Document:

Exhibit 4.2

 

 

Smith & Nephew plc

 

 

 

The Smith & Nephew Global Share Plan 2010

 

 

 

 

 

 

 

 

This is a copy of the rules of

The Smith & Nephew Global Share Plan 2010

as produced to the Annual General Meeting

of the Company on 6 May 2010 and initialled by

the Chairman for the purposes of identification only

 

 

 

 

........................................

 

Chairman

 

 

  

  

  

 

 

Table of Contents

 

 

 

 

	Contents	Page
	 	 	 
	
1

	
Definitions

	
1

	
2

	
Granting Awards

	
3

	
3

	
Before Vesting

	
5

	
4

	
Reduction of Award

	
6

	
5

	
When do Awards Vest?

	
7

	
6

	
What happens when an Award Vests?

	
8

	
7

	
Vesting in other circumstances - personal events

	
9

	
8

	
Vesting in other circumstances - corporate events

	
11

	
9

	
Changing the Plan and termination

	
12

	
10

	
General

	
13

	
11

	
Overseas sub-plans

	
16

	
Schedule 1 United Kingdom – Approved Options

	
17

	
Schedule 2 United States – Incentive Stock Options

	
23

 

  

  

  

 

 

Rules of the Smith & Nephew Global Share Plan 2010

 

 

	
1  

	
Definitions

 

In these rules:

 

“Acquiring Company” means a person who has or obtains Control of the Company;

 

“Award” means a Conditional Award or an Option;

 

“Award Date” means the date on which an Award is granted under rule ‎2.4;

 

“Business Day” means a day on which the London Stock Exchange (or, if relevant and if the Committee determines, any stock exchange nominated by the Committee on which the Shares are traded) is open for the transaction of business;

 

”Change of control” means

 

	 	
(i)  

	
when a general offer to acquire Shares made by a person (or a group of persons acting in concert) becomes wholly unconditional;

 

	 	
(ii)  

	
when, under Section 895 of the Companies Act 2006 or equivalent procedure under local legislation, a court sanctions a compromise or arrangement in connection with the acquisition of Shares; or

 

	 	
(iii)  

	
a person (or a group of persons acting in concert) obtaining Control of the Company in any other way;

 

“Committee” means, subject to rule ‎8.4, the remuneration committee of the board of directors of the Company or a person or group of persons duly authorised by the remuneration committee;

 

“Company” means Smith & Nephew plc;

 

“Conditional Award” means a conditional right to acquire Shares granted under the Plan;

 

“Control” means has the meaning given to it by Section 995 of the Income Tax Act 2007;

 

“Dealing Restrictions” means restrictions imposed by the Smith & Nephew Code of Dealing in Securities, any statute, order, regulation or Government directive, or by the Model Code and for this purpose the Model Code means the Model Code on dealings in securities set out in Listing Rule 9, annex 1 (of the London Stock Exchange), as varied from time to time;

 

“Dividend Equivalent” means an amount equal to the ordinary dividends payable on the number of Vested Shares between the Award Date and Vesting, subject to rule ‎6.5;

 

“Employee” means any employee of a Member of the Group (including an executive director);

 

“Expected Value” means the value of an Award on the Award Date using a valuation methodology determined by the Committee, which takes account of the sum of all various possible performance outcomes at Vesting and which reflects the probabilities of achieving different performance outcomes, rather than maximum outcome only;

 

“Expiry Date” means [date] 2020, the tenth anniversary of shareholder approval;

 

  

  

  

 

“Grantor” means, in respect of an Award, the entity which grants that Award under the Plan;

 

“London Stock Exchange” means London Stock Exchange plc;

 

”Market Value” means on any day not less than:

 

	 	
(i)  

	
the closing middle market quotation of a Share (taken from the Daily Official List of the London Stock Exchange) on the immediately preceding Business Day or, in the case of an ADR or ADS listed on the New York Stock Exchange, the closing price quoted on the New York Stock Exchange for that preceding Business Day; or

 

	 	
(ii)  

	
if the Committee so decides, the average of the closing middle market quotations of a Share (taken from the Daily Official List of the London Stock Exchange) or, in the case of an ADR or ADS listed on the New York Stock Exchange, the closing price quoted on the New York Stock Exchange over the immediately preceding three or five Business Days;

 

“Market Value Option” means an Option, the Option Price of which is set by reference to the Market Value of a Share on the Award Date;

 

“Member of the Group” means:

 

	 	
(i)  

	
the Company;

 

	 	
(ii)  

	
its Subsidiaries from time to time; or

 

	 	
(iii)  

	
any other company which is associated with the Company and is so designated by the Committee;

 

“Official List” means the list maintained by the Financial Services Authority for the purpose of Section 74(1) Financial Services and Markets Act 2000;

 

“Option” means a right to acquire Shares granted under the Plan;

 

“Option Period” means a period starting on the grant of an Option and ending at the end of the day before the tenth anniversary of the grant, or such shorter period as may be specified under rule ‎6.2 on the grant of an Option;

 

“Option Price” means zero, or the amount payable on the exercise of an Option, as specified under rule ‎2.4.8;

 

“Participant” means a person holding an Award or his personal representatives;

 

“Performance Condition” means any performance condition imposed under rule ‎2.6;

 

“Performance Period” means the period in respect of which a Performance Condition is to be satisfied;

 

“Plan” means these rules, known as “The Smith & Nephew Global Share Plan 2010”, as changed from time to time;

 

“Shares” means fully paid ordinary shares in the capital of the Company or any American Depositary Shares (“ADSs”) or American Depositary Receipts (“ADRs”) representing ordinary shares;

 

“Subsidiary” means a company which is a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006;

 

  

  

  

 

“US Taxpayer” means a person who is subject to taxation under the tax rules of the United States of America; and

 

“Vesting”, in relation to an Option, means an Option becoming exercisable and, in relation to a Conditional Award, means a Participant becoming entitled to have the Shares transferred to him subject to the Plan.

 

	
2  

	
Granting Awards

 

	
2.1  

	
Grantor

 

The Grantor of an Award must be:

 

	 	
2.1.1  

	
the Company;

 

	 	
2.1.2  

	
any other Member of the Group; or

 

	 	
2.1.3  

	
a trustee of any trust set up for the benefit of Employees.

 

An Award granted under the Plan, and the terms of that Award, must be approved in advance by the Committee.

 

	
2.2  

	
Eligibility

 

The Grantor may grant an Award to anyone who is an Employee on the Award Date in accordance with any selection criteria that the Committee in its discretion may set.

 

However, unless the Committee considers that special circumstances exist, an Award may not be granted to an Employee who on the Award Date has given or received notice of termination of employment, whether or not such termination is lawful.

 

	
2.3  

	
Timing of Award

 

Awards may not be granted at any time after the Expiry Date.

 

Awards may only be granted within 42 days, starting on any of the following:

 

	 	
2.3.1  

	
the date of shareholder approval;

 

	 	
2.3.2  

	
the day after the announcement of the Company’s results for any period;

 

	 	
2.3.3  

	
any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards;

 

	 	
2.3.4  

	
any day on which changes to the legislation or regulations affecting share plans are announced, effected or made; or

 

	 	
2.3.5  

	
the lifting of Dealing Restrictions which prevented the granting of Awards during any period specified above.

 

	
2.4  

	
Terms of Awards

 

Awards are subject to the rules of the Plan and any Performance Condition and must be granted by deed or in such other form as the Committee decides. The terms of the Award must be determined by the Grantor and approved by the Committee. The terms must be set out in the deed or other document (which may be in electronic form), including:

 

	 	
2.4.1  

	
whether the Award is:

 

  

  

  

 

 

	 	
(i)  

	
a Conditional Award;

 

	 	
(ii)  

	
an Option and whether or not it is a Market Value Option; or

 

	 	
(iii)  

	
a combination of these;

 

	 	
2.4.2

	
the number of Shares subject to the Award or the basis on which the number of Shares subject to the Award will be calculated;

 

	 	
2.4.3

	
any Performance Condition;

 

	 	
2.4.4

	
any other condition specified under rule ‎2.7;

 

	 	
2.4.5

	
the date(s) of Vesting, unless specified in a Performance Condition;

 

	 	
2.4.6

	
whether the Participant is entitled to receive any Dividend Equivalent;

 

	 	
2.4.7

	
the Award Date; and

 

	 	
2.4.8

	
the Option Price (if relevant).

 

	
2.5  

	
Market Value Options

 

In the case of a Market Value Option, the Option Price will not be less than the Market Value of a Share on the Award Date.

