlier date specified at the Date of
Grant;

	4.4.2 		the
surrender of that Option by the Option Holder;

	4.4.3 		the
first anniversary of the Option Holder’s death or twelve months following the
cessation of office or employment due to Ill health, Disability, Retirement, Redundancy
or in circumstances where the Plan Committee has made a Rule 4.2.2 determination in
respect of that Option;

	4.4.4 		the
day falling six months after the date of cessation of the Option Holder’s office or
employment with any Group Company (so as to hold no office or employment with any Group
Company) for any reason other than those mentioned in Rule 4.4.3 or 4.4.5.

	4.4.5 		on
the date that an Option Holder ceases to be a Director and/or employee of any Group
Company (so as to hold no office or employment with any Group Company) as a result of
being dismissed for cause. For the purposes of this Plan a statement by the Plan
Committee that an Option Holder has been dismissed for cause (including dishonesty or
gross misconduct) shall be conclusive;

	4.4.6 		on
the date on which an Option Holder, being a former officer or employee of a Group Company
who holds a Subsisting Option, is notified that the Plan Committee considers he has
committed an act of post employment misconduct. Post employment misconduct includes;

			(a)		any unauthorised use or disclosure of confidential information or
trade secrets of the Company or any Group Company acquired whilst that
Option Holder was employed by a Group Company;

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

			(b)		any other misconduct which is deemed by the Plan Committee to be
intentional misconduct adversely affecting the business or affairs of
the Company or any Group Company; or

			(c)		any breach of a covenant not to compete with or take up employment
with a company in material competition with the Company or any Group
Company which that Option Holder entered into before or at the time of
his cessation of office or employment with a Group Company.

			For the
purposes of this Rule 4.4.6 a statement by the Plan Committee that an Option Holder has
committed an act of post employment misconduct shall be conclusive; and

	4.4.7 		the
date of lapse determined in accordance with Rule 5.

	4.5 		For
the avoidance of any doubt an Option shall, at the latest, lapse on the date specified at
the Date of Grant to be the latest lapse date of that Option;

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	5 		Trade
sales, Reconstructions, Liquidations and Option Exchanges 

	5.1 		If
any person obtains Control of the Company as a result of making:

			(a)		an offer (whether a general offer or not) to acquire the whole of the
issued share capital of the Company (other than that which is already
owned by him) which is unconditional or which is made on a condition
such that if it is satisfied the person making the offer will have
Control of the Company; or

			(b)		an offer (whether a general offer or not) to acquire all the shares
(other than shares which are already owned by him) in the Company
which are of the same class as Shares subject to a Subsisting Option

			then, subject
to Rule 5.4, the Board shall notify all Option Holders as soon as is practicable of the
offer in accordance with Rule 8.5. All Subsisting Options whether Vested or not may be
exercised, from 21 days after the date of the receipt of that notification up to the
expiry of a period ending six months from the time when the person making the offer has
obtained Control of the Company and any condition subject to which the offer is made has
been satisfied. To the extent that any Subsisting Option is unexercised or has not been
exchanged for a New Option in accordance with Rule 5.4 at the end of such period, it
shall thereupon lapse.

	5.2 		If
a Compromise or Arrangement in relation to the Company takes place then, subject to Rule
5.4 all Subsisting Options whether Vested or not may be exercised from 21 days after the
date of Court sanction up to the expiry of a period of six months of that date. To the
extent that any Subsisting Option remains unexercised or has not been exchanged for a New
Option in accordance with Rule 5.4 at the end of such period it shall thereupon lapse.

	5.3 		If
any person becomes bound or entitled to acquire Shares in the Company under sections 428
to 430 of the Companies Act 1985 (the period during which the person remains so bound or
entitled being referred to as the “Relevant Period”) then, subject to Rule 5.4,
all Subsisting Options whether Vested or not may be exercised from 21 days after the
beginning of the Relevant Period up to the expiry of the Relevant Period and to the
extent that any Subsisting Option is unexercised or has not been exchanged for a New
Option in accordance with Rule 5.4 at the end of the Relevant Period, it shall thereupon
lapse.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	5.4 		Notwithstanding
Rules 5.1, 5.2 and 5.3 if, following an event specified in Rules 5.1, 5.2 or a
circumstance specified in Rule 5.3 (“the Relevant Event” being; the date of the
offer, the date the Court sanction the Compromise or Arrangement or the first day of the
Relevant Period respectively) the Board procures that all Subsisting Options can be
exchanged pursuant to Rule 5.5 the Board may, in its discretion, determine by written
resolution that:

