Document:

aviva_ex0404.htm

Exhibit 4.4 - Aviva Executive Share Option Plan

 

AVIVA plc

RULES

of the AVIVA

Executive Share Option Plan

 

(Adopted by the Board of Directors

of the Company on 19 February 2001,

approved by an Ordinary Resolution

of the Company on 24 April 2001,

amended by a Committee of the

Board of Directors of the Company

on 19 February 2002, further amended

by a Committee of the Board of Directors

of the Company on 31 July 2002, further

amended by a Committee of the Board of

Directors of the Company on 30 July 2003 and

further amended by a Committee of the Board of

Directors of the Company on 8 August 2007)

 

ERNST & YOUNG

Rolls House

7 Rolls Buildings

Fetter Lane

LONDON, EC4A 1NH

Tel: 020-7951-2000

 

AVIVA EXOP Rules - Rules & Appendix - Current.doc

  

  

  

AVIVA plc

 

EXECUTIVE SHARE OPTION PLAN

 

INDEX

 

	
Rule Heading
	
Rule Number

	 	 
	
Interpretation
	
2

	 	 
	
Committee may Grant Options
	
6

	 	 
	
Restrictions on the Granting of Options
	
6

	 	 
	
Conditions Attaching to Options
	
7

	 	 
	
Grant of Options
	
8

	 	 
	
Exercise of Options
	
10

	 	 
	
Lapse of Options
	
11

	 	 
	
Cessation of Employment before Exercise
	
12

	 	 
	
Change in Control and Liquidation
	
13

	 	 
	
Adjustment of Options
	
15

	 	 
	
Administration
	
15

	 	 
	
General
	
16

	 	 
	
Amendments to These Rules
	
17

	 	 
	
APPENDIX: Performance Condition
	
18

  

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RULES

 

of the

 

AVIVA EXECUTIVE SHARE OPTION PLAN

 

	
1.
	
INTERPRETATION

 

	
1.1
	
In these Rules the following expressions have the following meanings unless inconsistent with the context:

 

	
Expression
	

Meaning

 

	

 

"Allocate"

 

	
In relation to any share option scheme, placing unissued Shares under option and in relation to other types of employee share schemes, the issue and allotment of Shares

	

 

"the Auditors"

 

	

 

The auditors for the time being of the Company

 

	

 

"the Board"

 

	

 

The board of directors for the time being of the Company or the directors present at a duly convened meeting of the directors or a duly appointed committee thereof at which a quorum is present

 

	

 

"the Combined Code”

 

	

 

The principles of good governance and code of best practice prepared by the Committee on Corporate Governance, chaired by Sir Ronald Hampel, published in June 1998 and appended to, but not forming part of, the Listing Rules (as amended from time to time)

 

	

 

"the Committee'

 

	

 

The remuneration committee of the Board from time to time or a duly appointed sub­committee thereof at which a quorum is present

 

	

 

"the Company"

 

	

 

AVF/A pic (registered number 2468686)

 

	

 

"Control"

 

	
The meaning given to that expression by Section 840 of the Income and Corporation Taxes Act 1988 (and "Controlled" shall be construed accordingly)

	

 

"Date of Adoption"

 

	

 

The date upon which the Plan is approved by an ordinary resolution of the Company in general meeting

 

	

 

"Date of Grant"

 

	

 

The date upon which an Option is granted by the Committee pursuant to Rule 5.3

 

  

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"Dealing Day"
	

A day on which the London Stock Exchange is open for the transaction of business

 

	
"Eligible Employee"
	

Any person who is an employee or executive director of any company which is at the relevant date a member of the Group and who is required to devote the whole or substantially the whole of his working time to the business of the Group

 

	
"Exercise Price"
	

The price at which each Share subject to an Option may be acquired on the exercise of that Option, being (subject to Rule 10):

 

(i)    not less than the Market Value of a Share immediately preceding the Date of Grant; and

 

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

 

	

'Financial Year"

 

	

A financial year of the Company within the meaning of section 742 of the Companies Act 1985

 

	

"the Group"

 

	

The Company and all of the Subsidiaries for the time being or where the context so requires any one or more of them (and "Group Company" shall be construed accordingly)

 

	
"Issue or Reorganisation”
	

Any capitalisation issue or rights issue or rights offer or any other variation in the share capital of the Company including (without limitation) any consolidation, sub­division or reduction of capital of the Company or any other event affecting the share capital of the Company or on a demerger of the Company

 

	

“the London Stock Exchange"

 

	

The London Stock Exchange plc or its successor

 

  

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“Market Value"

 

	

In respect of a Share comprised in an Option:

 

(i)            if the Shares are for the time being admitted to the Official List of the UK Listing Authority - the average of the middle market quotations for a Share derived from the Official List of the UK Listing Authority for any three consecutive Dealing
Days in the thirty day period immediately preceding the Date of Grant of such Option; or

 

(ii)           if the Shares are not for the time being admitted to the Official List of the UK Listing Authority - the value of a Share over which such Option is granted as determined by the Committee in its absolute discretion as at the Date of Grant having regard
to the provisions of Part VITJ of the Taxation of Chargeable Gains Act 1992

 

	

"the Model Code"

 

	

The Model Code on Directors' Dealings in Securities as set out in the appendix to Chapter 16 of The Listing Rules (as amended from time to time) or any other agreement, arrangement, condition or contract adopted or entered into by the Company as contains provisions similar in purpose and effect (as the case may be)

 

	

"Option"

 

	

A right to acquire Shares granted subject to the Rules of the Plan

 

	

"Option Certificate''

 

	

A certificate provided to a Participant pursuant to Rule 5.3

 

	

"Option Period"

 

	

The period starting on the Date of Grant of an Option and ending at the end of the day before the tenth anniversary of the Date of Grant

 

	

"Participant"

 

	

A person who has been granted an Option and where the context so requires the legal personal representative(s) of such person (and "Participants" shall be construed accordingly)

 

  

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"Performance Condition"

 

	

In relation to the first Option granted under the Plan the performance conditions set out in the Appendix to these Rules and in relation to all subsequent Options the performance condition (or performance conditions) set out in the Appendix to the Rules, as determined by the Committee in its absolute discretion pursuant to Rules 4.2 and 4.3

 

	

"Performance Period"

 

	

In relation to an Option, and subject as otherwise provided in these Rules and the Appendix, such period as the Board may determine at the Date of Grant, and in the absence of any such determination, a period of three consecutive Financial Years commencing with the Financial Year in which the Date of Grant of such Option occurs

 

	

“Permitted Grant Period”

 

	

Any of the following:

 

(i)           the period of 42 days commencing on the Date of Adoption;

 

(ii)          the period of 42 days commencing on the date of the announcement of the results of the Company for any financial period;

 

(iii)         the period of 42 days commencing on the date on which the Model Code or any statute or any regulation or order made there under or any governmental directive effective for the time being to prevent the grant of Options shall cease to have effect; or

 

(iv)         any other time fixed by the Committee where in the absolute discretion of the Committee circumstances are considered to be exceptional so as to justify the grant of an Option

 

	

“the Plan”

 

	

The AVIVA Executive Share Option Plan established by the adoption of these Rules as an employees' share scheme (within the meaning of Section 743 of the Companies Act 1985) and as from time to time amended in accordance with the provisions hereof

 

	
“Retirement”
	
Retirement by agreement with his employer.

 

  

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“Rules”
	
These rules as from time to time amended

 

	
“Shares”
	
Fully paid ordinary shares in the capital of the Company

 

	
“Subsidiary”
	
Any company which is for the time being both:

 

(i)            Controlled by the Company; and

 

(ii)           a subsidiary of the Company within the meaning of Section 736 of the Companies Act 1985

 

	
“Trustee”
	
The trustee or trustees for the time being of the AVIVA Share Trust or any other employee benefit trust established by the Company

 

	
“UK Listing Authority”
	
The Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000, including where the context so permits any committee, employee, officer or servant to whom any function of the UK Listing Authority may for the time being be delegated

 

	
“Vest”
	
In relation to an Option, the crystallisation of a Participant’s right to exercise such Option (and “Vesting” shall be construed accordingly)

	
“Vesting Date”
	

 

In relation to any Option the date on which such Option Vests pursuant to Rules 6.1, 8 or 9

 

	
1.2
	
References to statutory provisions shall, where the context, so admits, or requires, be construed as including references to the corresponding provisions of any earlier statute (whether repealed or not) directly or indirectly amended, consolidated, extended or replaced by such provisions, or re-enacted in such provisions, and of any subsequent statute in force at any relevant time directly or indirectly amending,
consolidating, extending, replacing or re-enacting the same, and shall include any orders, regulations, instruments or other subordinate legislation made under the relevant statute.

 

	
1.3
	
Any reference to a Rule is a reference to one of these Rules.

 

	
1.4  
	
Where the context so admits the singular includes the plural and each gender includes the other gender.

  

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2.
	
COMMITTEE MAY GRANT OPTIONS

 

	
  
	
The Committee is empowered with effect from the Date of Adoption to grant Options to Eligible Employees in accordance with these Rules.

 

	
3.
	
RESTRICTIONS ON THE GRANTING OF OPTIONS

 

	
3.1  
	
The Committee shall not grant an Option to any Eligible Employee except during a Permitted Grant Period.

 

	
3.2  
	
No Option shall be granted to an Eligible Employee who is on the relevant Date of Grant expected by the Committee to retire within six months of such date.1

 

	
3.3  
	
No Option shall in any circumstances be granted more than five years after the Date of Adoption.

 

	
3.4  
	
In any Financial Year any Option granted to an Eligible Employee shall be limited and take effect so that immediately after the grant of such Option the aggregate Market Value of the Shares comprised in such Option when added to the aggregate Market Value of Shares comprised in any other Options granted to the Participant in that Financial Year shall not
exceed such amount as is equal to two times the annual basic salary (excluding bonuses and benefits in kind) of the relevant Eligible Employee payable by the Group on the relevant Date of Grant (or, where the Eligible Employee is paid the majority or all of his remuneration in a currency other than sterling, the sterling equivalent thereof)

 

	
3.5  
	
For the purposes of Rule 3.4 the aggregate Market Value of Shares shall be calculated as at the Date of Grant of the relevant Option as determined by the Committee pursuant to Rule 5.

 

	
3.6  
	
The maximum number of Shares which may on any day be Allocated under this Plan, when added to the number of Shares which have been Allocated in the preceding ten years under any other employees’ share scheme adopted by the Company, shall not exceed ten per cent (10%) of the Company’s issued ordinary share capital immediately prior to that day.

 

	
3.7  
	
The maximum number of Shares which may on any day be Allocated under this Plan, when added to the number of Shares which have been Allocated in the preceding ten years under any other discretionary employees’ share scheme adopted by the Company, shall not exceed five per cent (5%) of the Company’s issued ordinary share capital immediately prior
to that day.

 

	
3.8  
	
For the purpose of calculating the limits contained in Rules 3.6 and 3.7, any Shares comprised in an Option or other right that has lapsed or been released will be disregarded.

 

	
3.9  
	
No Option shall be granted to an Eligible Employee at a time when such grant to such Eligible Employee would be in breach of the Model Code.

 

 
1           This rule 3.2 is void under the Employment Equality (Age) Regulations 2006 and will not be applied.

  

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4.
	
CONDITIONS ATTACHING TO OPTIONS

 

	
4.1
	
Each and every Option shall be granted on terms that:

 

	 	
4.1.1
	
subject as provided in Rule 8, the Vesting of the Option is dependent upon the relevant Participant being an Eligible Employee from the Date of Grant of such Option until the Vesting Date; and

 

	 	
4.1.2  
	
subject as provided in Rules 8 and 9, the Vesting of the Option is dependent upon the satisfaction of the Performance Condition.

