Document:

aviva_20f-ex0407.htm

Exhibit 4.7

Dated 31 October 2001

 

AVIVA plc

TRUST DEED AND RULES OF THE

 

AVIVA ALL EMPLOYEE SHARE OWNERSHIP PLAN

 

(CONFORMED COPY INCORPORATING AMENDMENTS

TO 4 APRIL 2005, 1 DECEMBER 2009 AND 4 MAY 2011)

 

 

  

	
Initial Shareholders’ Approval

	
24 April 2001

	 	 
	
Renewed Shareholders’ Approval:

	
4 May 2011

	 	 
	
Directors’ Adoption of Amended Plan

	
2 March 2011

	 	 
	HMRC Approval:	8 November 2001
	 	 
	HMRC Ref:	A1464/SY

   

 

 

Linklaters

Linklaters LLP

One Silk Street

London EC2Y 8HQ

Telephone (+44) 20 7456 2000

 

Facsimile (+44) 20 7456 2222

 

Ref 01/140/R Berglund

   

  

374

  

   

Table of Contents

   

  

	
Contents

	
Page

	 	 	 
	
1

	

Meaning of words used

	
376

	 	 	 
	
2

	

Operation of the Plan

	
378

	 	 	 
	
3

	

Joining the Plan

	
378

	 	 	 
	
4

	
Free Shares

	
379

	 	 	 
	
5

	
Partnership Shares

	
381

	 	 	 
	
6

	
Matching Shares

	
385

	 	 	 
	
7

	
Dividends

	
386

	 	 	 
	
8

	
General rules about Shares

	
388

	 	 	 
	
9

	
Leaving Employment

	
390

	 	 	 
	10	
General rules relating to the Plan

	391
	 	 	 
	11	Data Protection	393
	 	 	 
	12	Assets of the Plan	394
	 	 	 
	13	Trustees holding Shares	394
	 	 	 
	14	Trustees	395
	 	 	 
	15	Participating Companies	397
	 	 	 
	16	Changing the rules	397
	 	 	 
	17	Termination	398
	 	 	 
	18	Governing law	 399

  

    

 

375

 

    

Trust Deed and Rules of the Aviva All Employee Share Ownership Plan

 

This Trust Deed and Rules of the Aviva All Employee Share Ownership Plan are made as a deed on 31 October 2001 and amended on 20 May 2011 between:

 

	
(1) 

	
Aviva plc (the “Company”); and

 

	
(2) 

	
Equiniti Share Plan Trustees Limited(the “Trustees Limited”),

 

to set up the Plan with effect from the date of formal approval of the Plan by HMRC.

 

By a deed dated 30 June 2011, Equiniti Share Plan Trustees Limited retired as trustee of the Plan and was replaced by Computershare Trustees Limited.

 

	
1

	
Meaning of words used

 

“Accumulation Period” means the period during which a Participant’s Contributions are held prior to their application by the Trustees in acquiring Partnership Shares and which shall not be longer than the period specified in paragraph 51(1) of Schedule 2 (currently 12 months).

 

“Award Day” means the date on which Free Shares or Matching Shares are awarded under the Plan.

 

“Award System” means the system of calculating the number of Free Shares to be awarded from time to time, adopted by the Directors and which satisfies paragraph 9 of Schedule 2 (participation on same terms).

 

the “Company” means Aviva plc.

 

“Connected Share Incentive Plan” means a Share Incentive Plan (other than the Plan) established by the Company or a connected company (as defined in paragraph 18 of Schedule 2) of the Company which has been approved under Schedule 2.

 

“Contributions” means deductions from a Participant’s Salary for the purpose of acquiring Partnership Shares.

 

“Directors” means the board of directors of the Company or a duly authorised committee.

 

“Dividend Shares” means Shares which the Trustees acquire by reinvesting Participants’ cash dividends from their Plan Shares, as described in rule 7 (Dividends).

 

“Employee” means, except for the purposes of rule 10.6 (Terms of employment), an employee of a Participating Company.

 

“Employment” means employment by the Company or any associated company (within the meaning of paragraph 94 of Schedule 2).

 

“Free Shares” means Shares awarded to Participants without payment, as described in rule 4 (Free Shares).

 

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

 

“Holding Period” means the period for holding Free Shares, Matching Shares and Dividend Shares in the Plan.

 

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

 

the “London Stock Exchange” means the London Stock Exchange plc.

 

“Market Value” means on any day where Shares are admitted to the Official List and traded on the London Stock Exchange, the mid market closing price derived from the Daily Official List of the London Stock Exchange for the 5 immediately preceding business days and where Shares are not so admitted,

   

  

376

  

   

“Market Value” has the meaning given by virtue of Part VIII of the Taxation of Chargeable Gains Act 1992 and as agreed in advance with HMRC Shares and Assets Valuation.

 

“Matching Shares” means Shares awarded without payment as described in rule 6 (Matching Shares), in proportion to any Partnership Shares allocated to Participants.

 

“Method 1” means the method described in paragraph 41 of Schedule 2.

 

“Method 2” means the method described in paragraph 42 of Schedule 2.

 

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

 

“Participant” means any Employee who has joined the Plan.

 

“Participating Company” means an employer participating in the Plan being the Company, any Subsidiary and any other company which (if required) HMRC agrees may participate and which in both cases is so designated by the Directors and which has entered into a deed of adherence with the Company and the Trustees under rule 15.1 (Inclusion in the Plan).

 

“Partnership Shares” means Shares which the Trustees allocate to Participants in respect of their Contributions.

 

“Performance Measures” means targets set by the Directors from time to time, which meet the requirements of paragraph 39 of Schedule 2 and govern the availability, number or value of Free Shares to be awarded.

 

“Plan” means the Aviva All Employee Share Ownership Plan, as changed from time to time.

 

“Plan Shares” means the Shares awarded or allocated to Participants under the Plan, including Dividend Shares.

 

“Reconstruction or Takeover” means a transaction affecting any Shares as described in paragraph 86 of Schedule 2.

 

“Salary” has the meaning in paragraph 43(4) of Schedule 2.

 

“Schedule 2” means Schedule 2 to ITEPA.

 

“Share” means a share in the capital of the Company, which meets the requirements of Part 4 of Schedule 2. This includes any security which forms part of any new holding referred to in paragraph 86 of Schedule.

 

“Subsidiary” means a company which is under the control of the Company (within the meaning of section 995 of the Income Tax Act 2007).

 

“Taxes Act” means within the meaning of Section 995 of the Income Tax Act 2007 (as extended by paragraph 91 of Schedule 2).

 

“Trustees” means the trustee or trustees for the time being of the Plan.

    

  

377

  

 

	
2.

	
Operation of the Plan

 

	
2.1

	
Purpose of the Plan

 

The purpose of the Plan is to help and encourage the holding of Shares by Participants or for their benefit.

 

The Trustees may achieve the purpose of the Plan by applying the capital and income of the Plan assets to or for the benefit of Participants as described in the Plan rules.

 

Every Employee who is invited to participate in the Plan must be invited on the same terms, and those who do participate must actually do so on the same terms, complying with paragraph 9 of Schedule 2.

 

	
2.2

	
Time of operation

 

The Directors can only operate the Plan at any time after its approval by HMRC.

 

If the Directors or the Trustees cannot award Free Shares 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 or the Trustees may award Free Shares within 42 days after the lifting of such restrictions.

 

	
3.

	
Joining the Plan

 

	
3.1

	
Invitations and applications to join

 

Subject to rules 3.2 (Prohibited invitations), whenever the Directors decide to operate the Plan, they must invite all Employees who:

 

	 	
3.1.1

	
are UK resident taxpayers (within the meaning of paragraph 8(2) of Schedule 2); and

   

	 	
3.1.2

	
have been employees of a qualifying company (within the meaning of paragraph 17 of Schedule 2) throughout any qualifying period of service set under rule 3.4 (Qualifying period of service).

 

They may also invite other Employees, provided that, if there is a qualifying period of service, the Employees satisfy rule 3.1.2.

 

	
3.2

	
Prohibited invitations

 

However, the Directors must not invite:

 

	 	
3.2.1

	
any Employee, in any tax year, who is to participate at the same time in another Share Incentive Plan approved under Schedule 2 which has been established by the Company or a connected company (within the meaning of paragraph 18(3) of Schedule 2) would have so participated but for the failure to meet a performance target; or

 

	 	
3.2.2

	
anyone who is excluded from participating under paragraph 19 of Schedule 2 (no material interest requirement).

 

The Trustees must maintain records of Employees who have participated in the Plan or any Connected Share Incentive Plan.

 

	
3.3

	
Form of invitation and application

 

The invitation and application to join the Plan must be made in the form determined by the Directors, and approved by HMRC (if necessary). This may include invitations and applications by writing or by e-mail, internet (or other electronic means) or interactive voice response.

 

The invitation and the application will, if applicable, specify whether, for that operation of the Plan, Free Shares and/or Partnership Shares and Matching Shares (and, where relevant, Dividend Shares) may be acquired. If Partnership Shares are offered, the application form will specify whether there is an Accumulation Period (or periods) and comply with rule 5 (Partnership Shares).

   

  

378

  

 

	
3.4

	
Qualifying period of service

   

The Directors may set a qualifying period of service from time to time. If the Directors set such a period for any operation of the Plan, it must apply in relation to, and be the same for, all Employees.

 

If Free Shares are offered, this period can be up to 18 months, ending with the Award Day of those Free Shares.

 

If Partnership Shares are offered and there is no Accumulation Period, the qualifying period can be up to 18 months, ending with the start of Contributions. If there is an Accumulation Period, the qualifying period can be up to 6 months, ending with the start of the relevant Accumulation Period.

 

	
3.5

	
Submission of applications

 

Employees invited to participate in the Plan, and who wish to do so, must submit the completed application by the date specified, if any. In doing so they agree to the terms and conditions of participation set out in the application. Anyone who has not submitted a completed application form as required will not participate in the Plan.