	5.4.1 		Subsisting
Options do not become exercisable as a result of the Relevant Event and any Subsisting
Option which is already exercisable ceases to be exercisable as from the Relevant Event;
and

	5.4.2 		that
all Subsisting Options shall be released in consideration of the Grant of a New Option in
accordance with Rules 5.5 and 5.6.

			Provided that
if the company which is the Acquiring Company in respect of the Relevant Event fails to
grant or to make a binding contractual commitment to grant the New Options pursuant to
Rule 5.5 within 40 days of the Relevant Event such resolution of the Board will cease to
be effective and all Subsisting Options will be exercisable pursuant to Rule 5.1, 5.2 or
5.3 (as the case may be).

	5.5 		If,
as a result of the events specified in Rules 5.1 or 5.2 the Board has required the
release of a Subsisting Option in consideration of the grant of a New Option or a company
has obtained Control of the Company, or if a person has become bound or entitled as
mentioned in Rule 5.3, the Option Holder may, and in the case of a Board resolution under
Rule 5.4 shall, if that other company (“the Acquiring Company”) so agrees,
release any Subsisting Option he holds in consideration of the grant of a New Option by
the Acquiring Company, and the following shall apply:

	5.5.1 		a
New Option shall be evidenced by an Option Certificate which shall import the relevant
provisions of these Rules;

	5.5.2 		a New Option shall, for all other purposes of this Plan,
be treated as having been acquired at the same time as the corresponding released Option.

	5.6 		For
the purpose of any application of the provisions of this Plan following a release of a
Subsisting Option and the grant of a New Option:

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	5.6.1 		in
the case of a release of a Subsisting Option and the grant of a New Option in
circumstances where the Board has not made a determination in accordance with Rule 5.4,
Rules 1, 4.3 and 5 to 9 (inclusive) shall apply and be deemed always to have applied to
the New Option;

	5.6.2 		in
the case of a release of a Subsisting Option and the grant of a new Option in
circumstances where the Board has made a determination under Rule 5.4, all the Rules of
this Plan shall apply mutatis mutandis to such New Option subject only to such amendments
as the Board shall consider are necessary or appropriate to reflect the change in
identity of the company over whose shares the New Options subsist or similar
consequential changes. For the avoidance of doubt, following a determination under Rule
5.4, an Option Holder’s New Option shall have the same Vested or unVested status
immediately following the release and new grant as the corresponding Options released by
that Option Holder and any determination made by the Board to accelerate Vesting in
accordance with Rules 5.1, 5.2 or 5.3 shall be deemed not to have been made.

	5.7 		If
notice is duly given of a general meeting at which a resolution will be proposed for the
voluntary winding-up of the Company, a Subsisting Option shall whether or not previously
Vested be exercisable in whole or in part (but so that any exercise hereunder shall be
conditional upon such resolution being passed) at any time thereafter until the
resolution is duly passed or defeated or the general meeting is concluded or adjourned,
whichever shall first occur. Immediately after any such resolution is passed any
Subsisting Options shall, to the extent that they are unexercised, thereupon lapse.

	5.8 		If
notice is duly given of a general meeting at which a resolution will be proposed whereby:

	5.8.1 		the
class of shares for the time being constituting Shares will be altered; or

	5.8.2 		the
rights attaching to shares which for the time being constitute Shares will be altered
such that shares will cease to be Shares.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

			Subsisting Options
may at the discretion of the Board be exercisable and the Board in its discretion may
specify whether this provision shall apply to Subsisting Options which are at the date of
such notice Vested and unVested or to Vested Options only (but so that any exercise
hereunder shall be conditional upon such resolution being passed) at any time thereafter
until such resolution is duly passed or defeated or the general meeting concluded or
adjourned, whichever shall first occur. Immediately after any such resolution is passed
all Subsisting Options (whether or not the Option was exercisable prior to the passing of
such resolution) shall, to the extent that they are unexercised, thereupon lapse unless
the Board shall have resolved to the contrary prior to the date of such resolution.

