EXHIBIT 4.1
RULES OF THE
BOC GROUP EXECUTIVE SHARE OPTION SCHEME 2003
Adopted by the Company on 17 January 2003
The UK Approved Schedule to this Plan has been approved by the Inland Revenue
under the provisions of Schedule 9 to the Income and Corporation Taxes Act 1988
under reference X22459
Deloitte & Touche
180 Strand
London
WC2R 1BL
Tel: 020 7438 3000
RULES OF THE BOC GROUP
EXECUTIVE SHARE OPTION SCHEME 2003
1 DEFINITIONS AND INTERPRETATION
1.1 In this Plan, the following words and expressions shall have the meanings
set out below:
American Depository Shares a receipt or certificate representing an
interest in Shares in the Company and the
terms "ADS" shall be construed accordingly;
Appropriate Period the meaning given by paragraph 15(2) of
Schedule 9 to the Taxes Act;
Board the board of directors of the Company from
time to time or a duly authorised committee
of it;
Company The BOC Group plc (registered no. 22096);
Control the meaning given by section 840 of the
Taxes Act;
Daily Official List the register of listed securities and the
prices of transactions published by the
London Stock Exchange;
Date of Grant the date on which the Grantor grants an
Option under Rule 2.1;
Dealing Day any day on which the London Stock Exchange
is open for the transaction of business;
Discretionary Share Plan an Employees' Share Scheme in which
participation is solely at the discretion of
the Board;
Eligible Employee any person who at the Date of Grant is an
employee or an executive director of a
Participating Company;
Employees' Share Scheme the meaning given by section 743 of the
Companies Act 1985;
Exercise Condition a condition or conditions imposed on the
exercise of an Option pursuant to Rule 2.2;
Grantor the Board (acting on behalf of the Company)
or the Trustees acting on the recommendation
or with the consent of the Board (as the
case may be);
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Grant Period the period of 42 days commencing on any of
the following:
(A) the date on which the Plan is
adopted by the Company;
(B) the day after the Company makes an
announcement of its results for any
period;
(C) any day on which changes to the
legislation affecting share option
plans are proposed or made;
(D) the date of commencement of an
Eligible Employee's employment with
a Participating Company, but only in
respect of that Eligible Employee;
or
(E) any day on which the Board resolves
that exceptional circumstances exist
which justify the grant of Options
provided that if the Grantor cannot grant
Options due to primary or secondary
legislation, regulation or government
directive or due to any code adopted by the
Company (including by reason of its share
capital being listed on the London Stock
Exchange) the relevant Grant Period shall be
42 days commencing on the day after the
restriction is lifted;
Group Member (A) a Participating Company; and
(B) the Company's holding company
(within the meaning of section 736
of the Companies Act 1985) or a
Subsidiary of the Company or the
Company's holding company;
London Stock Exchange the stock exchange operated by London Stock
Exchange plc or any successor operating the
same;
Market Value (i) in relation to a Share on any day:
(A) if the Shares are then fully quoted
on the London Stock Exchange, its
closing middle market quotation (as
derived from the Daily Official
List) for the immediately preceding
Dealing Day;
(B) otherwise, its market value,
determined in accordance with Part
VIII of the Taxation of Chargeable
Gains Act 1992;
(ii) in relation to an ADS on any day:
means an amount equal to half-way
between the high and low sales
prices of ADSs recorded on the New
York Stock Exchange on the
applicable valuation date.
Market Value Option Plan any share option plan adopted by the Company
under which options may only be granted with
an exercise price set by
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reference to the Market Value of a share at
the date of grant;
Option subject to Rule 2.10 a right to acquire
Shares under the Plan which is either
subsisting or is proposed to be granted;
Option Period a period commencing on the Date of Grant of
an Option and ending on the expiry of the
period specified under Rule 5.1.1;
Option Price subject to Rule 2.10, the price per Share,
as determined by the Grantor at the Date of
Grant, at which an Eligible Employee may
acquire Shares upon the exercise of an
Option being not less than the higher of:
(A) the Market Value of a Share on the
Date of Grant (or the average Market
Value of a Share on the Date of
Grant and the two immediately
preceding Dealing Days or the Market
Value at such other time or times as
may be determined by the Grantor
provided that such times or period
shall be within a Grant Period);
and;
(B) if the Shares are to be subscribed,
the nominal value of a Share;
but subject to any adjustment pursuant to
Rule 11;
Overseas Plan the US Plan set out in Schedule 2 to this
Plan as from time to time amended;
Participant any person to whom an Option has been
granted, or (where the context so admits)
his personal representatives;
Participating Company (A) the Company; and
(B) any other company which is under the
Control of the Company and is a
Subsidiary of the Company except one
which the Board has designated shall
not be a Participating Company; and
(C) if so designated by the Grantor, any
company owned by the Company jointly
with another person together with
any Subsidiary of such company;
Plan The BOC Group Executive Share Option Scheme
2003 as from time to time amended in
accordance with the Rules;
Rules the rules of the Plan as amended from time
to time;
Share a fully paid ordinary share in the capital
of the Company;
Subsidiary the meaning given by section 736 of the
Companies Act 1985;
Taxes Act the Income and Corporation Taxes Act 1988;
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Trustees the trustee or trustees for the time being
of any employee benefit trust established
for the benefit of all or substantially all
of the Eligible Employees; and
UK Approved Schedule that part of the Plan, comprising the UK
Approved Schedule attached at Schedule 1 to
the Plan, which has been approved by the UK
Inland Revenue in accordance with Schedule 9
to the Taxes Act, in its present form or as
from time to time amended in accordance with
the provisions hereof.
1.2 Where appropriate, references to an Act of Parliament shall include
reference to any substantially equivalent foreign legislation and all
references to any statutory provisions are to those provisions as amended,
extended or re-enacted from time to time and shall include any regulations
or other subordinate legislation made under them.
1.3 The Interpretation Act 1978 shall apply to these Rules on the same basis
as if they were an Act of Parliament.
