EXHIBIT 4.40
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THE TELEWEST 2000 ALL EMPLOYEE SHARE SCHEME
DATE ADOPTED: 2000
INLAND REVENUE REFERENCE:
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TABLE OF CONTENTS
Page
PART 1: GENERAL REQUIREMENTS.................................................................................1
1. Definitions And Interpretation......................................................................1
2. All-Employee Nature of Scheme.......................................................................2
3. Eligibility.........................................................................................2
4. Limits..............................................................................................3
5. Issue of Shares.....................................................................................4
6. Alterations And Additions...........................................................................4
7. Miscellaneous.......................................................................................4
PART 2: FREE SHARES..........................................................................................6
8. Maximum Annual Award................................................................................6
9. Participation On The Same Terms.....................................................................6
10. Performance Allowances: General.....................................................................6
11. Performance Allowances: Method One..................................................................7
12. Performance Allowances: Method Two..................................................................8
13. The Holding Period..................................................................................8
PART 3: PARTNERSHIP SHARES..................................................................................10
14. Partnership Share Agreements.......................................................................10
15. Partnership Share Money Held For Participant.......................................................11
16. No Accumulation Period.............................................................................11
17. Scheme With Accumulation Period....................................................................12
18. Application Of Money Deducted In Accumulation Period...............................................12
19. Restriction Imposed On Number Of Shares Awarded....................................................13
20. Stopping And Re-Starting Deductions................................................................13
21. Withdrawal From Partnership Share Agreement........................................................14
22. Repayment Of Partnership Share Money On Withdrawal Of Scheme Approval Or Termination Of
Scheme.............................................................................................14
23. Access To Partnership Shares.......................................................................14
24. Meaning Of "Salary"................................................................................14
PART 4: MATCHING SHARES.....................................................................................15
25. General Requirements For Matching Shares...........................................................15
26. Ratio Of Matching Shares To Partnership Shares.....................................................15
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TABLE OF CONTENTS
(continued)
Page
27. Application Of Provisions Relating To Holding Period Etc...........................................15
PART 5: REINVESTMENTS OF CASH DIVIDENDS.....................................................................16
28. Reinvestment.......................................................................................16
29. Limit On Amount Reinvested.........................................................................16
30. General Requirements For Dividend Shares...........................................................16
31. Acquisition Of Dividend Shares.....................................................................17
32. Holding Period For Dividend Shares.................................................................17
33. Certain Amounts Not Reinvested To Be Carried Forward...............................................17
PART 6: PROVISION FOR FORFEITURE............................................................................18
34. Permitted Restrictions: Provision For Forfeiture...................................................18
PART 7: TRUSTEES............................................................................................19
35. Duties Of Trustees.................................................................................19
36. Meeting Paye Obligations...........................................................................19
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THE TELEWEST 2000 ALL EMPLOYEE SHARE SCHEME
PART 1
GENERAL REQUIREMENTS
1. DEFINITIONS AND INTERPRETATION
1.1 In this Scheme, unless the context otherwise requires:-
"Accounting Period" means a period in respect of which the profit and
loss account and balance sheet of the Company are required to be made
up pursuant to section 277 of the Companies Act 1985;
"the Board" means the board of directors of the Company or a committee
appointed by them;
"the Company" means Telewest Communications plc (registered in England
and Wales No. 2983307);
"Free Shares" means shares to be appropriated to Participants without
payment;
"the London Stock Exchange" means London Stock Exchange Limited;
"Matching Shares" means shares to be appropriated to Participants
without payment in proportion to the Partnership Shares acquired by
them;
"Participant" means an individual to whom Free Shares or Matching
Shares have been appropriated, or on whose behalf Partnership Shares
have been acquired, under the Scheme;
"Participating Company" means the Company or any Subsidiary to which
the Board has resolved that this Scheme shall for the time being
extended;
"Partnership Shares" means shares to be acquired on behalf of
Participants out of sums deducted from their salary;
"Schedule 8" means Schedule 8 to the Finance Act 2000;
"Subsidiary" means a body corporate which is a subsidiary of the
Company (within the meaning of section 736 of the Companies Act 1985)
and of which the Company has control (within the meaning of section 840
of the Taxes Act 1988);
"the Taxes Act 1988" means the Income and Corporation Taxes Act 1988;
"the Trust Deed" means the trust instrument intended to be made
following the adoption of this Scheme by the Company in connection with
the operation of this Scheme;
"the Trustees" means the trustees or trustee for the time being of the
Trust Deed;
and expressions not otherwise defined herein have the same meanings as
they have in Schedule 8 to the Finance Act 2000.