 

	
2.6  

	
Performance Conditions

 

When granting an Award, the Grantor may, and must in the case of executive directors, make its Vesting conditional on the satisfaction of one or more conditions linked to the performance of the Company. A Performance Condition must be objective and specified at the Award Date. The Grantor, with the consent of the Committee, may waive or change a Performance Condition in accordance with its terms or if anything happens which causes the Grantor reasonably to consider it appropriate to do so.

 

	
2.7  

	
Other conditions

 

The Grantor may impose other conditions when granting an Award. Any condition must be objective, specified at the Award Date and may provide that an Award will lapse if it is not satisfied. The Grantor, with the consent of the Committee, may waive or change a condition imposed under this rule ‎2.7.

 

	
2.8  

	
Award certificates

 

Each Participant will receive a notification setting out the terms of the Award as soon as practicable after the Award Date. The notification may be the deed referred to in rule ‎2.4 or any other document and may be in electronic form.

 

	
2.9  

	
No payment

 

A Participant is not required to pay for the grant of any Award.

 

	
2.10  

	
Administrative errors

 

If the Grantor grants an Award which is inconsistent with rule ‎2.2, it will lapse immediately.

 

  

  

  

 

 

If the Grantor tries to grant an Award which is inconsistent with rule ‎2.11, ‎2.12 or ‎2.13, the Award will be limited and will take effect from the Award Date on a basis consistent with those rules.

 

	
2.11  

	
Individual limit for Awards

 

An Award must not be granted to an Employee if it would, at the proposed Award Date, cause the Expected Value of all Awards that he has been granted in that financial year under the Plan to exceed three times his annual basic salary from Members of the Group.

 

This limit may be exceeded if the Committee determines that exceptional circumstances make it desirable that Awards should be granted in excess of that limit, but Awards may not be granted in excess of 400% of annual basic salary in any circumstances.

 

“Basic salary” means gross salary before adjustment to take account of any flexible benefits.

 

Basic salary payable in a currency other than pounds sterling will be converted into pounds sterling at the average of the spot buying and selling rates with the relevant currency in comparable amounts by any clearing bank chosen by the Committee on a date chosen by the Committee.

 

	
2.12  

	
Plan limits - 10 per cent

 

A Grantor must not grant an Award if the number of Shares committed to be issued under that Award exceeds 10 per cent of the ordinary share capital of the Company in issue immediately before that day, when added to the number of Shares which have been issued, or committed to be issued, to satisfy Awards under the Plan, or options or awards under any other employee share plan operated by the Company, granted in the previous 10 years.

 

	
2.13  

	
Plan limits - 5 per cent

 

A Grantor must not grant an Award if the number of Shares committed to be issued under that Award exceeds 5 per cent of the ordinary share capital of the Company in issue immediately before that day, when added to the number of Shares which have been issued, or committed to be issued, to satisfy Awards under the Plan, or options or awards under any other discretionary employee share plan adopted by the Company, granted in the previous 10 years.

 

	
2.14  

	
Scope of Plan limits

 

Where the right to acquire Shares is released or lapses, the Shares concerned are ignored when calculating the limits in rules ‎2.12 and ‎2.13.

 

As long as so required by the Association of British Insurers, shares transferred from treasury to satisfy Awards are treated as shares issued by the Company.

 

	
2.15  

	
Listing Rules

 

No Shares will be issued under the Plan if it would cause Listing Rule 6.1.19 (shares in public hands) to be breached.

 

  

  

  

 

 

	
3  

	
Before Vesting

 

	
3.1  

	
Rights

 

A Participant is not entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of Shares subject to an Option or a Conditional Award until the Shares are issued or transferred to the Participant.

 

	
3.2  

	
Transfer

 

A Participant may not transfer, assign or otherwise dispose of an Option or Conditional Award or any rights in respect of it. If he does, whether voluntarily or involuntarily, then it will immediately lapse. This rule ‎3.2 does not apply:

 

	 	
3.2.1  

	
to the transmission of an Option or Conditional Award on the death of a Participant to his personal representatives; or

 

	 	
3.2.2  

	
to the assignment of an Option or Conditional Award, with the prior consent of the Committee, subject to any terms and conditions the Committee imposes.

 

	
3.3  

	
Adjustment of Awards

 

If there is:

 

	 	
3.3.1  

	
a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital;

 

	 	
3.3.2  

	
a demerger (in whatever form) or exempt distribution by virtue of Section 213 of the Income and Corporation Taxes Act 1988;

 

	 	
3.3.3  

	
a special dividend or distribution; or

 

	 	
3.3.4  

	
any other corporate event which might affect the current or future value of any Award,

 

the Committee may adjust the number or class of Shares or securities subject to the Award and, in the case of an Option, the Option Price.

 

The Option Price for a Market Value Option to subscribe for Shares may be adjusted to a price less than nominal value only if the Committee resolves to capitalise the reserves of the Company, subject to any necessary conditions. This capitalisation will be of an amount equal to the difference between the adjusted Option Price payable for the Shares to be issued on exercise and the nominal value of such Shares on the date of allotment of the Shares. If, at the time of exercise, the Committee does not resolve to capitalise the reserves of the Company for this purpose then the adjustment under this rule ‎3.3 will be deemed not to have taken place.

 

	
4  

	
Reduction of Award

 

	
4.1  

	
Review of Awards

 

The Committee may review Awards, or any individual Award, in the light of the performance of the Company, any Member of the Group and any business area or team, and the conduct, capability or performance of the Participant. The review may take place at any time determined by the Committee.

 

  

  

  

 

 

	
4.2  

	
Focus of review

 

In carrying out a review, the Committee will consider:

 

	 	
4.2.1  

	
in respect of the period from the earlier of the beginning of the Performance Period and the Award Date to the date of Vesting or, in the case of Options, the date of exercise:

 

	 	
(i)  

	
whether there has been a significant adverse change in the financial performance of the Company, including any significant loss at a general level or in respect of the Global Business Unit or Function in which the Participant worked; and/or

 

	 	
(ii)  

	
any other matter which appears relevant; and

 

	 	
4.2.2

	
the conduct, capability or performance of a Participant, and the performance of any team, business area or profit centre, if the Committee deems that the circumstances warrant a review. For the avoidance of doubt, the Committee may determine that a review should take place after a Participant has ceased to be an Employee.

 

	
4.3  

	
Reduction of Award

 

Following a review under rule ‎4.1, the Committee may, in its sole discretion, make any determination in respect of any part of an Award that has not Vested, including for example:

 

	 	
4.3.1

	
reducing the number of Shares in respect of an Award; and

 

	 	
4.3.2

	
determining that an  Award or any part of it will not Vest.

 

	
5  

	
When do Awards Vest?

 

	
5.1  

	
Satisfying conditions

 

As soon as reasonably practicable after the end of the Performance Period, the Company  will determine whether and to what extent any Performance Condition or other condition imposed under rule ‎2.7 has been satisfied or waived and how many Shares Vest for each Award.

 

	
5.2  

	
Timing of Vesting – Award subject to Performance Condition

 

Where an Award is subject to a Performance Condition, subject to rules ‎2.7, ‎7 and ‎8, an Award Vests, to the extent determined under rule ‎5.1, on the date on which the Company makes its determination under rule ‎5.1 or, if on that date a Dealing Restriction applies, the first date on which it ceases to apply.

 

	
5.3  

	
Timing of Vesting – Award not subject to Performance Condition

 

Where an Award is not subject to a Performance Condition, subject to rules ‎2.7, ‎7 and ‎8, an Award Vests on the date(s) of Vesting set by the Committee on the grant of the Award or, if on that date a Dealing Restriction applies, the first date on which it ceases to apply.

 

  

  

  

 

 

	
5.4  

	
Lapse

 

To the extent that any Performance Condition is not satisfied at the end of the Performance Period, the Award lapses, unless otherwise specified in the Performance Condition. To the extent that any other condition is not satisfied, the Award will lapse if so specified in the terms of that condition.

 

If an Award lapses under the Plan, it cannot Vest and a Participant has no rights in respect of it.

 

	
6  

	
What happens when an Award Vests?

 

	
6.1  

	
Conditional Award

 

Within 30 days of a Conditional Award Vesting, the Grantor will arrange (subject to rules ‎6.4, ‎6.5 and ‎10.8) for the transfer, including a transfer out of treasury or issue, to, or to the order of, the Participant, of the number of Shares in respect of which the Award has Vested.