1.4 The headings in the Rules are for the sake of convenience only and should
be ignored when construing the Rules.
2 GRANT OF OPTIONS
2.1 During a Grant Period, the Grantor may grant to any Eligible Employee an
Option over such number of Shares and at such Option Price as it may
determine.
2.2 The Grantor will make the exercise of an Option conditional on satisfying
one or more conditions. Such conditions must be objective and specified at
the Date of Grant and must not be waived or changed by the Grantor unless
where events happen which cause the Grantor reasonably to consider that:
2.2.1 a changed Exercise Condition would be a fairer measure of
performance, and would not be materially more or less
difficult to satisfy than the condition as it existed or when
first imposed; and
2.2.2 the changed Exercise Condition is similar in nature.
2.3 The grant of an Option or the delivery of any Shares following its
exercise shall be subject to obtaining any approval or consent required
under any applicable laws, regulations of governmental authority and the
requirements of the United Kingdom Listing Authority, and any other
securities exchange on which the Shares are traded.
2.4 No Option may be granted, exercised, released or surrendered at a time
when such grant, exercise, release or surrender would not be in accordance
with the "Model Code on Directors' Dealings in Securities" issued by the
United Kingdom Listing Authority, as amended from time to time, or any
other code adopted by the Company.
2.5 The Grantor shall execute a deed as evidence of the grant of an Option,
which deed may be in respect of an individual Option or any number of
Options granted at the same time. As soon as practicable after the Date of
Grant, the Grantor shall issue to each Participant a certificate in
respect of the Option in such form as the Grantor may from time to time
prescribe.
2.6 Participants are not required to pay for the grant of an Option.
2.7 Neither an Option nor any rights in respect of it may be transferred,
assigned or otherwise disposed of by a Participant to any other person
without the Grantor's prior consent, except
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that, on the death of a Participant, his Option may be transmitted to his
personal representatives.
2.8 A Participant may surrender all or part of his Option by notice in writing
to the Secretary of the Company within 30 days of the Date of Grant. If
this happens, the Option will, to the extent surrendered, be deemed for
all purposes never to have been granted, and no further Options shall be
granted to the Participant within 60 days of the date of surrender. No
consideration is payable for the surrender.
2.9 If the Grantor purports to grant an Option which is inconsistent with the
limits in Rule 3 or 4, the Option will be limited and will take effect
from the Date of Grant on a basis consistent with the Rules, and the
Grantor may call in the option certificate for endorsement, replacement or
cancellation.
2.10 The Grantor may grant an Option to acquire cash or other assets (including
Shares) which:
2.10.1 on exercise, subject to satisfying any Exercise Condition
where required by the Rules, delivers a value to the
Participant related to the increase in the Market Value of a
Share from the Date of Grant to the date of effective
exercise; and
2.10.2 is otherwise subject to the Rules, which shall be interpreted
in such manner as the Grantor reasonably determines is
necessary to give effect to this Rule 2.10.
2.11 All Options granted to Participants in the U.S. shall be evidenced by an
instrument(s) in such form or forms as may from time to time be approved
by the Company which, shall set out the manner in which a Participant may
exercise his Option and the form of payment for the Shares or ADSs
issuable or transferable under it.
2.12 The Company may arrange for any Option to constitute a right to ADSs
rather than Shares, in which case the references to "Shares" in the Plan
shall be deemed to be references to "ADSs" as the context may require.
2.13 In its discretion and upon such terms and conditions as it may implement
from time to time, the Company may arrange for (i) any Option over Shares
to be satisfied in the form of ADSs, and for any Option over ADSs to be
satisfied in the form of Shares and (ii) for the exercise price of any
Option expressed in Sterling to be paid in U.S. dollars, and for the
exercise price of any Option expressed in U.S. dollars to be paid in
Sterling using such rate of exchange as the Grantor may reasonably
specify.
3 INDIVIDUAL LIMITS
3.1 Subject to Rule 3.2 no Option shall be granted to an Eligible Employee
which would, at the Date of Grant, result in the market value (measured at
the relevant Date of Grant) of the Shares over which he has been granted
Options under the Plan and options under any other Market Value Option
Plan in respect of any financial year of the Company exceeding 200% of his
annual rate of basic salary.
3.2 In calculating the limit in Rule 3.1, no account shall be taken of any
Shares which have been put under Option to ensure that a Participant who
agrees to satisfy any liability to employer's national insurance
contributions (or the overseas equivalent to the extent this is lawful) is
not financially disadvantaged.
4 PLAN LIMITS
4.1 In any ten year period, the number of Shares which may be allocated under
the Plan and under any other Employees' Share Scheme adopted by the
Company shall not exceed such number
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as represents ten per cent of the issued ordinary share capital of the
Company from time to time.
4.2 In any twelve month period, the number of Shares allocated under the Plan
and under any other Discretionary Share Plan adopted by the Company shall
not exceed such number as represents 0.5 per cent of the issued ordinary
share capital of the Company from time to time unless the number of Shares
to be allocated under the Plan and under any other Discretionary Share
Plan adopted by the Company, when aggregated with the number of Shares in
any ten year period already allocated under the Plan and under any other
Discretionary Share Plan adopted by the Company, represents less than five
per cent of the issued ordinary share capital of the Company from time to
time,
4.3 In determining the above limits:
4.3.1 any Shares allocated to the Trustees under the Plan or any
other Employees' Share Scheme adopted by the Company shall be
included; and
4.3.2 no account shall be taken of any Shares where the right to
acquire such Shares was released or lapsed without being
exercised, including pursuant to Rule 2.8 above.
4.4 In this Rule "allocate" shall mean, in the case of any share option plan,
the placing of unissued shares under option and, in relation to other
types of Employees' Share Schemes, the commitment to issue shares or the
issue and allotment of shares (whichever is the earlier).