1.2 Any reference in this Scheme to shares shall be a reference to shares
that satisfy paragraphs 59 to 67 inclusive of Schedule 8 and any
reference in this Scheme to Scheme shares shall be construed in
accordance with the definition of "plan shares" in paragraph 130 (1) of
Schedule 8.
1.3 Any reference in this Scheme to any enactment includes a reference to
that enactment as from time to time modified, extended or re-enacted.
1.4 Expressions in italics are for guidance only and do not form part of
this Scheme.
2. ALL-EMPLOYEE NATURE OF SCHEME
2.1 Every employee of a Participating Company who -
2.1.1 meets the requirements mentioned in Rule 3 below, and
2.1.2 is chargeable to tax under Case I of Schedule E in respect of
the employment by reference to which he satisfies the
condition in Rule 3 below,
shall be invited to participate in this Scheme.
2.2 Subject to Rules 9.2 and 11.2 every employee who is invited to
participate in this Scheme shall be invited to participate on the same
terms and those who do participate shall do so on the same terms.
2.3 Participating Companies shall not be selected so that the Scheme has or
is likely to have the effect of conferring benefits wholly or mainly:
2.3.1 on directors; or
2.3.2 on employees receiving higher levels of remuneration.
3. ELIGIBILITY
3.1 Subject to Rule 3.4 below, an individual may only participate in an
award of shares under this Scheme if (and only if):-
3.1.1 he is at the relevant time an employee of a Participating
Company and he satisfies the conditions specified in Rule 3.2
below, or
3.1.2 he is at the relevant time an employee of a Participating
Company and is nominated by the Board for this purpose.
3.2 The conditions referred to in Rule 3.1.1 above are that the individual:
3.2.1 shall at all times during the qualifying period have been an
employee of a Participating Company, and
3.2.2 was at the relevant time chargeable to tax in respect of his
employment under Case I of Schedule E.
3.3 For the purposes of Rule 3.2 above:-
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3.3.1 the relevant time is, in the case of Free Shares, the time
such shares are appropriated and, in the case of Matching
Shares or Partnership Shares, the time the partnership share
money relating to such shares is deducted or first deducted
(and, in the case of Matching Shares, the deduction of
partnership share money "relating" to such shares is the
deduction relating to the Partnership Shares to which the
Matching Shares relate);
3.3.2 the qualifying period is the period of [18 months] ending at
the relevant time, or such other period ending at the relevant
time as the Board may determine which satisfies the
requirements of paragraph 14 of Schedule 8.
3.3.3 Chapter I of Part XIV of the Employment Rights Act 1996 shall
have effect, with any necessary changes, for ascertaining the
length of the period during which an individual shall have
been an employee and whether he shall be an employee at all
times during the period.
3.4 An individual shall not be eligible to have Free Shares or Matching
Shares appropriated to him or to acquire Partnership Shares at any time
if:
3.4.1 he is at that time ineligible to have shares so appropriated
to him by virtue of paragraph 15 of Schedule 8 (the "no
material interest" requirement) or paragraph 16 of Schedule 8
(the requirement of non-participation in other relevant share
schemes);
3.4.2 he has been given notice of dismissal for misconduct from the
employment by virtue of which he would but for this Rule be
eligible to participate in this Scheme (or has given notice of
resignation from such employment in order to avoid such
dismissal).
4. LIMITS
4.1 No shares shall be issued to the Trustees under this Scheme in the
period of 5 calendar years beginning with the year 2000 or any
successive period of 5 years which would, at the time they are issued,
cause the aggregate of:
4.1.1 the number of shares issued under this Scheme in that period,
and
4.1.2 the number of shares in the Company which shall have been or
may be issued in pursuance of options granted in that period,
or shall have been issued in that period otherwise than in
pursuance of options, under any other employees' share scheme
adopted by the Company,
to exceed such number as represents 5 per cent. of the ordinary share
capital of the Company in issue at that time.
4.2 No shares shall be issued to the Trustees under this Scheme in any year
which would, at the time they are issued, cause the aggregate of:-
4.2.1 the number of shares issued under this Scheme in the period of
10 calendar years ending with that year, and
4.2.2 the number of shares in the Company which shall have been or
may be issued in pursuance of options granted in that period,
or shall have been issued in that
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period otherwise than in pursuance of options, under any other
employees' share scheme adopted by the Company,
to exceed such number as represents 10 per cent. of the ordinary share
capital of the Company in issue at that time.