 

	
4.

	
Free Shares

 

	
4.1

	
Limit

 

	 	
4.1.1

	
If the Plan is operated to provide Free Shares, Free Shares awarded to each Employee participating in the Plan must not have an initial market value of more than £3,000 in any tax year, or any greater amount specified for the purposes of paragraph 35(1) of Schedule 2.

 

	 	
4.1.2

	
Initial market value means the Market Value of the Free Shares on the Award Day, and the market value of Shares subject to restrictions or risk of forfeiture shall be determined as if there were no restriction or risk.

   

	
4.2

	
Terms relating to Free Shares

 

The Directors will set the following:

 

	 	
4.2.1

	
the Allocation System for that operation of the Plan including any Performance Measures which apply, using either Method 1 or Method 2;

 

	 	
4.2.2

	
the Holding Period, which must be at least three years but not more than five years beginning with the Award Day, must be the same for all Free Shares being awarded and cannot be increased once that award has been made; and

 

	 	
4.2.3

	
any forfeiture provisions under rule 4.4 (Forfeiture of Free Shares).

 

During this Holding Period, rule 8.4 (Restrictions on disposals of Shares) applies in relation to the Free Shares.

 

	
4.3

	
Notifying Participants

 

As soon as practicable, the Directors will write and tell each Participant of the Holding Period applying to the Free Shares.

 

If Performance Measures apply to the availability, number or value of Free Shares, the Directors will, as soon as reasonably practicable, write and tell:

 

	 	
4.3.1

	
each Participant about the Performance Measures which will be used to calculate the number of Free Shares awarded to him; and

   

  

379

  

   

	 	
4.3.2

	
all Employees in general terms of the Performance Measures to be used to calculate the number of Free Shares awarded to each Participant, but the Directors may exclude from such notice any information if they reasonably consider that to disclose it would prejudice commercial confidentiality.

 

	
4.4

	
Forfeiture of Free Shares

 

The Directors may decide that an award of Free Shares will be made on the basis that if Participants leave Employment for a specified reason (other than for a reason set out in paragraph 32(2) of Schedule 2) within a specified period (not exceeding three years from the Award Day) they will cease to beneficially entitled to those Free Shares.

 

	
4.5

	
Payments by Participating Companies and acquiring Shares

 

The Directors will notify each Participating Company of the amount it is required to contribute in respect of an award of Free Shares. Each Participating Company will pay this amount to the Trustees and the Trustees will use the funds to purchase or subscribe for Shares, as agreed with the Directors.

 

	
4.6

	
Awards of Free Shares

 

The Trustees will award Free Shares to each Participant on the basis set out in the Allocation System and any Performance Measures. If they award Free Shares to a Participant who is not an Employee on the Award Day, this award will not be valid.

 

	
4.7

	
Notification by Trustees

 

As soon as practicable after the award of Free Shares, the Trustees will write and tell each Participant of the award. The Trustees will include the number and description of the Free Shares, the Holding Period applying to the Free Shares and their Market Value on the Award Day.

 

	
4.8

	
Transfer of legal title

 

After the end of the Holding Period, the Participant may at any time direct the Trustees to transfer legal title of Free Shares to him or her, or as he or she may direct.

   

  

380

  

   

	
5.

	
Partnership Shares

 

	
5.1

	
Application for Partnership Shares

 

If the Plan is operated to provide Partnership Shares, Employees invited must complete the relevant section of the application form. This section will satisfy the requirements of Part 6 of Schedule 2 and will include the notice required under paragraph 48 of Schedule 2 (notice of possible effect of deductions on benefit entitlement).

 

	
5.2

	
Amount of Contributions

 

	 	
5.2.1

	
The Directors will determine the maximum Contribution which will apply in relation to that operation of the Plan which will not be more than the lower of:

 

	 	
(i)

	
10% of the Participant’s Salary for that tax year; or

	 	
(ii)

	
£1,500 in any tax year; or

	 	
(iii)

	
a greater percentage or amount specified for the purposes of paragraph 46 of Schedule 2 from time to time.

 

	 	
5.2.2

	
If Contributions exceed these limits, the excess amount will be repaid to the Participant as soon as practicable (after deducting any income tax and national insurance contributions due).

 

	
5.3

	
Minimum Contribution

 

The Directors may set from time to time a minimum amount (not more than £10) for Contributions on any occasion. If there is such a minimum amount, it will be set out in the application.

 

	
5.4

	
Limit on Partnership Shares

 

The Directors may set from time to time a limit on the number of Shares which may be acquired as Partnership Shares. If there is such a limit, it will be set out in the application form to be signed by the Participants.

 

	
5.5

	
Scaling down

 

If there is a limit on the number of Partnership Shares which may be acquired and the Contributions set out in the application forms exceed that number, the Directors will scale down applications by taking any one or more of the following steps in turn:

 

	 	
5.5.1

	
reduce the excess of Contributions over any set minimum amount for Contributions proportionately; then

 

	 	
5.5.2

	
reduce all monthly Contributions to any set minimum amount for Contributions; then

 

	 	
5.5.3

	
select applications to contribute the minimum amount for Contributions by lot.

 

The Directors will notify Participants of the scaling down and their application will be deemed changed or withdrawn.

 

	
5.6

	
Holding Contributions

 

The Participants’ Contributions will be transferred to the Trustees as soon as practicable. The Trustees will hold the Contributions in an account with:

 

	 	
5.6.1

	
a person falling within Section 991(2)(b) of the Income Tax Act 2007; or

   

  

381

  

   

	 	
5.6.2

	
a building society; or

 

	 	
5.6.3

	
a firm falling within Section 991(2)(c) of the Income Tax Act 2007.

 

The account may, but need not, pay interest on the Contributions held. If it does, the Trustees must account to each Participant for the interest earned on his Contributions.

 

	
5.7

	
Repayment of Contributions

 

The Trustees must pay to a Participant any Contributions it holds (after deducting any income tax and national insurance contributions due) together with any interest if, before acquiring Partnership Shares on behalf of the Participant:

 

	 	
5.7.1

	
they receive a termination notice under rule 17.1 (Termination notice); or

 

	 	
5.7.2

	
HMRC notifies the Company that it has withdrawn the approval of the Plan under Schedule 2; or

 

	 	
5.7.3

	
the Participant ceases to be in Employment during an Accumulation Period.

 

	
5.8

	
Excess Contributions

 

If the Participant agrees when completing the application, the Trustees may carry forward and add to the amount of the next Contribution any Contributions not used to acquire Partnership Shares. If there is no such agreement, the Trustees must pay the excess to the Participant, after deducting any income tax and national insurance contributions due, as soon as practicable.

 

	
5.9

	
Accumulation Periods

 

The Directors may determine in relation to any operation of the Plan whether there will be an Accumulation Period.

 

The start and end of any Accumulation Period must be set out in the application. The Accumulation Period must start on or before the date of the first deduction of Contributions. It must not exceed 12 months. The same Accumulation Period or periods must apply to all Participants for each operation of the Plan.

 

If, during the Accumulation Period, a transaction occurs in relation to the Shares which results in a new holding of shares being equated with the Shares for the purposes of capital gains tax purposes (“new shares”), then the Contributions held may be used at the end of the Accumulation Period to acquire new shares. By signing the application form Participants agree to the acquisition of new shares.

 

	
5.10

	
Stopping and re-starting Contributions

 

A Participant may give written notice (which may be in electronic form) to the Company to stop making Contributions. He may also give notice to the Company at any time that he wishes Contributions to re-start, but he may not make up any missed Contributions. If the Plan is operated with an Accumulation Period, the Directors may determine whether Participants can re-start their Contributions more than once in an Accumulation Period. If such a determination is made, it will be set out in the application form and will apply equally to all Participants.

 

The Company will arrange for Contributions to stop within 30 days of receiving the notice, unless the notice specifies a later date. The Company will arrange for Contributions to re-start by the next due date for Contributions which is more than 30 days after receipt of the notice to re-start, unless the notice specifies a later date.

 

	
5.11

	
Varying Contributions

 

A Participant may vary his Contributions with the agreement of the Company.

   

  

382

  

   

	
5.12

	
Withdrawal from agreement to make Contributions

 

A Participant may at any time withdraw from the agreement to make Contributions made at the time of joining the Plan in relation to Partnership Shares and ask for the return of any Contributions which have not been used to acquire Partnership Shares by giving notice to the Company. The Participant will be treated as having stopped Contributions 30 days after the receipt of the notice, unless a later date is specified in the notice. The Trustees must pay to the Participant any Contributions they hold as soon as practicable (after deducting any income tax and national insurance contributions due) together with any interest, if payable. Any Partnership Shares already allocated will not cease to be subject to the Plan as a result of such a withdrawal.

 

	
5.13

	
Allocating shares – Accumulation Period

 

	 	
5.13.1

	
If there is an Accumulation Period, the Trustees must allocate Partnership Shares to each Participant within 30 days after the end of that Period.

 

	 	
5.13.2

	
The number of Shares allocated to each Participant will be calculated using the lower of the Market Value of the Shares at the beginning of the Accumulation Period and:

 

	 	
(i)

	
if all the Partnership Shares to be allocated to Employees on that occasion are purchased by the Trustees on the date of allocation or over five or fewer consecutive dealing days ending on the date of allocation and provided the Shares are quoted on the Daily Official List of the London Stock Exchange, the average price actually paid by the Trustees for the Shares; or

 

	 	
(ii)

	
the Market Value at the date of allocation.

 

	 	
5.13.3

	
All Partnership Shares must be allocated on the same date.

 

	
5.14

	
Allocating shares – no Accumulation Period

 

	 	
5.14.1

	
If there is no Accumulation Period, the Trustees must allocate Partnership Shares to the Participants by a date set by the Trustees. This date must be no later than 30 days after the last day on which the relevant deduction of Contributions takes place.