5 EXERCISE AND LAPSE OF OPTIONS - GENERAL RULES
5.1 An Option can only be exercised
5.1.1 except where exercise is allowed as described in Rules 6 or 7,
on or after the third anniversary of the Date of Grant or such
other date determined by the Grantor at the Date of Grant;
5.1.2 except where exercise is allowed as described in Rule 6 or 7,
by a Participant while he is an officer or employee of a Group
Member;
5.1.3 except where otherwise provided in Rule 6 and 7, if the
Exercise Condition (if any) is satisfied or waived.
5.2 An Option shall lapse on the earliest of:
5.2.1 the tenth anniversary of the Date of Grant (or such other
period as determined by the Grantor at the Date of Grant);
5.2.2 the expiry of all applicable periods specified in Rule 6;
5.2.3 the expiry of any of the applicable periods specified in Rule
7 except to the extent an Option is released in consideration
of the grant of a New Option (during one of the periods
specified in Rule 7) pursuant to Rule 8.2;
5.2.4 where Rule 8.1 applies, the expiry of the Appropriate Period
except where an Option is released in consideration of a New
Option pursuant to Rule 8.2;
5.2.5 the Participant ceasing to hold an office or employment or
giving or being given notice to terminate employment with a
Group Member in any circumstances except where it arises:
5.2.5.1 on any of the grounds specified in Rule 6; or
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5.2.5.2 during any of the periods specified in Rule 7
other than for an act or omission of the
Participant entitling his employer to terminate
without notice his office or employment or where
the Participant gives notice to terminate;
5.2.6 subject to Rule 7.5, the passing of an effective resolution or
the making of an order by the Court for the winding up of the
Company;
5.2.7 the Participant being deprived of the legal or beneficial
ownership of the Option by operation of law or being declared
bankrupt, unless the Grantor determines otherwise; and
5.2.8 the Participant purporting to transfer or dispose of the
Option or any rights in respect of it other than as permitted
under Rule 2.7.
5.3 For the purposes of this Rule 5 and Rule 6 below, a Participant shall not
be treated as ceasing to hold office or employment with a Group Member
until he has ceased to hold office or employment with all Group Members.
5.4 For the purposes of the Plan, a woman on maternity leave will not cease to
hold an office or employment until the earlier of the date on which she
notifies her employer of her intention not to return or the date on which
she ceases to have statutory or contractual rights to return to work.
6 EXERCISE OF OPTIONS - EXCEPTIONS TO THE GENERAL RULES WHEN
LEAVING/CHANGING EMPLOYMENT
6.1 If a Participant dies, even if any Exercise Condition has not been
satisfied, a proportion of his Option can be exercised for a period of
twelve months from the date of death (which proportion will reflect the
number of whole months of the Option Period which have elapsed at the date
of death) unless and to the extent the Grantor, acting fairly and
reasonably, determines otherwise within 30 days from the date of death.
The proportion of the Option that can be exercised shall be calculated as
soon as practicable and notified to the Participant's personal
representatives.
6.2 If a Participant retires from a Group Member, he may, subject to
satisfying any Exercise Condition, exercise a proportion of his Option
within six months of the expiry of the Option Period (which proportion
will reflect the number of months of the Option Period which have elapsed
at the date of retirement) unless and to the extent the Grantor, acting
fairly and reasonably, determines otherwise.
6.3 If a Participant ceases to hold office or employment with a Group Member
by reason of injury, ill-health or disability (evidenced to the
satisfaction of the Board), he may exercise a proportion of his Option
within twelve months of the date of cessation, even if any Exercise
Condition has not been satisfied (which proportion will reflect the number
of whole months of the Option Period which have elapsed at the date of
cessation) unless and to the extent the Grantor, acting fairly and
reasonably, determines otherwise within 30 days of the date of cessation.
6.4 If a Participant ceases to hold office or employment with a Group Member
by reason either of job elimination or a reduction in workforce directly
affecting him (as determined in the opinion of the Board), he may exercise
a proportion of his Option within three months of the date of cessation,
even if any Exercise Condition has not been satisfied (which proportion
will reflect the number of whole months of the Option Period which have
elapsed at the date of cessation) unless and to the extent the Grantor,
acting fairly and reasonably, determines otherwise within 30 days of the
date of cessation.
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6.5 If a Participant ceases to hold office or employment with a Group Member
by reason of the company in the Group which employees him ceasing to be a
Group Member or because of the transfer or sale of the undertaking (or
part of the undertaking) in which he is employed to a person who is not a
Group Member, he may exercise a proportion of his Option within three
months of the date of cessation, even if any Exercise Condition has not
been satisfied (which proportion will reflect the number of whole months
of the Option Period which have elapsed at the date of cessation) unless
and to the extent the Grantor, acting fairly and reasonably, determines
otherwise within 30 days from the date of cessation.
6.6 If a Participant ceases to hold office or employment with a Group Member
for any reason other than those specified in Rules 6.1, 6.2, 6.3, 6.4 and
6.4, his Option shall lapse unless and to the extent the Grantor, acting
fairly and reasonably, determines otherwise within three months from the
date of cessation.
7 EXERCISE OF OPTIONS - EXCEPTIONS TO THE GENERAL RULES ON TAKEOVER,
RECONSTRUCTION AND WINDING-UP
7.1 Subject to Rules 7.3, 7.6 and 8.1 below, if any person obtains Control of
the Company as a result of making, either:
7.1.1 a general offer to acquire the whole of the issued ordinary
share capital of the Company (which is either unconditional or
made on a condition such that if it is satisfied the person
making the offer will have Control of the Company); or
7.1.2 a general offer to acquire all the shares in the Company which
are of the same class as the Shares,
(in either case disregarding any shares already owned by it or by any
company associated with it), Options may be exercised within six months of
the time when the person making the offer has obtained Control of the
Company and any condition subject to which the offer is made has been
satisfied.)
7.2 For the purpose of Rule 7.1 a person shall be deemed to have obtained
Control of the Company if he and others acting in concert (as defined by
the City Code on Take-overs and Mergers) with him have together obtained
Control of it.
