EXHIBIT 4.2
THE COLT PERFORMANCE SHARE PLAN
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Established by a resolution of a Committee
of the Board of Directors of the Company
dated 4th April, 2000 and approved by an
ordinary resolution of the Company passed
on 25th May, 2000
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As amended up to 15th February, 2001
SLAUGHTER AND MAY (JZF)
35 Basinghall Street,
London EC2V 5DB
PN003670201
THE RULES OF THE COLT PERFORMANCE SHARE PLAN
CONTENTS
Page
1. INTERPRETATION AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction 2
1.3 Governing law 2
2. ELIGIBILITY 3
3. GRANT OF AWARDS 3
3.1 Operation of the Plan 3
3.2 Grant of Awards 3
3.3 Value of Award 4
3.4 Market value 4
3.5 Shares comprised in an Award 4
3.6 Adjustment of Performance Targets 4
4. VESTING OF AWARDS 5
4.1 General 5
4.2 Vesting of Awards 5
4.3 Notification to Participant 6
5. RESTRICTIONS UPON VESTING 6
5.1 General 6
5.2 Lapsing of Awards 6
5.3 Meaning of "ceasing to be employed" 6
5.4 Cessation of employment 7
6. CHANGE IN CONTROL AND LIQUIDATION 8
7. PROCEDURE ON VESTING 8
7.1 Issue or Transfer of Shares 8
7.2 Withholding obligations 9
7.3 Provision of Shares 9
8. NON-TRANSFERABILITY OF AWARDS 10
9. LOSS OF OFFICE 10
10. VARIATION OF CAPITAL 10
10.1 General 10
10.2 Adjustment of Awards 11
10.3 Restrictions on adjustment 11
10.4 Notification of adjustment 11
11. GENERAL 11
11.1 Administration 11
11.2 Costs and expenses 11
11.3 Power of amendment 11
11.4 Grant of Options 12
11.5 Termination 13
12. PLAN LIMITS 13
12.1 General 13
12.2 Life of Plan 14
13. NOTICES 14
13.1 To Employees and Participants 14
13.2 To the Company 14
13.3 To the Trustee 14
1. INTERPRETATION AND CONSTRUCTION
1.1 Definitions
(A) In this Plan, the following definitions apply.
(B) The "Auditors" are the auditors for the time being of the Company.
(C) An "Award" is an Award granted under Rule 3 of the Plan.
(D) The "Board" means the board of directors of the Company.
(E) The "Committee" means the Compensation Committee of the Board or
such other committee or committees of the Board as the Board may
from time to time determine or, if the Board so determines, the
Board.
(F) The "Company" is COLT Telecom Group plc registered in England under
No. 3232904.
(G) "Conditions" has the meaning given in Rule 3.2(A).
(H) "Control" has the meaning given to it by section 840 of the Income
and Corporation Taxes Act 1988.
(I) The "Date of Grant" of an Award is the date on which it is granted
or such earlier date as may be specified in the notification
referred to in Rule 3.2(D).
(J) A "Dealing Day" is a day on which the London Stock Exchange is open
for the transaction of business.
(K) "Employee" is any employee or salaried director of a member of the
Group.
(L) A "Financial Year" means a financial year of the Company as that
expression is defined in section 742 of the Companies Act 1985.
(M) "Grantor" means the Company where an Award is, or is to be, granted
by the Company and the Trustee where an Award is, or is to be,
granted by the Trustee.
(N) The "Group" means the Company and its Subsidiaries and "member of
the Group" is to be construed accordingly.
(O) The "London Stock Exchange" means the London Stock Exchange Limited.
(P) The "Market Price" in relation to any share means the middle market
quotation for that share as shown in the Daily Official List of the
London Stock Exchange.
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(Q) A "Participant" is the holder of an Award or, where the context
admits or requires, his personal representatives.
(R) The "Performance Period" in respect of an Award is a period set by
the Committee at or prior to grant of an Award.
(S) "Performance Target" means the measure of the financial or other
performance of the Company applied in relation to any Award in
accordance with Rule 3.2(A).
(T) The "Plan" means this plan (and including the Schedules to the
Rules) as from time to time amended.
(U) The "Rules" means the rules of this Plan.