5. ISSUE OF SHARES
5.1 Subject to Rule 4, the price at which shares in the Company may be
issued under this Scheme shall, if shares of the same class are quoted
in the London Stock Exchange Daily Official List, be not less than the
middle-market quotation of shares of that class (as derived from that
List) on a dealing day falling within the period of 14 days ending with
the date on which the shares are issued, but not falling before the
dealing day next following the date of announcement by the Company of
its final results for the Accounting Period in question.
5.2 All shares allotted under this Scheme shall rank equally in all
respects with shares of the same class then in issue except for any
rights attaching to such shares by reference to a record date prior to
the date of the allotment.
6. ALTERATIONS AND ADDITIONS
6.1 Subject to Rule 6.2 below, the Board may at any time alter this Scheme
in any respect (having regard to the fact that, if such an alteration
is made at a time when this Scheme is approved by the Inland Revenue
under Schedule 8, the approval will not thereafter have effect unless
the Inland Revenue have previously approved the alteration).
6.2 Subject to Rule 6.3 below, no alteration to the advantage of the
persons who may participate or are participating in this Scheme shall
be made under Rule 6.1 above to Rules 3 or 4 without the prior approval
by ordinary resolution of the members of the Company in general
meeting.
6.3 Rule 6.2 above shall not apply to any minor alteration to benefit the
administration of this Scheme, to take account of a change in
legislation or to obtain or maintain favourable tax, exchange control
or regulatory treatment for Participants, any Participating Company or
the Trustees.
7. MISCELLANEOUS
7.1 The rights and obligations of any individual under the terms of his
employment with the Company or a Subsidiary shall not be affected by
his participation in this Scheme or any right which he may have to
participate in it, and an individual who participates in it shall waive
all and any rights to compensation or damages in consequence of the
termination of his employment for any reason whatsoever insofar as
those rights arise or may arise from his ceasing to have rights under
this Scheme as a result of such termination.
7.2 Except where required by law, no money or money's worth received by any
individual under this Scheme shall form part of his remuneration for
any purpose whatsoever.
7.3 In the event of any dispute or disagreement as to the interpretation of
this Scheme, or as to any question or right arising from or related to
this Scheme, the decision of the Board shall be final and binding upon
all persons.
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7.4 Any notice or other communication under or in connection with this
Scheme may be given by personal delivery or by sending the same 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
employee of the Company or a Subsidiary, 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 employment.
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PART 2
FREE SHARES
8. MAXIMUM ANNUAL AWARD
8.1 The initial market value of the Free Shares awarded to a Participant in
any tax year must not exceed (pound)3,000 or such other limit as may be
permitted by Schedule 8 from time to time and for this purpose:
8.1.1 the "initial market value" of shares means their market value
(as defined in paragraph 125 of Schedule 8) on the date on
which they are appropriated; and
8.1.2 the market value of shares subject to restrictions or risk of
forfeiture (within the meaning of paragraph 24(3) of Schedule
8) shall be determined as if there were no such restriction or
risk.
9. PARTICIPATION ON THE SAME TERMS
9.1 Rule 2.2 (participation on the same terms) is infringed by the
appropriation of Free Shares by reference to factors other than those
mentioned in Rule 9.2:
9.2 Subject to Rule 9.3, Free Shares may be awarded by reference to an
employee's:-
9.2.1 remuneration;
9.2.2 length of service; or
9.2.3 hours worked
9.3 Where the awarding of Free Shares is by reference to more than one of
the factors mentioned in Rule 9.2 then:-
9.3.1 each factor shall give rise to a separate entitlement related
to the level of remuneration, length of service or (as the
case may be) hours worked; and
9.3.2 the total entitlement shall be the sum of those separate
entitlements.
10. PERFORMANCE ALLOWANCES: GENERAL
10.1 The Board may in its discretion determine that performance allowances
shall apply to any award of Free Shares, that is for:-
10.1.1 whether or not Free Shares will be awarded to an individual;
or
10.1.2 the number or value of Free Shares awarded
to be conditional on performance targets being met.
10.2 If performance allowances apply to an award of Free Shares such
allowances shall apply to all qualifying employees in relation to that
award.
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10.3 Performance measures and performance targets shall:
10.3.1 be based on business results or other objective criteria, and
10.3.2 be fair and objective measures of the performance of the units
to which they are or may be applied; and
10.3.3 be set for performance units comprising one or more employees
(provided that an employee shall not be a member of more than
one performance unit).
10.4 If performance awards are to be made, the Company shall as soon as
reasonably practicable:
10.4.1 notify each employee participating in the award of the
performance measures which will be used to determine the
number or value of Free Shares awarded to him; and
10.4.2 notify all qualifying employees of any Participating Company,
in general terms, of the performance measures to be used to
determine the number or value of Free Shares to be awarded to
each employee participating in the award.
provided that the Company may exclude from such notice any information
the disclosure of which the Company reasonably considers would
prejudice commercial confidentiality.