 

	
4.2
	
Any Performance Condition and the determination of the start and end of any Performance Period shall relate to the performance of the Company or any other member of the Group or the relevant Participant (as the case may be) judged according to such objective criteria as the Committee shall from time to time determine having due regard to:

 

	 	
4.2.1  
	
the Combined Code;

 

	 	
4.2.2  
	
guidelines or statements of principles published from time to time by the Association of British Insurers relating to best practice on share incentive schemes; and

 

	 	
4.2.3  
	
such other guidance issued by or on behalf of the London Stock Exchange or institutional shareholders.

 

	
4.3 
	
If in relation to an Option:

 

	 	
4.3.1  
	
there occurs any event or events which causes the Committee to consider that an amended Performance Condition would be a fairer measure of the performance of the Group, the Company, any Group Company or the relevant Participant (as the case may be); or

 

	 	
4.3.2  
	
that an amended Performance Condition would provide a more effective incentive to the relevant Participant the Committee may amend the Performance Condition in such manner as it in its absolute discretion determines PROVIDED THAT the amended Performance Condition, in the opinion of the Committee, is neither materially easier nor more difficult to achieve
than the original Performance Condition as envisaged by the Committee at the Date of Grant of the relevant Option. Any such amendment shall be binding on the relevant Participant. The Committee shall within 30 days of amending the Performance Condition give the Participant details of the amended Performance Condition.

 

	
5. 
	
GRANT OF OPTIONS

 

	
5.1
	
During any Permitted Grant Period and subject to Rule 3, the Committee may, if, in its absolute discretion, it so decides, grant Options to Eligible Employees.

  

-8-

  

 

	
5.2
	
Subject as otherwise provided in these Rules, the Committee shall have an absolute discretion in determining (inter alia):

 

	 	
5.2.1
	
the Eligible Employees to be granted Options;

 

	 	
5.2.2
	
the number of Shares to be comprised in each Option;

 

	 	
5.2.3
	
the aggregate Market Value of the Shares comprised in each Option.

 

	
5.3
	
Options shall be granted by a resolution of the Committee and, as soon as reasonably practicable after the passing of such resolution, the Committee shall provide each Participant with an Option Certificate which shall be in such form as the Committee may from time to time determine, specifying (inter alia) the following:

 

	 	
5.3.1
	
the Date of Grant;

 

	 	
5.3.2
	
the number of Shares over which the Option is granted;

 

	 	
5.3.3
	
the Exercise Price;

 

	 	
5.3.4
	
the terms of the Performance Condition; and

 

	 	
5.3.5
	
the Performance Period.

 

	
5.4
	
In the event of any Participant losing his Option Certificate (or otherwise failing to provide evidence to the satisfaction of the Committee of the grant of an Option), the Company shall, as soon as reasonably practicable after receipt of notice of such loss or failure together, if it so requires, with an indemnity from the Participant in respect of any liability of the Company arising as a consequence of such loss
or failure (in such form as the Committee may request), provide the Participant with a duplicate of such Option Certificate and any reference in these Rules to an Option Certificate shall include a reference to such a duplicate.

 

	
5.5
	
Any Participant to whom an Option is granted may, by notice to the Company (in such form as the Committee may request) given within 30 days after the Date of Grant, renounce in whole or in part his Option. In such a case, the Option shall be treated, for all purposes of the Plan, as never having been granted. No consideration shall be payable by the Company for any such renunciation.

 

	
5.6
	
Subject to the rights of a deceased Participant's legal personal representative(s) to exercise an Option in accordance with Rule 8.2, free from any restrictions, an Option shall be personal to the Participant to whom it is granted and shall not be transferable or assignable. An Option shall not be charged, pledged or otherwise encumbered and any purported assignment, charge, disposal or dealing with the rights and/or
interests of the Participant under the Plan shall render the Option void.

 

	
5.7
	
The Committee may determine that any Option shall be subject to such additional and/or modified terms and conditions relating to its grant or exercise as may be necessary to comply with or take account of any securities, exchange control or tax laws, regulations or changes in legislation or practice of any territory which may have application to the relevant Eligible Employee, Participant or Group Company.

  

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5.8
	
In exercising its discretion under Rule 5.7, the Committee may:

 

	 	
5.8.1  
	
require a Participant to make such declarations or take such other action (if any) as may be required for the purpose of any securities, tax or other laws of any territory which may be applicable to him at the Date of Grant or on the exercise of his Option; and

 

	 	
5.8.2  
	
adopt any supplemental rules or procedures governing the grant and/or exercise of the Option as may be required for the purpose of any securities, tax or other laws of any territory which may be applicable to an Eligible Employee or Participant including (without prejudice to the generality of the foregoing) taking such steps as may be necessary so as
to ensure that any withholding tax or social security or similar payments required to be paid or administered by the Company or Group Company (as the case may be) in connection with such Option is paid or administered in accordance with the laws or rules applicable.

 

	
5.9 
	
Overseas Participants

 

	 	
5.9.1
	
Irrespective of any other provision of the Plan the Committee may amend the Plan and the terms of Options as it considers necessary or desirable to take account of, or to mitigate or comply with, relevant overseas tax, securities or exchange control laws but the terms of such Options must not overall be more favourable than the terms of Options granted to other Eligible Employees.

 

	 	
5.9.2
	
Without prejudice to the generality of Rule 5.9.1, should relevant overseas tax, securities or exchange control laws not readily or easily permit the use of Shares in a particular jurisdiction, the Committee may amend the Plan so as to enable Options granted under it to be satisfied in cash provided that the terms of such Options must not overall be more favourable than the terms of Options granted to other Eligible
Employees.

 

	
6. 
	
EXERCISE OF OPTIONS

 

	
6.1
	
In relation to an Option, as soon as reasonably practicable after the expiry of the Performance Period, the Committee, acting fairly and reasonably in the interests of the Participant, shall determine whether the Performance Condition has been satisfied and, if such Performance Condition has been satisfied, the Option shall Vest (but only to the extent the terms of the Performance Condition so dictate):

 

	 	
6.1.1  
	
on (or as soon as reasonably practicable after) the third anniversary of the Date of Grant of such Option; or

 

	 	
6.1.2  
	
in the event that the provisions of Rule 9 apply, on (or as soon as reasonably practicable after) such determination.

 

	
6.2  
	
When an Option Vests, the Committee shall notify the Participant that his Option is exercisable (to the extent the terms of the Performance Condition so dictate) and the Participant shall then be entitled to exercise his Option in accordance with Rule 6.3.

 

	
6.3  
	
An Option may be exercised in whole or in part by the Participant sending a notice to the Committee. The notice shall be given in such form or manner not inconsistent with these Rules as the Committee may determine and be accompanied by correct payment in full in cleared funds of the Exercise Price for the number of Shares being acquired, Such notice shall
be effective on the date of its receipt by the Committee and such date will constitute the date of exercise of the Option.

  

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6.4  
	
Following the exercise of an Option in accordance with Rule 6.3 the Committee shall, subject to Rules 6.5, 6.7, 6.10 and 7 to 9 inclusive, procure that the relevant Shares are issued and/or transferred to the Participant or a nominee on behalf of the Participant within 30 days of the receipt of the relevant notice of exercise.

 

	
6.5
	
Taxation and Social Security

 

	 	
6.5.1  
	
Any liability (other than stamp duty) of a Participant to taxation or national insurance contributions (or overseas equivalent) in respect of an Option shall be for the account of the relevant Participant.

 

	 	
6.5.2  
	
The exercise of an Option shall be conditional on the Participant complying with arrangements specified by the Company for the payment of taxation (including without limitation the deduction of tax at source) and/or national insurance contributions (or overseas equivalent).

 

	 	
6.5.3  
	
The Company may at its discretion make arrangements for the sale of some of the Shares comprised in the Option to satisfy such tax liability and/or liability to national insurance contributions (or overseas equivalent).

 

	 	
6.5.4  
	
Each Participant indemnifies the Company and every other member of the Group and the Trustee against any tax claim of whatever nature or any other liability or obligation incurred by the Company or any member of the Group or the Trustee which relates to the liability of a Participant in the Plan to taxation or national insurance contributions (excluding
for the avoidance of doubt any liability to employer's national insurance contributions (or overseas equivalent)).

 

	
6.6
	
Any determination by the Committee pursuant to Rule 6.1 shall be final and binding on the relevant Participant who shall have no claim of any nature (whether in law or in equity or otherwise) against the Company, any member of the Group or the Trustee in respect of such determination.

 

	
6.7
	
The issue and/or transfer of all Shares (and the issue of a definitive share certificate or such other acknowledgement of shareholding as may be prescribed by the Committee from time to time) will be subject (if applicable) to such Shares being admitted to the Official List of the UK Listing Authority and to all (if any) necessary consents of H.M. Treasury or other authorities under enactments or regulations for
the time being in force and it shall be the responsibility of the Participant to comply with any requirements to be fulfilled in order to obtain or obviate the necessity for any such consent.

 

	
6.8
	
Rights

 

	 	
6.8.1  
	
Shares issued to a Participant or a nominee on behalf of the Participant (as the case may be) on exercise of an Option will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment.

 

	 	
6.8.2  
	
Shares transferred to a Participant or a nominee on behalf of the Participant (as the case may be) on exercise of an Option shall be transferred without the benefit of any rights attaching to such Shares by reference to a record date preceding the date of transfer.

  

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6.8.3  
	
Subject to Rule 6.5, Shares will be transferred and/or issued to each Participant or a nominee on behalf of the Participant (as the case may be) free from any liens, charges or encumbrances.

 

	
6.9
	
The Company shall ensure that it has made arrangements (with the Trustee or otherwise) to procure the issue and/or transfer of sufficient issued Shares to satisfy in full all Shares which are to be issued and/or transferred to a Participant or a nominee on behalf of the Participant (as the case may be). The Company shall pay or procure that the Trustee pays the stamp duty (if any) on the transfer of Shares to a Participant.

 

	
6.10
	
If the issue and/or transfer of Shares to a Participant or a nominee on behalf of the Participant (as the case may be) could be in contravention of the Model Code or any securities, tax or other kws of any territory which may be applicable to a Group Company, Eligible Employee or Participant such issue and/or transfer shall be
deferred until such time when such issue and/or transfer would not be in contravention of the Model Code or any securities, tax or other laws of any territory which may be applicable to a Group Company, Eligible Employee or Participant and the relevant Shares shall be issued and/or transferred to the Participant or a nominee on behalf of the Participant (as the case may be) as soon as reasonably practicable following the first date on which the issue and/or transfer would not be in such contravention.

 

	
7. 
	
LAPSE OF OPTIONS

 

An Option shall lapse upon the earliest of:

 

	
7.1  
	
the Participant ceasing to be an Eligible Employee otherwise than where an Option may be retained pursuant to Rule 8;

 

	
7.2  
	
subject as provided in Rules 9.3 or 9.4, the commencement of the winding-up of the Company;

 

	
7.3  
	
a bankruptcy order (or overseas equivalent) being made in respect of the Participant;

 

	
7.4  
	
on the expiry of the Option Period;

 

	
7.5  
	
the expiry of any of the periods referred to in Rules 8 and/or 9; and

 

	
7.6  
	
subject as provided in the Appendix, following the determination of the Committee pursuant to Rule 6.1 that the Performance Condition has not been satisfied, the date of such determination.

 

	
8. 
	