7.3 Subject to Rules 7.6 and 8.1, if any person becomes bound or entitled to
acquire Shares under sections 428 to 430F of the Companies Act 1985,
Options may be exercised at any time within the period of four weeks
beginning on the date on which that person first becomes so bound or
entitled;
7.4 If under section 425 of the Companies Act 1985 it is proposed that the
Court sanctions a compromise or arrangement for the purposes of or in
connection with the reconstruction of the Company or its amalgamation with
any other company or companies the following shall apply:
7.4.1 the Company shall notify all Participants at the same time as
it sends notices to members of the Company calling the meeting
to consider such a compromise or arrangement;
7.4.2 subject to Rules 7.6 and 8.1, Options may then be exercised
conditional on such compromise or arrangement being sanctioned
by the Court and becoming effective before the earlier of the
expiry of six months from the date of such notice and the date
on which the compromise or arrangement becomes effective;
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7.4.3 to the extent unexercised, Options shall lapse conditionally
on the compromise or arrangement being sanctioned by the Court
and becoming effective; and
7.4.4. after exercising an Option the Participant shall transfer or
otherwise deal with the Shares issued to him so as to place
him in the same position (so far as possible) as would have
been the case if such Shares had been subject to such
compromise or arrangement.
7.5 If notice is duly given of a resolution for the voluntary winding-up of
the Company, the Company shall notify all Participants. Subject to Rule
7.6, Options may then be exercised until the resolution is duly passed or
defeated or the meeting concluded or adjourned sine die provided that the
exercise of an Option pursuant to this Rule shall be conditional upon the
resolution being duly passed. If the resolution is duly passed all Options
shall, to the extent that they have not been exercised, lapse immediately.
7.6 Where Rules 7.1, 7.3, 7.4 or 7.5 apply only a proportion of an Option can
be exercised (which proportion will reflect the number of months of the
Option Period which have elapsed at the date of the relevant event) and
the Option may only be exercised having regard to the extent to which any
Exercise Condition has been satisfied at the date of the relevant event
unless and to the extent the Grantor, acting fairly and reasonably,
determines otherwise.
8 EXCHANGE OF OPTIONS FOLLOWING TAKEOVER ETC.
8.1 Rules 7.1, 7.3 and 7.4 shall not apply where:
8.1.1 the events are part of a scheme or arrangement whereby another
company ("the Acquiror") obtains Control of the Company;
8.1.2 immediately after the Acquiror obtains Control, the issued
ordinary share capital of the Acquiror is owned substantially
by the same persons who were equity shareholders of the
Company immediately prior to the Acquiror obtaining Control;
and
8.1.3 the Acquiror agrees to grant New Options in accordance with
Rule 8.2 in consideration for the release of any Options which
have not lapsed.
8.2 If:
8.2.1 Options become exercisable under Rules 7.1, 7.3 or 7.4 and a
company obtains Control of the Company; or
8.2.2 a company obtains Control in circumstances where Rule 8.1
applies; or
8.2.3 a company obtains Control of any Group Member as a result of a
demerger;
any Participant may during the Appropriate Period, by agreement with the
acquiring company, release any Option which has not lapsed ("the Old
Option") in consideration of the grant to him of an option ("the New
Option") which relates to shares in a different company (whether the
company which has obtained Control of the Company itself or some other
company). In the case of a demerger, a New Option may be granted in
respect of an appropriate part of an Old Option.
8.3 Where Rule 8.2 applies, the provisions of the Plan shall for this purpose
be construed as if:
8.3.1 the New Option were an option granted under the Plan at the
same time as the Old Option;
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8.3.2 except for the purpose of the definition of "Participating
Company" in Rule 1.1 and the reference to "the Company" in
Rule 13.2, the reference to The BOC Group plc in the
definition of "the Company" in Rule 1.1 were a reference to
the different company mentioned in Rule 8.2;
8.3.3 subject to Rule 8.3.4 any Exercise Condition will not apply;
and
8.3.4 where Rule 8.1 applies, the Exercise Condition will apply
either in its original form or an appropriately amended form
unless the Grantor of the New Option determines that it should
be disapplied in whole or in part.
9 MANNER OF EXERCISE
9.1 Subject to Rule 2.3, an Option may be exercised in whole or in part.
9.2 Subject to Rules 9.4 and 10.6 below, an Option may be exercised by
delivering to the Company Secretary or such other person as the Grantor
determines (as agent for the Grantor):
9.2.1 an option certificate covering at least all the Shares over
which the Option is then to be exercised;
9.2.2 a notice of exercise in the prescribed form duly completed and
signed by the Participant (or by his duly authorised agent);
and
9.2.3 a remittance for the aggregate Option Price made payable to
the Company (as agent for the Grantor, where appropriate) in
respect of the Shares over which the Option is exercised
provided that the Grantor may from time to time prescribe a different
exercise procedure.
9.3 If an Exercise Condition must be satisfied before an Option may be
exercised, the delivery of the notice of exercise shall not be treated as
effecting the exercise of the Option unless and until the Exercise
Condition has been satisfied. The effective date of exercise shall be the
later of the date of delivery of the notice of exercise and the date that
the Exercise Condition has been satisfied and consequently Rule 12.2 shall
not apply.
9.4 The Grantor may require a Participant to discharge or assume any liability
to taxation or social security contributions which may arise on the
exercise of an Option. The Company, any Participating Company, any Group
Member, any employing company or the Trustees may withhold any amount and
make any such arrangements as it considers appropriate to meet any
liability to taxation or social security contributions in respect of
Options (including their grant and exercise). These arrangements may
include the sale of any Shares on behalf of a Participant or the reduction
of the number of Shares receivable by the Participant.
10 ISSUE OR TRANSFER OF SHARES
10.1 The Company shall procure that sufficient Shares are available to transfer
or allot to satisfy the exercise of all outstanding Options.
10.2 Subject to Rules 2.3 and 2.4, Shares shall be issued or transferred to the
Participant (or his nominee) within 28 days following the date of
effective exercise of the Option.
