Document:

SECOND AMENDMENT TO
                         MANAGED CARE ALLIANCE AGREEMENT

THIS AMENDMENT (the "Amendment") is entered into this 9th day of May, 2005 by
and between CIGNA Health Corporation, for and on behalf of its CIGNA Affiliates
(individually and collectively, "CIGNA"), and Gentiva CareCentrix, Inc. ("MCA").

                               W I T N E S S E T H

WHEREAS, CIGNA and MCA entered into a Managed Care Alliance Agreement which
became effective January 1, 2004 (the "Agreement") whereby MCA agreed to provide
or arrange for the provision of certain home health care services to
Participants, as that term is defined in the Agreement;

WHEREAS, the parties wish to amend certain provisions of the Agreement as set
forth below;

NOW THEREFORE, CIGNA and MCA agree as follows:

     1.   Effective July 1, 2005, the Agreement is amended to extend to CIGNA's
          Massachusetts, Maine, New Hampshire, Rhode Island and Vermont markets.

     2.   Effective July 1, 2005, the Agreement is amended to add Exhibit XXV -
          CIGNA NEW ENGLAND, attached hereto.

     3.   The parties agree that Paragraph 10 of the Amendment to the Agreement
          dated January 1, 2005 is null and void as of the effective date of
          such Amendment and shall have no force and effect.

To the extent that the provisions in the Agreement, including any prior
amendments, conflict with the terms of this Amendment (including the exhibits
and schedules hereto), the terms in this Amendment shall supersede and control.
All other terms and conditions of the Agreement, as previously amended,
including the Program Attachments and the Exhibits attached thereto, shall
remain the same and in full force and effect. Capitalized terms not defined
herein but defined in the Agreement shall have the same meaning as defined in
the Agreement.

This Amendment shall take effect commencing on April 15, 2005

IN WITNESS WHEREOF, CIGNA and MCA have caused their duly authorized
representatives to execute this Amendment as of the date first written above.

CIGNA HEALTH CORPORATION

By:
      -------------------------------------
Its:       Senior Vice President
      -------------------------------------
Dated:
      -------------------------------------

GENTIVA CARECENTRIX, INC.

By:
      -------------------------------------
Its:      President and COO
      -------------------------------------
Dated:
      -------------------------------------
<PAGE>

                                   EXHIBIT XXV

                                CIGNA NEW ENGLAND

     Effective July 1, 2005, the Agreement shall extend to CIGNA's
     Massachusetts, Maine, New Hampshire, Rhode Island and Vermont (collectively
     "New England") markets. The terms and conditions of the Agreement,
     including the applicable Program Attachments, shall apply to Covered
     Services provided to Participants in New England ("CIGNA New England
     Participants") except as otherwise provided in this Amendment.

A.   Transition of Existing Patients/Provider Issues

     Effective July 1, 2005, MCA is responsible for the coordination of all new
     Covered Home Care Services for CIGNA New England Participants. CIGNA will
     direct Participating Providers, and coordinators of home care, and CIGNA
     Health Facilitation Center personnel to utilize MCA as the sole source of
     Covered Home Care Services for CIGNA New England Participants.

     No later than April 1, 2005, CIGNA and MCA agree to cooperate in good faith
     to establish a transition plan for CIGNA New England Participants. As part
     of that plan:

          o    A process to identify CIGNA New England Participants for
               transition, as may be required, will be developed. This process
               will include CIGNA requesting active CIGNA New England
               Participant patient lists from all Participating Providers of
               Covered Home Care Services in New England and authorizing MCA to
               contact those Participating Providers on behalf of CIGNA. Best
               efforts shall be made to produce an initial listing of CIGNA New
               England Participants subject to transition, with periodic updates
               with additional CIGNA New England Participant names identified
               over the April to June 2005 time period.
          o    CIGNA will provide each CIGNA New England Participant identified
               for transition with a transition notice as required by state
               regulations as soon as practicable following the issuance of the
               initial or subsequent transition listings. MCA and Represented
               Providers will be responsible for patient transition activities
               subsequent to notice from CIGNA.
          o    MCA will contact all Represented Providers and notify them of the
               requirement to cease all billings to CIGNA for all Covered Home
               Care Services and commence billing for such Covered Home Care
               Services through MCA.

     Further, CIGNA will:

          o    Terminate or suspend any direct agreements with any CIGNA New
               England Participating Provider of Covered Home Care Services for
               HMO, Gatekeeper and PPO Program Plans, effective June 30, 2005.

B.   Compensation and Billing.

     CIGNA and MCA agree that the terms and conditions applicable to the
     compensation portions of the Agreement, Exhibits, the applicable Program
     Attachments and rate schedules shall be applicable to Covered Home Care
     Services provided to CIGNA New England Participants, except as otherwise
     provided in this Amendment.

     Notwithstanding the capitation rate set forth in the Agreement, should the
     Baseline PMPM as calculated in Section C below entitled "Baseline PMPM
     Rate" be below * PMPM, then the capitation rate for CIGNA New England HMO
     Program and Gatekeeper Program Participants will be the Baseline PMPM as
     defined

*Confidential Treatment Requested

                                        2
<PAGE>

     and calculated in Section C below * (the "NE CAP PMPM") per member per
     month effective July 1, 2005. The NE CAP PMPM rate shall be effective from
     July 1, 2005 up to and including December 31, 2005. The NE CAP PMPM rate
     will be allocated among the existing HMO Program and Gatekeeper Program
     membership based on the weighted average of membership within each Program.

     If the Baseline PMPM is at or above *, then the NE CAP PMPM shall be * for
     the term of this Amendment.

     Between June 1, 2005 and June 30, 2005, MCA shall be reimbursed for all
     Covered Home Care Services at the existing fee-for-service rates applicable
     to each Program. CIGNA and MCA agree to Amend the Agreement under: (1)
     Exhibit A to the HMO Program Attachment - Fee For Service, Reimbursement
     For Other Services, Rate Area Designations; (2) Exhibit A to the PPO &
     Indemnity Program Attachment, Reimbursement For Other Services, Rate Area
     Designations; and (3) Exhibit A to Gatekeeper Program Attachment - Fee For
     Service, Reimbursement For Other Services, Rate Area Designations to
     identify Massachusetts and Rhode Island as Rate Area and Rate Designation*.

C.   Baseline PMPM Rate.

     Attachment 1 Identified TINS contains a listing of Tax Identification
     Numbers (TINs) for those providers that have historically provided Covered
     Home Care Services to CIGNA New England Participants. Each TIN is
     designated on Attachment 1 as either "*" or "*". Attachment 2 Master List
     of HCPCs represents a listing of Covered Home Care Services provided to
     CIGNA New England Participants. On Attachment 2, each HCPC is designated as
     "*" services or "*" services.

     No later than *, CIGNA shall provide MCA with a "* Report" for CIGNA New
     England Participants covered under Commercial HMO, Gatekeeper FlexCare and
     Open Access/Open Access Plus plans (the "CIGNA New England Managed Care
     Participants") which will detail any * which meets all of the criteria
     listed below for the purpose of establishing the Baseline PMPM:

     HCPC code on the Master List of HCPCs
     Date of Service (*)
     * date (*)

     The * Report shall include the following fields:

     Provider TIN
     Provider Name
     Product Code
     HCPC Code
     *
     *
     Date of Service
     Diagnosis Code
     *
     Member ID

     MCA shall conduct a review of the * Report. Any Provider TIN(s) that appear
     on the * Report but do not appear on Attachment 1 Identified TINS will be
     reviewed and designated, as may be mutually agreed upon based on previously
     agreed definitions of setting, as either "*" (*) or "*" (*). Attachment 1
     will then be amended to reflect the additional TINs. Any TIN on the *
     Report with a TIN designated as "*" will not be considered in determining
     the Baseline PMPM. However, should additional information become available
     to

*Confidential Treatment Requested

                                       3
<PAGE>

     appropriately categorize a provider which either has no TIN and/or no
     provider name as *, such provider may be redefined.

     The "*" shall be the sum of services on the * Report which meets the
     criteria below:

     TINs with a designation "*"
     HCPCs with a designation "*" services
     Service rendered to CIGNA New England Managed Care Participant

     No later than *, CIGNA will provide a report of its monthly membership of
     CIGNA New England Managed Care Participants for the period *. The "Baseline
     Membership" will be the summation of this monthly membership for the
     defined period. The Baseline PMPM shall be determined using the following:

                                        *
                               -------------------
                               Baseline Membership

D.   Monthly Reporting

     Commencing in *, for services provided on or after *, CIGNA will provide
     MCA with a monthly report detailing any * to CIGNA New England Participants
     that contained a HCPC code listed on Attachment 2 (the "Leakage Report") no
     later than the * day of each month, excluding month one (*). The Leakage
     Report shall contain the following information:

     Provider TIN
     Provider Name
     Product Code
     HCPC Code
     *
     *
     Date of Service
     *
     Diagnosis Code
     Member ID
     Covered lives for the preceding month.

     Should a monthly Leakage Report not be received within * day of the * day
     of the month following the month that is the subject of the Leakage Report,
     then for the purposes of the Reconciliation detailed in section E, any * by
     CIGNA in the calendar month that is the subject of the delayed Leakage
     Report*. For example, if the * Leakage Report *

E.   Reconciliation.

     No later than *, CIGNA shall provide MCA with a "Period Close Leakage
     Report" for the CIGNA New England Participants which will detail any *
     which meets all of the criteria listed below:

     HCPC code on the Master List of HCPCs;
     Dates of Service (*); and,
     * date *

     The Period Close Leakage Report shall include the following fields:

*Confidential Treatment Requested

                                       4
<PAGE>

     Provider TIN
     Provider Name
     Product Code
     HCPC Code
     *
     *
     Date of Service
     *
     Diagnosis Code
     Member ID

     The parties acknowledge and agree that in the event of CIGNA's inability to
     provide a Period Close Leakage Report to MCA no later than *.

     The Leakage PMPM shall be calculated as follows:

     MCA shall conduct a review of the Period Close Leakage Report. Any Provider
     TIN(s) that appear on the Period Close Leakage Report but do not appear on
     Attachment 1 Identified TINS will be reviewed and designated, as may be
     mutually agreed upon based on previously agreed definitions of setting, as
     either "*" or "*". Attachment 1 will then be amended to reflect the
     additional TINs. Any TIN on the Period Close Leakage Report with a TIN
     designated as "*" will not be considered in determining the Leakage PMPM.

     The * shall be the sum of services on the "Period Close Leakage Report"
     which meets the criteria below:

     TINs with a designation "*"
     HCPCs with a designation "*" services
     Services rendered to CIGNA New England Managed Care Participants

     Effective PMPM

     The * Baseline Membership will be the sum of the monthly membership for
     CIGNA New England Managed Care Participants for each month during the
     period *. The * Baseline Membership shall include all months in this time
     period whether or not CIGNA * Leakage Report *

     The Effective PMPM will be the sum of:

          1.   *
          2.   *;
          3.   *"*"; and,
          4.   *  as set forth in this Section E.

     Divided by:

     The * Baseline Membership

F.   Leakage Reconciliation

     If the * exceeds the *, then * will be entitled to * (1) * or (2) *. If the
     * is less than the *, no * is due *. The parties acknowledge and agree that
     the reconciliation process outlined in this Amendment shall be the
     exclusive and sole recourse available to * New England Managed Care
     Participants.

