EXHIBIT 4.2
THE BOC GROUP PLC
THE BOC GROUP EXECUTIVE SHARE OPTION SCHEME 1995
RULES
ADOPTED ON 20 JANUARY 1995
AMENDED ON 16 JANUARY 1997, 7 MARCH 1997, 3 MARCH 1999 AND 27 JULY 2000
1. DEFINITIONS
In these Rules unless the context otherwise requires the following words
and expressions shall have the following meanings:-
(a) "the Adoption Date" The date upon which this Scheme is adopted by the Company in
general meeting.
(b) "the Board" The board of directors of the Company or a duly authorised
committee thereof composed of non-executive directors.
(c) "Company" The BOC Group plc
(d) "Date of Grant" In relation to an Option, the date upon which it is granted
pursuant to Rule 2(1).
(e) "Executive" Any full-time senior executive (including an executive
director) employed by a member of the Group.
(f) "Executive Scheme" Any employee share option scheme (other than the Scheme) under
which individuals may be selected for participation at the
discretion of the body administering that scheme.
(g) "the Group" The Company and its Subsidiaries for the time being.
(h) "Market Value" Has the same meaning as in Section 272(3) and (4) of the
Taxation of Chargeable Gains Act 1992.
(i) "Normal Exercise Period" In relation to any Option, such period as may be prescribed
by the Board at the time when the Option is granted, beginning not
earlier than the third anniversary and ending not later than the
tenth anniversary of the Date of Grant.
(j) "Open Period" A period of 42 days beginning on the day following the
announcement to The London Stock Exchange of the results of
the Group for any period provided that if on any day within
such period dealings by a director would have been
prohibited under the Insider Dealing Rules of the Company that day
shall not be treated as part of an Open Period and the period of
42 days shall be extended as necessary (or commence on a later date)
in order to take account of any such prohibition.
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(k) "Option" A right granted to an Executive under the Scheme or a Subordinate
Scheme to subscribe for or purchase Ordinary Shares and for the
time being subsisting.
(l) "Option Price" The price ascertained in accordance with Rule 3 at which a
Participant may subscribe for or purchase Ordinary Shares
comprised in an Option.
(m) "Ordinary Share" A fully paid Ordinary Share in the capital of the Company
which satisfies the provisions of paragraphs 10 to 14 of
Schedule 9 to the Taxes Act 1988.
(n) "Participant" A person who holds an Option, or (where the context
requires) his personal representatives.
(o) "Relevant Event" Any variation in the share capital of the Company arising
from any reduction of capital or sub-division or
consolidation of share capital or issue of share capital by
way of capitalisation of profits or reserves or by way of
rights (including the issue by way of rights to ordinary
shareholders for less than full consideration of any
securities convertible into share capital or warrants or
options to subscribe share capital).
(p) "the Scheme" This Scheme in the form approved by the Company in general
meeting on the Adoption Date together with and subject
to any amendment thereto for the time being in force.
(q) "Subordinate Scheme" A Scheme adopted by the directors pursuant to Rule 12.
(r) "Subsidiary" A body corporate which is for the time being a subsidiary of
the Company within the meaning of Section 736 of the Companies
Act 1985 and which is under the control of the Company within
the meaning of Section 840 of the Taxes Act.
(s) "Taxes Act" The Income and Corporation Taxes Act 1988.
Any reference herein to any enactment is a reference to that enactment as
for the time being amended or re-enacted. Where the context so admits the
singular shall include the plural and vice versa and the masculine shall
include the feminine. Expressions defined in the Companies Acts for the
time being shall where the context so permits have the same meanings
where used herein.
2. GRANT OF OPTIONS
(1) The Board may during any Open Period grant Options to such
Executives as it may think fit.
(2) On granting Options the Board will impose such objective
conditions regarding the exercise of the Options as the Board
thinks fit. The Board may not waive or vary the conditions after
the Date of Grant (except as later provided in Rules 5 and 9)
unless in the opinion of the Board, the conditions have ceased to
be appropriate. Any amendment to the conditions pursuant to this
Rule 2(2) shall be made by the Board imposing such conditions
which in the Board's opinion are more appropriate and, so far as
is reasonably practicable, are equivalent to the conditions
originally imposed.