10.3 Shares issued or transferred pursuant to the Plan will rank pari passu in
all respects with the Shares then in issue, except that they shall not
rank for any right attaching to Shares by reference to a record date
preceding the effective date of exercise.
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10.4 If the Shares are listed on a recognised stock exchange, the Company shall
apply for listing of any Shares issued pursuant to the Plan (and not
already listed) as soon as practicable after their allotment.
10.5 Any Shares acquired on the exercise of Options will be subject to the
articles of association of the Company from time to time.
10.6 The Grantor may determine at any time that a Participant who exercises his
Option shall not pay the Option Price, but shall instead receive an amount
(in Shares, other assets or cash) equal to the amount by which the Market
Value of the Shares on the date of exercise in respect of the Option is
exercised exceeds the Option Price.
11 ADJUSTMENTS
11.1 The number of Shares over which an Option is granted, and the Option Price
(and where an Option has been exercised but no Shares have been allotted
or transferred pursuant to such exercise, the number of Shares which may
be so allotted or transferred and the price at which they may be acquired)
shall be adjusted in such manner as the Grantor shall determine following
any capitalisation issue, any offer or invitation made by way of rights,
subdivision, consolidation, reduction or other variation in the share
capital of the Company which in the reasonable opinion of the Grantor
justifies such an adjustment, so that (as nearly as may be without
involving fractions of a Share) the aggregate Option Price payable in
respect of an Option (if it was exercised in full) is unchanged.
11.2 Apart from pursuant to this Rule 11.2, no adjustment under Rule 11.1 above
shall reduce the Option Price to less than the nominal value of a Share.
Where an Option subsists over both issued and unissued Shares any such
adjustment may only be made if the reduction of the Option Price of
Options over both issued and unissued Shares can be made to the same
extent. Any adjustment made to the Option Price of Options over unissued
Shares shall only be made if and to the extent that the Board is
authorised to capitalise from the reserves of the Company a sum equal to
the amount by which the nominal value of the Shares in respect of which
the Option is exercisable exceeds the adjusted aggregate Option Price and
to apply such sum in paying up such amount on such Shares so that on
exercise of any Option in respect of which such a reduction shall have
been made the Board shall capitalise such sum (if any) and apply the same
in paying up such amount as aforesaid.
11.3 The Grantor may take such steps as it may consider necessary to notify
Participants of any adjustment made under this Rule 11 and to call in,
cancel, endorse, issue or reissue any certificate as a result of such
adjustment.
12 ADMINISTRATION
12.1 The Board shall administer the Plan. The Board shall have full authority,
consistent with the Plan to interpret and construe any provision of the
Plan and to adopt such regulations for administering the Plan as it may
deem necessary or appropriate. The Board's decision shall be final and
binding on all parties.
12.2 Any notice or other communication under or in connection with the Plan may
be given by personal delivery or by sending the same by electronic means
or by post, in the case of a company to its registered office, and in the
case of an individual to his last known address, or, where he is an
officer or employee of a Group Member, either to his last known address or
to the address of the place of business at which he performs the whole or
substantially the whole of the duties of his office or employment, and
where a notice or other communication is given by post, it shall be deemed
to have been received 72 hours after it was put into the post properly
addressed and stamped and if by electronic means when the sender receives
electronic confirmation of delivery or if not available 24 hours after
sending the notice.
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12.3 The Company may send to Participants copies of any notice or document
normally sent by the Company to the holders of Shares.
12.4 In the case of partial exercise of an Option, the Grantor may in
consequence call in, endorse, cancel and reissue, as it considers
appropriate, any certificate for the balance of the Shares over which the
Option was granted.
12.5 If any certificate is worn out, defaced or lost, it may be replaced on
such evidence being provided as the Grantor may require.
12.6 The Participating Companies shall bear the costs of introducing and
administering the Plan in such proportions as may be determined by the
Company.
12.7 The Company and any Subsidiary of the Company may provide money to the
Trustees 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 153 of
the Companies Act 1985. In addition, the Company may require any
Subsidiary of the Company to enter into such other agreement or agreements
to require such Subsidiary of the Company to reimburse the Company for any
other amounts paid by the Company under the Plan, directly or indirectly
in respect of such Subsidiary's employees.
13 CHANGING THE PLAN
13.1 Subject to the rest of this Rule 13, the Board may at any time alter or
add to all or any of the provisions of the Plan in any respect, (but only
with the prior consent of the Trustees if there are subsisting Options
which they have granted or agreed to satisfy which will be affected by the
alteration or addition).
13.2 No alteration or addition to the material advantage of Participants or
employees shall be made under Rule 13.1 without the prior approval by
ordinary resolution of the members of the Company in general meeting,
where such alteration or addition relates to:
13.2.1 the definition of "Eligible Employee";
13.2.2 the limits in Rule 3 and 4;
13.2.3 the determination of the Option Price;
13.2.4 the rights of Participants under Rule 11; and
13.2.5 the terms of this Rule 13.2
unless the alteration or addition is minor and is to benefit the
administration of the Plan or is necessary or desirable in order to take
account of any change in legislation or to obtain or maintain favourable
tax, exchange control or regulatory treatment for any Group Member, any
Participant or Eligible Employee.
13.3 No alteration or addition shall be made under Rule 13.1 which would
materially abrogate or adversely affect the subsisting rights of a
Participant unless it is made:
13.3.1 with the consent in writing of such number of Participants as
hold Options under the Plan to acquire 75 per cent of the
affected Shares which would be issued or transferred if all
such Options granted and subsisting under the Plan were
exercised; or
13.3.2 by a resolution at a meeting of Participants passed by not
less than 75 per cent of the Participants who attend and vote
either in person or by proxy,
12
and for the purpose of this Rule 13.3 the provisions of the articles of
association of the Company from time to time relating to shareholder
meetings shall apply mutatis mutandis.