*Confidential Treatment Requested

                                       5
<PAGE>

G.   Cost Reconciliation to *

     a.   If the * is less than the *, then the variance shall be called the *.
          For example, if the *.

     b.   No later than *, MCA will calculate an Actual PMPM as being the *
          which meet the following criteria:

          Dates of Service (*)
          * date (*)
          * under the capitated arrangement for sevices meeting guidelines for
          CIGNA New England Participants covered under HMO Program and
          Gatekeeper Program plans

          The Cost PMPM is calculated as the NE CAP PMPM less *.

          In the event that the * exceeds the *, then * will occur. * shall be
          entitled to *, but in no event shall that * exceed the value of the *.
          For example, the NE CAP PMPM is * and Cost PMPM is *, then MCA shall
          be entitled to (*) and would have no recourse for the remaining *.
          Example 2: *. Example 3, the NE CAP PMPM is *, then MCA shall be
          entitled to * and would have no recourse for the remaining *.

     c.   * will * through an adjustment to the * for * New England Participants
          covered under HMO Program and Gatekeeper Program plans for the * or,
          in the event that the *.

*Confidential Treatment Requested

                                       6
<PAGE>

Attachment 1 - Identified TINS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
TIN (Formatted)    Provider Name (As provided by CHC)                      Exhibit Designation
--------------------------------------------------------------------------------------------------------
<S>                <C>                                                   <C>
*                  *                                                     *
--------------------------------------------------------------------------------------------------------
</TABLE>

*Confidential Treatment Requested

                                       7
<PAGE>

Attachment 2 - Master List of HCPCs

<TABLE>
<CAPTION>
---------------------------------------------
HCPC              Exhibit Designation
---------------------------------------------
<S>             <C>
*               *
---------------------------------------------
</TABLE>

                                       8EX-4.1

 

Exhibit 4.1

HSBC Holdings plc

 

THE RULES

of the

HSBC HOLDINGS SAVINGS-RELATED SHARE OPTION PLAN:

(INTERNATIONAL)

Amended by resolutions of the Remuneration Committee

on 2 August 1996 and 20 February 1998, March 2001 and 29 November 2002

and further amended by the Company in general meeting on 26 May 2000

and 27 May 2005

 

 

 

Rules of the HSBC Holdings Savings-Related Share Option Plan:

(International)

CONTENTS

	 	 	 	 	 	 	 
	Rule	 	 	 	 	Page No	 
	 
	1
	 	DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	2
	 	INVITATION OF APPLICATIONS	 	 	10	 
	 
	 	 	 	 	 	 
	3
	 	SCALING DOWN	 	 	12	 
	 
	 	 	 	 	 	 
	4
	 	GRANT OF OPTIONS	 	 	12	 
	 
	 	 	 	 	 	 
	5
	 	NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE GRANTED	 	 	13	 
	 
	 	 	 	 	 	 
	6
	 	RIGHTS OF EXERCISE	 	 	16	 
	 
	 	 	 	 	 	 
	7
	 	TAKEOVER, RECONSTRUCTION AND AMALGAMATION, AND LIQUIDATION	 	 	20	 
	 
	 	 	 	 	 	 
	8
	 	MANNER OF EXERCISE	 	 	22	 
	 
	 	 	 	 	 	 
	9
	 	ISSUE OF SHARES	 	 	23	 
	 
	 	 	 	 	 	 
	10
	 	ADJUSTMENTS	 	 	23	 
	 
	 	 	 	 	 	 
	11
	 	ADMINISTRATION	 	 	24	 
	 
	 	 	 	 	 	 
	12
	 	ALTERATIONS	 	 	25	 
	 
	 	 	 	 	 	 
	13
	 	GENERAL	 	 	26	 
	 
	 	 	 	 	 	 
	14
	 	GOVERNING LAW	 	 	28	 
	 
	 	 	 	 	 	 
	15
	 	SECTION 423 OPTIONS	 	 	31	 

 

 

Rules of the HSBC Holdings Savings-Related Share Option Plan: (International)

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

	 	 	 	 	 
	“Acquiring Company”	 	the person mentioned in Rules 7(1)(a), 7(1)(b) or 7(1)(d)
being a company within the meaning of Section 832 of ICTA;
	 
	 	 	 	 
	“the Act”	 	the Income Tax (Earnings and Pensions) Act 2003;
	 
	 	 	 	 
	“Associated Company”	 	the meaning given by paragraph 47 of the Schedule;
	 
	 	 	 	 
	“the Auditors”	 	the auditors for the time being of the Company acting as
experts and not as arbitrators;
	 
	 	 	 	 
	“the Committee”	 	the Remuneration Committee or other duly authorised
committee of the Board of Directors of the Company which fulfils the same
function;
	 
	 	 	 	 
	“the Company”	 	save as provided in Rule 7(3) HSBC Holdings plc registered
in England under no 617987;
	 
	 	 	 	 
	“Continuous Employment”	 	the meaning ascribed by Chapter 1 of Part XIV of
the Employment Rights Act 1996;

2

 

	 	 	 	 	 
	“Control”	 	the meaning ascribed by Section 840 of ICTA;
	 
	 	 	 	 
	“Date of Grant”	 	the date an Option is granted under the Plan;
	 
	 	 	 	 
	“Dealing Day”	 	a day on which The London Stock Exchange is open for the
transaction of business;
	 
	 	 	 	 
	“Eligible Employee”	 	any director or employee of a
Participating Company excluding any
director or employee of a
Participating Company eligible to
participate in the HSBC Holdings
Savings-Related Share Option Plan
(UK); and
	 
	 	 	 	 
	 	 	any other director or employee
who at the time when an Option is
granted was a director or employee
of a Participating Company but who
at the Repayment Date is a director
or employee of a Subsidiary which is
not a Participating Company;
	 
	“Exercise Price”	 	the total amount payable in the
appropriate Local Currency on the
exercise of an Option, whether in
whole or in part, being an amount
equal to the relevant Option Price
multiplied by the number of Shares
in respect of which the Option is to
be exercised;
	 
	 	 	 	 
	“Grant Period”	 	a period of three calendar months commencing on the
Dealing Day following

3

 

	 	 	 	 	 
	 
	 	(1)	 	a day on which the HSBC Holdings
Savings-Related Share Option Plan or any amendment thereto is approved by the Inland Revenue under the Act; or
	 
	 	 	 	 
	 
	 	(2)	 	a day on which the Company makes an
announcement of its results for any year, half-year or other period or issues any prospectus, listing particulars or other
	 
	 	 	 	document containing equivalent information relating to Shares; or
	 
	 	 	 	 
	 
	 	(3)	 	a day on which an announcement is made of a new sharesave prospectus in the UK;
	 
	 	 	 	 
	“Holding Company”	 	in relation to the Acquiring Company, a company falling within the
definition in Section 736 of the Companies Act 1985;
	 
	 	 	 	 
	“Hong Kong Stock Exchange”	 	The Stock Exchange of Hong Kong Limited;
	 
	 	 	 	 
	“ICTA”	 	the Income and Corporation Taxes Act 1988;
	 
	 	 	 	 
	“Local Currency”	 	such lawful currency as the Committee shall determine to be
appropriate for the purposes of granting an Option to an Eligible
Employee;
	 
	 	 	 	 
	“the Local Currency Equivalent”	 	an amount of money in the Local Currency equivalent to such amount
in pounds sterling calculated by using an exchange rate as quoted

4

 

	 	 	 	 	 
	 	 	by a HSBC Group company on the relevant day subject to annual
revaluation as appropriate based on exchange rate movements;
	 
	 	 	 	 
	“Market Value”	 	the average of the middle market quotations of a Share (as derived
from the Daily Official List of The
London Stock Exchange) for the five
Dealing Days immediately preceding
the date of the relevant invitation
made under Rule 2(1) provided that
such days fall within the Grant
Period;
	 
	 	 	 	 
	“Maximum Contribution”	 	under all Savings Contracts the Local Currency Equivalent at the
date of an invitation pursuant to
Rule 2 of the lesser of:
	 
	 	 	 	 
	 
	 	(1)	 	£250 per month; and
	 
	 	 	 	 
	 
	 	(2)	 	the maximum amount specified in paragraph
	 
	 	 	 	25(3)(a) of the Schedule; and
	 
	 	 	 	 
	 
	 	(3)	 	such maximum contribution as may be determined from time to time by the
	 
	 	 	 	Committee;
	 
	 	 	 	 
	 	 	subject, in addition, to the Maximum Contribution per Eligible Employee
participating in the Plan not
exceeding any limit per annum or per
any other period applicable from
time to time to such Eligible
Employee, under foreign exchange or
securities laws or

5

 

	 	 	 	 	 
	 	 	regulations in the jurisdiction in which he is resident;
	 
	 	 	 	 
	“Minimum Contribution”	 	in relation to any invitation to participate in the Plan and Options
granted in respect of such
invitation whichever of the Local
Currency Equivalent of £5 or any
other such sum as the Committee
shall determine as the minimum
Monthly Contribution.
	 
	 	 	 	 
	“Monthly Contributions”	 	monthly contributions in Local Currency or any currency agreed by
the Committee agreed to be paid by
an Option Holder under his Savings
Contract the value of which is
determined for the purpose of Rule
2(6) at the Local Currency
Equivalent on the relevant date of
an invitation pursuant to Rule 2(1);
	 
	 	 	 	 
	“Option”	 	a right to subscribe for Shares pursuant to the Plan;
	 
	 	 	 	 
	“Option Holder”	 	a person to whom an Option which has neither lapsed nor been exercised
has been granted (or, as the context
requires, his personal
representatives);
	 
	 	 	 	 
	“Option Price”	 	the price per Share in pounds sterling (or in the Local Currency
at the applicable exchange rate
which is the exchange rate
determined by the Company as at
11:00am (UK time) on the working day
preceding the relevant invitation

6

 

	 	 	 	 	 
	 	 	date under Rule 2(1) (where appropriate and applicable)), as
determined by the Committee, at
which an Eligible Employee may
subscribe for Shares in respect of
which an Option has been granted to
him, being not less than:
	 
	 	 	 	 
	 
	 	(1)	 	80% of the Market Value of a Share; or
	 
	 	 	 	 
	 
	 	(2)	 	if greater, the nominal value of a share,
	 
	 	 	 	 
	 	 	subject to any adjustment pursuant to Rule 10(1);
	 
	 	 	 	 
	“Participating Company”
	 	(1)	 	the Company; and
	 
	 	 	 	 
	 
	 	(2)	 	any other company which is both a
Subsidiary of the Company and under the Control of the Company unless
it is a company which for the time being the Committee determine
should not participate;
	 
	 	 	 	 
	“the Plan”	 	the HSBC Holdings Savings-Related Share Option Plan: (International)
in its present form,
or as from time to time amended in accordance with
the Rules;
	 
	 	 	 	 
	“Repayment Date”	 	such date (or dates) determined by the Committee, being at least twelve
months after the commencement of the
Savings Contract,

7

 

	 	 	 	 	 
	 
	 	 	on which the Savings Contract is due
for repayment;
	 
	“Rules”	 	the rules of this Plan as amended from time to time;
	 
	 	 	 	 
	“Savings Authority”	 	a building society or bank recognised by the Committee from
time to time for the purpose of
receiving Monthly Contributions
under Savings Contracts;
	 
	 	 	 	 
	“Savings Contract”	 	a contract for monthly savings with the Savings Authority;
	 
	 	 	 	 
	“the Schedule”	 	Schedule 3 to the Act;
	 
	 	 	 	 
	“Share”	 	save as provided in Rule 7(3) an ordinary share in the Company and
“Shareholder” shall be construed
accordingly;
	 
	 	 	 	 
	“Subsidiary”	 	the meaning given to it in Section 736 of the Companies Act 1985;
	 
	 	 	 	 
	“US Code”	 	the US Internal Revenue Code of 1986;
	 
	 	 	 	 
	“US Participant”	 	a US citizen or US resident alien who is subject to section 409A of the US Code.