CESSATION OF EMPLOYMENT BEFORE EXERCISE

 

	
8.1
	
If a Participant ceases to be an Eligible Employee by reason of:

 

	 	
8.1.1
	
injury or disability (evidenced to the satisfaction of the Committee);

 

	 	
8.1.2  
	
redundancy (within the meaning of the Employment Rights Act 1996 or equivalent local legislation);

 

	 	
8.1.3  
	
Retirement;

  

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8.1.4  
	
the company by which he is for the time being employed ceasing to be Controlled by the Company or a sale by such company of its assets and undertaking in circumstances to which the Transfer of Undertakings (Protection of Employment) Regulations 1981 (or its overseas equivalent) apply to transfer his employment to a purchaser from such company; or

 

	 	
8.1.5
	
any other reason as determined by the Committee in its absolute discretion

 

then:

 

	 	
(i)
	
subject to Rule 8.2, in the case of a Participant ceasing to be an Eligible Employee before his Option Vests, his Option shall not lapse by reason of such cessation but shall Vest in accordance with the provisions of Rule 6 after the expiry of the Performance Period as if there had been no cessation of employment before the expiry of the Performance Period. The Option will remain exercisable for a period of 6 months
from Vesting. To the extent the Option is not exercised, it will lapse at the end of the period;

 

	 	
(ii)
	
in the case of a Participant ceasing to be an Eligible Employee after his Option Vests, his Option shall not lapse by reason of such cessation but will remain exercisable for a period of 6 months from the date of cessation of employment. To the extent the Option is not exercised, it will lapse at the end of the period.

 

	
8.2 
	
Where:

 

	 	
8.2.1  
	
a Participant ceases to be an Eligible Employee before the Vesting of his Option circumstance where Rule 8.1.3 applies; and

 

	 	
8.2.2  
	
the Date of Grant of such Option was within two years of the date on which the Participant was expected by the Committee to retire the number of Shares under Option to Vest (if any) shall be reduced in accordance with the provisions of Rule 8.3.

 

	
8.3
	
In determining the number of Shares under Option to Vest when Rule 8.2 applies, the Committee shall apply the following formula:

 

X   =   A   x   C

___

B

 

Where:

 

	 	
X =
	
the number of Shares under Option (if any) to Vest rounded down to the nearest whole number

 

	 	
A =
	
the number of days between the first day of the Performance Period and the day on which the Participant ceases to be an Eligible Employee (both days inclusive)

 

	 	
B =
	
the number of days in the Performance Period

 

	 	
C =
	
the number of Shares under Option that would have Vested had such Participant not ceased to be an Eligible Employee.2

 

 

	
2
	
These rules 8.2 and 8.3 are void under the Employment Equality (Age) Regulations 2006 and will not be applied.

  

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8.4
	
If a Participant dies before his Option has become exercisable, his Option may be exercised by his legal personal representative(s) within twelve months of the date of death. To the extent that any Option exercisable under this Rule 8.4 is not so exercised, it will lapse at the end of the period.

 

	
9.
	
CHANGE IN CONTROL AND LIQUIDATION

 

	
9.1 
	
General Offer

 

	 	
9.1.1
	
If a general offer is made to acquire the whole or part of the issued ordinary share capital of the Company (or such part thereof as is not then owned by the offeror or any company Controlled by the offeror and/or any persons acting in concert with the offeror) as a result of which the offeror (or any such companies and/or persons as aforesaid) gains Control of the Company then subject to Rule 9.6 the relevant Performance
Period relating to any Option will end on the date on which Control of the Company passes and the provisions of Rule 6 relating to the exercise of Options will apply.

 

	 	
9.1.2
	
Options will lapse at the end of the period of 6 months following such date.

 

	
9.2 
	
Sections 428 to 430F Companies Act 1985

 

	 	
9.2.1  
	
If a person becomes bound or entitled to acquire Shares under Sections 428 to 430F inclusive of the Companies Act 1985, then subject to Rule 9.6 the relevant Performance Period relating to any Option will end on the date on which such person becomes so bound or entitled and the provisions of Rule 6 relating to the exercise of Options will apply.

 

	 	
9.2.2  
	
Options will lapse when that person ceases to be so bound or entitled.

 

	 	
9.2.3  
	
If more than one period is relevant, Options will lapse at the end of the later period.

 

	
9.3 
	
Section 425 Companies Act 1985

 

	 	
9.3.1  
	
If the Court sanctions a compromise or arrangement under Section 425 of the Companies Act 1985 proposed for the purpose of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies then subject to Rule 9.6 the relevant Performance Period relating to any Option will end on the date on which
the compromise or arrangement is sanctioned by the Court and the provisions of Rule 6 relating to the exercise of Options will apply.

 

	 	
9.3.2  
	
Options will lapse at the end of the period of 6 months following such date.

  

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9.3.3  
	
Notwithstanding the provisions of Rule 9.3.1:

 

	
  
	
●
	
if the Shares have ceased to be listed on the London Stock Exchange at the date an Option may be exercised, the Option may be satisfied in such manner as the Committee thinks fit; and

 

	
  
	
●
	
Options shall not without the consent of the Committee be exercisable under this Rule 9.3 if the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, such company having substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement.

 

	
9.4 
	
Voluntary Winding Up

 

	 	
9.4.1  
	
In the event of a resolution being passed by the Company for the voluntary winding up of the Company (except for the purposes of a reconstruction or amalgamation sanctioned by the Court under Section 425 of the Companies Act 1985), then subject to Rule 9.6 the relevant Performance Period relating to any Option will end on the date such resolution is passed
and the provisions of Rule 6 relating to the exercise of Options will apply.

 

	 	
9.4.2  
	
Options will lapse at the end of the period of 6 months following such date.

 

	
9.5 
	
Demerger etc.

 

	 	
9.5.1  
	
In the event of the Committee becoming aware that the Company is or is expected to be affected by any demerger, dividend in specie, super dividend or other transaction which, in the opinion of the Committee, would affect the current or future value of any Option, then subject to Rule 9.6 the relevant Performance Period relating to any Option will end on
a date determined by the Committee and the provisions of Rule 6 relating to the exercise of Options will apply.

 

	 	
9.5.2  
	
The Committee will specify whether and when such Options will lapse following such events.

 

	
9.6
	
If any of the events described in Rules 9.1 to 9.5 inclusive happen, the Committee in its discretion may require, within the time periods referred to in Rules 9.1 to 9.5 inclusive, any Participant to relinquish his rights under his Option ("the Old Option") in consideration of the grant to him of a new option over shares in a different company ("the Replacement Option") PROVIDED THAT

 

	 	
9.6.1  
	
immediately prior to the Participant relinquishing his rights under the Old Option, the total Market Value of the Shares comprised in the Old Option is broadly equivalent to the total Market Value of the Shares comprised in the Replacement Option;

 

	 	
9.6.2  
	
the terms of the Replacement Option are, in so far as practicable, broadly equivalent to the terms of the Old Option; and

 

	 	
9.6.3  
	
any new or varied performance condition applying to the Replacement Option is, in the opinion of the Committee, neither materially easier nor more difficult to achieve than the original Performance Condition applying to the Old Option.

 

	
9.7
	
For the purposes of these Rules and the Appendix any reference to the Performance Period shall be to such period as shortened (if applicable) pursuant to this Rule 9.

  

-15-

  

 

	
10.
	
ADJUSTMENT OF OPTIONS

 

	
10.1  
	
Subject to Rule 10.2, upon the occurrence of an Issue or Reorganisation the Exercise Price and the number and/or nominal value of Shares comprised in each Option may be adjusted in such manner as the Committee (with the written concurrence of the Auditors (acting as experts and not as arbitrators) that in their opinion the adjustments proposed are fair
and reasonable) may deem appropriate.

 

	
10.2  
	
The Exercise Price of an Option to acquire existing Shares may be adjusted to a price per Share less than nominal value. The Exercise Price of an Option to subscribe for Shares may only be adjusted to a price per Share less than nominal value if the Board resolves to capitalise the reserves of the Company in an amount equal to the difference between the
adjusted Exercise Price payable in respect of the Shares to be issued on exercise and the nominal value of such Shares on the date of allotment.

 

	
10.3  
	
Notice of any adjustments made pursuant to Rule 10.1 may be given to the Participants by the Committee.

 

11.         ADMINISTRATION

 

	
11.1  
	
The Committee shall have power from time to time to make and vary such regulations (not being inconsistent with these Rules) for the implementation and administration of the Plan as it thinks fit.

 

	
11.2  
	
Any notice given by an Eligible Employee or a Participant to the Company in pursuance of the Plan must be given in writing and signed by the Eligible Employee or Participant as the case may be and shall be acted upon by the Company as soon as reasonably practicable after receipt provided that the Company may in its absolute discretion act on instructions
given or purporting to be given by telex message, facsimile, telecopier transmission and/or any other electronic communication and shall not be responsible for any loss whatsoever occasioned by so acting. Any such notice shall be properly given if sent by post (airmail if overseas) or delivered to the Company at its registered office.

 

	
11.3
	
Any notification or other notice which the Company is required to give or may desire to give to any Participant in pursuance of the Plan shall be sufficiently given:

 

	 	
11.3.1  
	
if he is a director or employee of any Group Company by delivering it to him at his place of work;

 

	 	
11.3.2  
	
if sent through the post in a prepaid envelope addressed to such Participant at his address last known to the Company; or

 

	 	
11.3.3  
	
if he is a director or employee of any Group Company by sending a facsimile transmission or any other electronic communication to a correct facsimile or electronic communication number or address.

 

	
11.4
	
Any notice sent by post (airmail if overseas) shall be deemed to be properly served 72 hours after an envelope containing such notice and properly addressed has been posted by first class post (or if sent airmail from or to overseas on the fifth day following the day of posting). Any notice sent by facsimile or any other electronic communication shall be deemed to be properly served at the time of transmission.

  

-16-

  

 

12.         GENERAL

 

	
12.1  
	
The decision of the Committee in any dispute or question concerning the construction or effect of the Plan or any other questions arising in connection with the Plan shall be final and conclusive subject to the concurrence of the Auditors whenever required under these Rules.

 

	
12.2  
	
The Board may at any time resolve to terminate the Plan in which event no further Options shall be granted but the provisions of the Plan shall continue in full force and effect in relation to Options then subsisting.

 

	
12.3
	
Notwithstanding any other provision of these Rules:

 

	 	
12.3.1  
	
the Plan shall not form any part of any contract of employment between the Trustee, the Company or any Subsidiary and any employees of any of those companies, and it shall not confer on any such employees any legal or equitable rights against the Trustee, the Company or any Subsidiary, directly or indirectly, or give rise to any cause of action in law
or in equity against the Trustee, the Company or any Subsidiary;

 

	 	
12.3.2  
	
the benefits to Eligible Employees or Participants under the Plan shall not form any part of their wages or remuneration or count as pay or remuneration for pension fund or other purposes;

 

	 	
12.3.3  
	
in no circumstances shall any Eligible Employee or Participant on ceasing to hold the office or employment by virtue of which he is or may be eligible to participate in the Plan (whether or not upon breach of the Eligible Employee's or Participant's contract of employment by his employer) be entitled to any compensation for any loss of any right or benefit
or prospective right or benefit under the Plan which he might otherwise have enjoyed whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

 

	
12.4  
	
The exercise of Options will be satisfied by the transfer of existing Shares and/or the issue of new Shares by the Company.

 

	
12.5  
	
These Rules shall be governed by and construed in all respects in accordance with English law.

 

	
13. 
	
AMENDMENTS TO THESE RULES

 

	
13.1
	
Subject as provided in the rest of this Rule 13, these Rules may be amended by resolution of the Board from time to time in any manner.