 

	
6.2  

	
Options

 

	 	
6.2.1

	
A Participant may exercise his Option at any time during the Option Period following Vesting by giving notice in the prescribed form to the Grantor or any person nominated by the Grantor and paying the Option Price (if any). The Option will lapse at the end of that period or, if earlier, on the earliest of:

 

	 	
(i)  

	
the date the Participant ceases to be an Employee;

 

	 	
(ii)  

	
six months after an event which gives rise to Vesting under rule ‎7.2 (or, if the Committee decides, such longer period not exceeding 18 months as the Committee may determine);

 

	 	
(iii)  

	
six months after an event which gives rise to Vesting under rule ‎8 or, if earlier, the date six weeks after the date on which a notice to acquire Shares under Section 979 of the Companies Act 2006 is first served; or

 

	 	
(iv)  

	
if the Participant dies, the earlier of one year from this death or three months after the Participant’s personal representatives notify the Company that they have obtained a grant of representation.

 

	 	
6.2.2

	
Subject to rules ‎6.4, ‎6.5 and ‎10.8, the Grantor will arrange for Shares to be transferred to or issued to the Participant within 30 days of the date on which the Option is exercised.

 

	 	
6.2.3

	
If an Option Vests under more than one provision of the rules of the Plan, the provision resulting in the shortest exercise period will prevail.

 

	
6.3  

	
Dividend Equivalent

 

An Award may include the right to receive a Dividend Equivalent which may be paid in cash or Shares (as determined from time to time by the Grantor with the consent of the Committee). Dividend Equivalents will be paid to any relevant Participant as soon as practicable after Vesting or, in the case of an Option, after exercise. For the avoidance of doubt, the Dividend Equivalent does not include the tax credit.

 

  

  

  

 

 

	
6.4  

	
Alternative ways to satisfy Awards

 

The Grantor may, subject to the approval of the Committee, decide to satisfy an Award by paying an equivalent amount in cash (subject to rule ‎6.5). For Options, the cash amount must be equal to the amount by which the market value of the Shares in respect of which the Option is exercised exceeds the Option Price. Alternatively, the Grantor may decide to satisfy an Option by procuring the issue or transfer of Shares to the value of the cash amount specified above.

 

The Company may determine that an Award will be satisfied in cash at the Award Date or at any time before satisfaction of the Award, including after Vesting or, in the case of an Option, after exercise.

 

In respect of Awards which consist of a right to receive a cash amount, the Committee may decide instead to satisfy such Awards (and any Dividend Equivalent) by the delivery of Shares, subject to rule ‎6.5. The number of Shares will be calculated by reference to the market value of the Shares on the date of Vesting for Conditional Awards and the date of exercise for Options.

 

	
6.5  

	
Withholding

 

The Company, the Grantor, any employing company or trustee of any employee benefit trust may withhold such amount and make such arrangements as it considers necessary to meet any liability to taxation or social security contributions in respect of Awards. These arrangements may include the sale or reduction in number of any Shares or the Participant discharging the liability himself.

 

	
6.6  

	
US Taxpayers

 

This rule ‎6.6 applies to a Participant who is a US Taxpayer.

 

Where an Option, which is not a Market Value Option or an Option subject to Section 83 of the US Internal Revenue Code 1986 (as amended), becomes exercisable, it shall lapse at the end of the Short-term Deferral Period.

 

For the purpose of this rule ‎6.6, the “Short-term Deferral Period” means the period ending on the later of:

 

	 	
6.6.1  

	
the 15th day of the third month in the year immediately following the Company’s taxable year in which an Option Vests; and

 

	 	
6.6.2 

	
the 15th day of the third month in the year immediately following the US Taxpayer’s taxable year in which an Option Vests.

 

	
7  

	
Vesting in other circumstances - personal events

 

	
7.1  

	
General rule on leaving employment

 

	 	
7.1.1

	
Unless rule ‎7.2 applies, an Award which has not Vested will lapse on the date the Participant ceases to be an Employee.

 

	 	
7.1.2  

	
The Committee may decide that an Award which has not Vested will lapse on the date on which the Participant gives or receives notice of termination of his employment with any Member of the Group (whether or not such termination is

 

  

  

  

 

 

	 	
  

	
lawful), unless the reason for giving or receiving notice is one listed in rule ‎7.2.1 below.

 

	
7.2  

	
“Good leavers”

 

	 	
7.2.1  

	
If a Participant ceases to be an Employee for any of the reasons set out below, then his Awards will Vest as described in rules ‎7.3 and ‎7.4 and lapse as to the balance. The reasons are:

 

	 	
(i)  

	
ill-health, injury or disability, as established to the satisfaction of the Company;

 

	 	
(ii)  

	
retirement with the agreement of the Participant’s employer;

 

	 	
(iii)  

	
the Participant’s employing company ceasing to be a Member of the Group;

 

	 	
(iv)  

	
a transfer of the undertaking, or the part of the undertaking, in which the Participant works to a person which is not a Member  of the Group;

 

	 	
(v)  

	
redundancy; and

 

	 	
(vi)  

	
any other reason, if the Committee so decides in any particular case.

 

	 	
7.2.2

	
The Committee may only exercise the discretion provided for in rule ‎7.2.1(vi) no later than 30 days after cessation of the relevant Participant’s employment.

 

	
7.3  

	
Vesting – Award subject to Performance Condition

 

Where rule ‎7.2 applies, the Award does not lapse, and the extent to which it will Vest is measured in accordance with rule ‎5.1 at the end of the Performance Period. However, the Committee may decide in its discretion that the Performance Period in respect of an Award should be treated as ending on the date of the termination of employment, and that the Award should Vest immediately, to the extent that the Performance Condition has been or is likely to be satisfied (as determined by the Committee in the manner specified in the Performance Condition or in such manner as it considers reasonable). Unless the Committee decides otherwise, the Award should be reduced pro rata to the last completed calendar month, so that it reflects only the proportion of the Performance Period which has elapsed before the termination of employment.

 

	
7.4  

	
Vesting – Award not subject to Performance Condition

 

Where rule ‎7.2 applies, and the Award is not subject to a Performance Condition, the Award Vests on the date of termination of Employment or on any other date determined by the Committee. The Award will Vest in full, unless the Committee decides that it should be reduced pro rata to reflect the acceleration of Vesting.

 

	
7.5  

	
Death

 

If a Participant dies, his Awards will Vest on the date of death but only to the extent that any Performance Condition has been or is likely to be satisfied as at the date of death. It will then lapse as to the balance. Unless the Committee decides otherwise, the Award will not be reduced pro rata to reflect the acceleration of Vesting.

 

The Committee will determine, in the manner specified in the Performance Condition (or, if  not so specified, in such manner as the Committee considers reasonable), the extent to 

 

  

  

  

 

 

which any Performance Condition has been satisfied and the proportion of the Award which will Vest.

 

The Grantor will only arrange for Shares to be issued or transferred to the personal representatives of a deceased Participant if they have produced a grant of representation.

 

	
7.6  

	
Overseas transfer

 

If a Participant remains an Employee but is transferred to work in another country or changes tax residence status and, as a result, he would:

 

	 	
7.6.1

	
suffer a tax disadvantage in relation to his Awards (this being shown to the satisfaction of the Committee); or

 

	 	
7.6.2

	
become subject to restrictions on his ability to exercise his Awards or to hold or deal in the Shares or the proceeds of the sale of the Shares acquired on exercise because of the security laws or exchange control laws of the country to which he is transferred,

 

then the Committee may decide that the Awards will Vest on a date they choose before or after the transfer takes effect. The Award will Vest to the extent the Committee permits and will lapse as to the balance.

 

	
7.7  

	
Meaning of “ceasing to be an Employee”

 

For the purposes of rules ‎7 and ‎6.2, a Participant will not be treated as ceasing to be an Employee until he is no longer an Employee of any Member of the Group or if he recommences employment with a Member of the Group within seven days.

 

	
8  

	
Vesting in other circumstances - corporate events

 

	
8.1  

	
Time of Vesting

 

	 	
8.1.1

	
In the event of a Change of control, an Award Vests subject to rules ‎8.2 and ‎8.3. The Award lapses as to the balance except to the extent exchanged under rule ‎8.3.

 

	 	
8.1.2

	
If the Company is or may be affected by any demerger, delisting, distribution (other than an ordinary dividend) or other transaction, which, in the opinion of the Committee, might affect the current or future value of any Award, the Committee may allow an Award to Vest. The Award will Vest to the extent specified in rule ‎8.2 and will lapse as to the balance unless exchanged under rule ‎8.3. The Committee may impose other conditions on Vesting.