	5.9 		For
the purpose of this Rule 5 other than Rule 5.5 a person shall be deemed to have obtained
Control of a company if he and others acting in concert with him have together obtained
Control of it.

	5.10 		The
exercise of an Option pursuant to the preceding provisions of this Rule 5 shall be
subject to the provisions of Rule 7 below.

	5.11 		A
New Option shall not be exercisable by virtue of the event on which it was granted.

	5.12 		For
the purposes of exercising any discretions conferred upon the Board under this Rule 5,
any member of the Board who is an Option Holder shall not be entitled to vote, and such
discretions may only be exercised by members of the Board who are not Option Holders and,
in the absence of a question or in the case of a tie, the Chairman of the Company’s
Remuneration Committee shall have a casting vote.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	6		Variation
of Share Capital

	6.1 		In
the event of any variation of the share capital of the Company, including, but without
prejudice to the generality of the preceding words, any demerger (whether qualifying or
not), capitalisation or rights issue or any consolidation, sub-division or reduction of
capital the number of Shares subject to any Subsisting Option and the Exercise Price may
be adjusted (including retrospective adjustments) by the Board provided that the Exercise
Price for a Share subject to an Option to Subscribe shall not be reduced below its
nominal value unless the Board gives an undertaking that upon exercise of such Options
arrangements will be made for the capitalisation (in accordance with the Company’s
Articles of Association) of undistributed profits or reserves of the Company of an amount
equal to the difference on any such exercise between the aggregate Exercise Price and the
aggregate nominal value of the Shares to be issued upon such exercise.

	6.2 		Such
adjustment shall be deemed to be effective, from the record date at which the respective
variation applied to other shares of the same class as the Shares. Any Options exercised
within that period shall be treated as exercised with the benefit of the variation.

	6.3 		The
Grantor shall take such steps as it considers necessary to notify Option Holders of any
adjustment made under Rule 6.1 and to call in, cancel, endorse, issue or reissue any
Option Certificate consequent upon such adjustment.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	7  	  	Manner of Exercise of Options 

	7.1 		An
Option shall be exercised in whole or in part by the Option Holder or, as the case may
be, his personal representatives giving notice in writing to the Company or its agent by
the Notice of Exercise accompanied by the appropriate payment and the relevant Option
Certificate and shall be effective on the date of the receipt of the appropriate payment
and paperwork by the Company or its agent.

	7.2 		Subject
to Rule 7.6 where an Option to Purchase is exercised the Shares subject thereto shall be
transferred to or as directed by the Option Holder within 30 days of the date of exercise
(or, if such transfer in such period would be prohibited by the Model Code, at the
earliest practicable time after such prohibition is lifted) and the Trustee shall arrange
for the delivery of a definitive share certificate or other evidence of title in respect
thereof. Subject to Rule 2.9 on the exercise of an Option to Purchase, the Trustees may
procure that the Company issues sufficient Shares to or as directed by the Option Holder
as provided for in Rule 7.3.

	7.3 		Subject
to Rule 7.6 on the exercise of an Option to Subscribe, the number of Shares specified in
the Notice of Exercise given in accordance with Rule 7.1 shall be allotted and issued
credited as fully paid to or as directed by the Option Holder within 30 days of the date
of exercise (or, if such allotment in such period would be prohibited by the Model Code
at the earliest practicable time after such prohibition is lifted) and the Company shall
arrange for the delivery of a definitive share certificate or other evidence of title in
respect thereof. On the exercise of an Option to Subscribe the Company may procure the
transfer of sufficient Shares from the Trustee or another shareholder in the Company (in
lieu of the issue of Shares by the Company) to or as directed by the Option Holder to
satisfy the Option in full provided that such transfer must take place within 30 days of
the date of exercise (or, if such transfer in such period would be prohibited as
aforesaid, at the earliest practicable time after such prohibition is lifted) and the
Company shall arrange for the delivery of a definitive share certificate or other
evidence of title in respect thereof.

	7.4 		Save
for any rights determined by reference to a record date preceding the date of allotment
or transfer, such Shares shall rank pari passu with the other shares of the same class as
Shares then in issue.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	7.5 		The
Company shall apply for Shares in respect of which an Option has been exercised to be
admitted to listing, if they are not so admitted already.