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(3) Such grant shall be evidenced by an Option certificate, including
details of any condition imposed pursuant to Rule 2(2), issued on
behalf of the Company to take effect as a deed.
(4) Any Executive to whom an Option is granted may, by notice in
writing to the Company given within 30 days after the Date of
Grant, renounce in whole or in part his rights thereunder. In such
a case, the Option shall to the extent renounced, be treated as
never having been granted and (if already issued) the Option
certificate shall be returned to the Company for cancellation or
(in the case of renunciation in part) for amendment. No
consideration shall be payable for any such renunciation.
(5) The grant and exercise of an Option shall be conditional on the
Participant agreeing to comply with any arrangements specified by
the Company for the payment of taxation and any national insurance
or other social contributions in respect of an Option (including
without limitation the right for the Company to sell on the
Participant's behalf, or require the Participant to sell,
sufficient Ordinary Shares to satisfy the Participant's taxation
or national insurance contribution liability).
3. OPTION PRICE
(1) Subject to any adjustment pursuant to Rules 8 and 9(6) the Option
Price for each Ordinary Share comprised in an Option shall be
determined by the Board but shall not be less than the Market
Value of the Ordinary Share on the Date of Grant or, in the case
of an Option to subscribe for Ordinary Shares if greater the
nominal value of such Ordinary Share.
(2) The Option Price relative to each Option shall be notified to the
Participant in the Option certificate.
4. LIMITATIONS ON THE GRANT OF OPTIONS
(1) For any one Executive, the aggregate Market Value of Ordinary
Shares comprised in options under the Scheme or any other
Executive Scheme, granted to him in the ten years up to the Date
of Grant, under which Ordinary Shares may be allotted or
transferred on exercise (excluding any such option to the extent
that it has been exercised or has lapsed by reason of
non-satisfaction of any condition imposed pursuant to Rule 2(2)
(or any equivalent provision of another Executive Scheme)) shall
not exceed four times his total annual emoluments. The Board may
grant Options in excess of this limit to replace Options which
have been exercised or have lapsed by reason of non-satisfaction
of any condition imposed pursuant to Rule 2(2) (or any equivalent
provision of another Executive Scheme) provided that the Board is
satisfied that there has been a significant improvement in the
Company's performance over two or three years before the grant of
any such replacement Options.
(2) On any date, the maximum number of Ordinary Shares over which the
Directors may grant Options under which Ordinary Shares are to be
allotted, when added to the number of Ordinary Shares allotted and
Ordinary Shares remaining to be allotted:
(i) in respect of options which are to be or have been granted
on the same date or within the previous ten years under the
Scheme, or any other share option scheme under which
Ordinary Shares may be or have been allotted on exercise,
shall not exceed 10 per cent of the number of Ordinary
Shares in issue on that date; and
(ii) in respect of options which are to be or have been granted
on the same date or within the previous ten years under the
Scheme, or any other Executive Scheme under which Ordinary
Shares may be or have been allotted on exercise, shall not
exceed 5 per cent of the number of Ordinary Shares in issue
on that date; and
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(iii) in respect of options which are to be or have been granted
on the same date or within the previous five years under
the Scheme, or any other share option scheme under which
Ordinary Shares may be or have been allotted on exercise,
shall not exceed 5 per cent of the number of Ordinary
Shares in issue on that date; and
(iv) in respect of options which are to be or have been granted
on the same date or within the period of four years
commencing on the Adoption Date under the Scheme or any
other Executive Scheme under which Ordinary Shares may be
or have been allotted on exercise, shall not exceed 2 1/2
per cent of the number of Ordinary Shares in issue on that
date.
(3) No Option shall be granted under the Scheme more than ten years
after the Adoption Date.
5. PERIODS WITHIN WHICH OPTIONS MAY BE EXERCISED
(1) Except as otherwise provided in these Rules, each Option may be
exercised at any time during the Normal Exercise Period, subject
to fulfilment of any condition imposed under Rule 2(2).