 

	
8.2  

	
Extent of Vesting

 

Where an Award Vests under rule ‎8.1:

 

	 	
8.2.1  

	
if the Award is subject to a Performance Condition, the Committee will determine the extent to which any Performance Condition has been satisfied and the proportion of the Award which will Vest. In addition, Committee may decide that the Award is reduced pro rata to reflect the acceleration of Vesting;

 

  

  

  

 

 

	 	
8.2.2  

	
if the Award is not subject to any Performance Condition, the Award will Vest in full. The Committee may decide that the Award is reduced pro rata to reflect the acceleration of Vesting.

 

	
8.3  

	
Exchange

 

An Award will not Vest under rule ‎8.1 but will be exchanged under rule ‎8.6 to the extent that:

 

	 	
8.3.1

	
an offer to exchange the Award is made and accepted by a Participant; or

 

	 	
8.3.2

	
the Committee, with the consent of the Acquiring Company, decides before Change of control that the Award will be automatically exchanged.

 

	
8.4  

	
Committee

 

In this rule ‎8, “Committee” means those people who were members of the remuneration committee of the Company immediately before the Change of control.

 

	
8.5  

	
Timing of exchange

 

Where an Award is to be exchanged under rule ‎8.3, the exchange is effective immediately following the relevant event.

 

	
8.6  

	
Exchange terms

 

Where a Participant is granted a new award in exchange for an existing Award, the new award:

 

	 	
8.6.1  

	
must confer a right to acquire shares in the Acquiring Company or another body corporate determined by the Acquiring Company;

 

	 	
8.6.2  

	
must be equivalent to the existing Award, subject to rule ‎8.6.4;

 

	 	
8.6.3  

	
is treated as having been acquired at the same time as the existing Award and, subject to rule ‎8.6.4, Vests in the same manner and at the same time;

 

	 	
8.6.4  

	
must:

 

	 	
(i)  

	
be subject to a Performance Condition which is, so far as possible, equivalent to any Performance Condition applying to the existing Award; or

 

	 	
(ii)  

	
not be subject to any Performance Condition but be in respect of the number of shares which is equivalent to the number of Shares comprised in the existing Award which would have Vested under rule ‎8.2.1 and Vest at the end of the original Performance Period; or

 

	 	
(iii)  

	
be subject to such other terms as the Committee considers appropriate in all the circumstances; and

 

	 	
8.6.5  

	
is governed by the Plan, excluding rule ‎9.2, as if references to Shares were references to the shares over which the new award is granted and references to the Company were references to the Acquiring Company or the body corporate determined under rule ‎8.6.1 above.

 

  

  

  

 

 

	
9  

	
Changing the Plan and termination

 

	
9.1  

	
Committee’s powers

 

Except as described in the rest of this rule ‎9, the Committee may at any time change the Plan in any way.

 

	
9.2  

	
Shareholder approval

 

	 	
9.2.1

	
Except as described in rule ‎9.2.2, the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Plan to the advantage of present or future Participants, which relates to:

 

	 	
(i)  

	
the persons to or for whom Shares may be provided under the Plan;

 

	 	
(ii)  

	
the limits on the number of Shares which may be issued under the Plan;

 

	 	
(iii)  

	
the individual limit for each Participant under the Plan;

 

	 	
(iv)  

	
the basis for determining a Participant's entitlement to, and the terms of, securities, cash or other benefits to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital;

 

	 	
(v)  

	
for Options, the determination of the Option Price; or

 

	 	
(vi)  

	
the terms of this rule ‎9.2.1.

 

	 	
9.2.2  

	
The Committee can change the Plan and need not obtain the approval of the Company in general meeting for any minor changes:

 

	 	
(i)  

	
to benefit the administration of the Plan;

 

	 	
(ii)  

	
to comply with or take account of the provisions of any proposed or existing legislation;

 

	 	
(iii)  

	
to take account of any changes to legislation; or

 

	 	
(iv)  

	
to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Participant.

 

	
9.3  

	
Notice

 

The Committee is not required to give Participants notice of any changes.

 

	
9.4  

	
Termination

 

The Plan will terminate on the Expiry Date, but the Committee may terminate the Plan at any time before that date. The termination of the Plan will not affect existing Awards.

 

  

  

  

 

 

	
10  

	
General

 

	
10.1  

	
Terms of employment

 

	 	
10.1.1

	
This rule ‎10.1 applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

 

	 	
10.1.2

	
Nothing in the rules or the operation of the Plan forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and his employer are separate from, and are not affected by, the Plan. Participation in the Plan does not create any right to, or expectation of, continued employment.

 

	 	
10.1.3

	
No Employee has a right to participate in the Plan. Participation in the Plan or the grant of Awards on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of Awards on the same basis, or at all, in any future year.

 

	 	
10.1.4

	
The terms of the Plan do not entitle the Employee to the exercise of any discretion in his favour.

 

	 	
10.1.5

	
The Employee will have no claim or right of action in respect of any decision, omission or discretion, which may operate to the disadvantage of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the Employee and his employer.

 

	 	
10.1.6

	
No Employee has any right to compensation for any loss in relation to the Plan, including any loss in relation to:

 

	 	
(i)  

	
any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment);

 

	 	
(ii)  

	
any exercise of a discretion or a decision taken in relation to an Award or to the Plan, or any failure to exercise a discretion or take a decision; and

 

	 	
(iii)  

	
the operation, suspension, termination or amendment of the Plan.

 

	
10.2  

	
Committee’s decisions final and binding

 

The decision of the Committee on the interpretation of the Plan or in any dispute relating to an Award or matter relating to the Plan will be final and conclusive.

 

	
10.3  

	
Third party rights

 

Nothing in this Plan confers any benefit, right or expectation on a person who is not a Participant. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 or any equivalent local legislation to enforce any term of this Plan. This does not affect any other right or remedy of a third party which may exist.

 

	
10.4  

	
Documents sent to shareholders

 

The Company is not required to send to Participants copies of any documents or notices normally sent to the holders of its Shares.

 

  

  

  

 

 

	
10.5  

	
Costs

 

The Company will pay the costs of introducing and administering the Plan. The Company may ask a Participant’s employer to bear the costs in respect of an Award to that Participant.

 

	
10.6  

	
Employee trust

 

The Company and any Subsidiary may provide money to the trustee of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent permitted by Section 682 of the Companies Act 2006 or any applicable law.

 

	
10.7  

	
Data protection

 

By participating in the Plan the Participant consents to the holding and processing of personal information provided by the Participant to any Member of the Group, trustee or third party service provider, for all purposes relating to the operation of the Plan. These include, but are not limited to:

 

	 	
10.7.1

	
administering and maintaining Participant records;

 

	 	
10.7.2

	
providing information to Members of the Group, trustees of any employee benefit trust, registrars, brokers or third party administrators of the Plan;

 

	 	
10.7.3

	
providing information to future purchasers or merger partners of the Company, the Participant’s employing company, or the business in which the Participant works; and

 

	 	
10.7.4

	
transferring information about the Participant to a country or territory outside the European Economic Area that may not provide the same statutory protection for the information as the Participant’s home country.

 

The Participant is entitled, on payment of a fee, to a copy of the personal information held about him or her. If any information is inaccurate the Participant has the right to have it corrected.

 

	
10.8  

	
Consents

 

All allotments, issues and transfers of Shares will be subject to any necessary consent under any relevant enactments or regulations for the time being in force in the United Kingdom or elsewhere. The Participant is responsible for complying with any requirements he needs to fulfil in order to obtain or avoid the necessity for any such consent.

 

	
10.9  

	
Share rights

 

Shares issued to satisfy Awards under the Plan will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment. Where Shares are transferred to a Participant, including a transfer out of treasury, the Participant will be entitled to all rights attaching to the Shares by reference to a record date on or after the transfer date. The Participant will not be entitled to rights before that date.

 

  

  

  

 

 

	
10.10  

	
Listing

 

If and so long as the Shares are listed and traded on a public market, the Company will apply for listing of any Shares issued under the Plan as soon as practicable.

 

	
10.11  

	
Notices

 

	 	
10.11.1

	
Any information or notice to a person who is or will be eligible to be a Participant under or in connection with the Plan may be posted, or sent by electronic means, in such manner to such address as the Company considers appropriate, including publication on any intranet.

 

	 	
10.11.2

	
Any information or notice to the Company or other duly appointed agent under or in connection with the Plan may be sent by post or transmitted to it at its registered office or such other place, and by such other means, as the Committee or duly appointed agent may decide and notify Participants.

