EXHIBIT 10.42
RULES OF THE
CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD.
BONUS SHARE PLAN
KPMG Tax Advisers
1 Puddle Dock
London EC4V 3PD
Ref: CAS3.DOC
RULES OF THE CASTLE TRANSMISSION SERVICES (HOLDINGS) LTD.
BONUS SHARE PLAN
1 DEFINITIONS
1.1 In these Rules the following words and expressions shall have, where the
context so admits, the following meanings:
"Act" -- the Income and Corporation Taxes Act 1988;
"Adoption Date" -- the date on which the Plan is adopted by the Board and the Trustees;
"Auditors" -- the auditors for the time being of the Company (acting as experts and not as arbitrators);
"Award" -- an award under the Plan which comprises an Option and/or a Bonus;
"Award Letter" -- the letter informing the Participant of the potential Award he may receive pursuant to Rule 2A of
the Plan in substantially the form set out in Appendix I as may be amended by the Board and
Trustees from time to time;
"Board" -- the board of directors of the Company or the Committee at which a quorum is present;
"Bonus" the cash sum payable determined in accordance with Rules 2A.3 or 2B.3;
"Committee" a duly constituted committee of the Board;
"Company" -- Castle Transmission Services (Holdings) Ltd. registered
in England no. 3242381 or save for Rules 2, 3, 4
and 9.2 such company as shall be at any time the
Acquiring Company as defined in Rule 6.5;
"Control" -- has the same meaning as in section 416 or section 840 of
the Act;
"Date of Grant" -- the date on which an Option is, was or is to be
granted to an Eligible Employee under the Scheme,
pursuant to Rule 4.1, 4.2 or 4.6;
"Eligible Employee" -- any director or employee of any Group Company;
"Financial Year" -- an accounting reference period of the Company;
"Group" -- the Company and its Subsidiaries and the expression "member of the Group" shall be construed
accordingly;
"Group Employee" -- any director or employee of any member of the Group;
"Letter of Grant" -- the letter informing the Option Holder of the grant of an Option to him in substantially the form
set out in Appendix II as may be amended by the Board and the Trustees from time to time;
"Merger" -- the acquisition of Control of the Company by Castle Tower Holding Corporation (a Delaware
corporation) or a company under the Control of or having Control of that company;
"New Option" -- an option over shares in the Acquiring Company (as defined in Rule 6.5) granted in consideration for
the release of a Subsisting Option;
"Operating Profit" -- the operating profit of the Group before account is taken of any interest charges/income, tax,
depreciation and amortisation as determined by the Board;
"Option" -- a right to acquire Units granted or to be granted pursuant
to Rules 4.1, 4.2 or 4.6;
"Option Certificate" -- an option certificate in substantially the form set out in Appendix III as may be amended by the
Board and the Trustees from time to time provided that it shall specify the Date of Grant and the
number of Units over which the Option has been granted;
"Option Holder" -- a person who has been granted an Option or (where the context admits) his legal personal
representative(s);
"Participant" -- an Eligible Employee who has been selected by the Board and the Trustees to participate in the Plan
in respect of a Financial Year;
"Performance" -- the actual Operating Profit of the Group for a Financial Year expressed as a percentage of the
budgeted figure set by the Board for that Financial Year, or where a different measure of budgeted
performance is considered by the Board to be appropriate the extent to which the Board judge that
budgeted performance to be satisfied;
"Plan" -- this Castle Transmission Services (Holdings) Ltd. Bonus Share Plan constituted and governed by the
Rules;
"Plan Price" -- the price per Unit to be applied when calculating the number of Units in respect of which an Option
is granted;
"Preference Form -- the form to be sent to the Potential Participants by the Board for completion as to the extent the
Potential Participants would prefer to receive any Award in respect of the relevant Financial Year
in cash in substantially the form set out in Appendix IV (2A) and (2B) as appropriate as may be
amended by the Board and the Trustees from time to time;
"Recognised Exchange" -- a recognised stock exchange within the meaning of section 841 of the Act or a recognised investment
exchange within the meaning of the Financial Services Act 1996;
"the Rules" -- the rules of the Plan as may be amended from time to time;
"Subsidiary" -- a company which is under the Control of the Company and which is a subsidiary of the Company within
the meaning of section 736 of the Companies Act 1985;
"Subsisting Option" -- an Option which has been granted and which has not lapsed, been surrendered, renounced or exercised
in full;
"Trust" -- The Castle Transmission Services (Holdings) Employee Benefit Trust;
"Trustees" -- the original trustees or other trustees for the time being of the Trust;
"Unit" -- subject to Rule 7, a stapled shareholding comprising one ordinary share of 1p and nine hundred and
ninety-nine redeemable preference shares of 1p each in the capital of the Company or, where a New
Option has been granted or is to be granted pursuant to Rule 4.6 a share in the capital of the
Acquiring Company.
1.2 In this Plan, except insofar as the context otherwise requires:
(i) words denoting the singular shall include the plural and vice versa;
(ii) words importing a gender shall include every gender and references
to a person shall include bodies corporate and unincorporated and
vice versa;
(iii) reference to any enactment shall be construed as a reference to that
enactment as from time to time amended, modified, extended or re-
enacted and shall include any orders, regulations, instruments or
other sub-ordinate legislation made under the relevant enactment;
and
(iv) heading and captions are provided for reference only and shall not
be considered as part of the Plan.
2. PARTICIPATION
2.1 Rules 2A and 2B set out the basis upon which Eligible Employees may
participate in the Plan and the basis upon which cash by the payment of a
Bonus and/or Units by the grant of Options may be awarded to them.