	7.6 		If,
in respect of any Option Holder, any Group Company or third party shall be:

			(a)		required by the law of any jurisdiction to deduct or withhold any
amounts in respect of tax and/or social security and/or
employees’ National Insurance contributions in respect of or on
account of that Option Holder’s liability for the same by reason
of the Options granted to him, (whether any such requirement arises at
the Date of Grant of the Options or at the date of exercise of the
Option or at some other date); or

			(b)		if the Option Holder shall be liable personally to account for tax
and/or social security and/or employees’ National Insurance
contributions in respect thereof; and/or

			(c)		if it shall be or become lawful for the liability of an Option
Holder’s employing company in respect of employer’s social
security or secondary national insurance contributions arising as a
result of the exercise of his Option to be met or refunded in whole or
in part by that Option holder;

			then in
any such case as specified by the Option Holder either:

	7.6.1 		the
Option Holder shall grant to the Company the irrevocable authority, as agent of the
Option Holder and on his behalf, to sell and/or retain and sell subsequently and/or
procure the sale of such number of Shares subject to the Option as is sufficient to
realise net proceeds sufficient to enable the relevant Group Company or third party (as
the case may be) to account for such amount of tax and/or social security and/or employees’ National
Insurance contributions including where it is lawful, the relevant Group Company’s
liability for the same arising as a result of the exercise of that Option and, in the
case of a sale, the Shares issued or transferred to the Option Holder upon exercise of an
Option shall be reduced by the number of such Shares as have been sold or retained as
mentioned above; or 

	7.6.2 		 the Option
Holder shall pay to the Company in pounds sterling or in such other currency as may be
required by the Company, (whether by cheque or by banker’s draft) the amount
necessary to satisfy such liabilities. 

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	7.7 		For
the avoidance of doubt:

	7.7.1 		where
in relation to Rule 7.6 the Option Holder opts in accordance with Rule 7.6.1 the Company
shall account to the relevant Group Company or third party (as the case may be) with the
net proceeds of sale for the Shares in order to enable the tax and/or social security
and/or National Insurance liabilities to be settled and if, following such sale, there
shall be any balance of the proceeds of sale not required to meet such liabilities, such
balance shall be paid by the Company to the Option Holder for his own use and benefit
absolutely;

	7.7.2 		if
the Option Holder on exercise fails to specify either Rule 7.6.1 or Rule 7.6.2 or,
if having specified Rule 7.6.2 he fails to make the required payment within 15 days of
the date of that exercise, he shall be deemed for all purposes to have given an
irrevocable authority within Rule 7.6.1.

	7.8 		If
an Option Holder exercises an Option the Trustee or the Company may in lieu of
transferring or allotting Shares in accordance with Rule 7.2 or 7.3:

	7.8.1 		allot
or transfer such number of Shares as could, subject to Rule 7.6, be acquired at Market
Value on the relevant date of exercise with an amount of cash equal to the difference
between the Market Value of a Share on the date of exercise and the Exercise Price under
the Option multiplied by the number of Shares over which that Option has been exercised
provided that this Rule shall in normal circumstances only be applied to facilitate the
operation of the Plan in jurisdictions where by reason of exchange control or similar
restrictions or regulations it is not permitted or is not practicable for an Option
Holder to transfer funds outside that jurisdiction;

	7.8.2 		make
other arrangements, including arrangements with a third party broker, to facilitate
cashless exercises.

			Provided that
if an allotment, transfer of Shares or cashless exercise arrangement is made to or
implemented for an Option Holder pursuant to this Rule 7.8, such Option Holder shall have
no further rights in respect of the Shares subject to that Option.

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	8  	  	Administration and Amendment 

	8.1 		The
Plan shall be administered by the Board whose decision shall be final.

	8.2 		Option
Holders shall not be entitled to:

	8.2.1 		receive
copies of accounts, circulars or notices sent to holders of Shares;

	8.2.2 		exercise
voting rights; or

	8.2.3 		receive
dividends, in respect of Shares which have not been issued or transferred to such Option
Holders on the exercise of Options in accordance with these Rules.