10.5 If performance allowances apply to an award of Free Shares then the
requirements of either Rule 11 or Rule 12 should be compiled with.
11. PERFORMANCE ALLOWANCES: METHOD ONE
11.1 Subject to Rule 11.2 the following requirements shall be satisfied in
relation to an award of Free Shares:
11.1.1 at least 20% of the shares in the award shall be awarded
without reference to performance;
11.1.2 the remaining shares shall be awarded by reference to
performance and;
11.1.3 the highest number of shares within Rule 11.1.2 awarded to an
individual shall not be more than four times the highest
number of shares within Rule 11.1.1 awarded to an individual
and if Free Shares of different classes are awarded, these requirements
shall apply separately in relation to each class.
11.2 Rule 2.2 shall apply to shares awarded pursuant to Rule 11.1 as
follows:
11.2.1 Rule 2.2 shall apply to shares awarded pursuant to Rule 11.1.1
and these shares shall be treated as a separate award of
shares for these purposes;
11.2.2 Rule 2.2 shall not apply to shares awarded pursuant to Rule
11.1.2.
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12. PERFORMANCE ALLOWANCES: METHOD TWO
12.1 The following requirements shall be satisfied in relation to an award
of Free Shares:
12.1.1 some or all of the shares shall be awarded by reference to
performance; and
12.1.2 the awarding of shares to qualifying employees who are members
of the same performance unit shall meet the requirements of
Rule 2.2 and, for these purposes, the Free Shares awarded in
respect of each performance unit are treated as a separate
award of Free Shares.
13. THE HOLDING PERIOD
13.1 The Board shall in its discretion specify a period ("the holding
period") during which a Participant is bound by contract with the
Company:
13.1.1 to permit his Free Shares to remain in the hands of the
Trustees, and
13.1.2 not to assign, charge or otherwise dispose of his beneficial
interest in the Free Shares provided that the Participants
obligations with respect to the holding period (which are
subject to Rules 19.5 and 36 and paragraph 121(5) of Schedule
8) shall terminate if during the period he ceases to be in
relevant employment.
13.2 The holding period:
13.2.1 must be a period of at least three years; but not more than
five years, beginning with the date on which the Free Shares
in question are awarded to the Participant; and
13.2.2 must be the same in respect of all shares in the same award.
13.3 The Board may specify different holding periods from time to time
provided that the Board may not increase the holding period specified
in respect of Free Shares that have been awarded under the Scheme.
13.4 The Board shall notify each Participant to whom Free Shares are
appropriated of the holding period applicable to those shares.
13.5 A Participant may during the holding period direct the Trustees:
13.5.1 to accept an offer for any of his Free Shares ("the original
shares") if the acceptance or agreement will result in a new
holding being equated with the original shares for the
purposes of capital gains tax; or
13.5.2 to accept an offer of a qualifying corporate bond within the
meaning of section 117 of the Taxation of Chargeable Gains Act
1992 (whether alone or with other assets or cash or both) for
his Free Shares if the offer forms part of such a general
offer as is mentioned in Rule 13.5.3; or
13.5.3 to accept an offer of cash, with or without other assets, for
his Free Shares if the offer forms part of a general offer
which is made to holders of shares of the same class as his or
of shares in the same company and which is made in the first
instance on a condition such that if it is satisfied the
person making the
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offer will have control of that company, within the meaning of
section 416 of the Taxes Act 1988; or
13.5.4 to agree to a transaction affecting his Free Shares or such of
them as are of a particular class, if the transaction would be
entered into pursuant to a compromise, arrangement or scheme
applicable to or affecting:
(a) all the ordinary share capital of the Company or, as
the case may be, all the shares of the class in
question; or
(b) all the shares, or all the shares of the class in
question, which are held by a class of shareholders
identified otherwise than by reference to their
employment or their participation in a plan approved
under Schedule 8.
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PART 3
PARTNERSHIP SHARES
14. PARTNERSHIP SHARE AGREEMENTS
14.1 Qualifying employees shall enter into an agreement with the Company
("partnership share agreement") under which:
14.1.1 the employee authorises the Company to deduct part of his
salary for the purchase of Partnership Shares; and
14.1.2 the Company undertakes to arrange for Partnership Shares to be
awarded to the employee in accordance with the rules of this
Scheme
and any reference to "salary" in Rule 14 shall be construed within the
meaning of paragraph 48 of Schedule 8.