 

	
13.2
	
Subject as provided in Rule13.3, no amendments shall be made to:

 

	 	
13.2.1  
	
the class of Eligible Employees;

 

	 	
13.2.2  
	
the limits on the number of Shares which are subject to the Plan;

 

	 	
13.2.3  
	
the maximum entitlement of any Participant;

 

	 	
13.2.4  
	
the terms upon which Shares may be transferred to a Participant under an Option;

  

-17-

  

 

	 	
13.2.5  
	
the adjustment of Options in the event of an Issue or Reorganisation; and

 

	 	
13.2.6  
	
this Rule 13 which are to the advantage of Participants (present or future) without the previous sanction of the Company in general meeting.

 

	
13.3
	
The Board may make any minor amendments without the approval of the Company in general meeting to:

 

	 	
13.3.1  
	
benefit the administration of the Plan; or

 

	 	
13.3.2  
	
comply with or take account of a change in legislation; or

 

	 	
13.3.3  
	
obtain or maintain favourable tax, exchange control or regulatory treatment of any Participant or Group Company.

 

	
13.4
	
No amendment shall be made which is to the disadvantage of, or places an obligation on, the Trustee without the prior written consent of the Trustee to such amendments.

  

-18-

  

 

  APPENDIX

 

Performance Conditions - August 2003

 

Pursuant to Rule 4.1 of the Rules, the Committee may grant an Option on the basis that its exercisability is dependent upon the satisfaction of a Performance Condition. Set out below are the Performance Conditions which shall apply to Options granted under the Plan in August 2003. Words and
expressions defined in the Rules shall have the same meaning herein unless the contrary intention appears.

 

	
1. 
	
RETURN ON CAPITAL EMPLOYED

 

	
 
	
1.1
	
The extent to which the first 30% of an Option shall become exercisable shall be determined by reference to the Return on Capital Employed of the Company, in real terms, over the Performance Period as calculated in accordance with the following table:

 

	
Percentage Return on Capital Employed

over Performance Period
	
Percentage of Shares comprised in 

Option which become exercisable

	
Less than 24%
	
0%

	
24%
	
10%

	
Between 24% and 30%
	
Pro rata between 10% and 30% on a

straight line basis

	
Greater than 30%
	
30%

 

	
1.2
	
For the purpose of the this Appendix, the "Return on Capita] Employed" for a period is the normalised rate of return on equity capital earned in that period in excess of inflation calculated on such basis as the Committee, acting reasonably, may specify from time to time provided that:

 

	 	
1.2.1  
	
the Committee shall request an independent opinion from a firm of professional advisers which is, in the Committee's opinion, qualified to give an opinion that the calculations of Return on Capital Employed have been carried out appropriately (such firm acting as experts and not arbitrators); and

 

	 	
1.2.2  
	
the "normalised rate of return" shall be calculated net of tax using life achieved operating profits and operating profits from other businesses including longer investment returns;

 

	 	
1.2.3  
	
the Committee may take into account significant changes in the net asset value arising over the Performance Period in determining whether the performance condition has been met.

 

	
1.3
	
At the end of the Performance Period the Committee shall consider the Return on Capital Employed of the Company and shall determine in accordance with this Appendix whether and to what extent any Options shall become exercisable.

 

	
 
	
1.4
	
Any decision of the Committee pursuant to paragraph 1.3 shall be final and binding on all Participants.

  

-19-

  

 

	
2. 
	
TOTAL SHAREHOLDER RETURN

 

	
 
	
2.1
	
The extent to which the remaining 70% of an Option shall become exercisable shall be determined by reference to the position of the Company in the Comparator Group List as calculated in accordance with the following ranking table;

 

	
Position of Company in Comparator

Group List
	
Percentage of Shares comprised

in Option which become exercisable

	
Below median
	
0%

	
Median
	
20%

	
Between median and upper decile
	
Pro-rate between20% and 70% on a

straight line basis

	
Upper decile and above
	
70%

 

	
 
	
2.2
	
For the purpose of the Total Shareholder Return Performance Condition, the following expressions have the following meanings:

 

	
“Comparator Group”
	
all those companies including the Company as at the first day of the Performance Period whose names are set out in paragraph 4 below

 

	
“Comparator Group List”
	
a list of the companies in the Comparator Group ranked in accordance with their Total Shareholder Return over the Performance Period provided that the Committee shall be entitled in its absolute discretion to make adjustments to the list (including adding, deleting or substituting any company to or from the Comparator Group
if in the opinion of the Committee it is appropriate to do so) where necessary to take account of mergers, acquisitions and de-mergers and in the event that a company ceases to trade, is taken over or is suspended from dealing on the London Stock Exchange (or such other stock exchange on which it is listed) or other such similar events provided that the adjusted list in the opinion of the Committee renders the Total Shareholder Return Performance Condition neither materially easier nor materially more difficult
to achieve.

 

	
2.3
	
The Total Shareholder Return for the Performance Period in respect of each company in the Comparator Group shall be calculated on such basis as the Committee, acting reasonably, may specify from time to time provided that:

 

	 	
2.3.1  
	
the Committee shall request a firm of independent consultants (such firm acting as experts and not arbitrators) to carry out the calculations of Total Shareholder Return and in so far as is reasonably practicable the same method of calculation shall be used for each and every company in the Comparator Group List;

  

-20-

  

 

	 	
2.3.2  
	
where any relevant figures are expressed in a currency other than sterling the Committee may convert the same into sterling in such manner as it in its discretion may determine; and

 

	 	
2.3.3  
	
the Committee may make such adjustments as it may in its absolute discretion think fit to take account of any variations in the share capital of any company in the Comparator Group occurring during the Performance Period.

 

	
2.4
	
At the end of the Performance Period the Committee shall consider the Comparator Group List and shall determine in accordance with this performance condition whether and to what extent any Options shall become exercisable. Any decision of the Committee regarding:

 

	 	
2.4.1
	
the identity of the Comparator Group;

 

	 	
2.4.2
	
the ranking of the Company in the Comparator Group List; and

 

	 	
2.4.3
	
adjustments to the Comparator Group List shall be final and binding on all Participants.

 

	
3. 
	
PERFORMANCE PERIOD

 

	
3.1  
	
The Performance Period shall be the three consecutive years commencing on 1 July 2003.

 

	
3.2  
	
In the event that the Committee determines that an Option is not exercisable at all at the end of the Performance Period, the Performance Period shall be extended by two additional years. The provisions of the Rules and this Appendix shall be varied accordingly.

 

	
3.3  
	
For the purposes of paragraph 3.2, the Return on Capital Employed vesting schedule will be varied to read as follows:

 

	
Percentage Return on Capital Employed

over Performance Period
	
Percentage of Shares comprised in Option

which become exercisable

	
Less than 40%
	
0%

	
40%
	
10%

	
Between 40% and 50%
	
Pro rata between 10% and 30% on a straight

line basis

	
Greater than 50%
	
30%

  

-21-

  

 

	
4. 
	
COMPARATOR GROUP

 

	
4.1 
	
The Comparator Group referred to in paragraph 2.2 shall be as follows:

 

	
Abbey National
	
Fortis

	 	 
	
AEGON
	
HBOS

	 	 
	
Allianz
	
HSBC

	 	 
	
AXA
	
ING

	 	 
	
Barclays
	
Legal & General Lloyds TSB Prudential

	 	 
	
CNP Assurances
	
RBS RSA Skandia Zurich Swiss Life

	 	 
	
Ergo
	  

 

  

-22-

  

Schedule

UK Inland Revenue Approved

 

 

	
Date of Inland Revenue approval:
	
23 August 2001

	 	 
	
Date of Inland Revenue approval to amend:
	
31 July 2002

	 	 
	
Date of Inland Revenue approval to further amend:
	
1 September 2003

	 	 
	
IR Ref:
	
X22013

 

The purpose of this Schedule is to make certain variations to the terms of the Plan pursuant to Rule 5.7 to enable Participants in the UK to participate in a tax-efficient manner. This Schedule is to be read as a continuation of the Plan and all the Plan provisions shall apply unless this Schedule shall expressly provide
to the contrary.

 

	
1  
	
INTERPRETATION

 

	
1.1  
	
In this Schedule, the following expressions have the following meanings unless inconsistent with the context:

 

	
Expression
	
Meaning

	 	 
	
“Associated Company”
	
The meaning given to that expression by Section 416 of the Taxes Act.

	 	 
	
“Date of Approval”
	
The date on which the Plan is approved by the Board of Inland Revenue under Schedule 4.

	 	 
	
“Earnings and Pensions Act”
	
The Income Tax (Earnings and Pensions Act 2003.

	 	 
	
“Eligible Employee”
	
Any director of any Participating Company who devotes substantially the whole of his working time to his duties not less than 24 hours per week (excluding meal breaks) or any employee (other than one who is a director) of any Participating Company (provided that the director or employee is not precluded by paragraph 9 of
Schedule 4 (material interest in a close company) from participating in the Plan).

	 	 
	
“Exercise Price”
	
The price at which each Share subject to an Option may be acquired on the exercise of that Option, being subject to Rule 10) not less than the higher of):

 

(i)  the Market Value of a Share immediately preceding the Date of Grant; and

 

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

 

  

-23-

  

	
“Issue or Reorganisation”
	
Any capitalisation issue or rights issue or rights offer or any other variation in the share capital of the Company including (without limitation) any consolidation, sub-division or reduction of capital of the Company or any other event affecting the share capital of the Company.

	 	 
	
“Market Value”
	
In respect of a Share comprised in an Option:

 

(i)  if the Share are for the time being admitted to the Official List of the UK Listing Authority – the average of the middle market quotations for a Share derived from the
Official List of the UK Listing Authority for the three consecutive Dealing Days immediately preceding the Date of Grant of such Option; or

 

(ii)  if the Shares are not for the time being admitted to the Official List of the UK Listing Authority – the value of a Share over which such Option is granted as determined
by the Committee in its absolute discretion as at the Date of Grant having regard to the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with the Inland Revenue Shares Valuation Division.

 

	 	 
	
“Participating Company”
	
Any Group Company which is permitted by the Inland Revenue to participate in the Plan and which is designated by the Board as a Participating Company.

	 	 
	
“Performance Condition”
	
In relation to the first Option granted under the Plan the objective performance conditions set out in the Appendix to these Rules and in relation to all subsequent Options the objective performance condition (or objective performance conditions) set out in the Appendix to the Rules, as determined by the Committee in its
absolute discretion pursuant to Rules 4.2 and 4.3.

	 	 
	
“Schedule 4”
	
Schedule 4 to the Earnings and Pensions Act.

  

-24-

  

	
“Shares”
	
Fully paid ordinary shares in the capital of the Company which satisfy the requirements of paragraphs 16 to 20 of Schedule 4.

	 	 
	
“Taxes Act”
	
The Income and Corporation Taxes Act 1988.

 

	
1.2  
	
Words and expressions not otherwise defined in this Schedule will have the meanings referred to in the Rules.

 

	
2  
	
COMMITTEE MAY GRANT OPTIONS

 

Rule 2 shall be deleted and replaced with the following:

 

“The Committee is empowered with effect from the Date of Approval to grant Options to Eligible Employees under this Schedule.”

 

	
3  
	
RESTRICTIONS ON THE GRANTING OF OPTIONS

 

Rule 3.4 shall be deleted and replaced with the following:

 

	
  
	
“3.4
	
Any Option granted under this Schedule to an Eligible Employee shall be limited and take effect so that immediately after the grant of such Option the aggregate Market Value of all the Shares which he may acquire on the exercise in full of all Options which have neither lapsed nor been exercised granted under this Plan and any other share option plan (other than a savings-related share option plan) approved by the
Board of Inland Revenue under Schedule 4 and adopted by the Company or any Associated Company, shall not exceed £30,000 (thirty thousand pounds) or such other limit as may be specified from time to time in paragraph 6 of Schedule 4.”