(V) "Shares" means fully-paid ordinary shares in the capital of the
Company.
(W) "Subsidiary" has the meaning given to it by section 736 of the
Companies Act 1985.
(X) The "Trust" means any trust for the benefit of, inter alia,
employees of the Group from time to time designated by the
Committee.
(Y) The "Trustee" means the trustee or trustees for the time being of
the Trust or, if there is more than one, the trustee or trustees of
the Trust nominated by the Committee.
1.2 Construction
(A) Where the context so admits, any reference in the Plan to the
singular includes the plural and vice versa.
(B) Any reference in the Plan to an enactment includes the enactment as
for the time being amended or re-enacted.
(C) The headings to the Rules are for reference purposes only and shall
not affect the meaning or construction of the Rules.
1.3 Governing law
This Plan and any Award granted under it is governed by, and is to be
construed in accordance with, English law.
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2. ELIGIBILITY
2.1 The persons who are eligible to receive Awards are such Employees as are
selected by the Committee to participate in the Plan.
2.2 An Award may not be made to an Employee within the two years prior to the
date on which the Employee is obliged to retire under the Employee's
contract of employment.
3. GRANT OF AWARDS
3.1 Operation of the Plan
(A) The Committee shall decide whether or not to operate the Plan on any
occasion and whether Awards should be made by the Company or by the
Trustee.
(B) All Awards must, save in circumstances determined by the Committee
to be exceptional, be granted as soon as is reasonably practicable
after the announcement of the Group's results for any period to the
London Stock Exchange.
(C) The Committee shall ensure that the Plan is not operated at any
time, or in any circumstances, when to do so would contravene the
provisions of the Criminal Justice Act 1993, the Company's share
dealing code, the Listing Rules of the London Stock Exchange or any
other applicable laws or regulations.
3.2 Grant of Awards
(A) Prior to the grant of Awards the Committee shall determine the
conditions which shall apply before an Award may vest. Those
conditions shall include
(i) a measure or measures of the financial or other performance of
the Group (the "Performance Target"); and
(ii) such additional conditions (if any) as the Committee may
determine,
together the "Conditions").
(B) If Awards are to be granted by the Company, the Company will grant
an Award to each relevant Employee on such Conditions. The Committee
will determine the cash amount of that Award.
(C) If Awards are to be granted by the Trustee, the Committee must
notify the Trustee of:
(i) the Employees whom it recommends be granted Awards and the
cash amount of the Award which it recommends; and
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(ii) the Conditions which the Committee recommends should be
attached to Awards and the applicable Performance Period,
and, if the Trustee agrees to the Plan being operated in relation to
that period and those individuals, the Trustee will grant an Award
to each such Employee on such terms.
(D) Each Employee who receives an Award will be given written notice of
the Award and of any Conditions applying to that Award.
3.3 Value of Award
The maximum number of Shares which a Participant may, subject to Rule 4,
acquire on vesting of an Award shall be calculated by dividing the cash
amount of the Award granted under Rule 3.2 by the market value of a Share,
as determined in accordance with Rule 3.4.
3.4 Market value
The "market value" of a Share for the purpose of Rule 3.3 is the
arithmetic average of the Market Prices, for the three Dealing Days
immediately before the Date of Grant or over such other period or periods
as the Committee may determine either generally or in any particular case.
3.5 Shares comprised in an Award
Participants will have no entitlement to or in respect of any Share
comprised in an Award until that Award vests. In particular, but without
limitation, Participants will have no entitlement to receive dividends in
respect of such Shares or to exercise any other rights in respect of them
until the relevant Award vests.
3.6 Adjustment of Performance Targets
(A) In the circumstances mentioned in Rule 3.6(D), the Grantor may
change the Performance Target and/or the additional Conditions
imposed under Rule 3.2(A).
(B) The power to change includes both the power to adjust and also the
power to impose a replacement Performance Target and/or replacement
additional Conditions.
(C) The Grantor's power is, however, restricted as follows -
(i) the change must not have the effect of making the Performance
Target or the additional Conditions more onerous than it was
or they were immediately before the circumstance in question,
and
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(ii) the change must not be made unless the Auditors (acting as
experts and not as arbitrators) have confirmed in writing to
the Committee (and to the Trustee where the Award was made by
the Trustee) that, in their opinion, it is fair and
reasonable, and
(iii) where the Award was made by the Trustee, the Committee has
approved the change.