 

	 	
10.11.3

	
Notices sent by post will be deemed to have been given on the second day after the date of posting. However, notices sent by or to a Participant who is working overseas will be deemed to have been given on the seventh day after the date of posting. Notices sent by electronic means, in the absence of evidence to the contrary, will be deemed to have been received on the day after sending.

 

	
10.12  

	
Governing law and jurisdiction

 

English law governs the Plan and all Awards and their construction. The English courts have non-exclusive jurisdiction in respect of disputes arising under or in connection with the Plan or any Award.

 

	
11  

	
Overseas sub-plans

 

The Committee may establish plans to operate overseas either by scheduling sub-plans to the Plan or by adopting separate plans in accordance with the authority given by shareholders. This includes designating from time to time which Employees may  be invited to participate in a particular sub-plan.

 

  

  

  

 

Schedule 1

United Kingdom – Approved Options

 

The Grantor may designate a Market Value Option as an approved option granted under this Schedule 1 (an “Approved Option”). If it does, the provisions of the Plan relating to Market Value Options will apply to such Approved Options, as amended by this Schedule 1. No other types of Awards may be designated as Approved Options under this Schedule 1.

 

The terms of Approved Options have been approved by HMRC under ITEPA under reference number X105539/EJM.

 

	
1  

	
Definitions

 

The following definitions apply to this Schedule 1 and add or amend, as appropriate, the definitions which are set out in the Plan:

 

“HMRC” means Her Majesty’s Revenue and Customs;

 

“ITEPA” means Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003; and

 

“Market Value” on any day means:

 

	 	
(i)  

	
where Shares of the same class are not admitted to the Official List, the market value of a Share calculated as described in Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with HMRC Shares and Assets Valuation; or

 

	 	
(ii)  

	
where Shares of the same class are admitted to the Official List:

 

	 	
(a)  

	
their middle market quotation on the immediately preceding Business Day;

 

	 	
(b)  

	
the average of the middle market quotations on the three or five immediately preceding Business Days; or

 

	 	
(c)  

	
such other price as may be agreed in advance with HMRC Shares and Assets Valuation.

 

The middle market quotation is taken from the Daily Official List of the London Stock Exchange.

 

	
2  

	
Eligibility

 

	
2.1  

	
Approved Options may only be granted to an employee of:

 

	 	
(i)  

	
the Company;

 

	 	
(ii)  

	
any Subsidiary; or

 

	 	
(iii)  

	
any jointly-owned company (within the meaning of paragraph 34 of ITEPA) designated by the Grantor.

 

	
2.2  

	
Approved Options cannot be granted to anyone who is:

 

	 	
(i)  

	
excluded from participation because of paragraph 9 of ITEPA (material interest provisions); or

 

	 	
(ii)  

	
a director who is required to work less than 25 hours a week (excluding meal breaks) for the Company.

 

  

  

  

 

 

	
3  

	
Timing of Award

 

In addition to rule ‎2.3, Approved Options may also be granted within 42 days starting on the date of HMRC approval of this Schedule 1. No Approved Options may be granted under this Schedule 1 until it has been approved by HMRC.

 

	
4  

	
Option Price

 

The Grantor will set the Option Price and state it on the Award Date.

 

The Option Price will be:

 

	 	
(i)  

	
not less than the Market Value of a Share on the Award Date or such other date as HMRC may agree in advance; and

 

	 	
(ii)  

	
if the Shares are to be subscribed, not less than the nominal value of a Share.

 

	
5  

	
Performance Conditions

 

The words “it appropriate to do so” in rule ‎2.6 are deleted and replaced with “that a changed Performance Condition would be fairer and would be no more difficult to satisfy”.

 

	
6  

	
Individual limit for Approved Options

 

The Grantor must not grant an Approved Option to an employee which would on the Award Date cause the aggregate Market Value of:

 

	 	
(i)  

	
the Shares subject to that Approved Option; and

 

	 	
(ii)  

	
the Shares which he may acquire on exercising other Approved Options; and

 

	 	
(iii)  

	
the shares which he may acquire on exercising his options under any other HMRC-approved discretionary scheme established by the Company or by any of its associated companies (as defined in paragraph 35 of ITEPA),

 

to exceed the amount permitted under paragraph 6(1) of ITEPA (currently £30,000). For the purposes of paragraph 6(iii), “Market Value” is calculated as at the date of grant of the options as described in the relevant plan rules.

 

If the Grantor tries to grant an Approved Option which is inconsistent with this paragraph 6, the Approved Option will be limited and will take effect from the Award Date on a basis consistent with this paragraph 6.

 

	
7  

	
Shares subject to an Approved Option

 

The Shares subject to an Approved Option must satisfy paragraphs 16 to 20 of ITEPA. If they cease to satisfy paragraphs 16 to 20 of ITEPA and the Committee notifies HMRC that it wishes Schedule 1 to be disapproved, the definition of “Market Value Option” will continue in effect, but an approved Market Value Option will cease to be an Approved Option and will be treated, for the purposes of the Plan rules, as a Market Value Option only.

 

	
8  

	
Transfer

 

Rule ‎3.2.2 shall not apply to Approved Options.

 

	
9  

	
Adjustment of Awards

 

  

  

  

 

 

	
9.1  

	
Adjustments may not be made to Approved Options under rule ‎3.3 where there is a demerger (in whatever form), an exempt distribution by virtue of Section 213 of the Income and Corporation Taxes Act 1988 or a special dividend or distribution.

 

	
9.2  

	
The Committee cannot adjust the class of Shares comprised in an Approved Option.

 

	
9.3  

	
No adjustment of Approved Options may be made under rule ‎3.3 without the prior approval of HMRC.

 

	
10  

	
Reduction of Award

 

Rule ‎4 does not apply in relation to Approved Options.

 

	
11  

	
Restrictions on exercise of an Approved Option

 

A Participant may not exercise an Approved Option while he is excluded from being granted an Approved Option under paragraph 9 of ITEPA (material interest provisions).

 

	
12  

	
Dividend equivalents

 

Rule ‎6.3 does not apply in relation to Approved Options.

 

	
13  

	
Alternative ways to satisfy Awards

 

Rule ‎6.4 does not apply in relation to Approved Options.

 

	
14  

	
Withholding

 

In rule ‎6.5, the last sentence “These arrangements may include the sale or reduction in number of any Shares or the Participant discharging the liability himself.” is deleted and replaced with “These arrangements may include the sale of any Shares, unless the Participant discharges any liability that may arise himself.”

 

	
15  

	
Specified age and redundancy

 

For the purposes of paragraph 35A of ITEPA, the specified age is 55 and “redundancy”, for the purposes of rule ‎7.2, has the meaning given to that term by the Employment Rights Act 1996.

 

	
16  

	
Death

 

If the Participant dies, the Approved Option may be exercised by his personal representatives within 12 months after his death, after which it will lapse.

 

	
17  

	
Exercise and lapse of Approved Options

 

If the Committee exercises any discretion in relation to an Approved Option, it must do so fairly and reasonably.

 

	
18  

	
Vesting in other circumstances - personal events

 

	
18.1  

	
Rule ‎7.1.2 is deleted and replaced by:

 

“The Committee may decide on the grant of an Approved Option, that an Approved Option which has not Vested will lapse on the date on which the Participant gives or receives notice of termination of employment with any Member of the Group (whether or not such 

 

  

  

  

 

termination is lawful), unless the reason for giving or receiving notice is one listed in rule ‎7.2.1.”

 

	
18.2  

	
Rule ‎7.4 is deleted and replaced by:

 

“Where rule ‎7.2 applies, and the Approved Option is not subject to a Performance Condition, the Approved Option Vests on the date of termination of Employment. The Approved Option will Vest in full, unless the Committee decides on the grant of the Approved Option that it should be reduced pro rata to reflect the acceleration of Vesting.”

 

	
18.3  

	
The first paragraph of rule ‎7.5 is deleted and replaced by:

 

“If a Participant dies, his Approved Option will Vest on the date of death but only to the extent that any Performance Condition has been or is likely to be satisfied as at the date of death. It will then lapse as to the balance. Unless the Committee decides otherwise on the grant of an Approved Option, the Approved Option will not be reduced pro rata to reflect the acceleration of Vesting.”

 

	
18.4  

	
Rule ‎7.6 does not apply in relation to Approved Options.

 

	
19  

	
Vesting in other circumstances - corporate events

 

	
19.1  

	
The sentence “The Committee may impose other conditions on Vesting.” in rule ‎8.1.2 does not apply in relation to Approved Options.