(2) If a Participant ceases to be an Executive by reason of injury,
ill-health or disability (evidenced to the satisfaction of the
Board) or death, then he or (as the case may be) his personal
representatives may exercise his Options, whether or not the
Normal Exercise Period has commenced and whether or not any
condition imposed under Rule 2(2) has been satisfied, within 12
months after he ceases to be an Executive. If the Options are not
so exercised they will lapse at the end of the said period of 12
months.
(3) If a Participant ceases to be an Executive by reason either of job
elimination or a reduction in workforce directly affecting him (as
determined in the opinion of the Board), he may exercise his
Options, whether or not any condition imposed under Rule 2(2) has
been satisfied, within 3 months after he ceases to be an
Executive, provided that on ceasing to be an Executive he has held
his Options for at least two years. If the Options are not so
exercised they will lapse at the end of the said period of 3
months.
(4) If a Participant ceases to be an Executive during the Normal
Exercise Period of an Option held by him by reason of his
retirement at or over age 60, or earlier with Company consent but
in no event prior to age 55, his Option may be exercised within 12
months after he ceases to be an Executive, provided that such
Option may only be exercised if any condition imposed under Rule
2(2) has been satisfied or is satisfied during such 12 months. If
any condition imposed under Rule 2(2) is not satisfied until the
twelfth month after the Participant ceased to be an Executive, the
Participant will have one month after satisfaction of the
condition in which to exercise his Option. If the Option is not so
exercised it will lapse at the end of the said periods of 12 or 13
months respectively.
(5) If a Participant ceases to be an Executive during the Normal
Exercise Period of an Option held by him by reason of his
terminating his employment or his employment is terminated in
circumstances not involving summary dismissal, impropriety or
misconduct on his part and the employment ceases for a reason not
falling within Rules 5(2) to (4) above, his Option may be
exercised within 3 months after he ceases to be an Executive
provided that any condition imposed under Rule 2(2) has been
satisfied on his ceasing to be an Executive. Where a Participant
receives a payment in lieu of notice, he shall be deemed to cease
to be an Executive at the end of the period in relation to which
the payment is made. If the Option is not so exercised, it will
lapse at the end of the said period of 3 months.
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(6) Save as provided by Rules 5(2) to 5(5), any Option held by a
Participant who ceases to be an Executive shall forthwith lapse
unless the Board in its absolute discretion determines that such
Option may remain in force, subject to any condition imposed under
Rule 2(2), for a period specified by the Board.
6. EXERCISE OF OPTIONS
(1) An Option may only be exercised by a Participant giving notice in
writing to the Company in the form prescribed by the Company,
accompanied by a remittance to the Company for the total Option
Price for the Ordinary Shares over which the Option is being
exercised and/or by such authorities as may be required to enable
the Company to receive such Option Price. In the case of an Option
under which Ordinary Shares are to be transferred the Company
shall receive the Option Price as agent for the person holding the
Ordinary Shares which are to be transferred to the Participant.
(2) An Option may be exercised in whole or in part in respect of any
number of the Ordinary Shares comprised therein, provided that if
an Option is being exercised in part it may not be exercised for
less than 1,000 Ordinary Shares except in the case of a final
exercise where the Option has previously been exercised in part.
(3) If the Option is exercised in respect of part only of the Ordinary
Shares comprised in the Option, the Company shall procure the
issue of an Option certificate to the Participant in respect of
the balance or call in the original Option certificate for
endorsement.
(4) An Option shall be deemed to have been exercised on the date when
the notice referred to in Rule 6(1) is received by the Company at
its registered office, or such other address as the Board may
direct or, if later, when the remittance of the Option Price is
received by the Company.
(5) Options shall be exercisable at any time permitted under Rule 5
(subject to Rule 9).
(6) All allotments, issues and transfers of Ordinary Shares will be
subject to the obtaining of any necessary consents under
enactments or regulations for the time being in force and, in so
far as the obtaining of such consents are the Participant's
obligation, it shall be the responsibility of the Participant to
comply with any requirements to be fulfilled in order to obtain or
obviate the necessity for any such consent.
7. SHARES ISSUED IN RESPONSE TO THE EXERCISE OF OPTIONS
(1) Subject to the necessary authorities and consents pursuant to
Rules 6(1) and (6), the Company shall procure that Ordinary Shares
shall be allotted or transferred to the Participant (or, at his
direction, his nominee) not more than twenty-eight days after the
exercise of the Option.