	8.3 		The
Board may from time to time amend these Rules provided that:

	8.3.1 		no
amendment shall be effective which would materially prejudice the interests of Option
Holders in relation to Options already granted to them unless such prior consent or
sanction of Option Holders is obtained as would be required under the provisions for the
alteration of class rights contained in the Articles of Association of the Company for
the time being if the Shares to be allotted or transferred on the exercise of the Options
constituted a separate but single class of shares and such Shares were entitled to such
right;

	8.3.2 		after
the Plan has been approved by the Company in general meeting, the provisions relating to:

			(a)		Option Holders;

			(b)		limitations in Rule 3 on the number of Shares subject to the Plan;

			(c)		the basis for determining an Option Holder’s entitlement under
the Plan, the terms of such entitlement and the provisions for the
adjustment of the same under the terms of Rule 6;

			(d)		limitations in Rules 2.9 and 2.10,

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

			cannot be
altered to the material advantage of Option Holders without the prior approval of the
Company in general meeting (except for minor amendments to benefit the administration of
the Plan, to take account of a change in legislation or to obtain or maintain favourable
tax, exchange control or regulatory treatment for Option Holders, or for Participating
Companies);

	8.4 		The
Board may, subject to Rules 8.3.1 and 8.3.2 create sub-plans to this Plan in which it may
make such amendments to the Rules as it considers necessary or desirable to operate the
Plan in any jurisdictions in which Eligible Employees are situated and may implement such
sub-plans in the form of schedules to the Plan applicable to the specified jurisdiction.

	8.5 		The
cost of establishing and operating the Plan shall be borne by the Group Companies which
employ the Option Holders in such proportions as the Board shall determine.

	8.6 		Any
notice or other communication under or in connection with the Plan may be given by the
Grantor either personally or by post or fax or e-mail or intranet, and to the Grantor
either personally or by post or fax or e-mail to the Secretary of the Grantor; items sent
by post shall be pre-paid and shall in the case of notices or communications to the
Grantor be treated as received on the day actually received by the Grantor and in the
case of notices from the Grantor shall be deemed to have been received 48 hours after
posting.

	8.7 		The
Board may exercise its discretion where it considers that it is necessary or desirable to
do so, to provide that such Eligible Employees so designated by the Board shall receive
awards which entitle them to receive a cash payment instead of Shares. Such awards will
be granted on substantially the same terms as Options (save that there shall be no
entitlement to receive Shares) subject to such modifications as considered appropriate by
the Plan Committee.

	8.8 		The
Board may determine at any time that no further Options be granted and may from time to
time modify or at any time suspend or terminate the Plan (but without prejudice to
Options already granted).

	

	kpmg	Reuters Group PLC

Discretionary Stock Option Plan Rules

Deposit Copy : 14 March 2001

	9  	  	Miscellaneous 

	9.1 		The
rights and obligations of any individual under the terms of his office or employment with
any Group Company shall not, except as specifically provided under the Plan, be affected
by his participation in the Plan or any right which he may have to participate therein,
and an individual who participates therein shall waive any and all rights to compensation
or damages in consequence of the termination of his office or employment for any reason
whatsoever insofar as those rights arise or may arise from his ceasing to have rights
under or be entitled to exercise any Option under the Plan as a result of such
termination.

	9.2 		The
existence of Options shall not affect in any way the right or power of the Company or its
shareholders to make or authorise any or all adjustments, recapitalisation,
reorganisations, reductions of capital, purchase or redemption of its own shares or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or convertible into, or otherwise affecting the Shares or the
rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

	9.3 		Neither
the grant of an Option nor any benefit which may accrue to an Option Holder on the
exercise thereof shall form part of that Option Holder’s pensionable remuneration
for the purposes of any pension scheme or similar arrangement which may be operated by
any Group Company.<PAGE>   1
                                  EXHIBIT 10(a)

                            P. H. GLATFELTER COMPANY

                            MANAGEMENT INCENTIVE PLAN
                         (ADOPTED AS OF JANUARY 1, 1994)
                    (AMENDED AND RESTATED DECEMBER 19, 2000)
                           (EFFECTIVE JANUARY 1, 2001)

1.       PURPOSE OF THE PLAN

                  The purpose of the Management Incentive Plan (hereinafter
called the "Plan") is to provide an incentive to greater efforts on the part of
key salaried employees to increase profits of P. H. Glatfelter Company,
hereinafter, together with its subsidiaries, called the "Company". The
underlying objectives of the Plan are as follows:

                           (a)      Maximize the annual return on capital
                                    employed by the Company.