	References to any statutory provision are to that provision as amended or re-enacted from
time to time, and, unless the context otherwise requires, words in the singular

8

 

	 	 	shall include the plural (and vice versa) and words importing the masculine shall include the feminine (and vice versa).

9

 

	2	 	Invitation of Applications

	 	(1)	 	Applications for the grant of Options under the Plan shall be invited only
during a Grant Period and only if the Committee so determines in its absolute
discretion. Invitations to apply for Options on any occasion shall be made in
accordance with the Rules and on equivalent terms to all Eligible Employees save that
where any limitation or restriction is required to comply with legislation or
regulations in any jurisdiction the terms offered to Eligible Employees in any such
jurisdiction may be varied to the extent of such limitation or restriction.
	 
	 	(2)	 	Invitations shall be made in such form as determined by the Committee and
shall include details of the following matters which shall be determined by the
Committee:

	 	(a)	 	the Option Price;
	 
	 	(b)	 	the latest date during the Grant Period by which applications
must be received, being not earlier than 14 days after the date of the
invitation;
	 
	 	(c)	 	the Minimum Contribution and the Maximum Contribution
including where relevant any additional constraints on the Maximum
Contribution applicable to the jurisdiction of the Eligible Employee or
Participating Company; and

	 	(3)	 	Each invitation shall be accompanied by:

	 	(a)	 	a proposal form for a Savings Contract;
	 
	 	(b)	 	an application form; and

10

 

	 	(c)	 	such other documentation as may be required to comply with
regulations or laws relating to tax, social security, employment or securities
or for completion of a Savings Contract.

	 	(4)	 	An application form shall be in such form as the Committee may from time to
time prescribe save that it shall provide for the applicant to state:

	 	(a)	 	the Monthly Contributions (being a multiple of a single unit
in the Local Currency Equivalent and not less than the Local Currency
Equivalent of the Minimum Contribution) which he wishes to make under the
related Savings Contract;
	 
	 	(b)	 	that his proposed Monthly Contributions (when taken together
with any Monthly Contributions he makes under any other Savings Contract) will
not exceed the Maximum Contribution applicable to him; and;
	 
	 	(c)	 	if the Committee has provided for various Repayment Dates
under the Savings Contract, such Repayment Date as the applicant may elect.
If the Committee does not specify a choice of Repayment Dates, the applicant
may only elect for the Repayment Date as specified by the Committee.

	 	(5)	 	Each application shall provide that, in the event of scaling down in
accordance with Rule 3, the Committee is authorised by the applicant either to alter
his application by reducing the amount of his Monthly Contributions to the extent of
such scaling down or to withdraw his application, as the case may be.
	 
	 	(6)	 	Each application shall be deemed to be for an Option over such number of
Shares as can be subscribed at the Option Price as an option granted under

11

 

	 	 	 	the HSBC
Holdings Savings-Related Share Option Plan (UK) where the savings contracts involve
the equivalent value of Monthly Contributions.

	3	 	Scaling Down

	 	To the extent that valid applications are received in excess of any
maximum number of Shares which may be determined by the Committee or
the limitations in Rule 5, then the Committee shall scale down
applications to the extent necessary by:

	 	(1)	 	reducing the proposed Monthly Contributions in excess of the Local Currency
Equivalent of the Minimum Contribution pro rata, and then, so far as necessary,
selecting by lot; or
	 
	 	(2)	 	pro rating all applications, provided that if the Local Currency Equivalent
of the Monthly Contributions of any Eligible Employee would thereby be reduced below
the Minimum Contribution his application shall be deemed to be to make a Monthly
Contribution of the Local Currency Equivalent of the Minimum Contribution, and then,
so far as necessary selecting by lot; or
	 
	 	(3)	 	in any other manner determined by the Committee not inconsistent with the
Plan.

	4	 	Grant of Options

	 	(1)	 	No Option shall be granted after whichever is the earlier of:

	 	(a)	 	60 days (or 72 days in the event that applications are scaled
down under Rule 3) after any day by reference to which the Option Price was
fixed; and
	 
	 	(b)	 	the last day of the applicable Grant Period.

12

 

	 	(2)	 	No Option shall be granted to a person unless at the Date of Grant he is an
Eligible Employee.
	 
	 	(3)	 	The Company shall issue to each Option Holder an option certificate (“an
Option Certificate”) in such form as the Committee may from time to time prescribe.
Each Option Certificate shall specify the Date of Grant of the Option, the number of
Shares over which the Option is granted and the Option Price and if Shares are only to
be distributed on a specified date, or pursuant to a fixed schedule, following the
exercise of the Option, that date or schedule.
	 
	 	(4)	 	Except as otherwise provided in these Rules, every Option shall be personal to
the Option Holder to whom it is granted and shall not be transferred, assigned or
charged. Each Option Certificate shall carry a statement to this effect.
	 
	 	(5)	 	No amount shall be payable by an Option Holder in respect of the grant of an
Option.
	 
	 	(6)	 	No discounted Options may be granted to US Participants under Rule 4 unless
such Options are granted on terms which comply with subparagraph (A) and, where
relevant subparagraph (B), of paragraph (2) of section 409A(a) paragraph (2) of the US
Code.

	5	 	Number of Shares in Respect of which Options may be Granted

	 	(1)	 	10% overall limit
	 
	 	 	 	The maximum number of Shares which may become issuable pursuant to the grant of
options on any day, when added to the number of Shares issuable
pursuant to the grant of options in the preceding ten years under this Plan and any
other employees’ share plan adopted by the Company, shall not

13

 

	 	 	 	exceed ten per cent
(10%) of the Shares in issue immediately prior to that day.

14

 

	 	(2)	 	Hong Kong Stock Exchange limits

	 	(a)	 	Subject to Rules 10 (adjustment) and 12 (alterations), the
maximum number of Shares which may become issuable pursuant to the grant of
options, when added to the number of Shares issuable pursuant to the grant of
options under this Plan and, after 27 May 2005, under any other employees’
share plan adopted by the Company, shall not exceed 1,119,000,000 being ten
per cent (10%) of the Shares in issue on 18 March 2005; and
	 
	 	(b)	 	The limit on the number of Shares which may be issued upon
exercise of all outstanding options granted and yet to be exercised under this
Plan and any other employees’ share plan adopted by the Company shall not
exceed 30% of the Shares in issue from time to time. No options may be
granted under any employees’ share plan adopted by the Company if it would
result in this limit being exceeded.

	 	(3)	 	Exclusion of certain Shares
	 
	 	 	 	For the purpose of Rules 5(1) and 5(2):

	 	(a)	 	any Shares which are already in issue when placed under
option; and
	 
	 	(b)	 	any Shares comprised in any option which has lapsed or been
surrendered, shall be disregarded

15

 

	 	(4)	 	Interpretation of plan limits
	 
	 	 	 	For the purposes of this Rule: “employees’ share plan” has the same meaning as
“employees’ share scheme” in section 743 of the Companies Act 1985.
	 
	 	(5)	 	Hong Kong Stock Exchange requirement: 1% per Participant limit
	 
	 	 	 	The total number of Shares issued and to be issued to any Option Holder on the
exercise of Options granted to him in any 12 month period shall not exceed 1% of
the Shares in issue.

	6	 	Rights of Exercise

	 	(1)	 	(a) Save as provided in Rules 6(2), 6(3) and 7, an Option may be exercised
only during the relevant period specified below commencing with the Repayment Date
under the relevant Savings Contract. However, where the Savings Contract is for a
period of 12 months the relevant period of six months specified below shall be reduced
to a period of three months commencing with the Repayment Date under the relevant
Savings Contract; and

	 	(b)	 	save as provided in Rules 6(2)(a) and 6(2)(b), an Option
shall not be exercisable later than six months after the Repayment Date; and
	 
	 	(c)	 	save as provided in Rule 6(2) an Option may only be exercised
by an Option Holder whilst he is a director or employee of a Participating
Company; and

16

 

	 	(d)	 	notwithstanding anything else in these Rules, the Committee
may, at any time prior to the exercise of an Option, shorten the period during
which the Option may be exercised if the Committee considers such shortening
to be necessary or desirable to comply with or take account of any proposed or
existing legislation in any country or territory or to obtain or maintain
favourable tax, exchange control or regulatory treatment for the Option Holder
or for any Participating Company; and
	 
	 	(e)	 	the maximum number of Shares that may be subscribed on the
exercise of an Option shall be limited to the number of Shares that may be
subscribed at the Option Price with the amount of the proceeds of the Savings
Contract, including interest accrued on the savings save that where such
proceeds are insufficient to subscribe for all the Shares in respect of which
the Option is exercisable because of exchange rate or interest rate
fluctuations the Option Holder may provide additional funds to subscribe for
all the Shares.

	 	(2)	 	Subject to Rule 6(1)(d), an Option may be exercised by an Option Holder or
his personal representatives within the periods specified in relation to the
applicable circumstances set out below:

	 	(a)	 	within 12 months following the date of his death if such
death occurs before the Repayment Date; or
	 
	 	(b)	 	within 12 months following the Repayment Date in the event of
his death within six months after the Repayment Date; or
	 
	 	(c)	 	within six months following his ceasing to hold the office or
employment by virtue of which he is eligible to participate in the Plan by
reason of being unable to work on account of any injury or disability, being
made redundant or on retirement on reaching age 60

17

 

	 	 	 	or any other age at which he is bound to retire in accordance with the
terms of his contract of employment; or
	 
	 	(d)	 	within six months following his ceasing to hold such office
or employment by virtue of which he is eligible to participate in the Plan by
reason of (i) the Company ceasing to have Control of the company for which he
worked or (ii) the transfer of the business or part of the business in which
he works to a person who is neither an Associated Company nor a Subsidiary; or
	 
	 	(e)	 	within six months following his ceasing, more than three
years after the Date of Grant of the Option, to hold such office or employment
by reason of early retirement with the consent of the employing company, or by
reason of pregnancy,

	 	 	 	and for the purposes of the Plan (and, in particular, Rule 6(5)(e)), a woman who is
on maternity leave by reason of pregnancy or confinement and who exercises her
right to return to work in accordance with the Employment Relations Act 1999 (or
equivalent legislation in the jurisdiction in which she is employed) before
exercising an Option shall be treated as not having ceased to hold such office or
employment. If she does not so exercise her right to return to work she will be
regarded as having ceased to hold such office or employment on the last day on
which she is entitled to return to work.