(2) The Company shall at all times keep available for issue sufficient
authorised but unissued Ordinary Shares (including for this
purpose Ordinary Shares to be issued directly to a Participant on
the exercise of his Options and Ordinary Shares to be issued to a
person who will in turn transfer such Ordinary Shares to a
Participant on the exercise of his Options) to permit the exercise
of all unexercised Options and the Company will, at its expense,
make application to The London Stock Exchange for admission to the
Official List of Ordinary Shares allotted pursuant to the exercise
of any Option.
(3) All Ordinary Shares allotted upon exercise of Options shall
(subject to Rule 8) rank pari passu with the other Ordinary Shares
in issue at the date of allotment.
8. ADJUSTMENT OF OPTIONS
Upon the occurrence of any Relevant Event, the number of Ordinary Shares
comprised in each Option and/or the Option Price thereunder shall be
adjusted in such manner as the Board considers fair and reasonable
provided that:
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(a) no adjustment shall be made pursuant to this Rule which would
increase the aggregate Option Price; and
(b) the Option Price for an Ordinary Share is not reduced below its
nominal value.
Notice of any such adjustment shall be given to the Participants by the
Board, who may call in the Option certificate for endorsement or
replacement.
9. CHANGES IN CONTROL OR WINDING-UP OF THE COMPANY
(1) For the purposes of this Rule 9 Control shall have the meaning
given in Section 840 of the Taxes Act, and (other than for Rule
9(6)) a person shall be deemed to have Control of the Company if
he and others acting in concert with him have together obtained
Control of it.
(2) If any person obtains Control of the Company as a result of
making:-
(a) a general offer to acquire the whole of the issued Ordinary
Share capital of the Company 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) a general offer to acquire all the shares in the Company
which are of the same class as the Ordinary Shares
then any Option may be exercised (whether or not any condition
imposed by Rule 2(2) has been satisfied) within six months of 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.
(3) If a court shall direct that a meeting of the holders of Ordinary
Shares be convened pursuant to section 425 of the Companies Act
1985 for the purposes of considering a scheme of arrangement
involving the reconstruction of the Company or its amalgamation
with any other company or companies:
(a) each Participant may exercise his Options (whether or not
the Normal Exercise Period has commenced and whether or not
any condition imposed under Rule 2(2) has been satisfied)
conditionally on either the scheme of arrangement being
approved by the shareholders' meeting or sanctioned by the
court (as determined by the Board in its absolute
discretion), between the date of the court's direction and
twelve noon on the day immediately preceding the date for
which the shareholders' meeting is convened. Any Option not
exercised by the end of that period shall cease to be
exercisable between that time and the first date on which
it can be determined whether or not the relevant condition
is satisfied. If the relevant condition is not satisfied,
the Options shall continue. If the relevant condition is
satisfied the Options shall, without prejudice to the
operation of Rule 9(6), lapse automatically on the date on
which the scheme of arrangement is sanctioned by the court;
and
(b) the Board shall endeavour to procure that where a
Participant has conditionally exercised his Options in
accordance with (a) above prior to twelve noon on the day
immediately preceding the date for which the shareholders'
meeting is initially convened the scheme of arrangement
shall, so far as it relates to Ordinary Shares, be extended
to such Participant as if each Ordinary Share in respect of
which the Option was conditionally exercised had been
allotted and issued or transferred to him by that time.
(4) If any person becomes bound or entitled to acquire Ordinary Shares
in the Company under Section 428 or 429 of the Companies Act 1985,
any Option may be exercised
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(whether or not any condition imposed by Rule 2(2) has been
satisfied) at any time when the person remains so bound or
entitled.
(5) If the Company passes a resolution for voluntary winding up, any
Option may be exercised (whether or not any condition imposed by
Rule 2(2) has been satisfied) within six months of the passing of
the resolution.