14.2 Each partnership share agreement will be given effect by deductions
from the qualifying employee's salary and, for the purposes of this
Scheme, any amounts so deducted are referred to as "partnership share
money".
14.3 Subject to Rule 14.4, the partnership share agreement shall specify:
14.3.1 what amounts are to be deducted; and
14.3.2 at what intervals
provided that such amounts and intervals may be varied with the consent
of the Company and the Participant.
14.4 Subject to Rule 14.5, the amount of partnership share money deducted
from a Participant's salary must not exceed:
14.4.1 (pound)125 in any month (or such other maximum amount as may
for the time being be permitted by paragraph 36(l)(a) of
Schedule 8); or
14.4.2 where the salary is not paid at monthly intervals, such amount
as bears to (pound)125 the same proportion as the pay interval
in question bears to one month (or such other maximum amount
as may for the time being be permitted by paragraph 36(l)(b)
of Schedule 8).
14.5 The amount of partnership share money deducted from a Participant's
salary shall not exceed 10% of the Participant's salary, meaning:
14.5.1 if there is no accumulation period (as provided in Rule 16
below), 10% of the salary payment from which the deduction is
made;
14.5.2 if there is an accumulation period (as provided in Rule 17
below), 10% of the total of the salary payments made to the
Participant over that period.
14.6 The Board may set lower limits than those specified in Rules 14.4 and
14.5.
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14.7 Any amount deducted in excess of that allowed by Rules 14.4 and 14.5
above, or any lower limit set by the Board for the purposes of this
Scheme pursuant to Rule 14.6, shall be paid over to the relevant
employee as soon as practicable.
14.8 The Board may specify that the amount to be deducted in pursuance of a
partnership share agreement in any month must not be less than a
minimum amount (the minimum amount shall not be greater than (pound)10
or such other minimum amount as may for the time being be permitted by
paragraph 37(2) of Schedule 8).
14.9 The partnership share agreement shall contain a notice in a prescribed
form containing prescribed information as to the possible effect of
deductions on an employee's entitlement to social security benefits,
statutory sick pay and statutory maternity pay and for these purposes
"prescribed" means prescribed by regulations made by the Board of the
Inland Revenue.
15. PARTNERSHIP SHARE MONEY HELD FOR PARTICIPANT
15.1 Subject to Rules 16.4, 18.4 and 18.5 (obligations to pay money to
employee) partnership share money shall be paid to the Trustees as soon
as practicable and held by them on behalf of the Participant until such
time as it is applied by them in acquiring Partnership Shares on the
Participant's behalf.
15.2 References in this Scheme to the Trustees acquiring Partnership Shares
on behalf of a Participant include their appropriating to a Participant
shares already held by them.
15.3 The Trustees shall keep any money required to be held by them under
this Scheme in an account (interest bearing or otherwise) with:
15.3.1 an institution authorised under the Banking Act 1987;
15.3.2 a building society; or
15.3.3 a relevant European institution.
15.4 If the partnership share money held on behalf of a Participant is held
in an interest bearing account, the Trustees shall account to the
Participant for the interest.
16. NO ACCUMULATION PERIOD
16.1 If the Company does not specify an accumulation period under Rule 17
below, partnership share money must be applied by the Trustees in
acquiring Partnership Shares on behalf of the Participant on the
acquisition date.
16.2 For the purposes of this Rule 16, "the acquisition date" means the date
set by the Trustees in relation to the award of Partnership Shares,
being a date within 30 days after the last date on which the
partnership share money to be applied in acquiring the shares was
deducted.
16.3 The number of shares awarded to each Participant shall be determined in
accordance with the market value (within the meaning of paragraph 125
of Schedule 8) of the shares on the acquisition date.
16.4 Any surplus partnership share money remaining after the acquisition of
shares by the Trustees:
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16.4.1 may with the agreement of the Participant be carried forward
and added to the amount of the next deduction, and
16.4.2 in any other case must be paid over to the Participant as soon
as practicable.
16.5 This Rule is subject to Rule 19 (restrictions imposed on number of
shares awarded).
17. SCHEME WITH ACCUMULATION PERIOD
17.1 The Board may specify an accumulation period not exceeding twelve
months.
17.2 If the Board specifies an accumulation period under Rule 17.1 above:
17.2.1 the partnership share agreement must specify when each
accumulation period begins and ends (the beginning of the
period being not later than the date on which the first
deduction is made); and
17.2.2 the accumulation period which applies in relation to each
award of Partnership Shares must be the same for all
individuals who are eligible to participate in the award.