 

	
4  
	
CONDITIONS ATTACHING TO OPTIONS

 

	
4.1  
	
Rule 4.3 shall be amended by replacing the word “or” in the last line of Rule 4.3.1 with the word “and”.

 

	
4.2  
	
Rule 4.3 shall be amended by deleting the word “materially” from the third line of the last paragraph.

 

	
5  
	
GRANT OF OPTIONS

 

	
5.1  
	
Rule 5.3 shall be amended by inserting the words “executed as a deed and” between the words ”which shall be” and “in such form as the Committee may determine”.

 

	
5.2  
	
Rule 5.7 shall be amended by inserting the words “provided that the Committee must obtain the approval of the Board of Inland Revenue to any such additional and/or modified terms and conditions” at the end of the rule.

 

	
5.3  
	
Rule 5.8 shall be amended by inserting the words “provided that the Committee must obtain the approval of the Board of Inland Revenue to any such additional and/or modified terms and conditions” at the end of the Rule 5.8.

 

	
5.4  
	
Rule 5.9 shall be deleted.

 

  

-25-

  

 

	
6  
	
EXERCISE OF OPTIONS

 

	
6.1  
	
Rule 6.2 shall be amended by inserting the words ”, subject to Rule 6.11,” between the words “Participant shall” and “then be entitled” in line three of Rule 6.2.

 

	
6.2  
	
Rule 6.4 shall be amended by the deletion of “6.5,” from the second line of Rule 6.4.

 

	
6.3  
	
Rule 6.5.2 shall be amended by inserting the words “, payment by cheque, sale of existing Shares or sale of Shares acquired from the exercise of the Option” after the words “including without limitation the deduction of tax at source”.

 

	
6.4  
	
Rule 6.5.3 shall be deleted its entirety.

 

	
6.5  
	
Rule 6 shall be amended by inserting a new Rule 6.11:

 

	
  
	
“6.11
	
No Option may be exercised by a Participant at any time when he is, or by the legal personal representative(s) of a Participant who at the date of his death was, prohibited from such exercise by virtue of the provisions of paragraph 9 of Schedule 4 (material interest in a close company)."

 

	
6.6  
	
Rule 6.6 shall be amended by the deleting the words “who shall have no claim of any nature (whether in law or in equity or otherwise) against the Company, any member of the Group of the Trustee in respect of such determination” at the end of Rule 6.6.

 

	
7  
	
CHANGE IN CONTROL AND LIQUIDATION

 

	
7.1  
	
Rule 9.3.3 shall be deleted in its entirety.

 

	
7.2  
	
Rule 9.6 shall be deleted in its entirety and replaced with the following wording:

 

	
  
	
“9.6
	
If any of the events described in Rules 9.1 to 9.3 inclusive happen, the Participant may, within the time periods referred to in Rules 9.1 to 9.3 inclusive and with the agreement of the acquiring company, relinquish his rights under his Option (“the Old Option) in consideration of the grant to him of a new option over shares in a different company (whether the offeror company itself or some other company falling
within paragraph (b) or (c) of paragraph 16 of Schedule 4) (“the Replacement Option”) PROVIDED THAT

 

	
  
	
9.6.1
	
the Shares comprised in the Replacement Option are fully paid ordinary shares in the capital of such company which satisfy the requirements of paragraphs 16 to 20 of Schedule 4;

 

	
  
	
9.6.2
	
immediately prior to the Participant relinquishing his rights under the Old Option, the total Market Value of the Shares comprised in the Old Option is equivalent to the total Market Value of the Shares comprised in the Replacement Option (by virtue of satisfying the requirements of paragraph 27(4) of Schedule 4);

 

	
  
	
9.6.3
	
the Exercise Price for the Replacement Option is equivalent to the Exercise Price for the Old Option;

 

	
  
	
9.6.4
	
the terms of the Replacement Option are equivalent to the terms of the Old Option; and

 

	
  
	
9.6.5
	
any new or varied performance condition applying to the Replacement Option is, in the opinion of the Committee, neither easier nor more difficult to achieve than the original Performance Condition applying to the Old Option.”

 

  

-26-

  

 

	
8  
	
ADJUSTMENT OF OPTIONS

 

Rule 10.1 shall be amended by the insertion of the words “, subject to the prior approval of the Board of Inland Revenue,” between the words “may” and “be adjusted” in lines two and three.

 

	
9  
	
AMENDMENTS TO THESE RULES

 

Rule 13 shall be amended by the addition of a new Rule 13.5:

 

	
  
	
“13.5
	
For so long as this Plan as amended by this Schedule is approved by the Board of Inland Revenue under Schedule 4 no amendment which constitutes an alteration to a key feature of the Plan shall have effect unless and until approved by the Inland Revenue.”

 

 

 

 

 

 

 

 

 

-27-aviva_saye2007.htm

Exhibit 4.5 - Aviva Save-As-You-Earn (SAYE) Plan Rules (2007)

 

Dated 26 April 2007 

 

 

 

 

 

 

 

 

 

 

AVIVA PLC

 

 

 

 

 

 

 

 

 

RULES OF THE AVIVA

SAVINGS RELATED SHARE OPTION SCHEME 2007

 

 

	 	Shareholders' Approval:	26 April 2007	 
	 	Directors' Adoption:	22 February 2007	 
	 	HMRC Approval:	6 June 2007	 
	 	HMRC Ref:	SRS100153/GRP	 
	 	Expiry Date:	26 April 2017	 
	 	Amended:    [●]	 

 

 

 

Linklaters

 

One Silk Street 

London EC2Y 8HQ

 

 

 

Telephone (44-20) 7456 2000 

Facsimile (44-20) 7456 2222 

 

Ref 01/145/CMilsom

  

 

 

 

 

Table of Contents

 

 

	Contents	 	Page
	 	 	 
	1	
Definitions
	1
	 	 	 
	2	
Invitations
	3
	 	 	 
	3	
Application
	4
	 	 	 
	4	
Scaling down
	5
	 	 	 
	5	
Option Price
	6
	 	 	 
	6	
Grant of Options
	6
	 	 	 
	7	
Scheme limits
	7
	 	 	 
	8	
Variations in share capital
	8
	 	 	 
	9	
Exercise and lapse - general rules
	8
	 	 	 
	10	
Exercise and lapse - exceptions to the general rules
	9
	 	 	 
	11	
Exchange of Options
	12
	 	 	 
	12	
Exercise of Options
	13
	 	 	 
	13	
General
	15
	 	 	 
	14	
Changing the Scheme and termination
	17
	 	 	 
	15	
Governing law
	19

 

 

i

 

 

Rules of the Aviva plc Savings Related Share Option Scheme 2007

 

	1	Definitions
	 	 	 	 
	1.1	Meanings of Words Used
	 	 
	 	
In these Rules:

 

“Acquiring Company” is any company which has obtained Control of the Company or has become entitled and bound as mentioned in Rule 10.6 (Section 429 notice) as a result of events specified in Rule 10.5 (Takeovers) or Rule 10.7 (Company reconstructions)
or Rule 10.8 (Reorganisation or merger);

 

“Associated Company” has the meaning given to it by paragraph 47(1) of Schedule 3 to ITEPA;

 

“Bonus Date” means the date on which the bonus becomes payable under the terms of the relevant Savings Contract;

 

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

 

“Company” means Aviva plc;

 

“Contribution” means a contribution under a Savings Contract;

 

“Control” has the meaning given to it by Section 840 of the Taxes Act;

 

“Date of Grant” means the date on which an Option is granted;

 

“Directors” means the board of directors of the Company or a duly authorised committee of the Board or any other duly authorised person;

 

“Eligible Employee” means any person who satisfies the conditions set out below. The conditions are that the person:

	 	 
	 	(i)	
either is an employee (but not a director) of a Participating Company, or is a director of a Participating Company who is required to work for the company for at least 25 hours a week (excluding meal breaks); and

	 	 	 	 
	 	(ii)	
has earnings in respect of his office or employment within paragraph (a) above which are general earnings (or would be if there were any) to which Section 15 or Section 21 of ITEPA applies; and

	 	 	 	 
	 	(iii)	
has such qualifying period (if any) of continuous service (not exceeding five years prior to the Date of Grant) as the Directors may from time to time determine;

	 	 	 	 
	 	
In addition, it means any person who is an executive director or employee of a Participating Company who is nominated by the Directors (or is nominated as a member of a category of such executive directors or employees).

 

However, the definition of “Eligible Employee” does not include anyone who is excluded from participation because of paragraph 11 of Schedule 3 to ITEPA (material interest provisions);

 

 

1

 

 

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

 

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

 

“Listing Rules” means the rules relating to admission of the Official List;

 

“London Stock Exchange” means London Stock Exchange plc or its successor;

 

“Member of the Group” means: 

	 	 	 	 
	 	(i)	
the Company; and

	 	 	 	 
	 	(ii)	
its Subsidiary or Subsidiaries from time to time; and

	 	 	 	 
	 	(iii)	
any other company which is associated and is so designated by the Directors;

	 	 	 	 
	 	
“Model Code” means the Model Code on dealings in securities set out in Listing Rule 9 annex 1;

 

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

 

“Option” means a right to acquire Shares granted under the Scheme which is subject to the Rules;

 

“Optionholder” means a person holding an Option including his personal representatives;

 

“Option Price” means the amount payable for each Share on the exercise of an Option calculated as described in Rule 5 (Option price);

 

“Participating Companies” means:

	 	 	 	 
	 	(i)	
the Company; and

	 	 	 
	 	(ii)	
any Subsidiary designated by the Directors; and

	 	 	 
	 	(iii)	
any jointly-owned company (within the meaning of paragraph 46 of Schedule 3 to ITEPA) designated by the Directors; and

	 	 	 
	 	(iv)	
any other entity designated by the Directors which HMRC agree may participate.

	 	 	 	 
	 	
“Regulations” means the Employment Equality (Age) Regulations 2006;

 

“Rules” means the rules of the Scheme as changed from time to time;

 

“Savings Contract” means a contract under a certified contractual savings plan, within the meaning of Section 326 of the Taxes Act, which is approved by HMRC for the purposes of Schedule 3 to ITEPA;

 

“Scheme” means this Scheme known as “The Aviva plc Savings Related Share Option Scheme 2007” as changed from time to time;

 

“Shares” means fully paid ordinary shares in the capital for the time being of the Company which satisfy paragraphs 18 to 22 of Schedule 3 to ITEPA;

 

“Specified Age” means 60;

 

“Subsidiary” means a company which is:

	 	 	 	 
	 	(i)	
a subsidiary of the Company within the meaning of Section 736 of the Companies Act 1985; and

 

 

2

 

 

	 	(ii)	
under the Control of the Company.

	 	 	 	 
	 	
“Taxable Year” means the 12 month period in respect of which the Optionholder is obliged to pay US Tax or, if it would result in a longer period for the exercise of an Option, the 12 month period in respect of which the Optionholder’s employing
company is obliged to pay tax.

 

“Taxes Act” means the Income and Corporation Taxes Act 1988;

 

“Trustee” means the trustee of any employee trust described in Rule 13.7 (Employee trust).

 

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

 

“US Tax” means taxation under the tax rules of the United States of America.

	 	 	 	 
	1.2	
Shares

	 	 	 	 
	 	If any Shares which are subject to an Option cease to satisfy paragraphs 18 to 22 of Schedule 3 to ITEPA and the Directors notify HMRC that they wish the Scheme to be disapproved then the definition of “Shares” in Rule 1.1 is automatically changed to “fully paid ordinary shares in the capital of the Company”.
	 	 	 	 