                           (b)      Incent key management employees toward the
                                    achievement of the Company's vision.

                           (c)      Promote and reward management teamwork
                                    across the entire Company.

                           (d)      Enable the Company to attract and retain a
                                    talented management team.

                           (e)      Assure that Plan awards are at risk
                                    annually.

2.       AMENDMENT OR TERMINATION OF THE PLAN

                  This Plan is an amendment and restatement of the P. H.
Glatfelter Company Management Incentive Plan and shall continue in force from
year to year until amended, modified or terminated. The Company reserves the
right by action of its Board of Directors or the Compensation Committee thereof
(hereinafter called the "Committee") at any time to amend or modify the Plan in
any respect, or to terminate the Plan in its entirety, provided that, if the
Plan is in effect at the beginning of a fiscal year, it may not be terminated or
amended for such year. The Company will seek the approval of the Company's
shareholders for an amendment if such approval is necessary to comply
<PAGE>   2
with the Internal Revenue Code, Federal or state securities law or any other
applicable rules or regulations.

3.       ADMINISTRATION OF THE PLAN

                  The management of the Plan shall be vested in the Committee,
which shall be comprised solely of two or more "outside directors" (as defined
in regulations promulgated under Section 162(m) of the Internal Revenue Code).
The majority of the members of the Committee at any time in office shall
constitute a quorum for the transaction of business at any meeting. Any
determination or action of the Committee may be made or taken by a majority of
its members present at any meeting at which a quorum is present or without a
meeting by unanimous written consent executed by all the members then in office.

4.       PARTICIPANTS IN THE PLAN

                  (a) Except as provided in subparagraph (b), the participants
in the Plan for each fiscal year shall be proposed by the Chief Executive
Officer and approved by the Committee on or before the December 31 immediately
preceding such fiscal year. In this respect, the action of the Committee shall
be final. Participation is limited to selected key management and highly
compensated salaried employees of the Company who have significant team-based
leadership responsibility for corporate, business segment or facility-based
operations. Nothing herein contained shall be construed as giving any salaried
employee the right to participate in the Plan, except after approval by the
Committee, and then his/her participation shall be subject to all the provisions
of the Plan.

                  (b) New participants may be added during a Plan year, after
approval by the Committee if during such Plan year they are either hired or
promoted into a position meeting the criteria for participation set forth in
subparagraphs (a) and (c). Any such new participant's award will be prorated to
reflect the period of service from the later of the date of his/her hire or
promotion and the date of his/her addition as a participant in the Plan until
the end of such Plan year. Such new participants are not eligible to make a
deferral election in their first Plan year.

                  (c) The criteria that will be considered by the Committee in
approving a participant shall include position responsibilities, organizational
reporting relationship, current salary grade and/or rate, individual performance
expectations and competitive practices.

                  (d) A participant's salary grade at the first day of each

                                       2
<PAGE>   3
year or partial year with respect to which he/she is approved by the Committee
as a participant in the Plan shall be such participant's salary grade for
purpose of determining the maximum, target and minimum awards for such year or
partial year; provided, however, that if a participant is assigned to more than
one salary grade during such year or partial year, such participant's incentive
award for such year or partial year shall be determined on the basis of each
salary grade to which such participant was assigned during such year or partial
year, prorated based on the portion of such year or partial year during which
such participant was assigned to each such salary grade.

                  (e) If a participant's employment by the Company should
terminate during a Plan year by reason of death, retirement or permanent
disability, his/her incentive award shall be determined on the basis of his/her
base salary midpoint for such fiscal year, prorated to reflect the period of
service prior to his/her death, retirement or permanent disability, and shall be
paid either to him/her or, as appropriate, the beneficiary specifically
designated by such participant on the applicable form, or, if no such specific
designation is made, to such beneficiary as is designated by such participant
under the Company's Group Life Insurance Plan. Participants who have been
removed from the payroll of the Company during a Plan year for any reason, other
than death, retirement or permanent disability, shall not participate in the
Plan for such year, unless the Committee, in its sole discretion, determines
that they shall so participate. The decision of the Committee in this regard
shall be final.

