Template:Nutshell Equity Derivatives 3

Article 3 Exercise of Options
3.1. General Terms Relating to Exercise.

3.1(a) “Exercise Period” means:

(i) For American Options: all Scheduled Trading Days from, and including, the Commencement Date to, and including, the Expiration Date between 9:00 a.m. and the Latest Exercise Time,

(ii) For Bermuda Options: each Potential Exercise Date and the Expiration Date, between 9:00 a.m. and the Latest Exercise Time, and

(iii) For European Options: the Expiration Date between 9:00 a.m. and the Expiration Time.

All such times will be local time in the location specified in the Confirmation for receipt by Seller or Seller’s Agent or, if not specified, local time in the jurisdiction of the Exchange.

3.1(b) “Exercise Date” means the Scheduled Trading Day during the Exercise Period on which such Option is exercised.

3.1(c) “Potential Exercise Date” means each specified as such in a Bermuda Option Confirmation (or, if it is not a Scheduled Trading Day, the next following Scheduled Trading Day), unless it is a Disrupted Day due to an event occurring before the Latest Exercise Time in which case it will be the following undisrupted Scheduled Trading Day, though if eight Scheduled Trading Days in a row are Disrupted Days, the eighth one, even though a Disrupted Day, will be the Potential Exercise Date. In any case, if an Option Transaction is exercised on a Scheduled Trading Day that would have been an Potential Exercise Date had it not been a Disrupted Day, that day will be treated as the Potential Exercise Date when determining whether an Exercise Date has occurred during the Exercise Period.

3.1(d) “Latest Exercise Time” will be specified in the Option Transaction Confirmation (and if it is not, will be the Expiration Time). On the Expiration Date it will be the Expiration Time.

3.1(e) The “Expiration Time” for an Option Transaction will be the time specified or, if not specified, the Valuation Time.

3.1(f) “Expiration Date” will be specified in an Option Transaction Confirmation (or, if it is not a Scheduled Trading Day, the following Scheduled Trading Day), unless that day has become a Disrupted Day before the Latest Exercise Time. In this case it will be the next undisrupted Scheduled Trading Day, though if eight Scheduled Trading Days in a row are Disrupted Days, the eighth one, even though a Disrupted Day, will be the Expiration Date. In any case, if an Option Transaction is exercised on a Scheduled Trading Day that would have been an Expiration Date had it not been a Disrupted Day, that day will be treated as the Expiration Date when determining whether an Exercise Date has occurred during the Exercise Period.

3.2. Procedure for Exercise.

(a) Notice: Unless Automatic Exercise applies, Buyer must give irrevocable notice during the Exercise Period to Seller to exercise an Option.

(b) Late notices: For American Options, a notice given after the Latest Exercise Time on a Scheduled Trading Day will be effective on the following Scheduled Trading Day in the Exercise Period (if there is one).

(c) Multiple Exercise: Where Multiple Exercise applies, Buyer must specify how many Options it is exercising on each Exercise Date.

(d) Written confirmation of oral notices: Buyer will execute and deliver to Seller a written confirmation confirming any oral exercise within one Scheduled Trading Day however, failure by to provide such confirmation will not affect the validity of an oral notice.

3.3. Multiple Exercise.

3.3(a) If “Multiple Exercise” applies to an American Option or a Bermuda Option, Buyer may exercise any part of the unexercised Options on any Scheduled Trading Day during the Exercise Period but may not exercise fewer than the Minimum Number of Options or more than the Maximum Number of Options on any one Scheduled Trading Day, and where an “Integral Multiple” is specified, only in that Integral Multiple.

An attempted exercise on any Scheduled Trading Day of:

(i) more than the Maximum Number of Options will be treated as an exercise of the Maximum Number of Options only (and the excess will remain unexercised);

(ii) fewer than the Minimum Number of Options will be ineffective; and

(iii) an amount of Options that is not in the Integral Multiple will be rounded down to the next lowest Integral Multiple (and the excess will remain unexercised).

3.3(b) Clean-up exercise: In any case, Buyer may exercise any number of Options that does not exceed the Maximum Number of Options provided that is all the remaining unexercised Options on any Exercise Date and, on the Expiration Date, all unexercised Options.

3.3(c) “Minimum Number of Options” will be specified in the Option Transaction Confirmation where Multiple Exercise applies.

3.3(d) “Maximum Number of Options” will be specified in the Option Transaction Confirmation where Multiple Exercise applies.

3.4. Automatic Exercise. If “Automatic Exercise” applies to an Option Transaction then (unless, by the Expiration Time on the Expiration Date Buyer notifies Seller that Automatic Exercise should not occur) each unexercised Option will be automatically exercised:

3.4(a) Cash Settlement: at the Expiration Time on the Expiration Date; and

3.4(b) Physical Settlement: if the Calculation Agent determines the Option to be In-the-Money at such time, as at the Expiration Time on the Expiration Date.

3.4(c) “In-the-Money” means:

(i) For a Call: That the Reference Price at least equals the price at which a Related Exchange would automatically exercise a Physically-settled option on that Share with that Strike Price or, if there are no listed options on that Share or there is no Related Exchange, the Reference Price exceeds the Strike Price; and

(ii) For a Put: That the Reference Price is no greater than the price at which a Related Exchange would automatically exercise a Physically-settled option on that Share with that Strike Price or, if there are no listed options on that Share, or there is no Related Exchange, the Reference Price is less than the Strike Price); and

3.4(d) “Reference Price” means the price per Share or per Basket determined as of the Expiration Time on the Expiration Date and, if no means of determining such price or amount are provided, that will be:

(i) For a Share Option Transaction: The Relevant Price of the Share

(ii) For a Share Basket Option Transaction:the sum of the values for each Share in the Basket determined as its Relevant Price multiplied by its Number of Shares (in either case, using the Valuation Time and Valuation Date as the Expiration Time and Expiration Date)