	1.3	
Unapproved schedule

	 	 	 	 
	 	The directors may adopt an unapproved schedule (or schedules) for the purpose of granting unapproved options to employees employed outside the UK on terms which are appropriate to the jurisdiction in which the employee is employed on the Date of Grant or any other terms which the Directors consider appropriate.
	 	 	 	 
	2	
Invitations

	 	 	 	 
	2.1	
Operation

	 	 	 	 
	 	The Directors have discretion to decide whether the Scheme will be operated. When they operate the Scheme they must invite all Eligible Employees to apply for an Option.
	 	 	 	 
	2.2	
Time when invitations may be made

	 	 	 	 
	 	2.2.1	
Invitations may only be made within 42 days starting on any of the following:

	 	 	 	 
	 	 	(i)	
the day on which the Scheme is formally approved by HMRC;

	 	 	 	 
	 	 	(ii)	
the day after the announcement of the Company’s results through a regulatory information service for any period;

	 	 	 	 
	 	 	(iii)	
any day on which the Directors resolve that exceptional circumstances exist which justify the making of invitations;

	 	 	 	 
	 	 	(iv)	
any day on which changes to the legislation or regulations affecting savings related share option plans approved by HMRC under the Taxes Act or ITEPA are announced, effected or made; or

 

 

3

 

 

	 	 	(v)	
any day on which a new Savings Contract prospectus is announced or takes effect.

	 	 	 	 
	 	2.2.2	
If the Directors cannot make the invitations due to restrictions imposed by statute, order, regulation or Government directive, or by any code adopted by the Company based on the Model Code, the Directors may make the invitations within 42 days after the lifting of such restrictions.

	 	 	 	 
	2.3	
Form of invitations

	 	 	 	 
	 	The invitation will specify:
	 	 	 	 
	 	2.3.1	
the requirements a person must satisfy in order to be eligible to participate;

	 	 	 	 
	 	2.3.2	
the Option Price or how it is to be calculated;

	 	 	 	 
	 	2.3.3	
the form of application and the date by which applications must be received. This date must be between 14 days and 25 days after the date of the invitation unless otherwise agreed in advance with HMRC;

	 	 	 	 
	 	2.3.4	
the length of the Savings Contract (including whether it is possible to choose to defer receiving the bonus at the end of the savings period in order to receive an increased bonus) and the date of start of the savings;

	 	 	 	 
	 	2.3.5	
the maximum number, if any, of Shares over which Options may be granted;

	 	 	 	 
	 	2.3.6	
the maximum permitted Contribution in each month which must not be more than the maximum specified by ITEPA which is currently £250;

	 	 	 	 
	 	2.3.7	
the minimum permitted Contribution in each month (which must be between £5 and £10); and

	 	 	 	 
	 	2.3.8	
whether the bonus or interest payable under the Savings Contract may be used on the exercise of the Option to purchase Shares.

	 	 	 	 
	3	
Application

	 	 	 	 
	3.1	
Form of Application

	 	 	 	 
	 	An application for an Option must include an application for a Savings Contract with a savings carrier nominated by the Directors. The application will be made in writing, or electronically, in a form specified by the Directors and will require the Eligible Employee to state:
	 	 	 	 
	 	3.1.1	
the Contribution he wishes to make;

	 	 	 
	 	3.1.2	
that his proposed Contribution, when added to any Contributions he makes under any other Savings Contract, will not exceed the maximum permitted under ITEPA which is currently £250; and

	 	 	 
	 	3.1.3	

the length of the Savings Contract if relevant, and whether he wishes to defer receipt of his bonus at the end of the savings period in order to receive an increased bonus.

 

 

4

 

 

	3.2	
Number of Shares

	 	 
	 	Each Eligible Employee’s application will be for an Option over the largest whole number of Shares which he can acquire at the Option Price with the expected repayment under the related Savings Contract. The “expected repayment” in this Rule 3.2 does not include any bonus or interest excluded under Rule 2.3.8.
	 	 
	3.3	
Modification of application and proposals

	 	 	 	 
	 	3.3.1	
If there are applications for Options over more Shares than the maximum specified in the invitation, each application and proposal for a Savings Contract will be deemed to have been modified or withdrawn as described in Rule 4.

	 	 	 	 
	 	3.3.2	
If an application for a Savings Contract specifies a Contribution which, when added to any other Contributions already being made by the Eligible Employee, exceeds the maximum permitted (whether under ITEPA, the Savings Contract or any limit specified in the invitation), the Directors are authorised to modify it by reducing the Contribution to the maximum
possible amount. Any such modification must be made before the Option is granted and before the application for the Savings Contract is accepted.

	 	 	 	 
	4	
Scaling down

	 	 
	4.1	
Method

	 	 
	 	If valid applications are received for a total number of Shares in excess of any maximum number specified in the invitation under Rule 2.3.5 or any limit under Rule 7, the Directors will scale down applications by choosing one or more of the following methods:
	 	 	 	 
	 	4.1.1	
reducing the proposed Contributions by the same proportion to an amount not less than the minimum amount permitted under the Savings Contract; or

	 	 	 
	 	4.1.2	
reducing the proposed Contributions in excess of an amount chosen by the Directors, which must not be less than the minimum amount permitted under the Savings Contract, by the same proportion to an amount not less than the amount chosen by the Directors; or

	 	 	 
	 	4.1.3	
treating any elections for the maximum bonus as elections for the standard bonus; or

	 	 	 
	 	4.1.4	
treating bonuses as wholly or partly excluded from the expected repayment amount.

	 	 	 
	 	The Directors may use other methods but they must agree these in advance with HMRC.
	 	 	 
	4.2	
Insufficient Shares

	 	 	 
	 	If, having scaled down as described in Rule 4.1 (Method), the number of Shares available is insufficient to enable Options to be granted to all Eligible Employees making valid applications, the Directors may either select by lot, or decide not to grant any Options.

 

 

5

 

 

	5	
Option Price

	 	 
	5.1	
Setting the price

	 	 	 	 
	 	The Directors will set the Option Price which must be:
	 	 	 	 
	 	5.1.1	
not manifestly less than 80 per cent of the Market Value of a Share either on the date on which invitations are sent to eligible employees or on the date specified in the invitation; and

	 	 	 
	 	5.1.2	
if the Shares are to be subscribed, not less than the nominal value of a Share.

	 	 	 	 
	5.2	
Market Value

 

“Market Value” on any particular day means:

	 	 	 	 
	 	5.2.1	
where Shares of the same class are admitted to the Official List and traded on the London Stock Exchange:

	 	 	 	 
	 	 	(i)	
their price for the immediately preceding Business Day; or

	 	 	 	 
	 	 	(ii)	
if the Directors decide, the average price for the 3 immediately preceding Business Days; or

	 	 	 	 
	 	 	(iii)	
such other price as Shares and Assets Valuation at HMRC may agree in advance.

	 	 	 	 
	 	 	The “price” is the middle market quotation taken from the Daily Official List of the London Stock Exchange.
	 	 	 
	 	5.2.2	
where Rule 5.2.1 does not apply, the market value of a Share calculated as described in Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with Shares and Assets Valuation at HMRC.

	 	 	 	 
	6	
Grant of Options

	 	 
	6.1	
Time of grant

	 	 
	 	Subject to Rule 4.2 (Insufficient Shares), the Directors must grant an Option to each Eligible Employee who has submitted and not withdrawn a valid application. The Option is to acquire, at the Option Price, the number of Shares for which the Eligible Employee has applied (or is deemed to have applied). The grant must be made within 30 days (or 42 days if applications are scaled
down) of the first day by reference to which the Option Price was set.
	 	 	 	 
	6.2	
Restrictions on grant

	 	 	 	 
	 	6.2.1	
A grant of an Option to a person who is not an Eligible Employee on the Date of Grant is void.

	 	 	 
	 	6.2.2	
Options may only be granted under the Scheme between the date of approval of the Scheme by the Company in general meeting and the tenth anniversary of that date.  Approved Options may only be granted after the date HMRC approves the Scheme.

 

 

6

 

 

	 	6.2.3	
A grant of an Option in excess of the Scheme limits in Rule 7 will take effect as a grant of an Option which would not exceed those limits.

	 	 	 	 
	6.3	
Option certificates

	 	 	 	 
	 	6.3.1	
The Directors will send to each Optionholder an option certificate as soon as practicable after the Date of Grant. The Directors will set the form of the certificate, but the certificate must be consistent with these Rules.

	 	 	 	 
	 	6.3.2	
If any option certificate is lost or damaged the Directors may replace it on such conditions as they wish to set.

	 	 	 	 
	6.4	
No payment

	 	 	 	 
	 	Optionholders are not required to pay for the grant of any Option.
	 	 	 	 
	6.5	
Disposal restrictions

	 	 	 	 
	 	An Optionholder must not transfer, assign or otherwise dispose of an Option or any rights in respect of it. If, in breach of this Rule, an Optionholder transfers, assigns or disposes of an Option or rights, whether voluntarily or involuntarily, then the relevant Option will immediately lapse. This Rule 6.5 does not apply to the transmission of an Option on the death of an Optionholder
to his personal representatives.
	 	 
	7	
Scheme limits

	 	 
	7.1	
10 per cent in 10 year limit

	 	 
	 	The number of Shares which may be allocated under the Scheme on any day must not exceed 10 per cent of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Shares which have been allocated in the previous 10 years under the Scheme and any other employee share plan operated by the Company.
	 	 
	7.2	
Listing Rules

	 	 
	 	No Shares will be allocated under the Scheme if this would cause rule 6.1.19 (shares in public hands) of the Listing Rules to be breached.
	 	 
	7.3	
Exclusions

	 	 
	 	Where the right to acquire Shares is released or lapses without being exercised these Shares are ignored when calculating the limits in this Rule.
	 	 
	7.4	
Meaning of “allocate”

	 	 
	 	
“Allocate” means granting an option or other right to acquire unissued Shares, or if there is no such grant, the issue and allotment of Shares.

 

 

7

 

 

	8	
Variations in share capital

	 	 
	8.1	
Adjustment of Options

	 	 
	 	If there is a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital:
	 	 	 	 
	 	8.1.1	
the number of Shares comprised in each Option; and

	 	 	 
	 	8.1.2	
the Option Price,

	 	 	 	 
	 	
may be adjusted in any way (including retrospective adjustments) which the Directors consider appropriate. However, no adjustment may be made under this Rule 8 without the prior approval of HMRC.

 

The adjusted total Option Price must be as near as possible to, and must not exceed, the expected proceeds of the related Savings Contract at the Bonus Date. These are the proceeds taken into account under Rule 3.2 to calculate the number of shares subject to the Option.

	 	 	 	 
	8.2	
Nominal value

	 	 	 	 
	 	8.2.1	
The Option Price may be adjusted to less than nominal value. However, where Shares are to be subscribed, Rule 8.2.2 must be followed.

	 	 	 
	 	8.2.2	
Where Shares are to be subscribed, the Option Price may only be adjusted to a price less than nominal value if the Directors resolve to capitalise the reserves of the Company, subject to any necessary conditions. This capitalisation will be of an amount equal to the difference between the adjusted Option Price payable for the Shares to be issued on exercise
and the nominal value of such Shares on the date of allotment of the Shares. If, at the time of exercise, the Directors do not resolve to capitalise the reserves of the Company for this purpose then the adjustment under this Rule 8.2 will be deemed not to have taken place.

	 	 	 
	8.3	
Notice

	 	 
	 	The Directors may notify Optionholders of any adjustment made under this Rule 8.
	 	 