13.4 No alteration shall be made to the Plan if following the alteration the
Plan would cease to be an employees' share scheme (as defined in section
743 of the Companies Act 1985).
13.5 Notwithstanding any other provision of the Plan, other than Rule 13.1 the
Grantor may, in respect of Options granted to Participants who will be
subject to taxation outside the United Kingdom on their remuneration amend
or add to the provisions of the Plan and the terms of Options as it
considers necessary or desirable to take account of or to mitigate or to
comply with relevant overseas taxation, securities or exchange control
laws provided that the terms of Options granted to such Participants are
not overall more favourable than the terms of Options granted to other
Participants.
13.6 As soon as reasonably practicable the Grantor shall give notice of any
alteration or addition under Rule 13.1 to any Participant materially
affected.
13.7 No alteration or addition under Rule 13 shall require the consent of any
person unless expressly provided in these Rules.
14 LEGAL ENTITLEMENT
14.1 Nothing in the Plan or in any instrument executed pursuant to it will
confer on any person any right to continue in employment, nor will it
affect the right of any Group Member to terminate the employment of any
person without liability at any time with or without cause, nor will it
impose upon the Board or any other person any duty or liability whatsoever
(whether in contract, tort or otherwise) in connection with:
14.1.1 the lapsing of any Option pursuant to the Plan;
14.1.2 the failure or refusal to exercise any discretion under the
Plan; and/or
14.1.3 a Participant ceasing to hold office or employment for any
reason whatever.
14.2 Options shall not (except as may be required by taxation law) form part of
the emoluments of individuals or count as wages or remuneration for
pension or other purposes.
14.3 Any person who ceases to be an officer or employee with any Group Member
as a result of the termination of his office or employment for any reason
and however that termination occurs, whether lawfully or otherwise, shall
not be entitled and shall be deemed irrevocably to have waived any
entitlement by way of damages for dismissal or by way of compensation for
loss of office or employment or otherwise to any sum, damages or other
benefits to compensate that person for the loss or alteration of any
rights, benefits or expectations in relation to any Option, the Plan or
any instrument executed pursuant to it.
14.4 Nothing in the Plan shall be deemed to give any Eligible Employee any
right to participate in the Plan.
15 GENERAL
15.1 The Plan shall terminate on the tenth anniversary of its adoption by the
Company or at any earlier time by the passing of a resolution by the Board
or an ordinary resolution of the Company in general meeting. Termination
of the Plan will be without prejudice to the subsisting rights of
Participants.
15.2 These Rules will be governed by and construed in accordance with the laws
of England. Any person referred to in this Plan submits to the exclusive
jurisdiction of the English courts.
13
THE BOC GROUP EXECUTIVE SHARE OPTION SCHEME 2003
SCHEDULE I
UK APPROVED SCHEDULE
1. DEFINITIONS
1.1 The words and expressions used in this UK Approved Schedule which have
capital letters have the meanings set out below, and words and expressions
not otherwise defined have the same meaning they have in the Rules of the
Plan to which this UK Approved Schedule is attached. In the event of any
conflict between the rules of this UK Approved Schedule and the Rules of
the Plan the provisions of the UK Approved Schedule will take precedence
insofar as Options granted to and exercised by UK Eligible Enployees are
concerned.
Associated Company In relation to the Company:
(A) any company which has Control of the
Company; and
(B) any company which is under the
Control of the Company or any
company referred to in (A) above;
Close Company A close company as defined in Section 414(1)
of the Taxes Act as varied by Paragraph 8 of
Schedule 9 to the Taxes Act;
Eligible Employee Any person who at the Date of Grant is:
(A) an employee of a Participating
Company, who is not a director;
or
(B) a full-time director of a
Participating Company who is
required under the terms of his
office or employment to devote not
less than 25 hours per week
(excluding meal breaks) to his
duties;
and in either case, not precluded by
Paragraph 8 of Schedule 9 of the Taxes Act
from participating in the Plan;
Market Value In relation to a Share on any day:
(A) if the Shares are then fully quoted
on the London Stock Exchange, its
closing middle market quotation (as
derived from the Daily Official
List) for the immediately preceding
Dealing Day;
(B) otherwise, its market value,
determined in accordance with Part
VIII of the Taxation of Chargeable
Gains Act 1992;
Material Interest The meaning given by Section 187(3) of the
Taxes Act;
14
Member of a Consortium The meaning given by Section 187(7) of the
Taxes Act;
Share A fully paid ordinary share in the capital
of the Company which satisfies the
requirements of Paragraphs 10 to 14 of
Schedule 9 to the Taxes Act;
1.2 For the purposes of this UK Approved Schedule the following words shall be
added to Paragraph (B) in the definition of Market Value: "and agreed in
advance with the Shares Valuation Division of the Inland Revenue".
2. GENERAL
2.1 The purpose of this UK Approved Schedule is to benefit Eligible Employees
who are, or may become, resident in the United Kingdom.
2.2 An Option may not be granted under the UK Approved Schedule before this
Schedule has been approved by the Inland Revenue under the Taxes Act.
2.3 This UK Approved Schedule applies to any grant of Options specified as
having been granted subject to its terms and conditions.
3. AMENDMENTS TO THE PLAN
For the purpose of Options granted under this UK Approved Schedule, the
Rules of the Plan shall apply subject to the following amendments:
3.1 No Option shall be granted under the UK Approved Schedule to an Eligible
Employee at any time if it would result in:
3.1.1 the aggregate Market Value of the Shares at the Date of Grant
which he may acquire in pursuance of rights obtained under the
UK Approved Schedule; and
3.1.2 the aggregate market value of shares which the Eligible
Employee could acquire by the exercise of an option under any
other Executive Share Option Plan approved under Schedule 9 of
the Taxes Act established by the Company or any Associated
Company and not exercised;
to exceed (pound)30,000 or such other limit contained from time to time in
Paragraph 28(1) of Schedule 9 to the Taxes Act. Any Option granted under
this Schedule will be limited and take effect so that the above limit will
not be exceeded. The Grantor may call in the option certificate for
endorsement, replacement or cancellation (as appropriate).