	 	(3)	 	An Option may also be exercised by an Option Holder within six months
following the date he reaches age 60 if he continues after that date to hold the
office or employment by virtue of which he is eligible to participate in the Plan.

18

 

	 	(4)	 	No person shall be treated for the purposes of Rules 6(1)(c), 6(2)(c),
6(2)(d) and 6(5)(e) as ceasing to hold an office or employment by virtue of which he
is eligible to participate in the Plan until he ceases to hold any office or
employment in the Company or any Associated Company of the Company or any company of
which the Company has Control. For the purpose of this Rule the definition of
Associated Company carries the amended meaning given by paragraph 35 of the Schedule.
	 
	 	(5)	 	An Option shall lapse upon the occurrence of the earliest of the following
events:

	 	(a)	 	subject to (b) below, six months after the Repayment Date; or
	 
	 	(b)	 	where the Option Holder dies:

	 	(i)	 	before the Repayment Date, 12 months after
the date of death; or
	 
	 	(ii)	 	in the period of six months after the
Repayment Date, 12 months after the Repayment Date;

	 	(c)	 	the expiry of any of the applicable periods specified in
Rules 6(2)(c) 6(2)(d) and 6(2)(e) save that, if at the time any of such
applicable periods expire, time is running under Rules 6(2)(a) or 6(2)(b), the
Option shall not lapse by reason of this Rule 6(5)(c) until the expiry of the
period in Rules 6(2)(a) or 6(2)(b); or
	 
	 	(d)	 	the expiry of any of the periods of exercise specified in
Rules 7(2)(b), 7(2)(c) and 7(2)(d) save with regard to any Option which is
rolled over pursuant to Rule 7(3); or

19

 

	 	(e)	 	the date on which an Option Holder ceases to be a director or
employee of any Participating Company or any Associated Company of the Company
for any reason other than those specified in Rule 6(2); or
	 
	 	(f)	 	the date on which a resolution is passed, or an order is made
by the Court, for the compulsory winding-up of the Company; or
	 
	 	(g)	 	the date on which the Option Holder does or omits to do
anything, as a result of which he is deprived of the legal or beneficial
ownership of the Option; or
	 
	 	(h)	 	subject to Rule 7(3), where Rule 7(1)(a) applies, six weeks
from the date on which the person referred to therein who obtains Control of
the Company is first entitled to give, in connection with the offer referred
to therein, a valid notice to acquire compulsorily any Shares pursuant to
Section 429 of the Companies Act 1985; or
	 
	 	(i)	 	any date on which the period during which an Option may be
exercised terminates as a result of a determination by the Committee pursuant
to Rule 6(1)(d).

	7	 	Takeover, Reconstruction and Amalgamation, and Liquidation

	 	(1)	 	This Rule shall apply where:

	 	(a)	 	any person obtains Control of the Company as a result of
making either a general offer to acquire the whole of the Company’s issued
share capital (other than any shares already owned by the Holding Company or
any Subsidiary of the Holding Company) and which is made on a condition such
that if it is satisfied the offeror will have

20

 

	 	 	 	such Control, or a general offer to acquire all the shares in the Company
which are of the same class as the Shares; or

	 	(b)	 	any person obtains Control of the Company in pursuance of a
compromise or arrangement sanctioned by the Court under Section 425 of the
Companies Act 1985; or
	 
	 	(c)	 	without any person obtaining Control of the Company, the
Court sanctions a scheme of arrangement affecting the Shares under Section
425 of the Companies Act 1985; or
	 
	 	(d)	 	any person becomes bound or entitled to acquire Shares in the
Company under Sections 428 to 430 of the Companies Act 1985; or
	 
	 	(e)	 	a resolution is passed for the voluntary winding-up of the
Company,

	 	 	 	and for the purpose of this Rule 7 (except Rule 7(3)) a person shall be deemed to
have obtained Control of the Company if he and others acting in concert with him
have together obtained Control.

	 	(2)	 	Subject to Rules 6(1)(d) and 6(5) an Option may be exercised during any of
the following periods:

	 	(a)	 	in relation to Rule 7(1)(a), within six months of the date
Control is so obtained and any condition subject to which the offer is made is
satisfied (or until the expiry of the period mentioned in (c) below, if
earlier); or
	 
	 	(b)	 	in relation to Rules 7(1)(b) and 7(1)(c), until six months
after the date the Court sanctions the scheme of arrangement; or

21

 

	 	(c)	 	in relation to Rule 7(1)(d), during any period in which the
person remains so bound or entitled; or
	 
	 	(d)	 	in relation to Rule 7(1)(e), within six months of the passing
of the resolution.

	 	(3)	 	Notwithstanding anything to the contrary in these Rules, where any person
mentioned in Rules 7(1)(a), 7(1)(b) or 7(1)(d) is a company an Option Holder may, by
agreement with the Acquiring Company, and within the appropriate period mentioned in
Rules 7(2)(a), 7(2)(b) and 7(2)(c), release his Option under the Plan (“the Old
Option”) in consideration of the grant to him of a new Option (“the New Option”) which
within the meaning ascribed by paragraph 39(4) of the Schedule, is equivalent to the
Old Option but relates to Shares in a different company (whether the Acquiring Company
or some other company). With effect from the date of release references in Rules, 7,
8, 9, 10, 11 and 13 (and, in relation to expressions used in those Rules, in Rule 1)
to “the Company” and “Shares” in the Company shall, in relation to the New Option, be
construed as references to the Acquiring Company and Shares in the Acquiring Company
or some other company as the case may be.

	8	 	Manner of Exercise

	 	(1)	 	An Option may only be exercised during the periods specified in Rules 6 and
7. Exercise may be in whole or in part, and shall be by the delivery to the secretary
of the Company or his duly appointed agent of the necessary form of instruction duly
completed and signed by the Option Holder, together with a remittance for the Exercise
Price payable in respect of the Shares over which the Option is to be exercised. The
relevant Shares shall be allotted within 28 days following such delivery.
	 
	 	(2)	 	The Company, or any relevant Participating Company, will be entitled to
withhold and the Option Holder will be obligated to pay the amount of any

22

 

	 	 	 	tax or social security contributions or other regulatory payments payable by or on
behalf of such an Option Holder in connection with the Option exercise. The
Committee may establish appropriate procedures to provide for any such payment.

	9	 	Issue of Shares

	 	(1)	 	Shares allotted under this Plan shall rank equally in all respects with the
Shares for the time being in issue save as regards any rights attaching to such Shares
by reference to a record date prior to the date of allotment, and in the case of a
transfer of existing Shares, the transferee shall not acquire any rights by reference
to a record date prior to the date of such transfer.
	 
	 	(2)	 	The Company shall use its best endeavours to procure that as soon as
practicable after the allotment of any Shares pursuant to the Plan application shall
be made to the relevant stock exchanges and other regulatory authorities for the
listing and trading of the Shares.

	10	 	Adjustments

	 	(1)	 	The number of Shares over which an Option is granted and the Option Price
thereof, and the limits in Rule 5 on the number of Shares issuable under the Plan
shall be adjusted in such manner as the Committee shall determine following any
capitalisation issue, subdivision, consolidation or reduction of share capital and in
respect of any discount element in any rights issue or other variation of share
capital, no adjustment made pursuant to this Rule 10(1) shall have the effect of
reducing the Option Price below the nominal value of a Share.
	 
	 	(2)	 	The Committee may take such steps as they may consider necessary to notify
Option Holders of any adjustment made under Rules 10(1) and to call in,

23

 

	 	 	 	cancel, endorse, issue or reissue any Option Certificate consequent upon such
adjustment. An adjustment in respect of Options may only be made under this Rule
if the proportion of the Shares subject to that Option is the same both
immediately before and immediately after that adjustment and (other than in the
case of a bonus issue) the Company’s Auditors have confirmed to the Committee in
writing that this is the case.

	11	 	Administration

	 	(1)	 	Notices or documents required to be given to an Eligible Employee or to an
Option Holder shall either be delivered to him by

	 	(a)	 	hand;
	 
	 	(b)	 	sending them to him at his last known address according to
the information provided by him. Notices sent by post shall be deemed to have
been given on the day following the date of posting; or
	 
	 	(c)	 	sending them by facsimile, email or any form of electronic
means acceptable to the Committee to the Option Holder’s last known facsimile
number or email address. Notices sent by this method of communication shall
be deemed to have been given at the time of despatch.

	 	(2)	 	The Company may distribute to Option Holders copies of any notice or document
sent by the Company to its shareholders generally.
	 
	 	(3)	 	The Company shall at all times keep available sufficient unissued Shares to
satisfy the exercise of all Options which have neither lapsed nor been exercised taking
account of any other obligations of the Company to allot unissued Shares.

24

 

	 	(4)	 	The Committee may make such regulations for the administration of the Plan as
they deem fit, provided that no regulation shall be valid to the extent it is

inconsistent with these Rules.
	 
	 	(5)	 	All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders or resolutions of the Committee shall be
final, conclusive and binding.
	 
	 	(6)	 	The Company will bear the cost of introducing and operating the Plan
(including but not limited to stamp duty, stamp duty reserve tax and any other costs
relating to the issue of Shares upon the exercise of Options). However, the Company
may require any Participating Company to reimburse the Company for any Plan costs
borne by the Company, directly or indirectly, in respect of that Participating
Company’s officers or employees.

	12	 	Alterations

	 	(1)	 	Amendments to the advantage of Option Holders
	 
	 	 	 	Subject to Rule 10, this Plan may be amended by the Committee in any way, provided
that no alteration to the advantage of Option Holders or Eligible Employees may be
made to the provisions relating to:

	 	(a)	 	the persons to whom Options may be made;
	 
	 	(b)	 	the limits on the number of Shares in respect of which
Options may be made;
	 
	 	(c)	 	the maximum individual entitlements for Option Holders;
	 
	 	(d)	 	the basis for determining Option Holders’ entitlements to,
and the terms of, Shares to be provided under this Plan;

25

 

	 	(e)	 	the periods during which Options may be exercised;
	 
	 	(f)	 	any rights attaching to Shares comprised in Options;
	 
	 	(g)	 	the adjustment of Options in the event of a bonus or rights
issue, open offer, sub-division or consolidation of Shares or reduction of
capital or any other variation of capital;
	 
	 	(h)	 	Rule 13 (1) (termination of this Plan); and
	 
	 	(i)	 	this Rule 12.

	 	 	 	without the prior approval of the Company’s Shareholders in general meeting except
for minor amendments which the Committee considers necessary or desirable in order
to benefit the administration of the Plan, to take account of a change in the
applicable legislation in any country or territory or to obtain or maintain
favourable tax, exchange control or regulatory treatment for Option Holders or any
Group Company.
	 
	 	(2)	 	Hong Kong Stock Exchange requirement
	 
	 	 	 	In relation to Options, the provisions of this Plan relating to the matters set out
in Rule 17.03 of the listing rules of the Hong Kong Stock Exchange cannot be
altered to the advantage of Option Holders without the prior approval of the
Company’s Shareholders in general meeting and the Hong Kong Stock Exchange, and any
other alterations to the provisions of the Plan relating to Options which are of a
material nature, or any change to the terms of subsisting Options, must be approved
by the Company’s Shareholders in general meeting except where the alterations take
effect automatically under the terms of this Plan.