 

	 	
5.14.2

	
If all the Partnership Shares to be allocated to Employees on that occasion are purchased by the Trustees on the date of allocation or over five or fewer consecutive dealing days ending on the date of allocation and provided the Shares are quoted on the Daily Official List of the London Stock Exchange, the number of Shares allocated to each Participant will be calculated using the average price actually paid by the Trustees for the Shares.

 

	 	
5.14.3

	
If all the Partnership Shares to be allocated to Employees on that occasion are not purchased by the Trustees on the date of allocation or over five or fewer consecutive dealing days ending on the date of allocation the number of Shares allocated to each Participant will be calculated using the Market Value on the date of allocation.

 

	 	
5.14.4

	
All Partnership Shares must be allocated on the same date.

 

	
5.15

	
Allocation eligibility requirement

 

The Trustees will not allocate Partnership Shares to an individual who is not an Employee at the following times:

 

	 	
5.15.1

	
where there is no Accumulation Period, at the time the related Contributions are deducted; and

 

	 	
5.15.2

	
where there is an Accumulation Period, at the time of the first deduction of the related Contributions.

    

  

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rule 9.1 (Leaving Employment) applies if an Employee leaves Employment during the acquisition period for an award of Partnership Shares.

 

	
5.16

	
Notification by Trustees

 

As soon as practicable after the Trustees have allocated Partnership Shares to a Participant, the Trustees will notify that Participant. The Trustees will set out the number and description of the Partnership Shares, the amount of Contributions used to acquire the Shares and the basis on which the number of Shares was calculated including the Market Value of the Shares on the date the Shares were acquired on their behalf.

	
5.17

	
Access to Partnership Shares

 

A Participant may at any time take out of the Plan any Partnership Shares allocated to him. This is subject to any income tax and national insurance due and rule 6.4 (Forfeiture of Matching Shares).

 

A Participant may, at any time, direct the Trustees to transfer legal title of Partnership Shares to him or, subject to the agreement of the Trustees, any other person. He may also assign or charge his beneficial interest in the Partnership Shares.

 

   

  

384

  

 

	
6.

	
Matching Shares

 

	
6.1

	
Ratio of Matching Shares to Partnership Shares

 

If the Plan is operated to provide Matching Shares, a Participant who is allocated Partnership Shares is entitled to an award of Matching Shares. The Directors will set the ratio of Matching Shares to Partnership Shares from time to time and the ratio which applies will be set out in the application form. The same ratio must apply to all those who participate in the related allocation of Partnership Shares.

 

The ratio cannot exceed the ratio specified in paragraph 60 of Schedule 2, which is currently two Matching Shares to one Partnership Share.

 

The ratio may change in the circumstances set out in the application. The Directors will tell Participants if the ratio changes, before the allocation of the related Partnership Shares.

 

	
6.2

	
Rights and restrictions

 

Matching Shares must be shares of the same class and carry the same rights as the Partnership Shares to which they relate.

 

The Holding Period and rules 4.2.2, 8.4 (Restrictions on disposals of Shares) and 9.1 (Leaving Employment) apply to the award of Matching Shares.

 

	
6.3

	
Payments by Participating Companies and acquiring Shares

 

The Directors will notify each Participating Company of the amount it is required to contribute in relation to Matching Shares. Each Participating Company will pay this amount to the Trustees and the Trustees will immediately use the funds to purchase or subscribe for Shares, as agreed with the Directors.

 

	
6.4

	
Forfeiture of Matching Shares

 

The Directors may decide that an award of Matching Shares will be made on the basis that if a Participant leaves Employment for a specified reason (other than for a reason specified in paragraph 32(2) of Schedule 2) within a specified period (not exceeding three years from the Award Day) he will lose any right to receive Matching Shares.

 

The Directors may also decide that an award of Matching Shares will be made on the basis that a Participant who takes out of the Plan the Partnership Shares in respect of which the Matching Shares were awarded (other than for a reason specified in paragraph 32(2) of Schedule 2) within a specified period (not exceeding three years from the Award Day) will not be entitled to any Matching Shares in respect of those Partnership Shares.

 

	
6.5

	
Awards of Matching Shares

 

The Trustees will award Matching Shares to each Participant on the basis set out in the application. Awards of Matching Shares will be made to all Participants on exactly the same basis.

 

The Trustees will award Matching Shares on the same day as they allocate the related Partnership Shares to Participants.

 

However, the Directors may decide to operate the Plan on the basis that if any Partnership Shares allocated are not sufficient to result in the award of a Matching Share on the same day, the match will be made when sufficient Partnership Shares have been allocated.

    

  

385

  

 

	
6.6

	
Notification by Trustees

 

The notification requirements set out in rule 4.7 (Notification by Trustees) will apply to Matching Shares and the Trustee will set out the Market Value of the Matching Shares on the date of allocation and the price per Share used to calculate the number of Partnership Shares allocated on the same day in accordance with rule 5.13 (Allocating shares – Accumulation Period) or 5.14 (Allocating shares – no Accumulation Period).

 

	
6.7

	
Transfer of legal title

 

After the end of the Holding Period the Participant may at any time direct the Trustees to transfer legal title of Matching Shares (and any related Dividend Shares) to him, or as he may direct.

 

	
7.

	
Dividends

 

	
7.1

	
Dividend Shares

 

	 	
7.1.1

	
The Directors may from time to time decide that:

 

(i) the Trustees must re-invest cash dividends they receive in respect of Plan Shares they hold on behalf of Participants in additional Shares to be held on behalf of Participants; or

 

(ii) the Trustees must reinvest cash dividends as set out in rule 7.1.1 but only in respect of Plan Shares of Participants who have chosen this by completing the relevant section on the application.

 

	 	
7.1.2

	
The total amount so reinvested cannot exceed £1,500 in each tax year (or such greater amount specified for the purposes of paragraph 64(1) of Schedule 2). If the Directors have not made such decisions, or to the extent that the cash dividends exceed the limit, the Trustees must pay over cash dividends to the relevant Participant as soon as practicable.

 

	 	
7.1.3

	
If a Participant reinvests an amount under this rule 7.1 in a tax year and, in the same tax year, has reinvested an amount in dividend shares under any Connected Share Incentive Plan, that amount will count, for the purposes of this rule 7.1.3, as if it were reinvested under this Plan.

 

	
7.2

	
Allocating Dividend Shares

 

	 	
7.2.1

	
If all the Dividend Shares to be allocated to Employees on any occasion are purchased by the Trustees on the date of allocation or over five or fewer consecutive dealing days ending on the date of allocation, and provided the Shares are quoted on the London Stock Exchange, then the number of Dividend Shares allocated to each Participant will be calculated using the average price actually paid by the Trustees for the Shares.

 

	 	
7.2.2

	
If all the Dividend Shares to be allocated to Employees on any occasion are not purchased by the Trustees on the date of allocation or over five or fewer consecutive dealing days ending on the date of allocation, then the number of Dividend Shares allocated to each Participant will be calculated using the Market Value on the date of allocation.

 

	 	
7.2.3

	
Dividend Shares must be allocated on or before a date set by the Trustees. This date must be no later than 30 days after the date they receive the cash dividend.

 

All the Dividend Shares must be allocated on the same date. In allocating Shares the Trustees must treat Participants fairly and equally.

 

	
7.3

	
Cash dividends carried forward and paid

 

The Trustees may retain, carry forward and add to the amount of the next cash dividend to be reinvested the amount of any cash dividend which is not sufficient for the allocation of one or more Dividend Shares. But the Trustees must keep these amounts separately identifiable and amounts derived from an earlier cash dividend are treated as reinvested before an amount derived from a later cash dividend.

   

  

386

  

   

The Trustees must pay to the Participant, as soon as practicable, any cash amounts referred to above:

 

	 	
7.3.1

	
which are not reinvested in Dividend Shares within 3 years of payment of the dividend; or

 

	 	
7.3.2

	
if the Participant ceases to be in Employment; or

 

	 	
7.3.3

	
if the Trustees receive a termination notice under rule 17.1 (Termination notice).

 

When making the payment, the Trustees will supply to the Participant the information specified in paragraph 80(4) of Schedule 2.

 

	
7.4

	
Notification

 

As soon as practicable after the Trustees have allocated any Dividend Shares to a Participant, the Trustees will notify the Participant. The Trustees will set out the number and description of those Dividend Shares, the price per Share which was used to calculate the number of Dividend Shares allocated in accordance with rule 7.2.1 or 7.2.2 the Holding Period and any cash dividends carried forward as described in rule 7.3 (Cash dividends carried forward and paid). The tax treatment of cash dividends and Dividend Shares will be as described in paragraph 80 of Schedule 2.

 

	
7.5

	
Rights and restrictions

 

Dividend Shares must be shares of the same class and carry the same rights as the Shares in respect of which the dividend is paid. They must not be subject to any forfeiture.

 

Rule 4.2.2 applies to Dividend Shares but the Holding Period must be 3 years starting on the date the Trustees allocated the Dividend Shares as described in rule 7.2 (Allocating Dividend Shares) rule 8.4 (Restrictions on disposals of Shares) and 8.7 (Offers) also apply.

 

	
7.6

	
Transfer of legal title

 

After the end of the Holding Period, the Participant may at any time direct the Trustees to transfer legal title of Dividend Shares to him or as he may direct.

 

	
7.7

	
Other dividends

 

Cash dividends payable in respect of Plan Shares and not reinvested in Dividend Shares (because they exceed the limit set out in rule 7.1 (Dividend Shares) or for any other reason) will belong to the relevant Participant. The Trustees will pay those dividends to the Participant as soon as practicable after receipt.

 

The Trustees are not required to pay a Participant any interest earned on any dividend to which the Participant is entitled.

 

The Trustees must hold unclaimed dividends for at least 12 years from the date of declaration of the dividend. If any dividends are unclaimed after this period, the Trustees may keep them and use them for the purposes of the Plan.

 

Where any dividends received are foreign cash dividends within the meaning of paragraph 75(6) of Schedule 2 the Trustees will notify the Participant of the amount of any foreign tax deducted from the dividend before it was paid.