3.2 Rule 2.9 of the Plan shall not apply to Options granted under this UK
Approved Schedule.
3.3 For the purpose of Rule 3.1 above, the UK sterling equivalent of the
Market Value of a Share on any day shall be determined by taking the
mid-market spot rate of that currency at the close of business for that
day published by the Financial Times on that day, or if that day is not a
Dealing Day, the mid-market spot rate for that currency at the close of
business published in the Financial Times on the next preceding Dealing
Day. If the grant of an Option would otherwise cause the limit in Rule 3.1
to be exceeded, it shall take effect as the grant of an Option under the
UK Approved Schedule over the highest number of Shares which does not
cause the limit to be exceeded together with the grant under the Plan over
the balance of the Shares.
15
3.4 Rule 2.7 of the Plan shall be amended to read as follows: "Subject to the
rights of exercise by the Participant's personal representatives pursuant
to Rule 6.1, every Option shall be personal to the Participant to whom it
is granted and shall not be transferable or in any way alienable.
3.5 Rules 2.12 and 2.13 of the Plan shall not apply to Options granted under
this UK Approved Schedule.
For the avoidance of doubt an Option under this UK Approved Schedule shall
refer to an option to acquire Shares and not an option to acquire ADSs.
3.6 Rule 2.10 of the Plan shall not apply to Options granted under this UK
Approved Schedule.
3.7 An Option may not be exercised at any time when a Participant has or has
had within the preceding 12 months a Material Interest in a Close Company
which is:
3.7.1 the Company; or
3.7.2 any company which has Control of the Company or is a Member of
a Consortium which owns the Company.
3.8 In Rule 6 and Rule 7.6 of the Plan, the words "unless and to the extent
the Grantor determines otherwise" shall not apply to Options granted under
this UK Approved Schedule.
3.9 The Grantor may extend the exercise period in Rules 6.3, 6.4 and, to the
extent that exercise is permitted in Rule 6.6 of the Plan, to the later of
42 months from the Date of Grant and (if relevant) 42 months from the last
occasion that the Participant exercised an option to which Section 185(3)
of the Taxes Act applied.
3.10 Rule 8.2 of the Plan shall be amended as follows:
3.10.1 The words "(for the purposes of Paragraph 15 of Schedule 9 to
the Taxes Act) is equivalent to the Old Option and" shall be
included after "... in consideration of the grant to him of an
Option ("the New Option") which"; and
3.10.2 The words "falling within Paragraph 10(b) or (c) of Schedule 9
to the Taxes Act)" shall be included after "... (whether the
company which has obtained Control of the Company itself or
some other company".
3.10.3 Rule 8.2.3 of the Plan shall not apply to Options granted
under this UK Approved Schedule
3.11 Rule 10.6 of the Plan shall not apply to Options granted under this UK
Approved Schedule.
3.12 No adjustment shall be made pursuant to Rule 11.1 of the Plan without the
prior approval of the Inland Revenue (so long as the UK Approved Schedule
is approved by the Inland Revenue) which relate to Options granted under
the UK Approved Schedule.
3.13 No adjustment may be made in accordance with Rule 11 of the Plan in
respect of Options granted under the UK Approved Schedule in the event of
a demerger of the Company or other exceptional event that does not include
the variation of the share capital of the Company.
3.14 If an alteration or addition is made by the Board under Rule 13.1 of the
Plan at a time when the UK Approved Schedule is approved by the Inland
Revenue under Schedule 9 to the Taxes Act, such alteration or addition
shall not have effect on Options pursuant to the UK Approved Schedule
until it has been approved by the Inland Revenue.
16
3.15 If an Eligible Employee's remuneration comprises either wholly or in part
of payments in a currency other than pounds sterling ("Foreign Currency"),
for the purpose of calculating any maximum number of Shares which may be
acquired pursuant to the exercise of Options under the UK Approved
Schedule, that Foreign Currency shall be converted into pounds sterling at
the mid-market spot rate for that currency at the close of business
published by the Financial Times on the Date of Grant, or if this is not a
Dealing Day, the mid-market spot rate for that currency at the close of
business published in the Financial Times on the next preceding Dealing
Day.
17
THE BOC GROUP EXECUTIVE SHARE OPTION SCHEME 2003
SCHEDULE 2
US EMPLOYEES
1. DEFINITIONS
1.1 The words and expressions used in this Schedule 2 (the `US Schedule')
which have capital letters have the meanings set out below, and words and
expressions not otherwise defined have the same meaning they have in the
Rules of the Plan to which this Schedule 2 is attached:
Code The United States Internal Revenue Code of
1986 (as amended);
Eligible Employee (A) For the purposes of an ISO, any
person who at the Date of Grant is
an employee or director in his
capacity as an employee of either
the Company or a Parent or
Subsidiary of the Company and who is
required to devote substantially the
whole of his working time to the
business of the Company and its
Subsidiaries;
(B) For the purposes of an Option which
is not an ISO, the meaning given in
the Plan;
ISO An incentive stock option within the meaning
of section 422 of the Code;
Option Price (A) The meaning given in the Plan; and
(B) In the case of an ISO where the
Eligible Employee owns (within the
meaning of Section 422 (b) (6) of
the Code) Shares equal to more than
10% of the total combined voting
power of all classes of shares of
the Company, or of its Parent of
Subsidiary (a `Ten Percent
Shareholder'), not less than 110% of
the Market Value of a Share on the
Date of Grant;
Parent Any company which is a parent corporation of
the Company within the meaning of section
424(e) of the Code;
Securities Act the United States Securities Act of 1933
(as amended);
Subsidiary (A) The meaning given by section 736 of
the Companies Act 1985; and
(B) A subsidiary corporation within the
meaning of section 424(f) of the
Code; US Person the meaning given by
Rule 902(k) promulgated under the
Securities Act;
US Person the meaning given by Rule 902(k) promulgated
under the Securities Act;
18
2. GENERAL
2.1 The purpose of this Schedule 2 is to benefit Eligible Employees who are
employed or remunerated in the United States or who are citizens of the
United States.