 

	
19.2  

	
Rule ‎8.2.2 is deleted and replaced by:

 

“if the Approved Option is not subject to any Performance Conditions, the Approved Option will Vest in full. The Committee may decide on the grant of an Approved Option that the Approved Option is to be pro rated to reflect the acceleration of Vesting.”

 

	
19.3  

	
Rule ‎8.3.2 does not apply to Approved Options.

 

	
20  

	
Exchange of Approved Options

 

	
20.1  

	
If HMRC approval of the terms of Approved Options is to be maintained, Approved Options can only be exchanged, as described in rule ‎8.6, if the Acquiring Company:

 

	 	
20.1.1

	
obtains Control of the Company as a result of making a general offer to acquire:

 

	 	
(i)  

	
the whole of the issued ordinary share capital of the Company (other than that which is already owned by it and its subsidiary or holding company) made on a condition such that, if satisfied, the Acquiring Company will have Control of the Company;

 

	 	
(ii)  

	
all the Shares (or all those Shares not already owned by the Acquiring Company or its subsidiary or holding company); or

 

	 	
20.1.2

	
obtains Control of the Company under a compromise or an arrangement sanctioned by the court under Section 895 of the Companies Act 2006 or other local sanction procedure which the HMRC agrees is equivalent; or

 

	 	
20.1.3

	
becomes bound or entitled to acquire Shares under Section 981 of the Companies Act 2006 or other local legislation which HMRC agrees is equivalent.

 

  

  

  

 

 

	
20.2  

	
Approved Options must be exchanged within the period referred to in paragraph 26(3) of ITEPA and with the agreement of the company offering the exchange.

 

	
20.3  

	
The new award will be in respect of shares which satisfy the conditions of paragraph 27(4) of ITEPA, in a body corporate falling within paragraph 16(b) or (c) of ITEPA.

 

	
20.4  

	
Rule ‎8.6.4 is replaced with the following:

 

“must be subject to a Performance Condition which the Committee, acting fairly and reasonably, considers:

 

	 	
(i)  

	
is, so far as is practicable, equivalent to; and

 

	 	
(ii)  

	
will be no more or less difficult to satisfy than

 

the Performance Condition applying to the existing Award; and”.

 

	
20.5  

	
Following exchange, the Plan will remain the Company’s plan.

 

	
20.6  

	
Where there is an offer to acquire shares as described in paragraph 20.1.1 or a court sanction as described in paragraph 20.1.2 and:

 

	 	
(i)  

	
the shareholders of the Acquiring Company, immediately after it has obtained Control, are substantially the same (at least 75%) as the shareholders of the Company immediately before then; or

 

	 	
(ii)  

	
the obtaining of Control amounts to a merger with the Company; and

 

	 	
(iii)  

	
the Acquiring Company consents to the exchange of Approved Options under this paragraph,

 

Approved Options will not be exercisable. Instead, all Approved Options will be exchanged in accordance with rule ‎8.6, as amended in relation to Approved Options.

 

	
21  

	
Changing the terms of Approved Options

 

	
21.1  

	
The Committee need not obtain the approval of the Company in general meeting for any minor changes which are necessary or desirable in order to obtain or maintain HMRC approval for the terms of Approved Options under ITEPA or any other enactment.

 

	
21.2  

	
If HMRC approval of the terms of Approved Options is to be maintained, any change to the Plan under rule ‎9 which requires HMRC approval and which is made after it has been approved under ITEPA will only have effect when it is approved by HMRC.

 

  

  

  

 

Schedule 2

United States – Incentive Stock Options

 

The Grantor may designate a Market Value Option as an Incentive Stock Option within the meaning of Section 422 of the Code (as defined below) and granted under this Schedule 2. If it does, the provisions of the Plan relating to Market Value Options will apply to such ISOs, as amended by this Schedule 2. No other types of Awards may be designated as ISOs under this Schedule 2.

 

	
1  

	
Definitions

 

The following definitions apply to this Schedule 2 and add or amend, as appropriate, the definitions which are set out in the Plan:

 

“Code” means the United States of America Internal Revenue Code of 1986, as amended;

 

“Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months;

 

“Incentive Stock Option” or “ISO” means a stock option that is intended to qualify for special federal income tax treatment pursuant to sections 421 and 422 of the Code (or a successor provision thereof) and which is so designated by the Grantor on the Award  Date. Under no circumstances shall any Market Value Option that is not specifically designated as an ISO be considered an ISO;

 

“Leave of Absence” means a leave of absence authorised by the Participant’s employer for any reason;

 

“Market Value” means:

 

	 	
(iv)

	
in respect of any day, the closing middle market quotation of a Share quoted on the London Stock Exchange for the day immediately preceding the Award Date on which the relevant market was open or, in the case of an ADR or ADS listed on the New York Stock Exchange, the closing price quoted on the New York Stock Exchange for that day; or

 

	 	
(v)

	
if the Shares are not fully quoted on the London Stock Exchange, the market value of a Share determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed on or before that date with HMRC; and

 

“Subsidiary Corporation” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the Award Date, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

	
2  

	
Eligibility to be granted ISOs

 

An ISO may be granted to any employee of the Company or a Subsidiary Corporation.

 

Notwithstanding the foregoing, to the extent required under Section 422 of the Code, an ISO may not be granted to an individual who, at the Award Date, owns stock possessing more than 10% of the total combined voting power of all classes of stock of his or her employer corporation or of its parent or Subsidiary Corporations (as such ownership may 

 

  

  

  

 

be determined for purposes of Section 422(b)(6) of the Code) unless: (i) at the time such ISO is granted, the Option Price is at least 110% of the Market Value of the Shares subject to the ISO; and (ii) the ISO by its terms is not exercisable after the expiration of five years from the Award Date.

 

	
3  

	
Exercise period for ISOs

 

Notwithstanding anything in the rules of the Plan, an ISO will lapse, at the latest, 10 years (or five years in the case of an individual described in Section 422(b)(6) of the Code (relating to certain 10% owners)) after the Award Date.

 

	
4  

	
Individual limit on ISOs

 

To the extent that the aggregate Market Value of the Shares subject to an ISO (determined as of the Award Date), which first becomes exercisable under the Plan during any calendar year (including any other options granted under such stock option plans required to be taken into account under Section 422(d) of the Code), exceeds US$100,000, the portion of such ISO that exceeds US$100,000 shall not be an ISO, but shall continue in effect as a Market Value Option governed by the rules of the Plan not including this Schedule 2.

 

	
5  

	
Option Price of an ISO

 

The Option Price of an ISO will not be less than 100% (or 110%, in the case of an individual described in Section 422(b)(6) of the Code (relating to certain 10% owners)) of the Market Value of a Share on the Award Date.

 

	
6  

	
Overall limit on number of ISOs

 

The aggregate number of Shares subject to ISOs will not exceed the lower of the limits set out in rules ‎2.12 and ‎2.13 of the Plan and [●] million Shares (or, if ISOs are granted over ADSs or ADRs, the equivalent in ordinary shares). The Committee may make such adjustments as they see fit to this limit to take account of any transaction set out in rule ‎3.3 of the Plan.

 

	
7  

	
Transferring ISOs

 

An ISO may not be transferred, assigned or otherwise disposed of other than by will or the laws of descent and distribution and, during the lifetime of a Participant, must not be exercisable by any other person.

 

	
8  

	
Holding requirement

 

If a Participant disposes of Shares acquired upon exercise of an ISO in a “disqualifying disposition” within the meaning of Section 422 of the Code, that is, less than:

 

	 	
(vi)  

	
two years after the Award Date of the ISO; or

 

	 	
(vii)  

	
one year from the issue or transfer of Shares to the Participant on the exercise of the ISO,

 

or in any other disqualifying disposition within the meaning of Section 422 of the Code, the Participant shall notify the Company of the date and terms of such disposition in writing within 15 days thereof.

 

  

  

  

 

 

	
9  

	
Withholding

 

The Company, the Grantor, any employing company or the trustee of any benefit trust may withhold such amount and make such arrangement as it considers necessary to meet any applicable tax withholding liability. These arrangements may include the sale of Shares on behalf of a Participant or a reduction in the number of Shares to which the Participant would otherwise be entitled.

 

	
10  

	
Leaving employment

 

Except in the event of the Participant’s death, where rule ‎7.2 of the Plan applies with respect to an ISO, if such ISO is exercised later than three months after cessation of employment, it shall cease to be treated as an ISO, but shall continue in effect as a Market Value Option governed by the rules of the Plan, not including this Schedule 2.