17.3 Subject to Rule 17.2.2, the partnership share agreement may specify
that an accumulation period comes to an end on the occurrence of a
specified event.
17.4 If, during an accumulation period, a transaction occurs in relation to
any of the shares ("the original holding") to be acquired under a
partnership share agreement which results in a new holding of shares
being equated with the original holding for the purposes of capital
gains tax, then the partnership share agreement shall have effect after
the time of that transaction as if it were an agreement for the
purchase of shares comprised in the new holding, provided the
Participant gives his consent for these purposes.
18. APPLICATION OF MONEY DEDUCTED IN ACCUMULATION PERIOD
18.1 If the Board specifies one or more accumulation periods then, subject
to Rules 18.5 and 18.6, partnership share money deducted in each period
shall be applied by the Trustees in acquiring Partnership Shares on
behalf of the Participant on the acquisition date.
18.2 For the purposes of this Rule 18, "the acquisition date" means the date
set by the Trustees in relation to the award of Partnership Shares,
being a date within 30 days after the end of the accumulation period
which applies in relation to the award.
18.3 The number of shares awarded to each Participant shall be determined in
accordance with the lower of:
18.3.1 the market value of the shares at the beginning of the
accumulation period; and
18.3.2 the market value of the shares on the acquisition date
and "market value" shall be construed within the meaning of paragraph
125 of Schedule 8.
18.4 Any surplus partnership share money remaining after the acquisition of
shares by the Trustees:
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18.4.1 may with the agreement of the Participant be carried forward
to the next accumulation period; and
18.4.2 in any other case must be paid over to the Participant as soon
as practicable.
18.5 Where partnership share money has been deducted in an accumulation
period and the employee ceases to be in relevant employment during that
period then the partnership share money shall be paid over to the
individual as soon as practicable.
18.6 The partnership share agreement may provide that, where an accumulation
period comes to an end on the occurrence of a specified event, the
partnership share money deducted in that period must be paid over to
the individual as soon as practicable instead of being applied in
acquiring shares.
18.7 This Rule 18 is subject to Rule 19 (restriction imposed on number of
shares awarded).
19. RESTRICTION IMPOSED ON NUMBER OF SHARES AWARDED
19.1 Subject to Rule 19.2, the Board may specify the maximum number of
shares ("the award maximum") to be included in an award of Partnership
Shares and, for these purposes, a different number may be specified in
relation to different awards.
19.2 Where Rule 19.1 applies:
19.2.1 partnership share agreements shall contain an undertaking by
the Company to notify the Participant of any restriction on
the number of shares to be included in an award: and
19.2.2 such undertaking shall be given, if there is no accumulation
period, before the deduction of the partnership share money
related to the award and, if there is an accumulation period,
before the beginning of the accumulation period relating to
the award.
19.3 Where the award maximum in respect of an award of Partnership Shares is
smaller than the number of shares which would otherwise be included in
the award then the number of Partnership Shares included in each
individual award under Rules 16.1 or 18.1 shall be reduced
proportionately.
20. STOPPING AND RE-STARTING DEDUCTIONS
20.1 A Participant may at any time give notice in writing to the Company to
stop deductions in pursuance of a partnership share agreement.
20.2 A Participant who has stopped deductions may subsequently give notice
in writing to the Company to re-start deductions in pursuance of a
partnership share agreement, but may not make up deductions that have
been missed.
20.3 Where there are one or more accumulation periods, an employee may be
prevented from re-starting deductions more than once in any
accumulation period.
20.4 Unless a later date is specified in the notice:
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20.4.1 the Company must within 30 days of receiving a notice within
Rule 20.1 ensure that no further deductions are made by it
under the partnership share agreement; and
20.4.2 the Company must on receiving a notice within Rule 20.2
re-start deductions under the partnership share agreement not
later than the re-start date
and, for the purposes of Rule 20.4.2, "the re-start date" is the date
of the first deduction due under the partnership share agreement more
than 30 days after receipt of the notice within Rule 20.2.
21. WITHDRAWAL FROM PARTNERSHIP SHARE AGREEMENT
21.1 A Participant may withdraw from a partnership share agreement at any
time by notice in writing to the Company.
21.2 Unless a later date is specified in the notice, a notice of withdrawal
takes effect 30 days after it is received by the Company.
21.3 Where a Participant withdraws from a partnership share agreement, any
partnership share money held on the Participant's behalf shall be paid
over to him as soon as practicable.