(6) If as a result of the events specified in Rules 9(2) or 9(3) a
company has obtained Control of the Company, or if a company has
become bound or entitled as mentioned in Rule 9(4), the
Participant may, by agreement with that other company ("the
Acquiring Company"), within the appropriate period (as defined in
paragraph 15(2) of Schedule 9 of the Taxes Act), release each
Option (the "Old Option") for an option (the "New Option") which
satisfies the conditions that it:
(a) is over shares in the Acquiring Company or some other
company falling within paragraph 10 (b) or (c) of Schedule
9 of the Taxes Act, which satisfy the conditions specified
in paragraphs 10 to 14 inclusive of Schedule 9 of the Taxes
Act; and
(b) is a right to acquire such number of such ordinary shares
as has on acquisition of the New Option an aggregate Market
Value equal to the aggregate Market Value of the shares
subject to the Old Option on its release; and
(c) has an Option Price per share such that the aggregate price
payable on exercise in full which equals the aggregate
price which would have been payable on exercise in full of
the Old Option; and
(d) is otherwise identical in terms to the Old Option.
The New Option shall, for all other purposes of this Scheme, be
treated as having been acquired at the same time as the Old Option
and as if any condition imposed pursuant to Rule 2(2) has been
satisfied.
Where any New Options are granted pursuant to this clause 9(6),
references elsewhere in these Rules shall, in relation to the New
Options, be construed as if reference to the Company and to the
Ordinary Shares were references to the Acquiring Company, or, as
the case may be, to the other company to whose shares the New
Options relate, and to the shares in that other company.
(7) An Option shall lapse on the expiry of any of the periods
specified in Rules 9(3), 9(4) and 9(5) save where an Option is
released in consideration of the grant of a New Option over shares
in the Acquiring Company (during one of the periods specified in
Rules 9(2) and 9(3)) pursuant to Rule 9(6). Notwithstanding the
foregoing paragraphs of this Rule 9, no Option shall be exercised
after the expiry of the Normal Exercise Period.
10. ADMINISTRATION AND AMENDMENT OF THE SCHEME
(1) The Board may by resolution alter the Rules of the Scheme in any
respect provided that:
(a) no alteration shall alter adversely the rights attaching to
or the terms of any Options granted prior to such
alteration except with the consent in writing of
Participants who, if they exercised their Options in full,
would thereby become entitled to not less than
three-quarters in nominal amount of all the Ordinary Shares
which would fall to be issued or transferred to
Participants upon exercise in full of all outstanding
Options; and
(b) no amendment to the advantage of Executives or Participants
may be made without the prior approval of the Company in
general meeting except in the case of an amendment which is
necessary or desirable to take advantage of new
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legislative provisions and developments in the law relating
to option schemes or to benefit the administration of the
Scheme; and
any alteration so approved shall bind all Participants whether or
not they consented to it.
(2) The Board shall have power to delegate the administration of the
Scheme to such persons (whether or not members of the Board) as it
thinks fit but this power shall not extend to the selection of
Executives to participate in the Scheme nor to the grant of
Options hereunder nor to the exercise of any discretions conferred
hereunder.
(3) The decision of the Board shall be final and binding in all
matters relating to the Scheme and in particular the decision as
to whether or not any person is eligible to participate in the
Scheme or whether or not any Option has lapsed shall rest solely
in the Board.
(4) Participants shall be entitled to receive copies of all notices,
reports and accounts of the Company sent to Ordinary Shareholders.
(5) The rights and obligations of a Participant under the terms and
conditions of his office or employment shall not be affected by
his participation in the Scheme or any right he may have to
participate in the Scheme. An individual who participates in the
Scheme waives all and any rights to compensation or damages in
consequence of the termination of his office or employment with
any company 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 Scheme as a result of
such termination or from the loss or diminution in value of such
rights or entitlements. If necessary, the Participant's terms of
employment shall be varied accordingly.
11. PROHIBITION AGAINST ASSIGNMENT
The rights of a Participant in respect of Options may not be assigned,
transferred charged or otherwise alienated except to the extent necessary
to enable Options to be exercised in accordance with Rule 5(2).
12. SUBORDINATE SCHEMES
(1) The Board may adopt Subordinate Schemes, which shall form part of
this Scheme, which shall contain regulations and provisions
applicable to Options granted to Executives who are subject to
taxation in any one or more specified countries or territories.