 

Notwithstanding the foregoing, if cessation of employment is by reason of Disability, the ISO shall continue to be treated as an ISO if it is exercised within one year following cessation of employment and shall cease to be treated as an ISO, but shall continue in effect as a Market Value Option governed by the rules of the Plan, not including this Schedule 2, if it is exercised later than one year after cessation of employment.

 

	
11  

	
Leave of Absence

 

If a Leave of Absence exceeds three months and the Company is required, either by statute or contract, to re-employ the Participant upon expiration of such leave, ISOs will continue to be treated as ISOs during the Leave of Absence. If re-employment upon expiration of a Leave of Absence that exceeds three months is not so guaranteed, the ISOs held by the Participant shall cease to be treated as ISOs six months after the first day of such leave, but shall continue in effect as a Market Value Option governed by the rules of the Plan, not including this Schedule 2.

 

	
12  

	
Amendment

 

Shareholder approval of any amendment made to the Plan or this Schedule 2 shall be obtained to the extent necessary to comply with Section 422 of the Code (relating to ISOs).

 

	
13  

	
Adjustment and exchange

 

If rule ‎3.3 or rule ‎8.3 of the Plan applies with respect to ISOs, any adjustment to or exchange of an ISO shall be made in accordance with Section 424 of the Code.

 

	
14  

	
Effective date and termination

 

Unless terminated earlier by the Committee, this Schedule 2 shall terminate on the day prior to the tenth anniversary of the earlier of:

 

	 	
(viii)

	
the adoption of the Plan by the Committee; and

 

	 	
(ix)

	
the approval of the Plan by the Company’s shareholders.

 

All ISOs granted under this Schedule 2 prior to its termination shall remain in effect until such ISOs have been satisfied or terminated in accordance with the provisions of the Plan and this Schedule 2.

 

  

  

  

 

 

	
15  

	
Governing law

 

English law governs the ISOs and their construction. However, ISOs will be construed in accordance with the provisions of Section 422 of the Code so as to preserve their status as Incentive Stock Options.

 

	
16  

	
Failure to comply with the Code in relation to an ISO

 

To the extent that an ISO fails to meet any of the requirements of Section 422 of the Code, it shall cease to be an ISO but shall, from the date of such failure, continue in effect as a Market Value Option governed by the rules of the Plan, not including this Schedule 2.Exhibit 10.1

Exhibit 10.1

EXECUTION COPY

AMENDMENT NO. 12

TO

RECEIVABLES PURCHASE AGREEMENT

THIS AMENDMENT NO. 12 TO RECEIVABLES PURCHASE AGREEMENT dated as of July 1, 2010 (this
“Agreement”) is entered into among INSIGHT RECEIVABLES, LLC (the “Seller”), INSIGHT
ENTERPRISES, INC. (“Insight” and the “Servicer”), the Purchasers and Managing
Agents party hereto, and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main
Office Chicago)), as agent for the Purchasers (in such capacity, the “Agent”). Capitalized
terms used herein but not defined herein shall have the meanings provided in the Receivables
Purchase Agreement defined below.

W I T N E S S E T H

WHEREAS, the parties hereto are parties to that certain Receivables Purchase Agreement dated
as of December 31, 2002 (as amended, restated, supplemented or otherwise modified from time to
time, the “Receivables Purchase Agreement”);

WHEREAS, the parties hereto have agreed to amend the Receivables Purchase Agreement on the
terms and conditions hereafter set forth;

NOW, THEREFORE, in consideration of the premises set forth above, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

SECTION 1. Amendment. Subject to the fulfillment of the conditions precedent set
forth in Section 2 below, the Receivables Purchase Agreement is hereby amended as follows:

1.1 Section 5.1 thereof is hereby amended to add the following new clause (z) at the end
thereof:

(z) Payments in Ordinary Course. Each remittance of Collections by the Seller
to the Agent, the Managing Agents or the Purchasers hereunder will have been made (i) in
payment of a debt incurred in the ordinary course of business or financial affairs and (ii)
in the ordinary course of business or financial affairs.

1.2 Section 9.1(g)(iii) thereof is amended to delete the reference therein to “6.50%” and to
substitute “6.00%” therefor

1.3 Section 10.2 thereof is hereby amended and restated in its entirety as follows:

Section 10.2 Increased Cost and Reduced Return. (a) If any Regulatory Change
(i) subjects any Purchaser or any Funding Source to any charge or withholding on or with
respect to any Funding Agreement or this Agreement or a Purchaser’s or Funding Source’s
obligations under a Funding Agreement or this Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Purchaser or any Funding
Source of any amounts payable under any Funding Agreement

 

 

 

or this Agreement (except for
changes in the rate of tax on the overall net income of a Purchaser or Funding Source or
taxes excluded by Section 10.1) or (ii) imposes, modifies or deems applicable any
reserve, assessment, fee, tax, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or liabilities of a Funding Source
or a Purchaser, or credit extended by a Funding Source or a Purchaser pursuant to a Funding
Agreement or this Agreement or (iii) imposes any other condition the result of which is to
increase the cost to a Funding Source or a Purchaser of performing its obligations under a
Funding Agreement or this Agreement, or to reduce the rate of return on a Funding Source’s
or Purchaser’s capital as a consequence of its obligations under a Funding Agreement or this
Agreement, or to reduce the amount of any sum received or receivable by a Funding Source or
a Purchaser under a Funding Agreement or this Agreement, or to require any payment
calculated by reference to the amount of interests or loans held or interest received by it,
then, upon demand by the applicable Managing Agent, Seller shall pay to such Managing Agent,
for the benefit of the relevant Funding Source or Purchaser, such amounts charged to such
Funding Source or Purchaser or such amounts to otherwise compensate such Funding Source or
such Purchaser for such increased cost or such reduction. The term “Regulatory
Change” shall mean (i) the adoption after the date hereof of any applicable law, rule or
regulation (including any applicable law, rule or regulation regarding capital adequacy) or
any change therein after the date hereof, (ii) any change after the date hereof in the
interpretation or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, or (iii) the compliance, whether commenced
prior to or after the date hereof, by any Funding Source or Purchaser with the final rule
titled Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance:
Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles;
Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues,
adopted by the United States bank regulatory agencies on December 15, 2009, or any rules or
regulations promulgated in connection therewith by any such agency.

(b) A certificate of the applicable Purchaser or Funding Source setting forth the
amount or amounts necessary to compensate such Purchaser or Funding Source pursuant to
paragraph (a) of this Section 10.2 shall be delivered to the Seller and shall be
conclusive absent manifest error.

(c) If any Purchaser or any Funding Source has or anticipates having any claim for
compensation from the Seller pursuant to clause (iii) of the definition of Regulatory Change
appearing in paragraph (a) of this Section 10.2, and such Purchaser or Funding
Source believes that having the facility publicly rated by one credit rating
agency would reduce the amount of such compensation by an amount deemed by such
Purchaser or Funding Source to be material, such Purchaser or Funding Source shall provide
written notice to the Seller and the Servicer (a “Ratings Request”) that such
Purchaser or Funding Source intends to request a public rating of the facility from one
credit rating agency selected by such Purchaser or Funding Source and reasonably acceptable
to the Seller, of at least “A”, or its equivalent (the “Required Rating”). The

 

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Seller and the Servicer agree that they shall cooperate with such Purchaser’s or Funding
Source’s efforts to obtain the Required Rating, and shall provide the applicable credit
rating agency (either directly or through distribution to the Agent, applicable Managing
Agent, Purchaser or Funding Source), any information requested by such credit rating agency
for purposes of providing and monitoring the Required Rating. The Managing Agents shall pay
(i) the initial fees payable to the credit rating agency for providing the rating, (ii)
reasonable attorneys’ fees of counsel for Managing Agents and the Seller, payable in
connection with obtaining the rating, subject to a cap of $10,000 in the aggregate, and
(iii) all ongoing fees payable to the credit rating agency for their continued monitoring of
the rating, in each case allocated among the Managing Agents based on the Pro Rata Share of
their Purchaser Groups. Nothing in this Section 10.2(c) shall preclude any
Purchaser or Funding Source from demanding compensation from the Seller pursuant to
Section 10.2(a) hereof at any time and without regard to whether the Required Rating
shall have been obtained, or shall require any Purchaser or Funding Source to obtain any
rating on the facility prior to demanding any such compensation from the Seller.