22. REPAYMENT OF PARTNERSHIP SHARE MONEY ON WITHDRAWAL OF SCHEME APPROVAL
OR TERMINATION OF SCHEME
22.1 Any partnership share money held on behalf of a Participant shall be
paid over to him in accordance with Rule 22.2 where:
22.1.1 approval of the Scheme is withdrawn by the Board of the Inland
Revenue under paragraph 118 of Schedule 8; or
22.1.2 a plan termination notice is issued in respect of the Scheme
under paragraph 120 of Schedule 8.
22.2 The payment shall be made:
22.2.1 in a case within Rule 22.1.1, as soon as practicable after
notice of the withdrawal is given to the Company; and
22.2.2 in a case within Rule 22.1.1, as soon as practicable after the
plan termination notice is notified to the trustees under
paragraph 120(2) of Schedule 8.
23. ACCESS TO PARTNERSHIP SHARES
23.1 When Partnership Shares have been awarded to a Participant, the
Participant may at any time withdraw any or all of the Partnership
Shares from the Scheme.
24. MEANING OF "SALARY"
24.1 References to a Participant's "salary" are to such of the emoluments of
the Participant's employment by reference to which he is eligible to
participate in the Scheme as are liable to be paid under deduction of
tax pursuant to section 203 of the Taxes Act 1988 (PAYE), after
deducting amounts included by virtue of Chapter II of Part V of that
Act (expenses and benefits in kind), or would be so liable apart from
Schedule 8.
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PART 4
MATCHING SHARES
25. GENERAL REQUIREMENTS FOR MATCHING SHARES
25.1 The Matching Shares:
25.1.1 must be shares of the same class and carrying the same rights
as the Partnership Shares to which they relate;
25.1.2 must be awarded on the same day as the Partnership Shares to
which they relate are awarded; and
25.1.3 must be awarded to all Participants on exactly the same basis.
25.2 Rule 24.1 is subject to Rule 33 (permitted restrictions: provisions for
forfeiture).
26. RATIO OF MATCHING SHARES TO PARTNERSHIP SHARES
26.1 The partnership share agreement must specify:
26.1.1 the ratio of Matching Shares to Partnership Shares for the
time being offered by the Company; and
26.1.2 the circumstances and manner in which the ratio may be changed
by the Company.
26.2 The ratio must not exceed 2:1 and must be applied by reference to the
number of shares.
26.3 A Participant who has entered into a partnership share agreement must
be informed by the Company if the ratio offered by the Company changes
before Partnership Shares are acquired under the agreement.
27. APPLICATION OF PROVISIONS RELATING TO HOLDING PERIOD ETC.
27.1 The provisions of Rules 13 of Part 2 of this Scheme (holding period and
related matters) apply in relation to Matching Shares as they apply to
Free Shares.
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PART 5
REINVESTMENT OF CASH DIVIDENDS
28. REINVESTMENT
28.1 Subject to Rule 29, where the Board so directs:
28.1.1 all cash dividends in respect of Scheme shares held on behalf
of Participants may be applied in acquiring further shares on
their behalf; or
28.1.2 all cash dividends in respect of Scheme shares held on behalf
of Participants who elect to reinvest their dividends must be
applied in acquiring further shares on their behalf,
in both cases, referred to in Part 5 of this Scheme as "reinvestment"
and the further Scheme shares so acquired are referred to in Parts 5.6
and 7 of this Scheme as "dividend shares".
28.2 The Board may revoke a direction made under Rule 28.1.
28.3 Where the Board does not make a direction in accordance with Rule 28.1
then the dividends shall be paid over to Participants as soon as
practicable.
29. LIMIT ON AMOUNT REINVESTED
29.1 The total dividend reinvestment in respect of any Participant shall not
exceed (pound)l,500 in any tax year (or such other limit specified from
time to time in paragraph 54(l) of Schedule 8).
29.2 For the purposes of Rule 29. I, "the total dividend reinvestment" in
respect of a Participant is the sum of:
29.2.1 the amount applied by the Trustees in acquiring dividend
shares on behalf of the Participant under this Scheme; and
29.2.2 the amount applied by the trustees of other employee share
ownership plans (within the meaning of paragraph l(1) of
Schedule 8) that are established by the Company or an
associated company (within the meaning of paragraph 126 of
Schedule 8) and approved under Schedule 8, in acquiring
dividend shares on his behalf.
29.3 If the amounts received by the Trustees exceed the limit in Rule 29.1
the balance shall be paid over to the Participant as soon as
practicable.
30. GENERAL REQUIREMENTS FOR DIVIDEND SHARES
30.1 Dividend shares shall be shares:
30.1.1 of the same class and carrying the same rights as the shares
in respect of which the dividend is paid; and
30.1.2 which are not subject to any provision for forfeiture.