   

  

387

  

   

	
7.8

	
Scrip dividends

 

The Trustees may receive, following a direction from the Participant, Shares credited as fully paid in whole or in part instead of a cash dividend (a scrip dividend). These Shares will not form part of the Participant’s Plan Shares. The Trustees will take all reasonable steps to transfer such Shares to the Participant.

 

	
8.

	
General rules about Shares

 

	
8.1

	
Listing

 

If and so long as Shares are admitted to listing on the Official List and to dealing on the London Stock Exchange, the Company will, where relevant, apply for listing of any Shares subscribed under the Plan as soon as practicable after their allotment.

 

	
8.2

	
Rights

 

Shares issued on subscription will rank equally in all respects with the Shares then in issue. However, the Directors may determine that they will not rank equally in all respects for any dividends or other distributions payable or made in respect of a period beginning before their date of issue.

 

Where Shares are transferred Participants will have the benefit of all rights attaching to the Shares by reference to a record date on or after the date on which they are allocated or awarded.

 

The Trustees may award Shares where a proportion of which rank for any dividend or other distribution or other rights attaching to Shares by reference to a record date preceding the relevant Award Day and a proportion of which do not. If this happens, the Trustees will award the Shares to each Participant as far as practicable in those same proportions.

   

	
8.3

	
Acquisition of Shares

 

The Company may from time to time ask the Trustees to acquire any number of Shares specified by it for award or allocation to Participants on a later operation of the Plan. If the Trustees agree to acquire Shares, the Company will ensure that the Trustees have sufficient funds to do so. The Trustees may also acquire Shares at any other time, if they have sufficient funds to do so. These Shares must satisfy the conditions specified in Part 4 of Schedule 2. Before any such Shares are awarded or allocated under the Plan, they will be held on general trust for the purposes of the Plan.

 

Where there is a qualifying transfer of Shares to the Trustees those Shares must not be used as Partnership Shares and must be included in any award of Free Shares or Matching Shares made after the date of the transfer in priority to other Shares available for a particular award.

 

For the purposes of this rule 8.3 there is a qualifying transfer of Shares to the Trustees if Shares (which are within the meaning of Section 69(3AC) of the Finance Act 1989) are transferred to them by the trustees of an employee share ownership trust and the transfer is a qualifying transfer within Section 69(3AA) of the Finance Act 1989 (transfer of shares in, or shares purchased from money in, an employee share ownership trust immediately before 21 March 2000).

 

	
8.4

	
Restrictions on disposals of Shares

 

The Participant must permit the Trustees to retain his Free Shares, Matching Shares and Dividend Shares throughout the Holding Period and the Trustees must retain them. The Participant cannot assign, charge or otherwise dispose of his beneficial interests in the Free Shares, Matching Shares and Dividend Shares in any way during the Holding Period, and the Trustees shall not dispose of the Free Shares, Matching Shares and Dividend Shares (whether by transfer to the Participant or otherwise) during the Holding Period, unless the Participant has ceased to be in Employment, or if the circumstances set out in paragraphs 36(4) or 77 of Schedule 2 apply.

   

  

388

  

    

	
8.5

	
Plan limits

 

The number of Shares which may be allotted under the Plan on any day must not, when added to the aggregate of the number of Shares which have been allotted in the previous 10 years under the Plan and any other employees’ share scheme operated by the Company, exceed 10 per cent of the ordinary share capital of the Company in issue immediately before that day.

     

In this rule 8.5 “allotted” means, in the case of any share option scheme, the placing of unissued shares under option and, in relation to other types of employees’ share scheme, includes the issue of shares. In determining the limits above no account shall be taken of any Shares where the right to acquire Shares was released or lapsed without being exercised. For the avoidance of doubt, the acquisition of any shares by market purchase by, or for the purpose of, an employee share scheme is not within the meaning of “allotted”.

 

	
8.6

	
Voting

 

The Trustees may, but will not be obliged to, invite Participants to direct them on the exercise of any voting rights attaching to Plan Shares held by the Trustees on their behalf. In the absence of any directions, the Trustee will not vote. The Trustees will only be entitled to vote on a show of hands if all directions received from Participants who have given directions in respect of a particular resolution are identical. The Trustees will not be under any obligation to call for a poll. In the event of a poll the Trustees will follow the directions of Participants.

 

The Trustees must not vote in respect of unallocated Shares or any Shares they hold under the Plan which have not been registered in their name.

 

	
8.7

	
Offers

 

The Participant (or anyone properly authorised) may direct the Trustees on the appropriate action to take in relation to any right relating to a Participant’s Plan Shares to receive other shares, securities or rights of any description, and in relation to a Reconstruction or Takeover. The Trustees will not be obliged to seek any direction and may not take any action without it. If the Trustees are to be involved in any liability they may require an indemnity from the Participant which they consider appropriate.

 

Where the Trustees exercise rights under a rights issue in respect of a Participant’s Plan Shares, any shares, securities or rights allotted as a result shall be treated as if they were Plan Shares identical to the Shares in respect of which the rights were conferred and as if they were awarded to the Participant under the Plan in the same way and at the same time as those Shares to which they relate. But this only applies if the rights issue is offered in respect of all ordinary shares in the company and is subject to paragraphs 88(3) to 88(5) of Schedule 2.

 

On a Reconstruction or a Takeover, the Trustees will hold any new shares (as described in paragraphs 86 and 87 of Schedule 2) as Shares subject to the Plan, as if they were the original Shares.

 

	
8.8

	
Fractional entitlements

 

Where, following any offer described in rule 8.7 (Offers), the Trustees receive rights or securities, they will allocate them among the Participants concerned on a proportionate basis, rounding down if necessary. The Trustees will then add the fractions not allocated and sell the unallocated rights and securities. The Trustees will deduct all expenses of sale and applicable taxation from the proceeds of sale and distribute the net proceeds of sale proportionately among the Participants whose allocation was rounded down. However, if a Participant’s entitlement is under £3 the Trustees may retain that sum and hold it on trust for the purposes of the Plan.

   

  

389

  

    

	
8.9

	
Capital receipts and other amounts

 

When the Trustees receive money which is a capital receipt (within the meaning of Section 502 of ITEPA) or the proceeds of any disposal, they will transfer the sum to the Participant after complying with their PAYE obligations. The Trustees may, however, retain any capital receipt under £3 due to any Participant and hold it on trust for the purposes of the Plan

 

The Trustees must also pay over to each Participant any money or money’s worth relating to any of his Plan Shares, apart from money’s worth consisting of new shares as described in rule 8.7 (Offers). But the Trustees are entitled to retain any amounts needed to discharge their PAYE obligations and cash dividends reinvested or carried forward under rule 7.3 (Cash dividends carried forward and paid).

 

	
8.10

	
Tax liabilities

 

The Trustees will maintain the necessary records to comply with their PAYE obligations and those of the Participating Companies so far as they relate to the Plan.

 

The Trustees will pay to the relevant employing companies sufficient sums to enable the employing companies to discharge any obligations to make PAYE deductions for income tax or national insurance contributions which arise in the circumstances in Section 510(1) of ITEPA.

 

The Trustees may withhold any amount and make any such arrangements which they consider necessary, including the sale of any of a Participant’s Shares, in order to discharge those obligations.

 

When a Participant becomes liable to tax under ITEPA or Chapter 3 or 4 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 in relation to his Plan Shares, the Trustees must give the Participant any information relevant to determining that liability.

 

	
9.

	
Leaving Employment

 

	
9.1

	
Leaving Employment

 

	 	
9.1.1

	
Subject to rules 4.4 (Forfeiture of Free Shares) and 6.4 (Forfeiture of Matching Shares), if a Participant leaves Employment, his Plan Shares will cease to be subject to the Plan.

 

	 	
9.1.2

	
Subject to rules 4.4 (Forfeiture of Free Shares) and 6.4 (Forfeiture of Matching Shares), unless the Directors decide otherwise, the Plan will operate on the basis that if a Participant leaves Employment for any reason, the Trustees will transfer the Participant’s Plan Shares to the Participant or as he may direct (or, if the Participant has died, to the personal representatives) as soon as reasonably practicable.

 

	 	
9.1.3

	
If a Participant leaves Employment during the acquisition period relating to an allocation of Partnership Shares, he shall:

 

	 	
(i)

	
for the purpose of awards of Partnership Shares and Matching Shares be treated as ceasing to be in Employment immediately after the allocation of Partnership Shares; and

	 	
(ii)

	
for the purpose of determining when his Plan Shares cease to be subject to the Plan, be treated as ceasing to be in Employment immediately after the allocation of Partnership Shares.

 

	 	
9.1.4

	
For the purposes of this rule 9.1 “acquisition period” has the meaning given to it in paragraph 97(3) of Schedule 2.

     

  

390

  

 

	
9.2

	
Tax free withdrawal of Plan Shares

 

In accordance with paragraph 498 of ITEPA, a Participant is not liable to income tax or national insurance contributions on his Shares ceasing to be subject to the Plan on leaving Employment for any of the following reasons:

 

	 	
9.2.1

	
because of injury or disability;

 

	 	
9.2.2

	
on being dismissed by reason of redundancy;

 

	 	
9.2.3

	
by reason of a transfer to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I.2006/246) applies;

 

	 	
9.2.4

	
if the relevant employment is employment by an associated company (see paragraph 95(2) of Schedule 2), by reason of a change of control or other circumstance ending that company’s status as an associated company;

 

	 	
9.2.5

	
by reason of the Participant’s retirement on or after reaching the specified retirement age of 60; or

 

	 	
9.2.6

	
on the Participant’s death.

 

	
10.

	
General rules relating to the Plan

 

	
10.1

	
Stamp duty

 

The Trustees will pay stamp duty and other expenses involved in a transfer of Shares to a Participant. But if the Shares are transferred to someone other than the Participant, either the person receiving the Shares or the Participant must pay the stamp duty and other expenses.