1.4 The definition of “Amortization Date” set forth in Exhibit I thereto is amended and
restated in its entirety as follows:

"Amortization Date” means the earliest to occur of (i) the day on which any of
the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the
Business Day immediately prior to the occurrence of an Amortization Event set forth in
Section 9.1(d)(ii), (iii) the Business Day specified in a written notice from the
Agent following the occurrence of any other Amortization Event pursuant to Section
9.2 hereof, (iv) the Business Day specified in a written notice from the Agent following
the failure to obtain the Required Rating within 90 days following delivery of a Ratings
Request to the Seller and the Servicer, and (iv) the date which is 30 days after the Agent’s
receipt of written notice from Seller that it wishes to terminate the facility evidenced by
this Agreement.

1.5 Exhibit I thereto is amended to add the new definition “Applicable Price Differential”
thereto in alphabetical order”

"Applicable Price Differential” has the meaning set forth in the Fee Letter.

1.6 The definition of “Deducted Receivable” set forth in Exhibit I thereto is amended and
restated in its entirety as follows:

"Deducted Receivables” means, collectively, the California Contingent
Receivables, the Software Spectrum Government Receivables, and all Receivables the Obligor
of which is Microsoft Corporation or any of its subsidiaries.

1.7 Clause (ii) of the definition of “Eligible Receivable” set forth in Exhibit I thereto is
amended to delete the reference therein to “25%” and to substitute “35%” therefor.

 

3

 

1.8 Clause (v) of the definition of “Eligible Receivable” set forth in Exhibit I thereto is
amended and restated in its entirety as follows:

(v) which by its terms is due and payable within 90 days of the original invoice date
therefor and has not had its payment terms extended; provided, however, that
(i) no more than 35% of the aggregate Outstanding Balance of all Eligible Receivables may be
due and payable more than 30 days and within 60 days after the original invoice date thereof
and (ii) no more than 10% of the aggregate Outstanding Balance of all Eligible Receivables
may be due and payable more than 60 days and within 90 days after the original invoice date
thereof;

1.9 The definition of “Facility Termination Date” set forth in Exhibit I thereto is amended
and restated in its entirety as follows:

"Facility Termination Date” means the earliest of (i) April 1, 2013, (ii) the
Liquidity Termination Date and (iii) the Amortization Date.

1.10 The definition of “Fee Letter” set forth in Exhibit I thereto is amended and restated in
its entirety as follows:

"Fee Letter” means (i) that certain Fourth Amended and Restated Fee Letter,
dated as of June 24, 2010, among Seller, the Agent and the Managing Agents and (ii) any
other letter designated as a “Fee Letter” therein and entered into between Seller and any of
the parties hereto from time to time, in each case as such letter may be amended, restated,
supplemented or otherwise modified and in effect from time to time.

1.11 The definition of “LIBO Rate” set forth in Exhibit I thereto is amended to delete the
reference therein to “4.25%” and to substitute “3.45% plus the Applicable Price Differential”
therefor.

1.12 The definition of “Liquidity Termination Date” set forth in Exhibit I thereto is amended
and restated in its entirety as follows.

"Liquidity Termination Date” means April 1, 2013 or such later date to which
the Liquidity Termination Date may be extended in accordance with Section 12.3.

1.13 Exhibit I thereto is amended to add the following new definitions thereto in alphabetical
order:

"Ratings Request” has the meaning set forth in Section 10.2(c).

"Required Rating” has the meaning set forth in Section 10.2(c).

SECTION 2. Conditions Precedent. This Agreement shall become effective as of the
close of business on the date first above written, subject to the satisfaction of the conditions
precedent that (a) the Managing Agents shall have received: (i) counterparts of this Agreement
executed by each of the parties hereto, (ii) a Reaffirmation of Performance Undertaking in the form
attached as Exhibit A, executed by Insight, and (iii) all fees and expenses required to be paid on
the date hereof pursuant to the terms of the Fee Letters and (b) the Managing Agents shall have
received for the ratable account of the Purchasers in their respective Purchaser Groups, all fees
required to be paid on the date hereof pursuant to the Fourth Amended and Restated Fee Letter,
dated as of July 1, 2010, by and among the Agent, PNC Bank, National Association and the Seller.

 

4

 

SECTION 3. Representations and Warranties. Each of the Seller and the Servicer hereby
represents and warrants that (i) this Agreement constitutes its legal, valid and binding
obligation, enforceable against such party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law) and the implied covenants of
good faith and fair dealing; and (ii) after giving effect to this Agreement, the representations
and warranties of each such party, respectively, set forth in Article V of the Receivables
Purchase Agreement are true and correct in all material respects with the same effect as if made on
the date hereof, except to the extent such representations and warranties expressly relate to an
earlier date. The Seller further represents and warrants that after giving effect to this
Agreement, no event has occurred and is continuing that constitutes an Amortization Event or a
Potential Amortization Event.

SECTION 4. Reference to and Effect on the Receivables Purchase Agreement.

4.1 Upon the effectiveness of this Agreement, (i) each reference in the Receivables Purchase
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean
and be a reference to the Receivables Purchase Agreement, as amended hereby, and (ii) each
reference to the Receivables Purchase Agreement in any other Transaction Document or any other
document, instrument or agreement executed and/or delivered in connection therewith, shall mean and
be a reference to the Receivables Purchase Agreement as amended hereby.

4.2 Except as specifically amended hereby, the terms and conditions of the Receivables
Purchase Agreement, of all other Transaction Documents and any other documents, instruments and
agreements executed and/or delivered in connection therewith, shall remain in full force and effect
and are hereby ratified and confirmed.

4.3 The execution, delivery and effectiveness of this Agreement shall not operate as a waiver
of any right, power or remedy of the Agent, any Purchaser or any Managing Agent under the
Receivables Purchase Agreement or any other Transaction Document or any other document, instrument
or agreement executed in connection therewith, nor constitute a waiver of any provision contained
therein, in each case except as specifically set forth herein.

SECTION 5. Costs and Expenses. The Seller agrees to pay on demand all reasonable
costs and expenses of the Agent, the Managing Agents and the Purchasers in connection with the
preparation, execution and delivery of this Agreement and the other instruments and documents to be
delivered in connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent, the Managing Agents and the Purchasers with
respect thereto and with respect to advising the Agent, the Managing Agents and the Purchasers as
to their respective rights and responsibilities hereunder and thereunder.

 

5

 

SECTION 6. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.

SECTION 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, BUT NOT LIMITED TO, 735 ILCS SECTION 105/5-1 ET
SEQ., BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS) OF THE STATE OF ILLINOIS.

SECTION 8. Section Titles. The section titles contained in this Agreement are and
shall be without substance, meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

[Remainder of page left intentionally blank]

 

6

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the date first above written.

	 	 	 	 	 
	 	INSIGHT RECEIVABLES, LLC

 	 
	 	By:  	Insight Receivables Holding, LLC, its Sole Member
 	 
	 	 	 	 
	 	 	 
	 	By:  	/s/ Helen Johnson
 	 
	 	 	Name:  	Helen Johnson 	 
	 	 	Title:  	Treasurer 	 
	 
	 
	 	INSIGHT ENTERPRISES, INC.

 	 
	 	By:  	/s/ Helen Johnson
 	 
	 	 	Name:  	Helen Johnson 	 
	 	 	Title:  	Treasurer 	 
	 

Signature Page to

Amendment No. 12 to Receivables Purchase Agreement

 

 

 

	 	 	 	 	 
	 	JUPITER SECURITIZATION COMPANY LLC
(successor by merger to JS Siloed Trust), as a Conduit

 	 
	 	By:  	JPMorgan Chase Bank, N.A., its administrative trustee	 
	 
	 	 	 
	 	By:  	/s/ Joel C. Gedroic
 	 
	 	 	Name:  	Joel C. Gedroic 	 
	 	 	Title:  	Executive Director 	 
	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial Institution, as Agent and as a Managing Agent

 	 
	 	By:  	/s/ Joel C. Gedroic
 	 
	 	 	Name:  	Joel C. Gedroic 	 
	 	 	Title:  	Executive Director 	 
	 

Signature Page to

Amendment No. 12 to Receivables Purchase Agreement

 

 

 

	 	 	 	 	 
	 	MARKET STREET FUNDING LLC, as a Conduit

 	 
	 	By:  	/s/ Doris J. Hearn
 	 
	 	 	Name:  	Doris J. Hearn 	 
	 	 	Title:  	Vice President 	 
	 
	 	PNC BANK, NATIONAL ASSOCIATION
as a Financial Institution and a Managing Agent

 	 
	 	By:  	/s/ Robin A. Reeher
 	 
	 	 	Name:  	Robin A. Reeher 	 
	 	 	Title:  	Vice President

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