	13	 	General

26

 

	 	(1)	 	The Plan shall terminate on 27 May 2015 or at any earlier time by resolution
of the Committee. Termination of the Plan shall be without prejudice to the
subsisting rights of Option Holders.
	 
	 	(2)	 	If an Eligible Employee or an Option Holder shall cease for any reason
including as a result of being wrongfully or unfairly dismissed to be in the
employment of the company or any of its Subsidiaries, he shall not be entitled, by way
of compensation for loss of office or employment or otherwise howsoever, to any sum or
any benefit to compensate him for any consequential loss or curtailment of any right
or benefit accrued or in prospect under the Plan, and any such loss or curtailment
shall not form part of any claim for damages for breach of any contract of employment
of any Eligible Employee or Option Holder or compensation for unfair dismissal or any
other claim whatsoever.
	 
	 	(3)	 	Data protection
	 
	 	 	 	By participating in the Plan the Option Holders consent to the
holding and processing of personal data provided by them to the Company or
other Group Company by which they are employed for all purposes relating to
the operation of this Plan. These include, but are not limited to:

	 	(a)	 	administering and maintaining Option Holders’ records;
	 
	 	(b)	 	providing information to the trustees of any employee benefit
trust, registrars, brokers or third party administrators of the Plan;
	 
	 	(c)	 	providing information to future potential or actual acquirers
of the Company or the Group Company or undertaking in which Option Holders are
employed; and
	 
	 	(d)	 	transferring information about Option Holders to any country
or territory.

27

 

	14	 	Governing Law
	 
	 	 	This Plan is governed by and shall be construed in accordance with the laws of England and
the parties to any dispute relating to the Plan shall submit to the exclusive jurisdiction
of the High Court of England.

28

 

SCHEDULE 1

MALTA

	1.	 	The Rules shall apply to Eligible Employees resident in Malta subject to paragraph 2 below.
	 
	2.	 	In Rule 1, the definition of Maximum Contribution shall be replaced with the following:

	 	 	 	 	 
	 

	 	“Maximum Contribution”
	 	under all Savings Contracts the Local Currency Equivalent at the date
of an invitation pursuant to Rule 2 of the lesser of:

	 	(1)	 	£250 per month; and
	 
	 	(2)	 	the maximum amount specified in paragraph 25(3)(a) of the Schedule; and
	 
	 	(3)	 	such maximum contribution as may be determined from time to time by the
Committee,

	 	 	subject, in addition, to the Maximum Contribution per Eligible Employee participating in
the Plan not exceeding the limit per annum applicable from time to time to such Eligible
Employee, in relation to foreign currency investments, by order of the Central Bank of
Malta

29

 

SCHEDULE 2

USA

Rules for the operation of the HSBC Savings-Related Share Option Plan: (International) (“the Plan”)
for Option Holders either resident in the United States of America (“the USA Section”) or otherwise
selected by the Committee.

	 	 	 
	A.1

	 	These rules are made under the terms of the
Plan. The Rules apply to Option Holders of
the HSBC Group in the USA except to the
extent modified by this Schedule. The USA
Section will apply to any Option Holder who
is employed in the USA on any date when an
invitation to apply for an Option is made
under the Plan.
	 
	 	 
	A.2

	 	Rule 8(1) of the Plan shall not apply to
the USA Section. The following provision
shall be substituted for Rule 8(1):
	 
	 	 
	 

	 	“8 Manner of Exercise

	 	(1)	 	An Option may only be exercised during the periods specified in Rules 6 and
7. Exercise may be in whole or in part, and shall be by the delivery to the secretary
of the Company or his duly appointed agent of a notice of exercise in the prescribed
form duly completed and signed by the Option Holder, together with a remittance for
the Exercise Price payable in respect of the Shares over which the Option is to be
exercised. Upon exercise, Shares shall be allotted within 28 days following such
delivery.”

	 	 	 
	A.3

	 	The following is added as Rule 15 of the Plan to apply to the USA
Section and for the purposes of this USA Section, where any conflict
arises between the provisions of the Plan and the USA Section, the
terms of the USA Section will prevail:

30

 

	 	 	 
	“15  Code Section 423: the HSBC US Employee Stock Plan

The following Rules shall apply to the grant of any options over Shares under the Plan to Section
423 Eligible Employees that are intended to comply with Code Section 423.

	(1)	 	Definitions
	 
	 	 	For purposes of this Rule 15, the following words and expressions shall, where the context
so permits, have the meanings set forth below:

	 	(a)	 	“Account” means a recordkeeping account maintained for a Participant to which
payroll deductions, if applicable, shall be credited.
	 
	 	(b)	 	“Code” means the USA Internal Revenue Code of 1986, as amended.
	 
	 	(c)	 	“Section 423 Eligible Employee” means an Employee eligible to participate in
the Plan and receive a Section 423 Option in accordance with Rule 15(2).
	 
	 	(d)	 	“Section 423 Option” means an option to purchase Shares as determined by the
Committee in its or their sole discretion that is granted to a Section 423 Eligible
Employee in accordance with this Rule 15 and Code Section 423.
	 
	 	(e)	 	“Cut-Off Date” means the date established by the Committee from time to time
by which enrollment forms must be received prior to an Enrollment Date.
	 
	 	(f)	 	The “Plan” means the HSBC US Employee Stock Plan constituted by the Rules of
the HSBC Holdings Savings-Related Share Option Plan: (International) as modified by
A.3 of this Schedule 2.

31

 

	 	(g)	 	“Effective Date” means the date the Plan was adopted by the Committee,
subject to the approval of the Company’s Shareholders within one (1) year of such
date.
	 
	 	(h)	 	“Eligible Employee” means any US tax paying active employee of a
participating Company.
	 
	 	(i)	 	“Enrollment Date” means the first Trading Day of a Savings Period.
	 
	 	(j)	 	“Fair Market Value” means, as of any applicable date, the average of the
middle market quotations of a Share (as derived from the Daily Official List of The
London Stock Exchange) for the five Dealing Days immediately prior to such applicable
date.
	 
	 	(k)	 	“Date of Grant” as defined in Rule 1 of the Plan.
	 
	 	(l)	 	“Grant Price” means the Fair Market Value of a Share as of the Date of Grant
for a Section 423 Option.
	 
	 	(m)	 	“Participant” means a Section 423 Eligible Employee who has enrolled in the
Plan pursuant to Rule 15(3).
	 
	 	(n)	 	“Exercise Date” with respect to a Savings Period means the last Trading Day
in such Savings Period.
	 
	 	(o)	 	“Exercise Date Price” means the Fair Market Value of a Share on the
applicable Exercise Date.
	 
	 	(p)	 	“Savings Period” means the savings period designated by the Committee;
provided that each period shall in no event end later than: (i) five (5) years from
the date the Section 423 Option is granted if the Purchase Price is to be not less
than eighty-five percent (85%) of the Fair Market Value of the

32

 

	 	 	 	Shares on the Exercise Date; or (ii) otherwise, twenty-seven (27) months from the
Date of Grant.
	 
	 	(q)	 	“Option Price” means the price designated by the Committee, at which each
Share may be purchased under any Section 423 Option, but in no event less than
eighty-five percent (85%) of the lesser of:

	 	(i)	 	The Grant Price, as defined in Rule 15(1)(l); and
	 
	 	(ii)	 	The Exercise Date Price, as defined in Rule 15(1)(o)

	 	(r)	 	“Trading Day” means “Dealing Day” (a day on which The London Stock Exchange
is open for the transaction of business).

	(2)	 	Eligibility
	 
	 	 	No Eligible Employee shall be granted a Section 423 Option:

	 	(i)	 	If, immediately after the grant, such Employee would own, and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or of any
parent or subsidiary of the Company within the meaning of Code Section 423; or
	 
	 	(ii)	 	Which permits the Employee’s rights to purchase stock under all employee
stock purchase plans, as defined in Code Section 423, of the Company and its
subsidiaries to accrue at a rate which exceeds twenty-five thousand dollars (USD
$25,000) of fair market value of the stock (determined at the time such Section 423
Option is granted), as applicable, for each calendar year in which such stock option
is outstanding at any time;

33

 

	 	(iii)	 	If the Employee’s customary employment does not meet certain requirements
for length of employment determined by the Company or the Committee from time to time;
provided, however, that any such requirement for length of employment shall comply
with Code Section 423; or
	 
	 	(iv)	 	If the Employee is prohibited by the laws of a country or territory (of whose
law he is subject) from participating in the Plan.

	 	 	unless his or her participation is required as a matter of local law or regulation.
	 
	(3)	 	Enrollment
	 
	 	 	Any Section 423 Eligible Employee may enroll in the Plan with regard to Section 423
Options to be granted pursuant to this Rule 15 for any
future Savings Period by completing and signing an Enrollment election form or by such other means as the Committee
shall prescribe and submitting such Enrollment election as prescribed on or before the
Cut-Off Date with respect to such Savings Period.
	 
	(4)	 	Grant of Section 423 Options on Enrollment
	 
	 	 	Enrollment by a Section 423 Eligible Employee in the Plan with regard to Section 423
Options as of an Enrollment Date will constitute the grant by the Company to such
Participant of a Section 423 Option on such Enrollment Date.
	 
	(5)	 	Exercise, Purchase and Expiry

	 	(i)	 	A Section 423 Option shall expire, if not sooner terminated in accordance
with the Plan, on the earliest to occur of: (a) the end of the Savings Period in which
such Option was granted; (b) the completion of the purchase of Shares under the Option
under Rule 15(6); or (c) the date on which participation of such Participant in the
Plan under this Rule 15 terminates for any reason.

34

 

	 	(ii)	 	If the Exercise Date Price exceeds the Option Price of a Section 423 Option,
it shall be exercised automatically to purchase on the Exercise Date the number of
Shares that the funds accumulated in the Participant’s Account as of such Exercise
Date will purchase at the applicable Option Price;
	 
	 	(iii)	 	If the Option Price exceeds the Exercise Date Price of a Section 423 Option,
the Option shall not be exercised automatically. Any payment amounts will be returned
to the Participant, together with any interest due.

	(6)	 	Payment
	 
	 	 	Shares to be purchased upon exercise of a Section 423 Option shall be paid for using the
payroll deductions, the terms and conditions of which are designated by the Company, which
have accumulated during the applicable Savings Period.
	 
	 	 	Payment amounts shall be credited to a Participant’s Account under Rule 15 of this Plan.
All payment amounts may be used by the Company for any purpose and, unless required to do
so by law or regulation, the Company shall have no obligation to segregate funds.
	 
	(7)	 	Holding Period
	 
	 	 	If Shares are purchased by a Participant pursuant to Rule 15(5)(ii), then, the Company
shall deposit such Shares in a nominee account for a period of twelve (12) months, and
within a reasonable time after such period, the Company shall deliver or cause to be
delivered to the Participant a certificate or certificates for the whole number of Shares
purchased by the Participant.
	 
	 	 	If any law or applicable regulation of the United States of America’s Securities and
Exchange Commission or other body having jurisdiction shall require that the

35

 

	 	 	Company take any action in connection with the Shares being purchased under the Section 423
Option, delivery of the certificate or certificates for such Shares shall be postponed
until the necessary action shall have been completed.