	9	
Exercise and lapse - general rules

	 	 
	9.1	
Exercise

	 	 
	 	Except where exercise is permitted as described in Rule 10 (Exercise and lapse - exceptions to the general rules), an Option can only be exercised:
	 	 	 
	 	9.1.1	
during the period of six months after the Bonus Date; and

	 	 	 	 
	 	9.1.2	
so long as the Optionholder is a director or employee of a Participating Company.

 

 

8

 

 

	9.2	
Material interest

	 	 
	 	An Optionholder cannot exercise his Option if he is (or was at the date of his death), ineligible to participate in the Scheme because of paragraph 11 of Schedule 3 to ITEPA (material interest provisions).
	 	 
	9.3	
Lapse

	 	 
	 	An Option will lapse on the earliest of:
	 	 	 	 	 
	 	9.3.1	
the date the Optionholder ceases to be a director or employee of a Participating Company, unless any of the provisions of Rule 10 (Exercise and lapse - exceptions to the general rules) apply;

	 	 	 	 	 
	 	9.3.2	
the date on which the Optionholder gives or is deemed to give notice under the Savings Contract that he intends to stop paying contributions under his Savings Contract;

	 	 	 	 	 
	 	9.3.3	
the date on which the Optionholder stops paying contributions under his Savings Contract unless any of the provisions of Rule 10 (Exercise and lapse - exceptions to the general rules) apply;

	 	 	 	 	 
	 	9.3.4	
the expiry of any period specified in Rule 10 (Exercise and lapse - exceptions to the general rules) except Rule 10.4 (Specified Age); or

	 	 	 	 	 
	 	9.3.5	
six months after the Bonus Date unless Rule 10.3 (Death) applies.

	 	 	 	 	 
	 	When this Rule 9.3 applies to an Optionholder who is a US Taxpayer, an Option will lapse on the date specified in this Rule 9.3 or, if earlier, on the expiry of 2.5 calendar months after the end of the Taxable Year in which the Option became exercisable.
	 	 	 	 	 
	10	
Exercise and lapse - exceptions to the general rules

	 	 	 	 	 
	10.1	Cessation of employment
	 	 	 	 	 
	 	10.1.1	An Optionholder may exercise his Option within 6 months after he ceases to be a director or an employee of a Participating Company for one of the reasons set out below. The reasons are:
	 	 	 	 	 
	 	 	(i)	injury, disability, redundancy within the meaning of the Employment Rights Act 1996 or retirement on reaching the Specified Age or any other age at which he is bound to retire.
	 	 	 	 	 
	 	 	 	For the purposes of rule 10.1.1, an employee is bound to retire if the employer has notified or should have notified the employee in accordance with paragraph 2 of Schedule 6 to the Regulations; and
	 	 	 	 	 
	 	 	 	(i)	
the contract of employment terminates on the intended date of retirement (as defined in paragraph 1 of Schedule 6 to the Regulations) or;

	 	 	 	 	 
	 	 	 	(ii)	
the contract of employment terminates on such date as is agreed between the employee and the employer pursuant to the exercise of a statutory right to request not to retire under paragraph 5 of Schedule 6 to the Regulations”.

 

 

9

 

 

	 	 	(ii)	
his office or employment being in a company of which the Company ceases to have Control;

	 	 	 	 
	 	 	(iii)	
the business or part of a business in which he works being transferred to a company which is neither an Associated Company nor a company of which the Company has Control.

	 	 	 	 	 
	 	10.1.2	
If the Optionholder ceases to be a director or employee of a Participating Company more than three years after the Date of Grant for one of the reasons set out below he may exercise his option within six months after leaving.  The reasons are:

	 	 	 	 	 
	 	 	(i)	
retirement with the agreement of the Optionholder’s employer;

	 	 	 	 
	 	 	(ii)	
any other reason permitted by the Directors.

	 	 	 	 	 
	 	10.1.3	
For the purposes of this Rule 10.1, an Optionholder is not treated as ceasing to be a director or employee of a Participating Company until he has ceased to be a director or employee of:

	 	 	 	 	 
	 	 	(i)	
the Company;

	 	 	 	 
	 	 	(ii)	
an Associated Company; or

	 	 	 	 
	 	 	(iii)	
a company under the control of the Company.

	 	 	 	 	 
	 	10.1.4	
This rule applies if an Optionholder:

	 	 	 	 	 
	 	 	(i)	
ceases to be a director or employee of a Participating Company but on or immediately after the date of cessation is a director or employee of an Associated Company,  and

	 	 	 	 
	 	 	(ii)	
subsequently ceases to be a director or employee of the Associated Company.

	 	 	 	 
	 	 	When this rule applies, the Optionholder can exercise his Option if the reason for him ceasing to be a director or employee of the Participating Company (not the Associated Company) was one of the reasons set out in Rule 10.1.1.
	 	 	 	 
	10.2	
Employment with an Associated Company

	 	 
	 	If an Optionholder  is on the bonus date an employee or director of an Associated Company or a company of which the Company has Control, he may exercise his Option within six months of that date.
	 	 
	10.3	
Death

	 	 
	 	If an Optionholder dies, his Option may be exercised by his personal representatives within one year after:
	 	 	 	 
	 	10.3.1	
the date of his death if death occurred before the relevant Bonus Date; or

	 	 	 
	 	10.3.2	
the Bonus Date if the death occurred on or within six months after the relevant Bonus Date.

 

 

10

 

 

	10.4	
Specified Age

	 	 	 	 	 
	 	If an Optionholder continues to be a director or employee of a Participating Company after the date on which he reaches the Specified Age, he may exercise his Option within 6 months after reaching the Specified Age.
	 	 
	10.5	
Takeovers

	 	 
	 	
This Rule applies where a person (or a group of persons acting in concert) obtains Control of the Company as a result of making a general offer to obtain Control of the Company which is unconditional or becomes or is declared wholly unconditional.

 

When this Rule applies Options may, subject to Rule 10.8 (Reorganisation or merger), be exercised within the 6 month period after the person making the offer has obtained Control of the Company and any condition subject to which the offer is made has been satisfied.

 

The Options will lapse at the end of the 6 month period unless the Directors give written notice to all the Optionholders before the end of the 6 month period that the Options will not lapse.

	 	 
	10.6	
Section 429 notice

	 	 
	 	
This Rule applies if a person (or a group of persons acting in concert) becomes bound or entitled to acquire Shares by serving a notice under section 429 of the Companies Act 1985 or other local legislation which HMRC agrees is equivalent (a “section 429 notice”). Subject to Rule 10.8 (Reorganisation or merger),
Options may be exercised at any time when that person remains so bound or entitled, which is the period of six weeks from the date of the section 429 notice.

	 	 
	10.7	
Company reconstructions

	 	 
	 	This Rule applies if under section 425 of the Companies Act 1985 (or other local legislation which HMRC agrees is equivalent):
	 	 	 	 	 
	 	10.7.1	
a court sanctions a compromise or arrangement, proposed for the purpose of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies; or

	 	 	 
	 	10.7.2	
there is a local procedure which HMRC agrees is equivalent.

	 	 	 
	 	Options may, subject to Rule 10.8 (Reorganisation or merger), be exercised within the 6 month period after the date of the sanction.
	 	 	 	 	 
	10.8	
Reorganisation or merger

	 	 
	 	
If this Rule applies, no Options are exercisable. Instead all Options are exchanged during the period set out in paragraph 38(3) of Schedule 3 to ITEPA. Rules 11.3 and 11.4 apply to the exchange.

 

This Rule applies when:

	 	 	 	 	 
	 	10.8.1	
an Acquiring Company has obtained Control of the Company or has become entitled and bound as mentioned in Rule 10.6 (Section 429 notice); and

 

 

11

 

 

	 	10.8.2	
the shareholders of the Acquiring Company, immediately after it has obtained Control, are substantially the same as the shareholders of the Company immediately before then; and

	 	 	 	 	 
	 	10.8.3	
the Acquiring Company consents to the exchange of Options under this Rule.

	 	 	 	 	 
	10.9	
Winding-up

	 	 
	 	
If the Company passes a resolution for its voluntary winding-up, Options may be exercised within six months after the date of the resolution. However, the issue of Shares after such exercise has to be authorised by the liquidator or the court (if appropriate), and the Optionholder must apply for this authority and
pay his application cost. Any Options not exercised during that period will lapse at the end of the period.

	 	 
	10.10	
Loss of Ownership

	 	 
	 	Where an Optionholder is deprived of the legal or beneficial ownership of the Option by operation of law or does anything or omits to do anything, which causes him to be so deprived or becomes bankrupt, all his Options will lapse.
	 	 
	10.11	
Priority

	 	 
	 	If there is any conflict between any of the provisions in Rules 9 (Exercise and lapse - general rules) and 10 (Exercise and lapse - exceptions to the general rules), the provision which results in the shortest exercise period will prevail.
	 	 	 	 	 
	11	
Exchange of Options

	 	 	 	 	 
	11.1	
Application

	 	 	 	 	 
	 	This Rule 11 applies to all Options (whether or not already exercisable) if a company:
	 	 	 	 	 
	 	11.1.1	
obtains Control of the Company as a result of making a general offer to acquire:

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

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

	 	 	 	 	 
	 	11.1.2	
obtains Control of the Company under a scheme of arrangement sanctioned by the court under Section 425 Companies Act 1985 or other local procedure which HMRC agrees is equivalent; or

	 	 	 
	 	11.1.3	
becomes entitled or bound to acquire Shares under Sections 428 and 429 Companies Act 1985 or other local legislation which HMRC agrees is equivalent.

 

 

12

 

 

	11.2	
Agreement to exchange

	 	 
	 	If this Rule 11 applies, the Optionholder may, with the agreement of the Acquiring Company, exchange his Options under Rule 11.3 (Exchange) during the period set out in  paragraph 38(3) of Schedule 3 to ITEPA.
	 	 
	11.3	
Exchange

	 	 
	 	
Where an Option is to be exchanged the Optionholder will be granted a new option to replace it.

 

Where an Optionholder is granted a new option then:

	 	 	 	 	 
	 	11.3.1	
the new option will be in respect of shares, which satisfy the conditions of paragraph 39 of Schedule 3 to ITEPA in any body corporate (falling within paragraph 18(b) or (c) of Schedule 3 to ITEPA determined by the Acquiring Company;

	 	 	 	 	 
	 	11.3.2	
the new option will be equivalent to the Option that was exchanged;

	 	 	 	 	 
	 	11.3.3	
the new option will be treated as having been acquired at the same time as the Option that was exchanged and be exercisable in the same manner and at the same time;

	 	 	 	 	 
	 	11.3.4	
the new option will be subject to the Rules as they last had effect in relation to the Option that was exchanged;

	 	 	 	 	 
	 	11.3.5	
with effect from the exchange, the Rules will be construed in relation to the new option as if references to Shares were references to the shares over which the new option is granted and references to the Company were references to the body corporate determined by the Directors under Rule 11.3.1.

	 	 	 	 	 
	11.4	
Grant

	 	 
	 	The Acquiring Company must not grant Options under the Scheme other than under Rule 11.3 (Exchange).
	 	 
	12	
Exercise of Options

	 	 
	12.1	
Limit on exercise

	 	 
	 	An Optionholder may exercise his Option using funds equal to or less than the amount repayable under his Savings Contract, including any bonus or interest. An Optionholder can only use Contributions made before the date of exercise of the Option, and any bonus or interest on them.
	 	 