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31. ACQUISITION OF DIVIDEND SHARES
31.1 In exercising their powers in relation to the acquisition of dividend
shares:
31.1.1 the Trustees shall treat Participants fairly and equally;
31.1.2 the Trustees shall apply a cash dividend in acquiring further
shares on behalf of Participants on the acquisition date;
31.1.3 the number of dividend shares acquired on behalf of each
Participant shall be determined in accordance with the market
value (within the meaning of paragraph 125 of Schedule 8) of
the shares on the acquisition date.
31.2 For the purposes of Rule 31.1.2, "the acquisition date" means the date
set by the Trustees in relation to the acquisition of dividend shares,
being a date within 30 days after the dividend is received by them.
31.3 References to the Trustees acquiring dividend shares on behalf of a
Participant include the Trustees appropriating to a Participant shares
already held by the Trustees.
32. HOLDING PERIOD FOR DIVIDEND SHARES
32.1 The provisions of Rule 13 of Part 2 of this Scheme (holding period and
related matters) apply in relation to dividend shares as they apply to
Free Shares, except that the holding period must be three years.
33. CERTAIN AMOUNTS NOT REINVESTED TO BE CARRIED FORWARD
33.1 Any amount that is not reinvested:
33.1.1 because the amount of the cash dividend to which the
Participant is entitled is not sufficient to acquire a share;
or
33.1.2 because there is an amount remaining after acquiring one or
more dividend shares on the Participant's behalf,
may be retained by the Trustees and carried forward to be added to the
amount of the next cash dividend to be reinvested, but shall be held by
them so as to be separately identifiable for the purposes of Rules 33.2
and 33.3.
33.2 Any amount retained under this paragraph shall be paid over to the
Participant as soon as practicable:
33.2.1 if or to the extent that it is not reinvested within the
period of three years beginning with the date on which the
dividend was paid, or
33.2.2 if during that period the Participant ceases to be in relevant
employment, or
33.2.3 if during that period a plan termination notice is issued in
respect of the Scheme.
33.3 For the purposes of this Rule 33 an amount carried forward under this
Rule 33 derived from an earlier cash dividend is treated as reinvested
before an amount derived from a later cash dividend.
17
PART 6
PROVISION FOR FORFEITURE
34. PERMITTED RESTRICTIONS: PROVISION FOR FORFEITURE
34.1 A Participant shall cease to be beneficially entitled to the Free
Shares or Matching Shares appropriated to that Participant on:
34.1.1 the Participant ceasing to be in relevant employment at any
time in the forfeiture period, or
34.1.2 in the case of Matching Shares, on the participant withdrawing
the Partnership Shares in respect of which these shares were
awarded from the Scheme within the forfeiture period,
otherwise than by reason of an event within paragraph 87(2) of Schedule
8 (circumstances in which there is no charge to tax on shares ceasing
to be subject to plan).
34.2 In Rule 34.1 "the forfeiture period" means the forfeiture period
specified by the Board being a period of not more than three years
beginning with the date on which the shares were awarded to the
Participant.
34.3 Forfeiture may not be linked to the performance of any person or
persons.
34.4 The same provision for forfeiture must apply in relation to all Free or
Matching Shares included in the same award under the Scheme.
18
PART 7
THE TRUSTEES
35. DUTIES OF TRUSTEES
35.1 The Trustees shall be resident in the United Kingdom and shall:
35.1.1 in the case of Free or Matching Shares, acquire shares and
appropriate then to employees in accordance with this Scheme;
35.1.2 in the case of Partnership Shares, apply partnership share
money in acquiring shares on behalf of employees in accordance
with the Scheme; and
35.1.3 in the case of dividend shares, to apply cash dividends in
acquiring shares on behalf of participants in accordance with
the Scheme.
36. MEETING PAYE OBLIGATIONS
36.1 Where a PAYE obligation is imposed on the Trustees as a result of any
of a Participant's Scheme shares ceasing to be subject to the Scheme,
the Trustees shall meet that obligation:
36.1.1 by disposing of any of those shares or any of the
Participant's remaining Scheme shares (if any); or
36.1.2 by virtue of the Participant paying to the Trustees a sum
equal to the amount required to discharge the obligation.
36.2 In Rule 36.1 the reference to a PAYE obligation includes an obligation
under paragraph 95 of Schedule 8 (PAYE: shares ceasing to be subject to
the plan) and in Rule 36.1.1 the reference to disposing of shares
includes the acquisition of the shares by the Trustees for the purposes
of the trust.
CLIFFORD CHANCE
200 Aldersgate Street
London EC1A 4JJ
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