36

 

	(8)	 	Withdrawal from the Plan and Termination of Employment

	 	(i)	 	Withdrawal from the Plan:
	 
	 	 	 	A Participant may withdraw from the Plan in full (but not in part) during any
Savings Period by delivering a notice of withdrawal (in a manner prescribed by the
Committee) at any time up to but not including the fifteen (15) days prior to the
Exercise Date next following the date such notice of withdrawal is delivered, or at
such shorter time in advance of such Exercise Date as the Committee may permit.
	 
	 	 	 	If notice of withdrawal is timely received, all funds then accumulated in the
Participant’s Account shall not be used to purchase Shares as of the next following
Exercise Date, but shall instead be distributed to the Participant as
soon as administratively feasible.
	 
	 	 	 	A Participant who has withdrawn during a Savings Period may not return funds to the
Company during the same Savings Period and require the Company to apply those funds
to the purchase of Shares. Any Section 423 Eligible Employee who has withdrawn from
the Plan under this Rule 15 may, however, re-enroll in the Plan with regard to Rule
15 on the next subsequent Enrollment Date, if any.
	 
	 	(ii)	 	Termination of Employment:
	 
	 	 	 	In compliance with the requirements of Code Section 423, Participation in the Plan
under this Rule 15 terminates immediately when a Participant ceases to be employed
by the Company or any Subsidiary Company for any reason whatsoever or otherwise
ceases to be a Section 423 Eligible Employee, and such terminated Participant’s
outstanding Options shall thereupon terminate.

37

 

	 	 	 	As soon as administratively feasible after termination of participation, the
Company shall pay to the Participant or his/her beneficiary or legal representative
any amounts accumulated in the Participant’s Account at the time of termination of
participation.

	(9)	 	Restrictions on Transfer
	 
	 	 	Section 423 Options granted under the Plan to a Participant may not be exercised during the
Participant’s lifetime other than by the Participant. Neither amounts credited to a
Participant’s Account nor any rights with respect to the exercise of a Section 423 Option
or to receive Shares under the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way by the Participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other disposition shall
be without effect, except that the Company or the Committee may treat such act as an
election to withdraw from the Plan in accordance with Rule 15(8)(i).
	 
	(10)	 	Retirement and Welfare Plans
	 
	 	 	No Section 423 Options granted under this Plan, or Shares, or cash paid pursuant to the
exercise of such options may be included as “compensation” for purposes of computing the
benefits payable to any Participant under any retirement plan (whether qualified or
non-qualified) or welfare benefit plans of the Company or any Subsidiary unless such other
plan expressly provides that such compensation shall be taken into account in computing a
Participant’s benefits.

38

 

Schedule 3

HSBC Holdings plc

 

THE RULES

of the

HSBC HOLDINGS SAVINGS-RELATED SHARE OPTION SCHEME:

(INTERNATIONAL) : IRISH SCHEME

Approved by Irish Revenue Commissioners on 28 March 2000

Adopted by the Remuneration Committee on 25 February 2000 and amended 29

November 2002

 

 

Rules of the HSBC Holdings Savings Related Share Option Scheme:

Overseas Section: Irish Scheme

CONTENTS

	 	 	 	 	 
	Rule	 	Page No
	 
	 	 	 	 
	1. DEFINITIONS

	 	 	1	 
	 
	 	 	 	 
	2. INVITATION OF APPLICATIONS

	 	 	7	 
	 
	 	 	 	 
	3. SCALING DOWN

	 	 	9	 
	 
	 	 	 	 
	4. GRANT OF OPTIONS

	 	 	10	 
	 
	 	 	 	 
	5. NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE
GRANTED

	 	 	11	 
	 
	 	 	 	 
	6. RIGHTS OF EXERCISE

	 	 	13	 
	 
	 	 	 	 
	7. TAKEOVER, RECONSTRUCTION AND AMALGAMATION,
AND LIQUIDATION

	 	 	16	 
	 
	 	 	 	 
	8. MANNER OF EXERCISE

	 	 	18	 
	 
	 	 	 	 
	9. ISSUE OF SHARES

	 	 	19	 
	 
	 	 	 	 
	10. ADJUSTMENTS

	 	 	19	 
	 
	 	 	 	 
	11. ADMINISTRATION

	 	 	20	 
	 
	 	 	 	 
	12. ALTERATIONS

	 	 	21	 
	 
	 	 	 	 
	13. GENERAL

	 	 	24	 

 

Rules of the HSBC Holdings Savings-Related Share Option Scheme: Overseas Section:

Irish Scheme

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

	 	 	 	 	 
	 

	 	“Acquiring Company”
	 	the person mentioned in Rules 7(1)((a),
7(1)(b), 7(1)(c) or 7(1)(d) being a
company within the meaning of Section 832
of the UK Income and Corporation Taxes Act
1988;
	 
	 	 	 	 
	 

	 	“the Act”
	 	the Taxes Consolidation Act 1997
	 
	 	 	 	 
	 

	 	“Associated Company”
	 	the meaning given to it by paragraph 1(1)
of Schedule 12A to the Act;
	 
	 	 	 	 
	 

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

	 	“Certified Contractual
Savings Scheme”
	 	the
meaning given to it by Section 519C(4) of the Act
	 
	 	 	 	 
	 

	 	“the Committee”
	 	the Remuneration Committee or other duly
authorised committee of the Board of
Committee of the Company which fulfils the
same function;

1

 

	 	 	 	 	 
	 

	 	“the Company”
	 	save as provided in Rule 7(3) HSBC
Holdings plc registered in England under
no 617987;
	 
	 	 	 	 
	 

	 	“Control”
	 	except as otherwise provided in the Rules,
has the meaning ascribed by Section 840 of
the UK Income and Corporation Taxes Act
1988;
	 
	 	 	 	 
	 

	 	“Date of Grant”
	 	the date an Option is granted under the
Scheme;
	 
	 	 	 	 
	 

	 	“Dealing Day”
	 	a day on which The London Stock Exchange
is open for business;
	 
	 	 	 	 
	 

	 	“Eligible Employee”
	 	means any person who:

	 	 	 	 	 	 	 
	 

	 	i)
	 	a)
	 	is an employee of any Participating Company,
including a full-time director
	 
	 	 	 	 	 	 
	 

	 	 	 	(b)
	 	is chargeable to tax under Schedule E in
respect of that employment, and
	 
	 	 	 	 	 	 
	 

	 	 	 	(c)
	 	who had on the date of the relevant issue
of the relevant invitations pursuant to
Rule 2(1) been such an employee or director
continuously for a period of 6 months or,
	 
	 	 	 	 	 	 
	 	 	(ii)	 	 is any other employee or director of a
Participating Company, nominated by the
Committee to be an Eligible Employee.

2

 

	 	 	 	 	 	 	 
	 	 	Provided that no person shall be an Eligible
Employee if that person is ineligible to participate
in the Scheme by virtue of paragraph 8, Schedule 12A
to the Act.

	 	 	 	 	 
	 

	 	“Exercise Price”
	 	the total amount payable in Euro on the exercise of an
Option, whether in whole or in part, being an amount
equivalent to the relevant Share Price calculated at the
Sterling-Euro exchange rate on the [London Interbank
lending market] at the close of business on the last
Dealing Day preceding the date on which the Committee
issue the invitation to apply for that Option multiplied
by the number of Shares in respect of which the Option is
to be exercised;
	 
	 	 	 	 
	 

	 	“Grant Period”
	 	a period of 3 calendar months commencing on the Dealing
Day following

	 	(1)	 	a day on which the Scheme or any amendment
thereto is approved in writing by the Revenue
Commissioners under the Act; or
	 
	 	(2)	 	a day on which the Company makes an
announcement of its results for any year,
half-year or other period or issues any
prospectus, listing particulars or other
document containing equivalent information
relation to Shares; or

3

 

	 	(3)	 	a day on which any announcement is made of
modifications to be made to the Act or an
announcement is made by the Qualifying Savings
Institution of a new savings-related share
option prospectus;

	 	 	 	 	 
	 

	 	“Holding Company”
	 	in relation to the Acquiring Company, a company
falling within the definition in Section 736 of the UK
Companies Act 1985;
	 
	 	 	 	 
	 

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

	 	(1)	 	save as mentioned in (2) below, its market
value as determined in accordance with section
548 of the Act or
	 
	 	(2)	 	if and so long as the Shares are listed on The
London Stock Exchange, the average of its
middle market quotations (as derived from the
Daily Official List of The London Stock
Exchange) for the five Dealing Days falling
within the Grant Period immediately preceding
the date of the relevant invitation made under
Rule 2(1);

	 	 	 	 	 
	 

	 	“Maximum Contribution”
	 	€320 or such other amount as specified in paragraph 25(2)(a) of
Schedule 12A to the Act, as

4

 

	 	 	 	 	 
	 

	 	 	 	the Committee shall determine as the maximum monthly
contribution;
	 
	 	 	 	 
	 

	 	“Minimum Contribution”
	 	€12 or such other amount, not being more than
€12, or such minimum sum as specified in
paragraph 25(2)(b) of Schedule 12A to the Act, as
the Committee shall determine as the minimum
monthly contribution.
	 
	 	 	 	 
	 

	 	“Monthly Contributions”
	 	monthly contributions agreed to be paid by an
Option Holder under his Savings Contract;
	 
	 	 	 	 
	 

	 	“Option”
	 	a right to subscribe for Shares pursuant to the
Scheme;
	 
	 	 	 	 
	 

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

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

	 	(1)	 	80% of the Market Value of a Share; or
	 
	 	(2)	 	if greater, and Shares are to be subscribed,
the nominal value of a Share,

5

 

	 	 	 	subject to any adjustment pursuant to Rule
10(1);

	 	 	 	 	 	 	 	 	 
	 

	 	“Participating Company”
	 	 	(1	)	 	the Company; and
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	(2	)	 	any other company for the time being designated
by the Committee as a Participating Company,
being a company which is under the control of
the Company within the meaning of section 432
of the Act;

	 	 	 	 	 
	 

	 	“Pensionable Age”
	 	has the meaning given to that expression in Section 2 of the Social
Welfare Consolidation) Act 1993;
	 
	 	 	 	 
	 

	 	“Qualifying Savings Institution”
	 	means any of the persons defined in section 519(C) of the
Act for the purpose of receiving monthly contributions under the Savings Contract;
	 
	 	 	 	 
	 

	 	“Repayment Date”
	 	the date under the Savings Contract on which the total value of the Savings
Contract is due for repayment;
	 
	 	 	 	 
	 

	 	“Rules”
	 	the rules of this Scheme as amended from time to time;

6

 

	 	 	 	 	 
	 

	 	“Savings Contract”
	 	a contract for monthly savings with a Qualifying
Savings Institution under a Certified Contractual
Savings Scheme;
	 
	 	 	 	 
	 

	 	“the Scheme”
	 	the HSBC Holdings Savings-Related Share Option Scheme
Irish Section in its present form, or as from time to
time amended in accordance with the Rules;
	 
	 	 	 	 
	 

	 	“Share”
	 	save as provided in Rule 7(3) an ordinary share in the
Company which complies with the provisions of
paragraphs 10 to 15 inclusive of Schedule 12A to the
Act and “Shareholder” shall be construed accordingly;
	 
	 	 	 	 
	 

	 	“Subsidiary”
	 	the meaning given
to it in Section
736 of the UK Companies Act 1985;

References in these Rules are to Irish statutory provisions as specified and those
provisions as amended or re-enacted from time to time, unless otherwise specifically
provided, and, unless the context otherwise requires, words in the singular shall include
the plural (and vice versa) and words importing the masculine shall include the feminine
(and vice versa).