                  (f) In consideration of the payments to be made in accordance
with the provisions of the Plan, the participants may not be participants in the
Company's Conference Group award program.

5.       DETERMINATION OF INCENTIVE COMPENSATION AWARDS

                  (a) The Plan shall provide incentive awards based on
achievement of performance measures for the next Plan year as proposed by the
Chief Executive Officer, and approved by the Compensation Committee, on or
before December 31 immediately preceding such Plan year or with respect to a new
participant added to the Plan during a Plan year pursuant to Paragraph 4(b)
before the date such new participant is added to the Plan. These performance
measures are intended to focus Plan participants on the achievement of the
strategic objectives of the Company for such Plan year. These performance
measures may change from year to year at the discretion of the Committee.

                  (b) The amount of a participant's award shall be based on a
percentage of such participant's base salary midpoint for the salary grade
approved for him/her by the Committee. If such salary midpoints

                                       3
<PAGE>   4
are revised at any time during a Plan year, the Committee will revise the
midpoints applicable to such year. Salary midpoints for Schoeller & Hoesch
participants shall be established in DM based on the DM/USD conversion rate at
the close of business on December 30, 1999. Such midpoints shall be maintained
in DM, to be adjusted only by structural increases for the domestic grade
equivalent. The incentive award as a percentage of base salary midpoint will
vary based on the applicable performance measures achieved for the Plan year. In
no event may the incentive award paid to any participant for any Plan year
exceed USD 1,000,000.

                  (c) The performance measures will be established in the
operating rules adopted by the Committee in accordance with Paragraph 8. The
incentive award shall equal the base salary midpoint multiplied by the Incentive
Award Factor, which will vary in relationship to the level of applicable
performance measures achieved for the year.

6.       PAYMENT OF INDIVIDUAL INCENTIVE AWARDS

                  (a) Each year after the Committee has approved the
participants in the Plan for the following year in accordance with Paragraph
4(a), participants (other than employees of Schoeller & Hoesch and participants
added after the beginning of a Plan year pursuant to Paragraph 4(b)) shall make
an election by February 1 of such following year to receive their incentive
award in cash or to defer the receipt of 25%, 50%, 75% or 100% of the award to a
future period, specifying irrevocably the timing of the future payment(s) in
accordance with the deferred options established by the Committee. Schoeller &
Hoesch employees and such new participants must receive awards in cash. The
amount of deferred awards shall be adjusted at the end of each calendar quarter
by crediting the cumulative deferred awards with interest for the quarter (i)
based on the prime rate of interest on the last business day of the quarter at
Morgan Guaranty Trust Company of New York (or such comparable rate as is
determined by the Committee if such prime rate is unavailable or, if in the
opinion of the Committee it no longer reflects the rate of interest on such
bank's demand loans to its most credit-worthy customers) for awards deferred
pursuant to plan years prior to 1999 and (ii) based on six-month LIBOR (as it
appears in the Wall Street Journal) plus 100 basis points on the last day of the
quarter for awards deferred pursuant to plan years beginning with 1999. The
interest credit shall be earned from the date when the award would have been
paid if not deferred and shall be compounded on the accumulated award and
accrued interest. Should a deferred award be paid during a quarter, interest on
the amount of such payment shall be accrued at the rate used for the immediately
preceding quarter.

                  (b) Cash incentive awards shall be paid annually as

                                       4
<PAGE>   5
promptly as practicable after the Company's certified public accountants have
completed their examination of the Company's year-end consolidated financial
statements and the Committee has certified the extent to which the applicable
performance measures have been met.

                  (c) Deferred incentive awards shall be paid on the first
Monday in April of each year pursuant to participants' elections to defer
receipt of their awards. In the event participants who have deferred awards
determine that they have a financial hardship which necessitates the
acceleration of the payment of the deferred award, they shall submit their
request to release the funds to the Committee which shall consider the
circumstances and, in its sole discretion, determine whether the request shall
be approved.