 

	
10.2

	
Notices

 

Any notice or other document which has to be given in connection with the Plan may be delivered to a Participant or sent by post to him at his home address using the records of that Participant’s employing company, or such other address as the Company or the Trustees consider appropriate or sent by e-mail (or other electronic means) to any address which according to the records of his employing company is used by him (or such other e-mail (or electronic) address as he may from time to time specify). Any notice or other document which has to be given to the Company or the Trustees in connection with the Plan may be delivered or sent by post to them at their registered offices (or such other place as the Directors or the Trustees may from time to time notify the Participants) or if the Directors allow and subject to such conditions as they may specify, sent by e-mail (or other electronic means) to the e-mail (or electronic) address for the time being notified by the Company. Notices sent by post will be deemed to have been given on the second day following the date of posting. Notices sent by e-mail (or other electronic means), in the absence of evidence to the contrary, will be deemed to have been received on the first day after sending.

 

	
10.3

	
Documents sent to shareholders

 

The Company may send to Participants copies of any documents or notices normally sent to the holders of its Shares. Such documents and notices may be provided electronically.

 

	
10.4

	
Directors’ and Trustees’ decisions

 

The decision of the Directors (or of the Trustees if the Directors so decide) in any dispute or question affecting any Employee or Participant will be final and binding on the parties concerned.

   

  

391

  

    

	
10.5

	
Regulations

 

The Directors and the Trustees will have the power from time to time to make or vary regulations for the administration and operation of the Plan, but these must be consistent with this Deed.

 

	
10.6

	
Terms of employment

 

	 	
10.6.1

	
For the purposes of this rule 10.6, “Employee” means any Participant, any Employee (within the meaning of rule 1 (Meaning of words used)) or any other person.

 

	 	
10.6.2

	
This rule 10.6 applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

 

	 	
10.6.3

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

 

	 	
10.6.4

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

 

	 	
10.6.5

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

 

	 	
10.6.6

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

 

	 	
10.6.7

	
The Employee will have no claim or right of action in respect of any decision, omission or discretion relating to his Plan Shares which may operate to the disadvantage of the Employee.

 

	 	
10.6.8

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

 

	 	
(i)

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

	 	
(ii)

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

 

	 	
10.6.8.1

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

 

	 	
10.6.9

	
Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the rules, including this rule 10.6. By participating in the Plan, an Employee waives all rights under the Plan, other than the right to receive any Free or Matching Shares awarded to him or any Partnership Shares or Dividend Shares allocated to him subject to and in accordance with the express terms of the rules, in consideration for, and as a condition of, his participation in the Plan.

 

	 	
10.6.10

	
Nothing in this Plan 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 Plan. This does not affect any other right or remedy of a third party which may exist.

 

	 	
10.6.11

	
Each of the provisions of this rule is entirely separate and independent from each of the other provisions. If any provision is found to be invalid then it will be deemed never to have been part of these rules and to the extent that it is possible to do so, this will not affect the validity or enforceability of any of the remaining provisions.

   

  

392

  

     

	
10.7

	
Beneficiary who is incapable

 

If the Trustees consider that a person cannot look after his or her affairs (because of illness, mental disorder, age or other reason) they may use any amounts or Shares due to that person for his or her benefit, or may pay or transfer them to some other person to do so. The receipt of the person to whom the Trustees make payments or transfer Shares will discharge the Trustees from any obligation in respect of the amounts or Shares concerned.

 

	
10.8

	
Setting up costs

 

The Company will pay the costs and expenses of the preparation and execution of these Plan rules.

 

	
10.9

	
Errors and omissions

 

If as a result of an error or omission Free Shares, Partnership Shares, Matching Shares or Dividend Shares are not awarded to a Participant in accordance with the Plan rules, the Trustees may, but without any obligation to do so, do all such acts or things as may be agreed with HMRC to rectify the error or omission.

 

	
10.10

	
Participation in more than one Connected Share Incentive Plan

 

When calculating the limits on individual participation in the Plan, awards which have been made to an Employee in the same tax year under a Connected Share Incentive Plan shall be included.

 

Awards means (depending on the limit being considered) awards of free shares or the acquisition by an employee of partnership shares or dividend shares under a Connected Share Incentive Plan.

 

The Trustees will maintain all records necessary to enable this rule to be complied with.

 

	
11.

	
Data Protection

 

	
11.1

	
By participating in the Plan the Participant consents to the holding and processing of personal data provided by him to the Company, any Participating Company, the Trustees or third party service provider for all purposes relating to the operation of the Plan. These include, but are not limited to:

 

	 	
11.1.1

	
administering and maintaining records;

 

	 	
11.1.2

	
providing information to the Company, any Participating Company, the Trustees, registrars, brokers or third party administrators of the Plan;

 

	 	
11.1.3

	
providing information to future purchasers of the Company or the business in which the Participant works; and

 

	 	
11.1.4

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

    

  

393

  

   

	
12.

	
Assets of the Plan

 

	
12.1

	
Assets held on trust

 

The Trustees will hold all the payments they receive and the assets representing them from time to time and all income on trust for the purposes of the Plan. The Trustees may also accept gifts of cash and Shares which will be held on trust for the purposes of the Plan.

 

	
12.2

	
Use of assets

 

The Trustees may invest any moneys from time to time held by them and not immediately required for the purpose of the Plan in such manner as they may choose. The Trustees are not under a duty to invest trust property.

 

The Trustees may receive Shares from a share ownership trust complying with the requirements of Schedule 5 of the Finance Act 1989. They may only use those Shares for the awards of Free Shares or Matching Shares, and must use them before using other Shares.

 

The Trustees may borrow in order to acquire Shares for the purposes of the Plan or, but only after getting the written consent of the Company, for any other purpose.

 

	
12.3

	
Plan expenses

 

The Trustees will pay the expenses of the Plan (including their own expenses incurred in attending to Plan business) from Plan assets, if the assets are sufficient and the Company decides in writing. If there is no such direction the expenses of the Plan will be met by the Participating Companies in proportion to the amounts paid by them under the Plan or (if the Trustees decide) in proportion to the number of Shares awarded to their Participants under the Plan in the related year, or in proportion to both.

 

	
12.4

	
Trustees’ duties relating to Shares

 

During the Holding Period, the Trustees may only sell or transfer any Free Shares, Matching Shares or Dividend Shares in the following circumstances:

 

	 	
12.4.1

	
if a Participant instructs this as described in rule 8.7 (Offers); or

 

	 	
12.4.2

	
to obtain sufficient funds to secure rights arising under a rights issue affecting Plan Shares; or

 

	 	
12.4.3

	
to discharge PAYE obligations under rule 8.10 (Tax liabilities); or

 

	 	
12.4.4

	
if they receive a termination notice as described in rule 17.1 (Termination notice).

 

	
13.

	
Trustees holding Shares

 

Where a Participant loses any right to receive Shares under the Plan, the Trustees will hold those Shares on general trust for the purposes of the Plan.

   

  

394

  

    

	
14.

	
Trustees

 

	
14.1

	
Appointment and removal

 

The Company may appoint new or additional trustees or a body corporate as a sole trustee. The Company may also remove trustees.

 

These powers will be exercised by deed. These powers may be exercised without giving a reason.

 

There must be at least two trustees, except when there is a sole corporate trustee.

 

All the trustees must be resident in the United Kingdom for United Kingdom tax purposes, at all times.

 

	
14.2

	
Retirement

 

A trustee may retire by giving to the Company three months written notice of his or her wish to retire. The notice will take effect at the expiry of three months after the date of the notice, or on any other date agreed with the Company. The retiring trustee need not give a reason for retiring and will not be responsible for any costs arising from his retirement. The retiring trustee will take the necessary action, as directed by the Company, to give effect to his retirement including delivering all documents which he or she has relating to the Plan. Any continuing trustee is authorised to effect the transfer of Plan assets on behalf of a retiring trustee.

 

	
14.3

	
Exercise of powers

 

If there is more than one trustee, the Trustees may act by majority vote, and may delegate powers, duties or discretions to any persons and on any terms (including terms which allow the delegate to sub-delegate).

 

The Trustees may allow any Shares to be registered in the name of an appointed nominee but these Shares must be registered in a designated account.

 

Trustees who delegate powers or use a nominee, are not divested of any responsibility under the rules or under Schedule 2.

 

The Trustees may at any time, and must if the Company so directs, revoke any delegation made under this rule 14.3, or require any Plan assets held by another person to be returned to the Trustees, or both.

 

	
14.4

	
Trustees’ charges

 

A trustee who carries on a profession or business may charge for services provided on a basis agreed with the Company, as also may a company or firm in which a trustee is interested (this will include the cost of any person to whom the trustee has delegated its powers under rule 14.3). These charges will also be paid from the Plan assets, if available, unless the Directors decide otherwise.

 

	
14.5

	
Limit of liability

 

A trustee will not be liable for any breach of trust except wilful wrongdoing (but a paid trustee will also be liable for negligence).

 

	
14.6

	
Indemnity

 

The Company will indemnify each of the trustees (except a paid trustee) against any expenses and liabilities which are incurred through acting as a trustee of the Plan but which cannot, for any reason, be met from the Plan’s assets. But this does not apply to expenses and liabilities which are incurred through wilful wrongdoing (or negligence in the case of a paid trustee) or covered by insurance under rule 14.7 (Insurance). The indemnity in this rule 14.6 is in addition to and without prejudice to the right which the Trustees have under general law and the Trustee Act 2000 to be indemnified out of the Plan’s assets.

   

  

395

  

   

	
14.7

	
Insurance

 

The Trustees may insure the Plan against any loss caused by it or any of its employees, officers, agents or delegates. They may also insure themselves and any of these persons against liability for breach of trust not involving wilful wrongdoing. Except in the case of a paid trustee the premiums may be paid from the Plan assets.

 

If the Trustees are insured, they will waive the protection of rule 14.5 (Limit of liability).