The regulations and provisions so adopted shall form appendices to
these Rules. These Rules shall apply to Subordinate Schemes
subject to the said special regulations and provisions. No such
regulation or provision shall contain any alteration to the
advantage of Participants (present or future) as regards Rule
1(g), 1(h), the limitation contained in Rule 4, or Rules 5 or
10(1).
(2) If an Executive is granted Options both under this Scheme and
under any one or more Subordinate Schemes, the limit in Rule 4(1)
shall apply to the aggregate of all such Options held by him.
13. TERMINATION
The Board may at any time resolve not to grant further Options under the
Scheme but without prejudice to the then subsisting rights of the
Participants.
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APPENDIX 1 - UK EMPLOYEES
For any Executive who the Board wishes to grant Options under an Inland Revenue
approved Scheme:-
(a) The Rules set out as numbers 1 to 13 of the foregoing Scheme shall apply
subject to the modifications contained in the following paragraphs of
this Appendix 1.
(b) Rule 1(e) shall be construed so that an Executive may become a
Participant in this Subordinate Scheme if:-
(i) he is required to devote not less than 25 hours per week
(excluding meal-breaks) to the business of the Group, and
(ii) he is not ineligible to participate in the Scheme by virtue of
Paragraph 8 of Schedule 9 of the Taxes Act.
(c) Deleted (27 July 2000)
(d) Rule 4(1) shall be construed so that, for any one Executive no Option
shall be granted to him under this Subordinate Scheme if the aggregate
Market Value of Ordinary Shares which may be acquired under all
outstanding Options granted to him under this Subordinate Scheme and any
other Inland Revenue approved Executive Scheme established by the Company
or any associated company of the Company, would exceed Pound
Sterling30,000 (or such other amount as shall be specified under
paragraph 28(1) of Schedule 9 of the Taxes Act form time to time). For
the purpose of this paragraph (d), "associated company" has the same
meaning as in Section 416 of the Taxes Act.
(e) Any Option granted to an Executive under this Subordinate Scheme may not
be exercised at any time when the Executive is ineligible to participate
in the Subordinate Scheme by virtue of Paragraph 8 of Schedule 9 of the
Taxes Act.
(f) No adjustment pursuant to Rule 8 shall take effect without the prior
approval of the Board of the Inland Revenue.
(g) The designation given to any Option granted under this Subordinate Scheme
shall be an Option with the suffix "A" to the number attributed to that
Option on the certificate therefor.
(h) In addition to its powers under Rule 10(1)(b) the Board may make such
amendments to this Subordinate Scheme as are necessary or desirable to
obtain or maintain Inland Revenue approval of this Subordinate Scheme.
(i) No alteration to the Rules of the Scheme or this Subordinate Scheme shall
have effect as regards this Subordinate Scheme unless it has been
approved by the Board of Inland Revenue for the purposes of the Taxes
Act.
(j) Rule 2(5) shall not apply unless and until a member of the Group is
obliged to account for any tax or national insurance or other social
contributions in respect of an Option under an Inland Revenue approved
scheme.
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APPENDIX 2 - US EMPLOYEES
(a) The Rules as set out in numbers 1 to 13 of the foregoing Scheme shall
apply to Participants who are employed or remunerated in the United
States or who are citizens of the United States ("Eligible Employees")
with the modifications contained in the following paragraphs of this
Appendix 2.
(b) Options granted to Eligible Employees may be either incentive stock
options (within the meaning of Section 422 of the United States Internal
Revenue Code of 1986) or Options which are not incentive stock options
("non-qualified stock options").
(c) Incentive stock options may be granted to any Eligible Employee. Any
Option which is intended to be an incentive stock option shall be
evidenced by a written document which contains such terms and conditions
so that it qualifies as an incentive stock option.
(d) No Option which is intended to be an incentive stock option may be
granted under this Scheme more than ten years after:
(i) the date of adoption of this Scheme by the Company or,
(ii) the date on which this Scheme is approved by the stockholders of
the Company, whichever is earlier.
(e) The aggregate number of shares on which incentive stock options may be
issued shall not exceed 23,900,000.
CFC : 946669
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