(D) The circumstances are -
(i) any variation of the Company's capital,
(ii) such circumstances as were specified when the Award was
granted, and
(iii) any event or events as a result of which the Committee
considers it fair and reasonable to change the Performance
Target and/or the additional Conditions.
4. VESTING OF AWARDS
4.1 General
The number of Shares in respect of which an Award vests and to which
the Participant will consequently become entitled is to be
determined by the Committee (with the consent of the Trustee, if the
Trustee is the Grantor) in accordance with the following provisions
of this Rule 4.
4.2 Vesting of Awards
(A) Subject to Rule 4.2(B), Awards will vest on the later of:
(i) the date or dates specified by the Committee at or before the
Date of Grant; and
(ii) the date on which the Committee determines that the
Performance Target and any other Conditions imposed under Rule
3.2(A) have been satisfied,
unless they have previously lapsed in accordance with the Rules of
the Plan.
(B) If the Performance Target and/or such Conditions are not and cannot
be satisfied the Award will lapse. However, the Grantor may permit
Awards to vest on or after the date(s) specified in Rule 4.2(A) even
if the Performance Target and/or other Conditions cannot be or have
not been satisfied if -
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(i) the Grantor considers that it is unlikely that the Performance
Target and/or other applicable Conditions will be satisfied in
the reasonably foreseeable future because of some unforeseen
event or events, and
(ii) the Grantor does not consider that it is appropriate to change
the Performance Target or other Conditions in accordance with
Rule 3.6 (Adjustment of Performance Targets), and
(iii) the Grantor considers that it is fair and reasonable to allow
the Award to vest,
in each case following consultation with the Committee, if the
Option was granted by the Trustees.
(C) If the Participant's Award does not vest, or does not vest in full,
then the Award or, as the case may be, the unvested portion of it
shall lapse.
4.3 Notification to Participant
The Committee shall notify Participants as soon as reasonably
practicable of the percentage (if any) of an Award which has vested.
5. RESTRICTIONS UPON VESTING
5.1 General
This Rule 5 overrides the other Rules.
5.2 Lapsing of Awards
If an Award lapses under any Rule, it will lapse for all purposes and will
not vest.
5.3 Meaning of "ceasing to be employed"
(A) Unless the Committee decides otherwise, a Participant shall for the
purposes of these Rules be treated as having ceased to be employed
within the Group on whichever is the earliest of the following -
(i) the date on which the Participant gives notice ending the
Participant's employment with the Group,
(ii) the date on which the Participant is given notice ending the
Participant's employment with the Group, and
(iii) the date on which the Participant's employment with the Group
otherwise ends without notice.
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(B) A Participant's employment with the Group will, if the Grantor so
determines on or before the grant of an Award, be deemed for the
purpose of this Rule 5.3 not to end if on cessation of employment
with a member of the Group the Participant becomes or is to become
an employee or director of (i) a Holding Company of the Company; or
(ii) a company holding not less than 25 per cent. of the issued
ordinary share capital of the Company; or (iii) a Holding Company or
Subsidiary of any Company referred to in (ii) or any other company
that is a Subsidiary of the Holding Company of any such Holding
Company. If the Grantor so determines, that fact shall be set out,
or referred to, in the Option Certificate.
5.4 Cessation of employment
(A) If a Participant ceases to be employed within the Group by reason of
the Participant's death, the Participant's Award(s) will vest in
full.
(B) If a Participant ceases to be employed within the Group in any other
circumstance, where the Committee so agrees, the Participant's Award
will vest if and to the extent that the Committee so determines and
subject to such conditions as the Committee may determine.
(C) Where a Participant ceases to be employed for any reason other than
those detailed in Rules 5.4(A) or (B), any Award held by the
Participant which has not then vested will lapse immediately.