	2	 	Invitation of Applications

	 	(1)	 	Applications for the grant of Options under the Scheme shall be invited only
during a Grant Period and only if the Committee so determines in its absolute
discretion. Invitations to apply for Options on any occasion shall be made in
accordance with the Rules and on identical terms to all Eligible Employees save

7

 

	 	 	 	that where any limitation or restriction is required to comply with legislation or
regulations in any jurisdiction the terms offered to Eligible Employees in any such
jurisdiction may be varied to the extent of such limitation or restriction.
	 
	 	(2)	 	Invitations shall be made in writing and shall include details of the following
matters which shall be determined by the Committee in accordance with the Rules:

	 	(a)	 	the Option Price;
	 
	 	(b)	 	the latest date during the Grant Period by which applications
must be received, being not earlier than 14 days after the date of the
invitation;
	 
	 	(c)	 	the Maximum Contribution and Minimum Contribution; and
	 
	 	(d)	 	whether the repayment to be made under the Savings Contract
shall be taken as including any bonus or any interest accrued at the Repayment
Date or, in the case of early exercise, the relevant date.

	 	(3)	 	Each invitation shall be accompanied by:

	 	(a)	 	a proposal form for a Savings Contract;
	 
	 	(b)	 	an application form; and
	 
	 	(c)	 	such other documentation as may be required to comply with
regulations or laws relating to tax, social security, employment or securities
or for completion of a Savings Contract.

8

 

	 	(4)	 	An application form shall be in such form as the Committee may from time to
time prescribe save that it shall provide for the applicant to state:

	 	(a)	 	the Monthly Contributions (being a multiple of €1 and not
less than the Minimum Contribution) which he wishes to make under the Related
Savings Contract;
	 
	 	(b)	 	that his proposed Monthly Contributions (when taken together
with any Monthly Contributions he makes under any other Savings Contract) will
not exceed the Maximum Contribution applicable to him; and;
	 
	 	(c)	 	if the Savings Contract provides the Eligible Employee with a
choice of Repayment Dates, the Eligible Employee’s choice in that respect.

	 	(5)	 	Each application shall provide that, in the event of scaling down in accordance
with Rule 3, the Committee is authorised by the applicant either to alter his
application by reducing the amount of his Monthly Contributions or to withdraw his
application, as the case may be, to the extent of such scaling down.
	 
	 	(6)	 	Each application shall be deemed to be for an Option over such number of Shares
as can be subscribed at the Option Price with the total value of the Savings Contract.

	3	 	Scaling Down
	 
	 	 	To the extent that valid applications are received in excess of any
maximum number of Shares which may be determined by the Committee or
the limitations in Rule 5, then the Committee shall scale down
applications to the extent necessary by:

9

 

	 	(1)	 	reducing the proposed Monthly Contributions in excess of the Minimum
Contribution pro rata, and then so far as necessary, selecting by lot; or
	 
	 	(2)	 	pro rating all applications, provided that if the Monthly Contributions of any
Eligible Employee would thereby be reduced below the Minimum Contribution, he shall be
deemed to have applied to make a Monthly Contribution of the Minimum Contribution, and
then so far as necessary selecting by lot; or
	 
	 	(3)	 	in any other manner determined by the Committee not inconsistent with the
Scheme.

	4	 	Grant of Options

	 	(1)	 	No Option shall be granted after whichever is the earlier of:-

	 	(a)	 	30 days (or 42 days in the event that applications are scaled
down under Rule 3) after any day by reference to which the Option Price was
fixed; and
	 
	 	(b)	 	the last day of the applicable Grant Period.

	 	(2)	 	No Option shall be granted to a person unless at the Date of Grant he is an
Eligible Employee.
	 
	 	(3)	 	The Company shall issue to each Option Holder an option certificate (“an Option
Certificate”) in such form as the Committee may from time to time prescribe. Each
Option Certificate shall specify the Date of Grant of the Option, the number of Shares
over which the Option is granted and the Option Price.

10

 

	 	(4)	 	Except as otherwise provided in these Rules, every Option shall be personal to
the Option Holder to whom it is granted and shall not be transferred, assigned or
charged. Each Option Certificate shall carry a statement to this effect.
	 
	 	(5)	 	No amount shall be payable by an Option Holder in respect of the grant of an
Option.

	5	 	Number of Shares in Respect of which Options may be Granted

	 	(1)	 	10% overall limit
	 
	 	 	 	The maximum number of Shares which may become issuable pursuant to the grant of
options on any day, when added to the number of Shares issuable pursuant to the
grant of options in the preceding ten years under this Scheme and any other
employees’ share plan adopted by the Company, shall not exceed ten per cent (10%) of
the Shares in issue immediately prior to that day.
	 
	 	(2)	 	Hong Kong Stock Exchange limits

	 	(a)	 	Subject to Rules 10 (adjustment) and 12 (alterations), the
maximum number of Shares which may become issuable pursuant to the grant of
options, when added to the number of Shares issuable pursuant to the grant of
options under this Scheme and, after 27 May 2005, under any other employees’
share plan adopted by the Company, shall not exceed 1,119,000,000 being ten per
cent (10%) of the Shares in issue on 18 March 2005; and.
	 
	 	(b)	 	The limit on the number of Shares which may be issued upon
exercise of all outstanding options granted and yet to be exercised under this
Scheme and any other employees’ share plan adopted by the Company

11

 

	 	 	 	shall not
exceed 30% of the Shares in issue from time to time. No options may be
granted under any employees’ share plan adopted by the Company if it would
result in this limit being exceeded.

	 	(3)	 	Exclusion of certain Shares
	 
	 	 	 	For the purpose of Rules 5(1) and 5(2):

	 	(a)	 	any Shares which are already in issue when placed under option;
and
	 
	 	(b)	 	any Shares comprised in any option which has lapsed or been
surrendered, shall be disregarded

	 	(4)	 	Interpretation of plan limits
	 
	 	 	 	For the purposes of this Rule: “employees’ share plan” has the same meaning as
“employees’ share scheme” in section 743 of the UK Companies Act 1985.
	 
	 	(5)	 	Hong Kong Stock Exchange requirement: 1% per Participant limit
	 
	 	 	 	The total number of Shares issued and to be issued to any Option Holder on the
exercise of Options granted to him in any 12 month period shall not exceed 1% of the
Shares in issue.

12

 

	6	 	Rights of Exercise

	 	 	 	 	 	 	 	 	 
	 

	 	 	(1	)	 	(a)
	 	Save as provided in Rules 6(2), 6(3) and 7, an
Option may be exercised only during the
relevant period specified below commencing
with the Repayment Date under the relevant
Savings Contract; and

	 	(b)	 	save as provided in Rules 6(2)(a) and 6(2)(b), an Option shall
not be exercisable later than six months after the Repayment Date; and
	 
	 	(c)	 	save as provided in Rule 6(2), an Option may only be exercised
by an Option Holder whilst he is a director or employee of a Participating
Company; and
	 
	 	(d)	 	an Option may not be exercised by an Option Holder at any time
when he is prohibited from such exercise by virtue of the provisions of
Paragraph 8 of Schedule 12A to the Act (material interest in a close company)
or, in the case of personal representatives when the Option Holder would have
been so prohibited; and
	 
	 	(e)	 	the maximum number of Shares that may be subscribed on the
exercise of an Option shall be limited to the number of Shares that may be
subscribed at the Option Price with the amount of the proceeds of the Savings
Contract, including any bonus and interest accrued on the savings.

	 	(2)	 	An Option may be exercised by an Option Holder or personal representative
within the periods specified in relation to the applicable circumstances set out below:

13

 

	 	(a)	 	within 12 months following the date of his death if such death
occurs before the Repayment Date; or
	 
	 	(b)	 	within 12 months following the Repayment Date in the event of
his death within six months after the Repayment Date; or
	 
	 	(c)	 	within six months following his ceasing to hold the office or
employment by virtue of which he is eligible to participate in the Scheme by
reason of injury, disability, redundancy within the meaning of the Redundancy
Payments Acts 1967 — 1991 of Ireland or retirement on reaching Pensionable Age;
or
	 
	 	(d)	 	within six months following his ceasing to hold such office or
employment by virtue of which he is eligible to participate in the Scheme by
reason of (i) the Company ceasing to have Control of the company for which he
worked or (ii) the transfer of the business or part of the business in which he
works to a person who is neither an Associated Company nor a Subsidiary; or
	 
	 	(e)	 	within six months following his ceasing, more than three years
after the Date of Grant of the Option, to hold such office or employment by
reason of retirement prior to Pensionable Age with the consent of the employing
company,

and for the purposes of the Scheme (and, in particular, Rule 6(5)(e), a woman who
leaves employment due to pregnancy or confinement in circumstances where she has a
right to return to work under the Irish Maternity Protection Act, 1994 shall be
deemed to have remained in employment until such time as she is no longer capable of
exercising a right to return to work and not to have ceased to have been employed if
she exercises that right.

14

 

	 	(3)	 	An Option may also be exercised by an Option Holder within six months following
the date he reaches Pensionable Age if he continues after that date to hold the office
or employment by virtue of which he is eligible to participate in the Scheme.
	 
	 	(4)	 	No person shall be treated for the purposes of Rules 6(1)(c), 6(2)(c), 6(2)(d)
and 6(5)(e) as ceasing to hold an office or employment by virtue of which he is
eligible to participate in the Scheme until he ceases to hold any office or employment
in the Company or any Associated Company of the Company or any company of which the
Company has Control. For the purpose of this Rule the definition of Associated Company
carries the amended meaning given by paragraph 1(1) of Schedule 12A to the Act.
	 
	 	(5)	 	An Option shall lapse upon the occurrence of the earliest of the following
events:

	 	(a)	 	subject to (b) below, six months after the Repayment Date; or
	 
	 	(b)	 	where the Option Holder dies:

	 	(i)	 	before the Repayment Date, 12 months after the
date of death; or
	 
	 	(ii)	 	in the period of six months after the Repayment
Date, 12 months after the Repayment Date;

	 	(c)	 	the expiry of any of the applicable periods specified in Rules
6(2)(c), 6(2)(d) and 6(2)(e), save that, if at the time any of such applicable
periods expire, time is running under Rules 6(2)(a) or 6(2)(b), the Option
shall

15

 

	 	 	 	not lapse by reason of this Rule 6(5)(c) until the expiry of the periods in
Rules 6(2)(a) or 6(2)(b); or
	 
	 	(d)	 	the expiry of any of the periods of exercise specified in Rules
7(2)(b), 7(2)(c) and 7(2)(d) save with regard to any Option which is
rolled-over pursuant to Rule 7(3); or
	 
	 	(e)	 	the date on which an Option Holder ceases to be a director or
employee of any Participating Company for any reason other than those specified
in Rule 6(2); or
	 
	 	(f)	 	the date on which a resolution is passed, or order is made by
the Court, for the compulsory winding-up of the Company; or
	 
	 	(g)	 	the date on which the Option Holder does or omits to do
anything, as a result of which he is deprived of the legal or beneficial
ownership of the Option.