 

	
14.8

	
Personal interest

 

The Trustees and any director, officer or employee of a corporation acting as trustee may be interested in any securities of a Participating Company or any company in which a Participating Company may be interested. Such person may enter into a contract with any such companies, and will not be liable to account for any profits obtained.

    

  

396

  

   

	
15.

	
Participating Companies

 

	
15.1

	
Inclusion in the Plan

 

An employer wishing to participate in the Plan must enter into a deed with the Company and the Trustees, agreeing to comply with the Plan rules.

 

	
15.2

	
Ceasing to participate

 

Any Participating Company will cease to participate in the Plan:

 

	 	
15.2.1

	
when it ceases to be a Subsidiary; or

 

	 	
15.2.2

	
if and during any times when the Directors decide that the Plan will not apply to it. (But in making this decision the Directors must ensure that the conditions in paragraph 10 of Schedule 2 are still satisfied. These conditions are that the Plan must not have any features which may discourage certain employees from participating, and that the Plan cannot benefit mainly directors or higher paid employees.)

 

	
16.

	
Changing the rules

 

	
16.1

	
Before HMRC approval

 

Before HMRC approves the Plan under Schedule 2 the Directors can change the rules as necessary in order to obtain approval.

 

	
16.2

	
After HMRC approval

 

After the Plan is approved by HMRC, the Directors and the Trustees may, together by deed at any time change the Plan rules. But if a key feature of the Plan is to be changed at a time when the Plan is approved by HMRC under Schedule 2, and the approved status of the Plan is to be maintained, the change will not have effect until it has been approved by HMRC.

 

A “key feature” is any provision needed to comply with the requirements of Schedule 2.

 

The power to change the rules in this rule 16.2 is also subject to the restrictions in rule 16.3 (Shareholders’ approval).

 

The Directors must not make any changes to the Plan which would breach the rule against perpetuities (see rule 17.4 (Perpetuity period)).

 

	
16.3

	
Shareholders’ approval

 

	 	
16.3.1

	
The Company in general meeting must approve in advance by ordinary resolution any proposed change to the advantage of present or future Participants which relates to the following:

 

	 	
(i)

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

	 	
(ii)

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

	 	
(iii)

	
the maximum entitlement for each Participant under the Plan; or

	 	
(iv)

	
the basis for determining each Participant’s entitlement to Shares; or

	 	
(v)

	
any rights attaching to the Shares; or

   

  

397

  

   

	 	
(vi)

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

	 	
(vii)

	
the terms of this rule 16.3.1.

   

Some relaxations of the requirements in this rule 16.3.1 are set out in rule 16.3.2.

 

	 	
16.3.2

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

 

	 	
(i)

	
to benefit the administration of the Plan; or

	 	
(ii)

	
which are necessary or desirable in order to obtain or maintain HMRC approval of the Plan under Schedule 2 or any other enactment; or

	 	
(iii)

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

	 	
(iv)

	
to take account of any changes to legislation; or

	 	
(v)

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

 

	
17.

	
Termination

 

	
17.1

	
Termination notice

 

The Company in general meeting or the Directors may at any time resolve to terminate the Plan. If they so resolve, they must issue a termination notice and give it without delay to:

 

	 	
17.1.1

	
HMRC;

 

	 	
17.1.2

	
the Trustees; and

 

	 	
17.1.3

	
all individuals who have Plan Shares and all Employees who have returned valid application forms but have not been awarded or allocated any Shares.

 

	
17.2

	
Effect of termination notice

 

Once the Trustees receive the termination notice, they must not award or acquire any more Shares on behalf of Participants.

 

The Trustees must remove each Participant’s Plan Shares from the Plan by either transferring them or the proceeds of their sale to the Participant or as he or she may direct. (If the Participant has died, his or her personal representatives may give these instructions.) This should be done as soon as practicable once three months have passed from the date the termination notice was given under rule 17 (Termination). But the Trustees must delay the removal of Plan Shares until this can be done without any liabilities to income tax under Sections 501 to 507 of ITEPA. The Trustees may also remove Plan Shares at an earlier time if the Participant agrees after receiving the termination notice.

 

The Trustees must also pay to Participants, as soon as they receive the termination notice, any cash dividends they are holding (rule 7.3 (Cash dividends carried forward and paid) or any Contributions they are holding (rule 5.7 (Repayment of Contributions)).

 

	
17.3

	
Surplus assets

 

Any surplus assets left after the Trustees have decided when Plan Shares will be removed under rule 17.2 (Effect of termination notice) will be paid to Participating Companies, so far as practicable, in proportion to the total amounts paid by each of them to the Plan, but the Trustees may decide on payments in different proportions.

    

  

398

  

 

	
17.4

	
Perpetuity period

 

The perpetuity period relating to the Plan is 80 years. The Trustees may not award Shares more than 76 years after the date of these Plan rules.

 

The end of the “perpetuity period” is the time by which Participants or other persons must have an interest in Shares, without risk of loss of any rights.

 

	
18.

	
Governing law

 

English law governs the Plan and its administration.

 

Executed as a deed on the date shown at the top of this document.

	
THE COMMON SEAL of Aviva plc

was hereunto affixed in the presence of:

    

		 
	
Authorised signatory

	 	 

	 	 	 
	
THE COMMON SEAL of Equiniti Share

Plan Trustees Limited was hereunto

affixed in the presence of:

		 
	 	 	 
	
Director

	 	 
	 	 	 
	 	 	 
	
Authorised Signatory

	 	 

 

 

 

 

 

 

399aviva_20f-ex0409.htm

Exhibit 4.9

   

AVIVA plc

 

 

RULES OF THE AVIVA

 

RECRUITMENT AND RETENTION SHARE AWARD PLAN

 

 

	    Directors’ Adoption:	2 December 2010
	    Expiry Date:	2 December 2020

 

 

 

 

 

Linklaters

Linklaters LLP

One Silk Street

London EC2Y 8HQ

 

Telephone (+44) 20 7456 2000

 

Facsimile (+44) 20 7456 2222

 

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400

  

  

Table of Contents

  

	Contents	Page
	 	 	 
	Introduction	402
	 	 	 
	1	Granting Awards	402
	 	 	 
	2	Before Vesting	403
	 	 	 
	3	Vesting of Awards	405
	 	 	 
	4	Consequences of Vesting	405
	 	 	 
	5	Vesting in other circumstances - personal events	406
	 	 	 
	6	Vesting in other circumstances - corporate events	408
	 	 	 
	7	Changing the Plan and termination	409
	 	 	 
	8	General	409
	 	 	 
	9	Definitions	411

      

  

401

  

 

Rules of the Aviva Recruitment and Retention Share Award Plan

   

Introduction

 

This Plan sets out the terms of an Award to be granted to an Employee in connection with his recruitment or retention. No new Shares shall be issued or transferred from treasury pursuant to the Plan until the Plan has been approved by the Company’s shareholders.

 

	
1

	
Granting Awards

   

	
1.1

	
Grantor

  

The Grantor of an Award must be:

    

	
  

	
1.1.1

	
the Company;

 

	
  

	
1.1.2

	
any other Member of the Group; or

 

	
  

	
1.1.3

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

 

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

 

	
1.2

	
Eligibility

 

The Grantor may grant an Award to anyone who is an Employee (excluding an executive director of the Company) on the Award Date in accordance with any selection criteria that the Directors in their discretion may set.

    

If the Grantor grants an Award which is inconsistent with this rule 1.2 (Eligibility), it will lapse immediately.

 

	
1.3

	
Timing of Award

 

Awards may be granted at any time subject to any Dealing Restrictions. However, Awards may not be granted at any time after the Expiry Date.

 

	
1.4

	
Terms of Awards

 

Awards are subject to the rules of the Plan, any Performance Condition and any other condition imposed under rule 1.6 (Other conditions) and must be granted by deed. The terms of the Award must be determined by the Grantor and approved by the Directors. The terms must be set out in the deed or other document (which may be in electronic form), including:

 

	 	
1.4.1

	
whether the Award is:

 

	
  

	
(i)

	
a Conditional Award;

 

	
  

	
(ii)

	
an Option;

 

	
  

	
(iii)

	
Restricted Shares,

 

or a combination of these;

 

	 	
1.4.2

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

 

	 	
1.4.3

	
any Performance Condition;

 

	 	
1.4.4

	
any other condition specified under rule 1.6 (Other conditions);

 

	 	
1.4.5

	
the expected date of Vesting, unless specified in a Performance Condition;

 

	 	
1.4.6

	
whether the Participant is entitled to receive any Dividend Equivalent;

   

  

402

  

   

	
  

	
1.4.7

	
the Award Date; and

 

	
  

	
1.4.8

	
the Option Price (if relevant).

 

	
1.5

	
Performance Conditions

 

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

 

	
1.6

	
Other conditions

 

The Grantor may impose other conditions when granting an Award. Any condition must be objective, specified at the Award Date and may provide that an Award will lapse if it is not satisfied. The Grantor, with the consent of the Directors, may waive or change a condition imposed under this rule 1.6 (Other conditions).

 

	
1.7

	
Award certificates

 

The Participant will receive a certificate setting out the terms of the Award as soon as practicable after the Award Date. The certificate may be the deed referred to in rule 1.4 (Terms of Awards) or any other document (which may be in electronic form), including a statement. If any certificate is lost or damaged the Company may replace it on such terms as it decides.

 

	
1.8

	
No payment

 

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

 

	
1.9

	
Restricted Share Agreement

 

On the grant of an Award of Restricted Shares, the Participant must enter into an agreement with the Grantor, that to the extent that the Award lapses under the Plan, the Shares are forfeited and he will immediately transfer his interest in the Shares, for no consideration or nominal consideration, to any person (which may include the Company, where permitted) specified by the Grantor.

 

	
1.10

	
Transfer of Restricted Shares

 

On or after the grant of an Award of Restricted Shares the Grantor will procure that the relevant number of Shares is transferred to the Participant or to another person to be held for the benefit of the Participant under the terms of the Plan.