(D) Notwithstanding any provision of the Plan to the contrary, if the
Committee determines, after full consideration of the facts
presented on behalf of the Company and a Participant, that the
Participant has:
(i) been engaged in fraud, embezzlement or theft or has committed
a criminal offence or other dishonesty in the course of the
Participant's employment by or involvement with a member of
the Group, which has damaged any member of the Group; or
(ii) made unauthorised disclosure of trade secrets or other
proprietary information of any member of the Group or of a
third party who has entrusted such information to any member
of the Group; or
(iii) materially breached any non-competition covenant of the
Participant in favour of any member of the Group; or
(iv) violated the Code of Ethics adopted by the Company from time
to time,
any Award held by the Participant shall lapse, whether or not that
Award has already vested and the Participant shall have no further
rights in relation to any such Award under the Plan.
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6. CHANGE IN CONTROL AND LIQUIDATION
6.1 If a person becomes entitled to give notice to Shareholders under section
429 of the Companies Act 1985 as a result of obtaining Control or making a
general offer to acquire all the Shares of the Company other than those
which are already owned by him and/or any person acting in concert with
him, all Awards will lapse on the date on which that person ceases to be
so entitled.
6.2 If under section 425 of the Companies Act 1985 the court sanctions a
compromise or arrangement between the Company and its members proposed for
the purposes of, or in connection with, a scheme for the reconstruction of
the Company or its amalgamation with any other company or companies all
Awards will lapse upon the compromise or arrangement becoming effective.
6.3 All Awards will lapse when an effective resolution is passed or an order
is made for the winding-up of the Company.
6.4 (A) This Rule 6.4 applies if -
(a) the events referred to in this Rule 6 form part of an
arrangement as a result of which the Company will be under the
Control of another company; and
(b) Participants are to be offered substitute Awards which are in
the reasonable opinion of the Committee of equivalent value
to, and which will vest in equivalent circumstances to, the
subsisting Awards.
(B) If a Participant holds an Award which has not then vested under the
Rules the Committee may prior to, or within 14 days after, that
change of Control and with effect from the date on which that change
of Control occurs, and if the Participant so agrees, amend each
Award so that it becomes a right to acquire shares in the acquiring
company, in accordance with Rule 6.4(A)(b) and, if the Committee
does so, such Awards will not lapse under Rules 6.1 or 6.2.
7. PROCEDURE ON VESTING
7.1 Issue or Transfer of Shares
(A) Within 30 days of the date on which an Award vests the Company will
issue (or procure the transfer) or (where the Award was granted by
the Trustee), the Trustee will transfer to the Participant (or at
the Participant's direction) the number of Shares which have vested.
(B) This obligation is, however, subject to Rules 7.2 and 7.3.
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(C) It is also subject to obtaining such consents or approvals as may be
required by any competent authority under regulations or enactments
for the time being in force. It is the responsibility of the
Participant to obtain such consents and approvals.
(D) Any stamp duty payable on the transfer of Shares under an Award
shall be paid by the Company.
7.2 Withholding obligations
(A) This Rule 7.2 applies if a Participant is liable to tax, duties or
other amounts on the vesting or exercise of an Award and the
Participant's employer or former employer is liable to make a
payment to the appropriate authorities on account of that liability.
(B) Where an Award has vested either the Company or the Trustee will
sell on behalf of the Participant sufficient of the Shares which
would otherwise be issued or transferred to the Participant on that
vesting or exercise so that the net proceeds of sale equal the
payment which the employer or former employer is required to pay to
the appropriate authorities on behalf of the Participant. Where such
shares are sold by the Trustee, the Trustee will account to the
employer or former employer for the net proceeds of sale. The
Company will procure that an amount equal to those net proceeds is
remitted to the appropriate authorities on behalf of the
Participant.
(C) Rule 7.2(B) shall not apply, however, if the Participant makes
alternative arrangements to the satisfaction of the Participant's
employer or former employer.
(D) The Company or Trustee need not sell the Shares referred to in Rule
7.2(B) in whole or in part and may either not issue such Shares or
may retain them as assets of the Trust provided that an amount equal
to the payment required to be made to the appropriate authorities is
made by the Company or is accounted for by the Trustee to the
employer or former employer, derived from the other assets of the
Company or the Trustee, as the case may be.