2.2 Options granted to Eligible Employees may be either ISOs or Options which
are not ISOs ("non-qualified stock options").
2.3 This Schedule 2 is contingent upon shareholder approval within twelve
months before or after adoption of this Schedule 2 by the Board. Failure
to receive such approval shall render Options granted under this Schedule
2 null and void.
2.4 The grant and exercise of any Option shall be subject to fulfilling the
requirements (including obtaining any required approval or consent) of the
provisions of the Securities Act or of any applicable regulation or
enactment. Neither the Options nor the Shares may be resold or otherwise
transferred within the United States of America, its territories or
possessions, any State of the United States of America or the District of
Columbia or to any U.S. Person, unless they are registered under the
Securities Act and qualified under all state securities laws or an
exemption from such registration and qualification is available.
2.5 Shares shall not be issued to a US Person pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act, the United States
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder and all applicable state securities laws, and shall
be further subject to the approval of Counsel for the Company with respect
to such compliance.
2.6 Any adjustment pursuant to Rule 11 of the Plan shall, in the case of ISOs,
be made in a manner consistent with Section 422 of the Code.
2.7 The Company shall (i) administer the US Schedule, (ii) establish from time
to time such rules and regulations as it may deem appropriate for the
proper administration of the US Schedule, and (iii) make such
determinations under, and such interpretations of, and take such actions
in connection with, the US Schedule as it may deem necessary or advisable,
including (but not by way of limitation) determinations, interpretations
and actions to ensure that Options that are intended to qualify as ISOs
shall so qualify.
2.8 An ISO may not be exerciseable more than 10 years after the Date of Grant
(5 years in the case of an ISO granted to a Ten Percent Shareholder).
2.9 The US Schedule may be further modified to ensure that any Option that is
intended to be an ISO under the US Schedule will comply with the
requirements of Section 422 of the Code.
2.10 It shall be a condition to the obligation of the Company to deliver Shares
or ADSs pursuant to any Option under the US Schedule that the Participant
pays to the Company (or the Subsidiary that employs the Participant) such
amount as may be required by the Company or such Subsidiary for the
purpose of satisfying any liability for any US Federal, state or local
taxes of any kind required to be withheld with respect thereto. Any Option
granted under the US Schedule may require the Company (or the Subsidiary
that employs the recipient), or permit the recipient of the Option to
elect, in accordance with any applicable rules established by the Company,
to withhold or to pay all or a part of the amount of the withholding taxes
in Shares or ADSs. Such election may be denied by the Company in its sole
discretion, or may be made subject to certain conditions specified by the
Company.
19
The applicable ISO award shall provide that if a Participant makes a
disposition, within the meaning of Section 424(c) of the Code and the
regulations promulgated thereunder, of any Shares or ADSs issued to such
Participant pursuant to the exercise of an ISO award within the two-year
period commencing on the Date of Grant or within the one-year period
commencing on the date of transfer of such Shares or ADSs to the
Participant pursuant to such exercise, the Participant shall, within 10
days of such disposition, notify the Company of it (or the Subsidiary that
employs the Participant), by delivery of written notice to the Company or
such Subsidiary at its principal executive office.
3. AMENDMENTS TO THE PLAN
For the purposes of Options granted under this Schedule 2, the Rules of
the Plan shall apply subject to the following amendments:
3.1 In respect of ISOs only, Rule 2.7 of the Plan shall be amended to read as
follows: "Every Option shall be personal to the Participant to whom it is
granted and shall not be transferable otherwise than by will or the laws
of descent and distribution, and is exercisable, during his lifetime, only
by him."
3.2 Rule 5.1.2 of the Plan shall be amended to read as follows: "except where
exercise is allowed as described in Rule 6 or 7, by a Participant while he
is an employee, or officer in his capacity as an employee, of a Group
Member."
3.3 In Rule 6.3 of the Plan, the words "injury, ill-health or disability
(evidenced to the satisfaction of the Board)" shall be replaced by the
following: "permanent and total disablement, meaning that the Participant
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months".
3.4 In Rules 6.2 and 7.1 and 7.4.2, the reference to "six months" shall be
replaced by "three months".
4. LIMITS
4.1 Shares placed under Options granted under this Schedule 2 shall be taken
into account for the purpose of Rule 4 of the Plan and vice versa.
4.2 The aggregate Market Value (determined at the Date of Grant) of Shares
with respect to which ISOs granted under this Schedule 2 and under all
incentive stock option plans of the Company and its Parent and
Subsidiaries shall first become exercisable by any Participant in any
calendar year shall not exceed 100,000 United States Dollars or the
Sterling equivalent, and, in the event that such limit is exceeded such
ISOs shall be treated, to the extent of such excess, as nonqualified stock
options. To the extent that such Participant holds two or more ISOs which
would become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such Options as Incentive
Stock Options shall be applied on the basis of the order in which such
Options are granted.
4.3 The maximum aggregate number of Shares which may be issued under the Plan
with respect to ISOs (the "ISO Maximum") is 49,000,000. Shares subject to
outstanding Options shall, to the maximum permitted by Section 422 of the
Code, be available for subsequent issuance under this Schedule 2 and the
ISO Maximum to the extent the Options expire, terminate, or are cancelled
for any reason prior to exercise in full. Should any changes be made to
the Shares by reason of any sub-division, stock dividend,
recapitalisation, consolidation of Shares, exchange of Shares, or other
change affecting the Shares without the receipt of consideration,
appropriate adjustment shall be made, in a manner consistent within
Section
20
422 of the Code, to the maximum number of Shares subject to the Plan and
the ISO Maximum and to the Option Price under each outstanding Option in
order to prevent dilution or enlargement of benefits thereunder.
Adjustments determined by the Grantor, or their properly authorised
designee, shall be binding and conclusive.
21