 

	
2

	
Before Vesting

 

	
2.1

	
Rights

 

	
  

	
2.1.1

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

 

	
  

	
2.1.2

	
Except to the extent specified in the Restricted Share Agreement, a Participant will have all rights of a shareholder in respect of Restricted Shares until the Award lapses.

 

	
2.2

	
Restricted Shares - documents and elections

 

Where the Award is of Restricted Shares:

   

  

403

  

   

	
  

	
2.2.1

	
The Participant must sign any documentation, including a power of attorney or blank stock transfer form, requested by the Grantor. If he does not do so within a period specified by the Grantor, the Award will lapse at the end of that period. The Grantor may retain the share certificates relating to any Restricted Shares.

 

	
  

	
2.2.2

	
The Participant must enter into any elections required by the Grantor, including elections under Part 7 of the Income Tax (Earnings and Pensions) Act 2003 and elections to transfer any liability, or agreements to pay, social security contributions. If he does not do so within a period specified by the Grantor, the Award will lapse at the end of that period.

 

	
2.3

	
Transfer

 

A Participant may not transfer, assign or otherwise dispose of an Award or any rights in respect of it. If he does, whether voluntarily or involuntarily, then it will immediately lapse. This rule 2.3 (Transfer) does not apply:

 

	
  

	
2.3.1

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

 

	
  

	
2.3.2

	
to the assignment of an Award, with the prior consent of the Directors, subject to any terms and conditions the Directors impose.

 

	
2.4

	
Adjustment of Awards

 

	
  

	
2.4.1

	
If there is:

 

	
  

	
(i)

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

 

	
  

	
(ii)

	
a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010;

 

	
  

	
(iii)

	
a special dividend or distribution, or

 

	
  

	
(iv)

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

 

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

 

	 	
2.4.2

	
Subject to the Restricted Share Agreement, a Participant will have the same rights as any other shareholders in respect of Restricted Shares where there is a variation or other event of the sort described in rule 2.4.1. Any shares, securities or rights allotted to a Participant as a result of such an event will be:

 

	 	
(i)

	
treated as if they were awarded to the Participant under the Plan in the same way and at the same time as the Restricted Shares in respect of which the rights were conferred; and

 

	 	
(ii)

	
subject to the rules of the Plan and the terms of the Restricted Share Agreement.

 

	
2.5

	
Reduction or forfeiture of Awards and Shares

 

If the Participant ceases to be an Employee by reason of resignation or dismissal at any time within 12 months after Vesting, the Directors may decide that:

 

	
  

	
2.5.1

	
an Award should be reduced or forfeited; and/or

 

	
  

	
2.5.2

	
some or all of the after-tax number of Shares which have been transferred to or on behalf of a Participant following Vesting or the value of any such Shares (determined by reference to any date the Directors decide) should be transferred to the Company or as it directs.

   

  

404

  

   

	
3

	
Vesting of Awards

 

	
3.1

	
Determination of Performance Conditions

 

Where an Award is subject to a Performance Condition, as soon as reasonably practicable after the end of the Performance Period, the Directors will determine whether and to what extent any Performance Condition or other condition imposed under rule 1.6 (Other conditions) has been satisfied or waived and how many Shares Vest for each Award.

 

	
3.2

	
Timing of Vesting – Award subject to Performance Condition

 

Where an Award is subject to a Performance Condition, subject to rules 1.6 (Other conditions), 5 (Vesting in other circumstances – personal events) and 6 (Vesting in other circumstances – corporate events), an Award Vests, to the extent determined under rule 3.1 (Determination of Performance Conditions), on the latest of:

 

	 	
3.2.1

	
the date on which the Directors make their determination under rule 3.1 (Determination of Performance Conditions); and

 

	 	
3.2.2

	
the date of Vesting set by the Directors on the Award Date, or, if on that day a Dealing Restriction applies, the first date on which it ceases to apply.

 

	
3.3

	
Timing of Vesting – Award not subject to Performance Condition

 

Where an Award is not subject to a Performance Condition, subject to rules 1.6 (Other conditions), 5 (Vesting in other circumstances – personal events) and 6 (Vesting in other circumstances – corporate events), an Award Vests on the date of Vesting set by the Directors on the Award Date or, if on that date a Dealing Restriction applies, the first date on which it ceases to apply.

 

	
3.4

	
Lapse

 

To the extent that any Performance Condition is not satisfied at the end of the Performance Period, the Award lapses, unless otherwise specified in the Performance Condition. To the extent that any other condition is not satisfied, the Award will lapse if so specified in the terms of that condition. If an Award lapses under the Plan it cannot Vest and a Participant has no rights in respect of it.

 

On the lapse of an Award of Restricted Shares, a Participant must transfer his interest in the Shares in accordance with the Restricted Share Agreement.

 

	
4

	
Consequences of Vesting

 

	
4.1

	
Conditional Award

 

Within 30 days of a Conditional Award Vesting, the Grantor will arrange (subject to rules 4.5 (Cash and share alternative), 4.6 (Withholding) and 8.8 (Consents)) for the transfer to, or to the order of, the Participant, of the number of Shares in respect of which the Award has Vested.

 

	
4.2

	
Options

 

	
  

	
4.2.1

	
A Participant may exercise his Option on any day after Vesting on which no Dealing Restriction applies by giving notice in the prescribed form to the Grantor or any person nominated by the Grantor and paying the Option Price (if any). The Option will lapse at the end of such period as determined by the Directors on the Award Date (unless the reason for Vesting is the Participant’s death, in which case the Option will lapse 12 months after Vesting) or, if earlier, on the earliest of:

 

	 	
(i)

	
the date the Participant ceases to be an Employeeby reason of dismissal for gross misconduct; or

 

	 	
(ii)

	
six months after an event which gives rise to Vesting under rules 5.2 (“Good leavers”), 5.5 (Overseas transfer) or 6 (Vesting in other circumstances – corporate events) or, if earlier, the date six weeks after the date on which a notice to acquire Shares under section 979 of the Companies Act 2006 is first served.

    

  

405

  

    

	 	
4.2.2

	
Subject to rules 4.5 (Cash and share alternative), 4.6 (Withholding) and 8.8 (Consents), the Grantor will arrange for Shares to be transferred to, or to the order of, the Participant within 30 days of the date on which the Option is exercised.

 

	 	
4.2.3

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

 

	
4.3

	
Restricted Shares

 

To the extent it has Vested, an Award of Restricted Shares will not lapse under the Plan. In addition, the restrictions referred to in rule 1.9 (Restricted Share Agreement) and contained in the Restricted Share Agreement between the Participant and the Grantor will cease to have effect. Any tax and social security contributions payable on Vesting are described in rule 4.6 (Withholding).

 

	
4.4

	
Dividend Equivalent

 

Subject to rule 2.1.2, Awards will not include any rights in respect of dividends on the Shares comprised in the Award before Vesting, unless the Grantor, in its discretion, decides otherwise at the Award Date. The Grantor may determine that an Award includes the right to receive a Dividend Equivalent. Dividend Equivalents will be paid to any relevant Participant as soon as practicable after Vesting.

 

For the purpose of this rule 4.4 (Dividend Equivalent) and unless the Directors determine otherwise, “market value” means the closing middle market quotation for a Share taken from the Daily Official List of the London Stock Exchange (or, in the case of an ADR, the closing price on the New York Stock Exchange as reported in the Wall Street Journal) on the date of Vesting or, in the case of an Option, the date of exercise.

 

The Grantor will exercise the discretions in this rule 4.4 (Dividend Equivalent) subject to the consent of the Directors.

 

	
4.5

	
Cash and share alternative

 

The Grantor may, subject to the approval of the Directors, decide to satisfy an Option or a Conditional Award by paying an equivalent amount in cash (subject to rule 4.6 (Withholding)). For Options, the cash amount must be equal to the amount by which the market value of the Shares in respect of which the Option is exercised exceeds the Option Price. Alternatively, the Grantor may decide to satisfy an Option by procuring the transfer of shares to the value of the cash amount specified above.

 

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

 

In respect of Awards which consist of a right to receive a cash amount, the Directors may decide instead to satisfy such Awards (and any Dividend Equivalents) by the delivery of Shares (subject to rule 4.6 (Withholding)). The number of Shares will be calculated by reference to the market value of the Shares on the date of Vesting for Conditional Awards and the date of exercise for Options.

 

	
4.6

	
Withholding

 

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

 

	
5

	
Vesting in other circumstances – personal events

 

	
5.1

	
General rule on leaving employment

 

Subject to rule 5.2 (“Good leavers”), an Award which has not Vested will cease to be capable of Vesting on the date on which the Participant gives or receives notice of termination of his employment with any Member of the Group (whether or not such termination is lawful), unless the Directors decide otherwise.

 

An Award will lapse on the date the Participant ceases to be an Employee unless one of the reasons in rule 5.2 applies.

 

This rule 5.1 will not apply where the Vesting of an Award is delayed due to the operation of a Dealing Restriction, unless the Participant ceases to be an Employee by reason of dismissal for misconduct.

    

  

406

  

	
5.2

	
“Good leavers”

 

	 	
5.2.1

	
If a Participant ceases to be an Employee for any of the reasons set out below, then his Awards will Vest as described in rules 5.3 (Vesting – Award subject to Performance Condition) and 5.4 (Vesting – Award not subject to Performance Condition) and lapse as to the balance. The reasons are:

 

	
  

	
(i)

	
retirement with the agreement of the Participant’s employer;

 

	
  

	
(ii)

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

 

	
  

	
(iii)

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

 

	
  

	
(iv)

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

 

	
  

	
(v)

	
redundancy, but only in circumstances which give rise to a redundancy payment;

 

	
  

	
(vi)

	
death; and

 

	
  

	
(vii)

	
any other reason, if the Directors so decide in any particular case.

 

	 	
5.2.2

	
The Directors may only exercise the discretion provided for in rule 5.2.1(vii) within 30 days after cessation of the relevant Participant’s employment.