                  (d) If participants separate from the Company before age 55,
or after age 55 without being vested under the terms of the Company's Retirement
Plan for Salaried Employees, including the Supplemental Executive Retirement
Plan (collectively, the "Pension Plans"), such participants shall receive the
unpaid amount of their cumulative deferred award(s) in a lump sum within 30 days
of their separation date or, at the sole discretion and option of the Committee,
as stipulated on their election form. If participants separate after age 55 and
are vested under the terms of the Company's Pension Plans, their deferred
award(s) shall be paid as stipulated on their election form(s). If participants
should die before their deferred awards have been completely paid out, the
unpaid amount will be paid in a lump sum to the beneficiary specifically
designated by the participant on the applicable form, or, if no such specific
designation is made, to such beneficiary as is designated under the Company's
Group Life Insurance Plan.

7.       MANAGEMENT INCENTIVE PLAN ADJUSTMENT SUPPLEMENT

                  The Company will supplement the basic monthly pension payable
under the Company's Pension Plans, with respect to an employee who is a
participant in the Plan and elected to defer incentive awards in accordance with
Paragraph 6 of the Plan, as provided in the Plan of Supplemental Retirement
Benefits for the Management Committee.

8.       MANAGEMENT INCENTIVE PLAN OPERATING RULES

                  (a) Except as provided in sub-paragraph (b), on or prior to
December 31 immediately preceding each Plan year, the Committee shall adopt
operating rules for such Plan year to be based on performance measures intended
to focus Plan participants on the achievement of the strategic objectives of the
Company for such Plan year. These operating rules will establish maximum, target
and minimum Incentive Award Factors for each salary grade or each participant
and the corresponding maximum, target and minimum levels

                                       5
<PAGE>   6
for such performance measures.

                  (b) For a new participant added during a Plan year as provided
in Paragraph 4(b), prior to the date he/she is added to the Plan, the Committee
shall adopt operating rules for such new participant consistent with the
operating rules adopted pursuant to sub-paragraph (a), but pro-rated, if
appropriate, to reflect the portion of the Plan year remaining after the
addition of such new participant.

9.       DEFINITIONS

                  For the purpose of determining the incentive awards under the
Plan, the following definitions shall apply:

                  (a) The "Incentive Award Factor" shall be the percentage of
base salary midpoint for each salary grade corresponding to the maximum, target
and minimum performance measures established in the operating rules.

                  (b) Retirement shall mean voluntary separation from service by
participants who have achieved an age whereby they are eligible for and have
elected to receive early retirement under the Company's Pension Plans.

                  (c) Disability shall mean a disability due to any medically
determinable physical or mental impairment that prevents a participant from
fulfilling the duties that such participant was performing at the time of the
occurrence of such disability and which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of more than
twelve months, as determined by the Committee in its sole discretion.

10.      RIGHTS NOT TRANSFERABLE

                  Rights to incentive cash awards and deferred incentive awards
are not transferable by a participant except upon the death of the participant
by operation of will or the laws of intestacy.

11.      FUNDING

                  The Plan is not funded. All awards that are not received in
cash shall remain as part of the general assets of the Company and shall not be
deemed held in trust for the benefit of the participant.

                                       6
<PAGE>   7
12.      WITHHOLDING OF APPLICABLE TAXES

                  The Company shall have the right to withhold amounts from
incentive cash awards and deferred incentive awards at such times and in such
amounts as the Company shall be required to withhold pursuant to any statute or
other governmental regulation or ruling.

13.      DELEGATION OF AUTHORITY TO CHIEF EXECUTIVE OFFICER

                  The Committee may, from time to time or at any time, delegate
to the Chief Executive Officer of the Company the authority to act on behalf of
the Committee with respect to all actions which may be taken by the Committee
under the Plan regarding participants who are below salary grade 17 and who are
not officers of the Company.

14.      CONCLUSION

                  The interpretation of the Plan or any provision thereof or the
operating rules made by the Committee shall be binding upon both the Company and
every participant in the Plan. While it is the intention of the Company to
provide a fair and reasonable basis for the determination of incentive
compensation awards and the selection of the participants, the Plan is not an
employment contract between the Company and the salaried employees or any
participants and shall not constitute an agreement by the Company to continue
any participant in its employ for any period of time notwithstanding that the
termination of the employment of a participant during a fiscal year will
preclude an incentive award to such participant for such year.

                                       7

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