	12.2	
Manner of exercise

	 	 
	 	Options must be exercised by notice in writing in a form specified by the Company signed by the Optionholder or by his agent and delivered to the Company or its agent. The Optionholder must also send:
	 	 	 	 	 
	 	12.2.1	
if the Company so requires, the relevant option certificate; and either

 

 

13

 

 

	 	12.2.2	
payment in full in cleared funds and evidence of the termination of the Savings Contract; or

	 	 	 
	 	12.2.3	
authority to terminate the Savings Contract and use the amount needed to acquire the number of Shares over which the Option is being exercised.

	 	 	 
	 	
The exercise of the Option is effective on the date of receipt by the Company or its agent of the notice, the option certificate (if required) and the relevant payment or authority. The Company may also make arrangement for Options to be exercised electronically or by telephone if HMRC has agreed to this in relation
to the Plan. If so, the Company will notify Optionholders of the process and documents required.

	 	 	 	 	 
	12.3	
Part exercise

	 	 	 	 	 
	 	Subject to any other restriction in the Rules, Options may be exercised in respect of all the Shares under the Option or some only of the Shares. However, Options must be exercised for at least 10 Shares and may be exercised only once in multiples of 10 Shares. These restrictions do not apply where an Option is exercised to the full extent possible at the time.
	 	 	 	 	 
	12.4	
Issue or transfer

	 	 
	 	Subject to Rule 12.6 (Consents):
	 	 	 	 	 
	 	12.4.1	
Shares to be issued following the exercise of an Option must be issued within 30 days of the date of exercise; and

	 	 	 
	 	12.4.2	
if Shares are to be transferred following the exercise of an Option, the Directors must procure this transfer within 30 days of the date of exercise.

	 	 	 	 	 
	12.5	
Rights

	 	 	 	 	 
	 	12.5.1	
Shares issued on exercise of an Option rank equally in all respects with the Shares in issue on the date of allotment. They do not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment.

	 	 	 
	 	12.5.2	
Where Shares are to be transferred on the exercise of an Option, Optionholders are entitled to all rights attaching to the Shares by reference to a record date after the transfer date. They are not entitled to rights before that date.

	 	 	 	 	 
	12.6	
Consents

	 	 	 	 	 
	 	All allotments, issues and transfers of Shares are subject to any necessary consents under any relevant enactments or regulations for the time being in force in the United Kingdom or elsewhere. The Optionholder is responsible for complying with any requirements to obtain or avoid the need for any such consent.
	 	 	 	 	 
	12.7	
Articles of association

	 	 	 	 	 
	 	Any Shares acquired on the exercise of Options are subject to the Articles of Association of the Company from time to time in force.

 

 

14

 

 

	12.8	
Listing

	 	 	 	 	 
	 	If and so long as the Shares are listed on the Official List or of any other stock exchange where Shares are traded, the Company must apply for listing of any Shares issued pursuant to the Scheme as soon as practicable after their allotment.
	 	 	 	 	 
	13	
General

	 	 	 	 	 
	13.1	
Notices

	 	 	 	 	 
	 	13.1.1	
Any notice or other document which has to be given to an Eligible Employee or Optionholder under or in connection with the Scheme may be:

	 	 	 	 	 
	 	 	(i)	
delivered or sent by post to him at his home address according to the records of his employing company; or

	 	 	 	 	 
	 	 	(ii)	
sent by e-mail or fax to any e-mail address or fax number which, according to the records of his employing company, is used by him;

	 	 	 	 	 
	 	 	or in either case such other address, which the Company considers appropriate.
	 	 	 	 	 
	 	13.1.2	
Any notice or other document which has to be given to the Company or other duly appointed agent under or in connection with the Scheme may be delivered or sent by post to it at its respective registered office (or such other place as the Directors or the duly appointed agent may from time to time decide and notify to Optionholders) or sent by e-mail or
fax to any e-mail address or fax number notified to the sender.

	 	 	 	 	 
	 	13.1.3	
Notices sent by post will be deemed to have been given on the earlier of the date of actual receipt and the second day after the date of posting. However, notices sent by or to an Optionholder who is working overseas will be deemed to have been given on the earlier of the date of actual receipt and the seventh day after the date of posting.

	 	 	 	 	 
	 	13.1.4	
Notices sent by e-mail or fax, in the absence of evidence of non-delivery, will be deemed to have been received on the day after sending.

	 	 	 	 	 
	13.2	
Documents sent to shareholders

	 	 
	 	The Company may send to Optionholders copies of any documents or notices normally sent to the holders of its Shares.
	 	 
	13.3	
Directors’ decisions final and binding

	 	 
	 	The decision of the Directors on the interpretation of the Rules or in any dispute relating to an Option or matter relating to the Scheme is conclusive.
	 	 
	13.4	
Costs

	 	 
	 	The Company will pay the costs of introducing and administering the Scheme. The Company may require each Participating Company to reimburse the Company for any costs incurred in connection with the grant of Options to, or exercise of Options by, employees of that Participating Company.

 

 

15

 

 

	13.5	
Administration

	 	 
	 	The Directors have the power from time to time to make or vary regulations for the administration and operation of the Scheme.
	 	 
	13.6	
Terms of employment

	 	 	 	 	 
	 	13.6.1	
For the purposes of this Rule, “Employee” means any employee of a Member of the Group.

	 	 	 
	 	13.6.2	
This rule applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

	 	 	 
	 	13.6.3	
Nothing in the Rules or the operation of the Scheme forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Scheme. Participation in the Scheme does not create any right to, or expectation of, continued
employment.

	 	 	 
	 	13.6.4	
No employee has a right to participate in the Scheme. Participation in the Scheme or the grant of Options on a particular basis in any year does not create any right to or expectation of participation in the Scheme or the grant of Options on the same basis, or at all, in any future year.

	 	 	 
	 	13.6.5	
The terms of the Scheme do not entitle the Employee to the exercise of any discretion under the Rules in his favour.

	 	 	 
	 	13.6.6	
The Employee will have no claim or right of action in respect of any decision, omission or discretion under the Rules, not relating to a subsisting Option, which may operate to the disadvantage of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied
duty) between the Employee and his employer.

	 	 	 
	 	13.6.7	
The Employee will have no claim or right of action in respect of any decision, omission or discretion under the Rules relating to a subsisting Option which may operate to the disadvantage of the Employee.

	 	 	 
	 	13.6.8	
No Employee has any right to compensation for any loss in relation to the Scheme, including any loss in relation to:

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

	 	 	 	 	 
	 	 	(ii)	
any exercise of a discretion under the Rules or a decision taken in relation to an Option or to the Scheme, or any failure to exercise a discretion or take a decision;

	 	 	 	 	 
	 	 	(iii)	
the operation, suspension, termination or amendment of the Scheme.

	 	 	 	 	 
	 	13.6.9	
Participation in the Scheme is permitted only on the basis that the Participant accepts all the provisions of the Rules, including this Rule. By participating in the Scheme, an Employee waives all rights under the Scheme, other than the right to exercise an Option subject to and in accordance with the express terms of the rules.

 

 

16

 

 

	 	13.6.10	
Nothing in this Scheme confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Scheme. This does not affect any other right or remedy of a third party which may exist.

	 	 	 	 	 
	13.7	
Employee trust

	 	 
	 	The Company and any Subsidiary of the Company may provide money to the trustee of any trust or any other person to enable the trust or him to acquire Shares for the purposes of the Scheme, or enter into any guarantee or indemnity for those purposes, to the extent permitted by Section 153 of the Companies Act 1985. 
	 	 
	13.8	
Withholding

	 	 
	 	If an Optionholder, who is not in receipt of earnings within paragraphs 15-21 of ITEPA, is subject to any withholding in any jurisdiction following the exercise of an Option then, unless the Optionholder discharges the liability himself, the Company, any employing company or the Trustee may withhold any amount and make any arrangements as it considers necessary to meet any liability
of the Optionholder to taxation or social security contributions in respect of Options. These arrangements include the sale of any Shares on behalf of an Optionholder.
	 	 
	13.9	
Data protection

	 	 
	 	By participating in the Scheme the Optionholder consents to the holding and processing of personal data provided by the Optionholder to the Company, any Associated Company, Trustee or third party service provider, for all purposes relating to the operation of the Scheme. These include, but are not limited to:
	 	 	 	 	 
	 	13.9.1	
administering and maintaining Optionholder records;

	 	 	 
	 	13.9.2	
providing information to an Associated Company, trustees of any employee benefit trust, registrars, brokers savings carrier or other third party administrators of the Scheme;

	 	 	 
	 	13.9.3	
providing information to future purchasers of the Company or the business in which the Optionholder works;

	 	 	 
	 	13.9.4	
transferring information about the Optionholder to a country or territory outside the European Economic Area that may not provide the same statutory protection for the information as the Optionholder’s home country.

	 	 	 
	14	
Changing the Scheme and termination

	 	 
	14.1	
Directors’ powers

	 	 
	 	Except as described in the rest of this Rule 14, the Directors may at any time change the Scheme in any way.

 

 

17

 

 

	14.2	
Shareholders’ approval

	 	 	 	 	 
	 	14.2.1	
Except as described in Rule 14.2.2, the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Rules to the advantage of present or future Optionholders which relates to the following:

	 	 	 	 	 
	 	 	(i)	
the persons to whom or for whom Shares may be provided under the Scheme;

	 	 	 	 	 
	 	 	(ii)	
the limitations on the number of Shares which may be issued under the Scheme;

	 	 	 	 	 
	 	 	(iii)	
the maximum Contribution which may be made under the Scheme;

	 	 	 	 	 
	 	 	(iv)	
the determination of the Option Price;

	 	 	 	 	 
	 	 	(v)	
any rights attaching to the Options and the Shares;

	 	 	 	 	 
	 	 	(vi)	
the rights of Optionholders in the event of a capitalisation issue, rights issue, sub-division or consolidation of shares or reduction or any other variation of capital of the Company;

	 	 	 	 	 
	 	 	(vii)	
the terms of this Rule 14.2.1.

	 	 	 	 	 
	 	14.2.2	
The Directors need not obtain the approval of the Company in general meeting for any minor changes:

	 	 	 	 	 
	 	 	(i)	
to benefit the administration of the Scheme;

	 	 	 	 
	 	 	(ii)	
which are necessary or desirable in order to maintain HMRC approval of the Scheme under Schedule 3 to ITEPA or any other enactment;

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

	 	 	 	 
	 	 	(iv)	
to take account of any changes to the legislation; or

	 	 	 	 
	 	 	(v)	
to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Optionholder.

	 	 	 	 
	14.3	
Revenue approval

	 	 
	 	If the approved status of the Scheme is to be maintained, any change to a key feature of the Rules after it has been approved under ITEPA will take effect from the later of:
	 	 	 	 	 
	 	14.3.1	
the date that the change is approved by HMRC; and

	 	 	 
	 	14.3.2	
the date the Directors resolve to approve the amendment.

	 	 	 
	 	
If the approved status of the Scheme is not to be maintained, the Directors must inform HMRC as soon as practicable.

 

A “key feature” is any provision necessary to meet the requirements of ITEPA.

	 	 	 	 	 
	14.4	
Notice

	 	 
	 	The Directors may give written notice of any changes made to any Optionholder affected.

 

 

18

 

 

	14.5	
Termination of the Scheme

	 	 
	 	The Scheme will terminate on the tenth anniversary of the date of approval of the Scheme by the Company in general meeting but the Directors may terminate the Scheme at any time before that date. However, Options granted before such termination will continue to be valid and exercisable as described in these Rules.
	 	 
	15	
Governing law

	 	 
	 	
English law governs the Scheme and all Options and their construction. The English Courts have non-exclusive jurisdiction in respect of disputes arising under or in connection with the Scheme or any Option.

	 	 	 	 	 

 

 

 

 

 

 

 

19

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