 

	
5.3

	
Vesting – Award subject to Performance Condition

 

Where rule 5.2 (“Good leavers”) applies, the Award does not lapse, and the extent to which it will Vest is measured in accordance with rule 3.1 (Determination of Performance Conditions) at the end of the Performance Period. 

 

However, the Performance Period in respect of an Award will be treated as ending on the date of the termination of employment, and the Award will Vest immediately, to the extent that the Performance Condition has been or is likely to be satisfied (as determined by the Directors in the manner specified in the Performance Condition or in such manner as they consider reasonable) where a Participant has died or where the Directors so decide in their discretion.

 

Unless the Directors decide otherwise, the Award should be reduced pro rata to reflect the number of days from the start of the Performance Period until cessation of the Participant’s employment as a proportion of the number of days of the Performance Period.

 

	
5.4

	
Vesting – Award not subject to Performance Condition

 

Where rule 5.2 (“Good leavers”) applies and the Award is not subject to a Performance Condition, the Award does not lapse but will Vest, in the case of death, immediately and otherwise on the date of Vesting set by the Directors on grant. However, the Directors may decide that the Award should Vest either immediately or on any other date. The Awards will Vest in full unless the Directors decide otherwise, in which case the Award will be reduced pro rata to reflect the period from the Award Date to the date of cessation of employment relative to the Vesting period.

 

	
5.5

	
Overseas transfer

 

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

 

	
  

	
5.5.1

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

 

	
  

	
5.5.2

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

 

then the Directors may decide that his Awards will Vest on a date they choose before or after the transfer takes effect. The Award will Vest to the extent they permit and the Directors will decide whether any balance of the Award will lapse.

   

  

407

  

   

	
5.6

	
Meaning of “ceasing to be an Employee”

 

For the purposes of rules 4 (Consequences of Vesting) and 5 (Vesting in other circumstances – personal events), a Participant will not be treated as ceasing to be an Employee until he is no longer an Employee of any Member of the Group or if he recommences employment with a Member of the Group within 14 days or such other period and on such basis as the Directors decide.

 

	
6

	
Vesting in other circumstances – corporate events

 

	
6.1

	
Time of Vesting

 

	 	
6.1.1

	
In the event of a Change of Control, an Award Vests subject to rules 6.1.2 and 6.3 (Exchange). The Award lapses as to the balance except to the extent exchanged under rule 6.3 (Exchange).

 

	 	
6.1.2

	
If the Company is or may be affected by any demerger, delisting, distribution (other than an ordinary dividend) or other transaction, which, in the opinion of the Directors, might affect the current or future value of any Award, the Directors may allow an Award to Vest. The Award will Vest to the extent specified in rule 6.2 (Extent of Vesting) and will lapse as to the balance unless exchanged under rule 6.3 (Exchange). The Directors may impose other conditions on Vesting.

 

	
6.2

	
Extent of Vesting

 

Where an Award vests under rule 6.1 (Time of Vesting):

 

	
  

	
6.2.1

	
If the Award is subject to a Performance Condition, the Directors will determine the extent to which any Performance Condition has been satisfied as at the date of Change of Control (as determined by the Directors in the manner specified in the Performance Condition or in such manner as they consider reasonable) and the proportion of the Award which will Vest. In addition, unless the Directors decide otherwise, the Award is reduced pro rata to reflect the number of days from the start of the Performance Period until the date of Change of Control as a proportion of the number of days of the Performance Period.

 

	
  

	
6.2.2

	
If the Award is not subject to any Performance Condition, the Award will Vest in full unless the Directors decide otherwise.

 

	
6.3

	
Exchange

 

An Award will not Vest under rule 6.1 ( Time of Vesting) but will be exchanged under rule 6.6 (Exchange terms) to the extent that:

 

	
  

	
6.3.1

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

 

	
  

	
6.3.2

	
the Directors, with the consent of the Acquiring Company, decide before Change of Control that the Award will be automatically exchanged.

 

	
6.4

	
Directors

 

In this rule 6 (Vesting in other circumstances – corporate events), “Directors” means those people who were members of the remuneration committee of the Company immediately before the Change of Control.

 

	
6.5

	
Timing of exchange

 

Where an Award is to be exchanged under rule 6.3 (Exchange) the exchange is effective immediately following the relevant event.

 

	
6.6

	
Exchange terms

 

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

 

	 	
6.6.1

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

 

	 	
6.6.2

	
must be equivalent to the existing Award, subject to rule 6.6.4;

     

  

408

  

    

	 	
6.6.3

	
is treated as having been acquired at the same time as the existing Award and, subject to rule 6.6.4, Vests in the same manner and at the same time;

 

	 	
6.6.4

	
must:

 

	 	
(i)

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

 

	 	
(ii)

	
not be subject to any Performance Condition but be in respect of the number of shares which is equivalent to the number of Shares comprised in the existing Award which would have Vested under rule 6.2.1 and Vest at the end of the original Performance Period; or

 

	 	
(iii)

	
be subject to such other terms as the Directors consider appropriate in all the circumstances,

 

	 	
6.6.5

	
is governed by the Plan as if references to Shares were references to the shares over which the new award is granted and references to the Company were references to the Acquiring Company or the body corporate determined under rule 6.6.1 above.

 

	
7

	
Changing the Plan and termination

 

	
7.1

	
Powers of amendment

 

Except as described in rules 7.2 (Employees’ share scheme) and 7.3 (Shareholder approval), the Directors may at any time change the provisions of the Plan in any respect. Schedules may be added to the Plan rules in order to facilitate variations in the operation of the Plan in different countries.

 

	
7.2

	
Employees’ share scheme

 

No amendment or operation of the Plan will be effective to the extent that the Plan would cease to be an “employees’ share scheme” as defined in Section 1166 of the Companies Act 2006.

 

	
7.3

	
Shareholder approval

 

No amendment to the Plan may be made, which would necessitate, under any law or regulation, the Plan’s approval by the Company in general meeting, until such approval has been obtained.

 

	
7.4

	
Notice

 

The Directors are not required to give the Participant notice of any change made.

 

	
7.5

	
Termination

 

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

 

	
8

	
General

 

	
8.1

	
Terms of employment

 

	 	
8.1.1

	
This rule 8.1 (Terms of employment) applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

 

	 	
8.1.2

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

 

	 	
8.1.3

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

 

	 	
8.1.4

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

 

	 	
8.1.5

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

    

  

409

  

   

	 	
8.1.6

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

 

	
  

	
(i)

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

 

	
  

	
(ii)

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

 

	
  

	
(iii)

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

 

	
8.2

	
Directors’ decisions final and binding

 

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

 

	
8.3

	
Third party rights

 

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

 

	
8.4

	
Documents sent to shareholders

 

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

 

	
8.5

	
Costs

 

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

 

	
8.6

	
Employee trust

 

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

 

	
8.7

	
Data protection

 

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

 

	
  

	
8.7.1

	
administering and maintaining Participant records;

 

	
  

	
8.7.2

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

 

	
  

	
8.7.3

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

 

	
  

	
8.7.4

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

   

  

410

  

   

The Participant is entitled, on payment of a fee, to a copy of the personal information held about him and, if anything is inaccurate, the Participant has the right to have it corrected.

 

	
8.8

	
Consents

 

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

 

	
8.9

	
Share rights

 

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

 

	
8.10

	
Listing

 

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

 

	
8.11

	
Notices

 

	
  

	
8.11.1

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

 

	
  

	
8.11.2

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

 

	
  

	
8.11.3

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

 

	
8.12

	
Governing law and jurisdiction

 

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

 

	
9

	
Definitions

 

In these rules:

 

“Acquiring Company” means a person who has or obtains control (within the meaning of Section 995 of the Income Tax Act 2007) of the Company;

 

“Award” means a Conditional Award, Restricted Shares or an Option;

 

“Award Date” means the date on which an Award is granted by deed under rule 1.4;

   

  

411

  

 

“Change of Control” means:

 

	 	
(i)

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

 

	 	
(ii)

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

 

	 	
(iii)

	
a person (or a group of persons acting in concert) obtaining control (within the meaning of Section 995 of the Income Tax Act 2007) of the Company in any other way.

 

“Company” means Aviva plc;

 

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

 

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

 

“Directors” means, subject to rule 6.4, the board of directors of the Company or a duly authorised person or group of persons;

 

“Dividend Equivalent” means a right to receive cash or Shares in respect of dividends (as determined from time to time by the Grantor), on such bases as the Grantor may, in its discretion determine;

 

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

 

“Expiry Date” means 2 December 2020, the tenth anniversary of the adoption of the Plan;

 

“Restricted Shares” means Shares held in the name of or for the benefit of a Participant subject to the Restricted Share Agreement;

 

“Restricted Share Agreement” means the agreement referred to in rule 1.9;

 

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

 

“London Stock Exchange” means London Stock Exchange plc;

 

“Member of the Group” means:

 

	 	
(i)

	
the Company;

 

	 	
(ii)

	
its Subsidiaries from time to time; or

 

	 	
(iii)

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

 

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

 

“Option Period” means a period starting on the grant of an Option and ending at the end of the day before the tenth anniversary of the grant, or such shorter period as may be specified under rule 4.2 on the grant of an Option;

 

“Option Price” means zero, or the amount payable on the exercise of an Option, as specified under rule 1.4.8;

 

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

 

“Performance Condition” means any performance condition imposed under rule 1.4;

 

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

 

“Plan” means these rules known as “The Aviva Recruitment and Retention Share Award Plan”, as changed from time to time;

 

“Shares” means fully paid ordinary shares in the capital of the Company or any American Depository Share or American Depositary Receipt (ADR) representing ordinary shares;

 

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

 

“Vesting” in relation to an Option, means an Option becoming exercisable; in relation to a Conditional Award, means a Participant becoming entitled to have the Shares transferred to him subject to the Plan; and in relation to Restricted Shares, means the restrictions set out in the Restricted Share Agreement ceasing to have effect as described in rule 4.3

  

 

412

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