	7	 	Takeover, Reconstruction and Amalgamation, and Liquidation

	 	(1)	 	This Rule shall apply where:

	 	(a)	 	any person obtains Control of the Company as a result of making
either a general offer to acquire the whole of the Company’s issued share
capital (other than any shares already owned by the Holding Company or any
Subsidiary of the Holding Company) and which is made on a condition that if it
is satisfied the offeror will have such Control, or a general offer to acquire
all the shares in the Company which are of the same class as the Shares; or

16

 

	 	(b)	 	any person obtains Control of the Company in pursuance of a
compromise or arrangement sanctioned by the Court under Section 425 of the UK
Companies Act 1985; or
	 
	 	(c)	 	without any person obtaining Control of the Company, the Court
sanctions a scheme of arrangement affecting the Shares under Section 425 of the
UK Companies Act 1985; or
	 
	 	(d)	 	any person becomes bound or entitled to acquire Shares in the
Company under Sections 428 to 430 of the UK Companies Act 1985; or
	 
	 	(e)	 	a resolution is passed for the voluntary winding-up of the
Company,

and for the purpose of this Rule 7 (except Rule 7(3)) a person shall be deemed to
have obtained Control of the Company if he and others acting in concert with him
have together obtained Control.

	 	(2)	 	Subject to Rule 6(5) an Option may be exercised during any of the following
periods:

	 	(a)	 	in relation to Rule 7(1)(a), within six months of the date
Control is so obtained and any condition subject to which the offer is made is
satisfied (or until the expiry of the period mentioned in (c) below, if
earlier); or
	 
	 	(b)	 	in relation to Rules 7(1)((b) and 7(1)(c), until the six months
after the date the Court sanctions the scheme of arrangement; or
	 
	 	(c)	 	in relation to Rule 7(1)(d), during any period the person
remains so bound or entitled; or

17

 

	 	(d)	 	in relation to Rule 7(1)(e), within six months of the passing
of the resolution.

	 	(3)	 	Notwithstanding anything to the contrary in these Rules, where any person
mentioned in Rules 7(1)(a), 7(1)(b), 7(1)(c) or 7(1)(d) is a company an Option Holder
may, by agreement with the Acquiring Company, and within the appropriate period
mentioned in Rules 7(2)(a), 7(2)(b) and 7(2)(c), release his Option under the Scheme
(“the Old Option”) in consideration of the grant to him of a new Option (“the New
Option”) which within the meaning ascribed by paragraph 16(3) of Schedule 12A to the
Act, is equivalent to the Old Option but relates to Shares in a different company
(whether the Acquiring Company or some other company falling within paragraph 11 of
Schedule 12A to the Act).
	 
	 	(4)	 	With effect from the date of release references in Rules 7, 8, 9, 10, 11 and 13
(and, in relation to expressions used in those Rules, in Rule 1) to “the Company” and
“Shares” in the Company shall, in relation to the New Option, be construed as
references to the Acquiring Company and Shares in the Acquiring Company or some other
company as the case may be.

	8	 	Manner of Exercise
	 
	 	 	An Option may only be exercised during the periods specified in Rules
6 and 7. Exercise may be in whole or in part, and shall be by the
delivery to the secretary of the Company or his duly appointed agent
of a notice of exercise in the prescribed form duly completed and
signed by the Option Holder, together with a remittance for the
Exercise Price payable in respect of the Shares over which the Option
is to be exercised and evidence that the monies remitted constitutes
the amount repaid under the relevant Savings Certificate. The relevant
Shares shall be allotted within 28 days following such delivery.

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	9	 	Issue of Shares

	 	(1)	 	Shares issued pursuant to the Scheme shall rank pari passu in all respects with
the Shares then in issue, except that they will not rank for any rights attaching to
Shares by reference to a record date preceding the date of exercise.
	 
	 	(2)	 	The Company shall use its best endeavours to procure that as soon as
practicable after the allotment of any Shares pursuant to the Plan application shall be
made to relevant stock exchanges and other regulatory authorities for the listing and
trading of the Shares.

	10	 	Adjustments

	 	(1)	 	The number of Shares over which an Option is granted, the Option Price thereof,
and the limits in Rule 5 on the number of Shares issuable under the Scheme shall
subject to the prior written approval of the Revenue Commissioners be adjusted in such
manner as the Committee shall determine (and the Auditors shall confirm in writing to
be in their opinion fair and reasonable) following any capitalisation issue,
subdivision, consolidation or reduction of share capital and in respect of any discount
element in any rights issue or other variation of share capital to the intent that (as
nearly as may be without involving fractions of a Share or an Option Price calculated
to more than two places of decimals) the Exercise Price payable in respect of an Option
shall remain unchanged but the number of Shares issuable under the Scheme and any other
employees’ share scheme shall take account of any such event, provided that no
adjustment made pursuant to this Rule 10(1) shall have the effect of reducing the
Option Price below the nominal value of a Share.
	 
	 	(2)	 	Any adjustment made to the Option Price of unissued Shares which would have the
effect of reducing the Option Price to less than the nominal value of the

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	 	 	 	Share shall
only be made if and to the extent that the Committee are authorised to capitalise from
the reserves of the Company a sum equal to the amount by which the nominal value of the
Shares in respect of which the Option is exercisable exceeds the adjusted Option Price.
The Committee may apply such sum in paying up such amount on such Shares so that on the
exercise of any Option in respect of which such a reduction shall have been made, the
Committee shall capitalise such sum (if any) and apply the same in paying up such
amount as aforesaid.
	 
	 	(3)	 	The Committee may take such steps as they may consider necessary to notify
Option Holders of any adjustment made under Rules 10(1) and to call in, cancel,
endorse, issue or reissue any Option Certificate consequent upon such adjustment.

	11	 	Administration

	 	(1)	 	Notices or documents required to be given to an Eligible Employee or to an
Option Holder shall either be delivered to him by

	 	(a)	 	hand;
	 
	 	(b)	 	sending them to him at his last known address according to the
information provided by him. Notices sent by post shall be deemed to have been
given on the day following the date of posting; or
	 
	 	(c)	 	sending them by facsimile, email or any form of electronic
means acceptable to the Committee to the Option Holder’s last known facsimile
number or email address. Notices sent by this method of
communication shall be deemed to have been given at the time of despatch.

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	 	(2)	 	The Company may distribute to the Option Holders copies of any notice or
document sent by the Company to its Shareholders generally.
	 
	 	(3)	 	The Company shall at all times keep available sufficient unissued Shares will
be available to satisfy the exercise of all Options which have neither lapsed nor been
exercised taking account of any other obligations of the Company to allot unissued
Shares.
	 
	 	(4)	 	The Committee may make such regulations for the administration of the Scheme as
it deems fit, provided that no regulation shall be valid to the extent it is
inconsistent with these Rules.
	 
	 	(5)	 	The decision of the Committee in any dispute relating to an Option or the due
exercise thereof or any other matter in respect of the Scheme shall be final and
conclusive subject to the certification of the Auditors having been obtained when so
required by Rule 10(1).
	 
	 	(6)	 	The costs of introducing and administering the Scheme shall be borne by the
Company.

	12	 	Alterations

	 	(1)	 	Subject to Rules 12(2) below, the Committee may alter the Rules of this Irish
Section in any way they see fit provided that no alteration shall be made at a time
when this Scheme is approved by the Revenue Commissioners under Schedule 12A to the Act
without prior written approval of the Revenue Commissioners.
	 
	 	(2)	 	Where the alteration is to the advantage of Option Holders (present and future)
and it relates to:

21

 

	 	(a)	 	the following definitions set out in Rule 1: “Eligible
Employee”; “Exercise Price”; “Grant Period”; “Market Value”; “Maximum
Contribution”; “Share” and “Option Price”; or
	 
	 	(b)	 	Rule 2(1) (invitation of applications); or
	 
	 	(c)	 	Rule 2(4) (application forms); or
	 
	 	(d)	 	Rule 3 (scaling down of Options); or
	 
	 	(e)	 	Rule 4(1) (period for grant of Options); or
	 
	 	(f)	 	Rule 4(2) (restriction on grant of Options to Eligible
Employees); or
	 
	 	(g)	 	Rule 4(4) (the non-transferability of an Option); or
	 
	 	(h)	 	Rule 4(5) (grant of Option without payment); or
	 
	 	(i)	 	Rule 5 (number of Shares over which Options may be granted in
aggregate under the Scheme); or
	 
	 	(j)	 	Rule 6 (rights of exercise); or
	 
	 	(k)	 	Rule 7 (rights upon a takeover, reconstruction or amalgamation,
or on voluntary liquidation); or
	 
	 	(l)	 	Rule 9 (issue of Shares); or
	 
	 	(m)	 	Rule 10 (adjustments to Options); or

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	 	(n)	 	this Rule 12; or
	 
	 	(o)	 	Rule 13 (termination of Scheme),

it will not be effective unless either:

	 	(i)	 	it is made with the prior sanction of an ordinary resolution of
the Company in general meeting; or
	 
	 	(ii)	 	it is made by the Committee as an amendment which it considers
necessary or desirable to comply with or take account of the provisions of any
proposed or existing legislation, or to take account of the occurrence of any
takeover or reconstruction of the Company, or to obtain or maintain favourable
tax treatment of any Shares or interests in Shares acquired or held under the
Scheme or any rights to acquire such Shares or interests, provided any such
amendment does not affect the basic structure of the Scheme.

	 	(3)	 	No alteration may be made which would abrogate or adversely affect the
subsisting rights of Option Holders unless such alteration is made:

	 	(a)	 	with the consent in writing of such number of Option Holders as
hold Options over 75 per cent of the Shares which would be issued if all
Options granted and subsisting were exercised and Shares issued; or
	 
	 	(b)	 	by a resolution at a meeting of Option Holders by a majority of
not less than 75 per cent of the Option Holders who attend and vote either in
person or by proxy. For the purposes of this Rule 12(3)(b) the Option
Holders shall be treated as the holders of a separate class of share capital

23

 

	 	 	 	and the provisions of the articles of association of the Company relating to
class meetings shall apply mutatis mutandis.

	 	(4)	 	Written notice of any amendment made in accordance with this Rule 12 shall be
given to all Option Holders.

	13	 	General

	 	(1)	 	The Scheme shall terminate on the tenth anniversary of the date on which the
Scheme is approved by the Company in General Meeting or at any earlier time by the
passing of a resolution by the Committee. Termination of the Scheme shall be without
prejudice to the subsisting rights of Option Holders.
	 
	 	(2)	 	If an Option Holder shall cease for any reason to be in the service of a
Participating Company, he shall not be entitled, by way of compensation for loss of
office or otherwise howsoever, to any sum or any benefit to compensate him for the
loss of any right or benefit accrued or in prospect under the Scheme.
	 
	 	(3)	 	The Scheme shall be governed by, and construed in accordance with, Irish law.

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