7.3 Provision of Shares
(A) If and to the extent that an Award granted by the Trustee vests in
accordance with the Rules and
(i) the Trustee is unable to transfer Shares to the Participant,
whether due to it holding insufficient Shares or other assets
to enable it to meet such Award or otherwise; or
(ii) any such transfer would be unlawful in any relevant
jurisdiction; or
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(iii) in making such a transfer the Trustee would be in breach of
its duties under the Trust,
the obligations of the Trustee under the Plan and the Award shall
lapse.
(B) If the obligations of the Trustee so lapse, the Company shall
procure that any Shares not so transferred by the Trustee to which
the Participant is entitled under the Rules (ignoring Rule 7.3(A))
(or an amount equal to the proceeds of the sale of such number of
Shares) are issued by the Company or transferred to the relevant
Participant, either by the Trustee or by some other person, as soon
as reasonably practicable.
8. NON-TRANSFERABILITY OF AWARDS
(A) An Award is personal to the Participant and the Participant's
personal representatives.
(B) If a Participant transfers, assigns, charges, encumbers or otherwise
alienates an Award or creates in favour of any third party any
interest therein or, in any case, attempts so to do, or a bankruptcy
order is made in respect of the Participant (or any similar event
occurs under the laws of any other country), the Award shall lapse.
9. LOSS OF OFFICE
(A) The participation in the Plan by a Participant is a matter entirely
separate from, and shall not affect, the Participant's pension
rights and terms of employment.
(B) In particular (but without limitation), if a Participant for any
reason whatsoever ceases to be employed by a member of the Group
(whether or not such cessation involves breach, or alleged breach,
of contract by the Company) or to be entitled to exercise an Award,
the Participant is not entitled to any rights or benefits under the
Plan save as specifically provided elsewhere in these Rules and is
not entitled to any compensation by reference to the rights granted
to, or the benefits capable of being received by, the Participant
under this Plan or for any loss or diminution in value in such
rights or benefits.
10. VARIATION OF CAPITAL
10.1 General
This Rule 10 applies if there is a variation in the share capital of the
Company or in the event of a demerger or a special dividend by the Company
or upon the happening of any other event as a result of which the Grantor
(with the consent of the Committee where the Grantor is the Trustee)
considers that it is appropriate to do so.
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10.2 Adjustment of Awards
(A) Subject to the rest of this Rule 10, the Grantor shall adjust each
Award in such manner as it decides to be appropriate, with the
consent of the Committee where the Grantor is the Trustee.
(B) For the avoidance of doubt, the Grantor may make such adjustments to
an Award which has vested but in respect of which Shares have not
yet been issued or transferred.
(C) The Grantor's decision shall be final and binding on each
Participant.
10.3 Restrictions on adjustment
Before making the adjustment, the Grantor must obtain the written
confirmation of the Auditors (acting as experts and not as arbitrators)
that the adjustment is, in their opinion, fair and reasonable.
10.4 Notification of adjustment
The Grantor must notify each Participant of any adjustment to an Award as
soon as practicable after the decision.
11. GENERAL
11.1 Administration
(A) Save as otherwise provided in the Rules, the Committee shall
administer the Plan.
(B) The Committee may from time to time make and amend such regulations
for the implementation and administration of the Plan as it thinks
fit.
(C) The Committee's decision on the construction of the Rules and on any
disputes arising under the Plan shall be final and binding on all
persons.
11.2 Costs and expenses
The costs of the preparation and operation of this Plan shall be borne by
the Company and the Subsidiaries in such proportions as the Committee from
time to time determines.
11.3 Power of amendment
(A) The Committee may at any time and from time to time amend the Plan
in any respect provided that:
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(i) subject to Rule 11.3(B), no amendment may be made to the
advantage of Employees or Participants to any provision of the
Rules relating to:
(a) the persons to whom or for whom Shares are provided
under the Plan;
(b) limitations on the number or amount of Shares subject to
the Plan;
(c) the maximum entitlement for any one Participant; or
(d) the basis for determining a Participant's entitlement
to, and the terms of, Shares and for the adjustment
thereof,
without the prior approval of the Company in general meeting.
(ii) no amendment shall be made which would affect adversely any of
the subsisting rights of a Participant except either with the
Participant's consent in writing or the consent of the
majority of the Participants affected by the amendment or
addition.
(B) Notwithstanding the limitation contained in Rule 11.3(A), the
Committee may without the prior approval of the Company in general
meeting:
(i) amend the Plan in order to take account of any amendments to
any applicable legislation or to obtain or maintain favourable
tax, exchange control or regulatory treatment for Participants
or any member of the Group; or
(ii) make minor amendments to the Plan to benefit its
administration.
(C) The Committee must give written notice to all Participants of any
amendment made in accordance with this Rule 11.3 which affects their
rights in any material respect.
11.4 Grant of Options
(A) The Committee may determine in any particular case or from time to
time that the Plan should be operated on the basis that, in place of
Awards, Participants are granted options by the Company or the
Trustee entitling them to acquire the number of Shares that would
otherwise have been comprised in the relevant Award.
(B) Any such option shall be exercisable for such period as the
Committee may determine following satisfaction of the applicable
Performance Target and any conditions imposed in accordance with
Rule 3.2(A).
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(C) The provisions of the Rules shall apply mutatis mutandis to any such
options and the Committee may make such amendments to the Rules as
may be necessary in order to implement the grant and exercise of any
such options.
11.5 Termination
The Committee may at any time suspend or terminate the operation of this
Plan and in such event no further Awards will be made for the time being
or, as the case may be, permanently but in all other respects the
provisions of this Plan shall remain in force.
12. PLAN LIMITS
12.1 General
(A) The Committee must ensure that the nominal amount of Shares issued
(whether directly to the Participant or to the Trustee) under the
Plan on any date does not exceed 10 per cent. of the nominal amount
of the Company's issued equity share capital on the day before the
date of issue, less the total nominal amount of -
(i) Shares issued on the exercise of options granted within the
previous 10 years under any share option scheme,
(ii) Shares remaining issuable in respect of options granted on the
same date or within the previous 10 years under any share
option scheme, and
(iii) Shares issued on the same date or within the previous 10 years
under any share incentive scheme in respect of moneys made
available by the Group.
(B) For the purposes of this Rule 12 -
(i) "equity share capital" has the meaning given to it by section 744 of
the Companies Act 1985,
(ii) the word "issue" means, in relation to Shares, the allotment and
issue of Shares forming part of the authorised but unissued share
capital of the Company and derivative expressions are to be
construed accordingly,
(iii) a "share incentive scheme" is the Plan and any other scheme (other
than a share option scheme) for employees of the Group which has
been approved by the Company in general meeting and provides for the
subscription of Shares, and
(iv) a "share option scheme" is the COLT Telecom Group Share Plan and any
other share scheme (other than a share incentive scheme) for
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employees of the Group which has been approved by the Company in
general meeting and provides for the grant of options to employees
to acquire Shares.
12.2 Life of Plan
No Awards may be granted more than 10 years after the first grant of
Awards.
13. NOTICES
13.1 To Employees and Participants
(A) Any notice or document to be given any Employee or Participant may
be given through normal internal communications or by personal
delivery or by sending it by ordinary post to the individual's last
known address or by e-mail or other electronic transmission.
(B) Where a notice or document is sent by post it shall be deemed to
have been received 72 hours after it was put into the post properly
addressed and stamped.
(C) All notices and documents sent by post will be sent at the risk of
the Employee or Participant concerned. Neither the Company nor any
of its Subsidiaries nor the Trustee shall have any liability
whatsoever to any Employee or Participant in respect of any notice
or document sent, nor shall the Company or any of its Subsidiaries
or the Trustee be concerned to see that any Employee or Participant
actually receives it.
13.2 To the Company
Any notice or document given by an Employee or a Participant to the
Company or the Committee shall be delivered or sent to the Company at its
registered office, marked for the attention of the Company Secretary (or
at such other place or places as the Committee may from time to time
determine and notify to Employees and Participants) and be effective upon
receipt. Notices may be sent by e-mail or other electronic transmission to
such address as the Company may from time to time specify.
13.3 To the Trustee
Any notice or document given by an Employee or a Participant to the
Trustee shall be delivered or sent to the Trustee, care of the Company at
its registered office (or at such other place or places as the Trustee may
from time to time determine and notify to Employees and Participants), and
be effective upon receipt.