2.2 On each occasion prior to considering which Eligible Employees should be
considered for participation in the Plan, the Board shall determine the
relevant Plan Price for that participation.
2A PARTICIPATION WHERE THE POTENTIAL AWARD TO BE RECEIVED BY THE PARTICIPANT
IS SPECIFIED TO BE DEPENDENT UPON PERFORMANCE FOR A FINANCIAL YEAR WHICH
HAS ENDED.
2A.1 At the beginning of the Financial Year or as soon as reasonably
practicable thereafter the Board determine which Eligible Employees should
be considered for participation in the Plan for that year ("the Potential
Participants"), and will inform the Potential Participants that they are
being considered for selection for the Plan and ask them to state their
preference on a Preference Form as to the extent to which they would
prefer to receive any Award in respect of that Financial Year in cash,
provided always that no Participant may elect to nor receive more than the
percentage, if any, specified in his Preference Form of his Award in cash.
2A.2 Following receipt of the completed Preference Forms from the Potential
Participants, the Board and the Trustees will determine which, if any,
Potential Participants are to participate in the Plan for that year.
2A.3 The Board and the Trustees will then determine, at their absolute
discretion, the potential Award that may be received by each Participant,
dependent upon Performance, in cash by the payment of a Bonus and/or in
Units by the grant of Options taking into account any preference received
from the Potential Participants concerning the extent to which the
Potential Participant would prefer to receive cash, subject to the
limitation, if any, specified as to the percentage of the Award receivable
by the Participant in cash set out at Rule 2A.1 above.
2A.4 The Board will issue an Award Letter to each Participant within 28 days of
the Board and the Trustees making their determination under Rule 2A.3
above. The Award Letter will set out both the amount of Bonus and the
number of Units over which an Option is to be granted for any given level
of Performance for the relevant Financial Year.
2B PARTICIPATION WHERE THE POTENTIAL AWARD TO BE RECEIVED BY THE PARTICIPANT
IS SPECIFIED TO BE CONDITIONAL UPON PERFORMANCE FOR A FINANCIAL YEAR WHICH
HAS ENDED.
2B.1 At any time or times the Board shall determine which Eligible Employees
should be considered for participation in the Plan based either on their
personal contribution or Performance for a Financial Year that has already
ended ("the Potential Participants"). The Potential Participants will be
informed that they are being considered for selection for the Plan and
will be asked to state their preference on a Preference Form as to the
extent to which they would prefer to receive any Award in respect of that
Financial Year in cash, provided always that no Participant may elect to
nor receive more than the percentage, if any, specified in his Preference
Form of his Award in cash.
2B.2 Following receipt of the completed Preference Forms from the Potential
Participants, the Board and the Trustees will determine which, if any,
Potential Participants are to participate in the Plan for that year ("the
Participants").
2B.3 The Board and the Trustees will then determine, at their absolute
discretion, the Award that may be received by each Participant in cash by
the payment of a Bonus and/or in Units by the grant of Options taking into
account any preference received from the Potential Participant concerning
the extent to which the Potential Participant would prefer to receive
cash, subject to the limitation, if any, specified as to the percentage of
the Award receivable by the Participant in cash set out at Rule 2B.1
above.
3 ACQUISITION OF SHARES
3.1 As soon as reasonably practicable after Performance for a Financial Year
has been determined, the Board and the Trustees will consider whether the
Award to be received by a Participant should be increased in an
appropriate manner to take account of any increase in the Participant's
basic salary since the date of preparation of the relevant Preference
Form.
3.2 Once the Board and the Trustees have given consideration to the matter
referred to in Rule 3.1, the Trustees shall determine the number of Units
over which Options are to be granted and hence the number of underlying
shares.
3.3 Provided the Trustees have sufficient funds in the Trust they shall,
unless the Board have instructed otherwise, subscribe for the aggregate
number of underlying shares determined at Rule 3.2 at such price per Unit
and hence per underlying share as the Board shall determine is appropriate
in the circumstances.
4. GRANT OF OPTIONS AND PAYMENT OF BONUS
4.1 As soon as reasonably practicable after Performance for a Financial Year
has been determined and the Board and Trustees have given consideration to
the matter referred to in Rule 3.1, the Company shall pay or procure the
payment by the relevant employing company of a Bonus (subject to whatever
deductions are required under Rule 4.5 below) to and the Trustees shall
grant Options to all Participants who remain Eligible Employees.
4.2 If the Board and the Trustees have determined that, notwithstanding
Performance for a Financial Year, each Participant defined in 2A.2 is to
receive an Award then as soon as reasonably practicable thereafter the
Company shall pay or procure the payment of a Bonus (subject to whatever
deductions are required under Rule 4.5 below) to and the Trustees shall
grant Options to each Participant so defined who remains an Eligible
Employee in accordance with their determination.
4.3 No Option may be transferred, assigned or charged and any purported
transfer, assignment or charge shall be void ab initio. Each Option
Certificate shall carry a statement to this effect. For the avoidance of
doubt, this Rule shall not prevent the Option of a deceased Option holder
being exercised by his personal representative(s) within the terms of
these Rules.
4.4 Options shall be granted by deed and shall be evidenced by the issue of a
Letter of Grant to Participants together with an Option Certificate as
soon as practicable after the Date of Grant.
4.5 The Company shall make or shall procure that such deductions (on account
of tax or similar liabilities) are made from the payment of any Bonus
under Rule 4.1 or Rule 4.2 as may be required by law.
4.6 Where the circumstances noted in Rule 6.5 apply New Options may be granted
in consideration for the release of options previously granted under the
Scheme. Such New Options are deemed to be equivalent to the old Options
and to have been granted within the terms of this Scheme.
5. EXERCISE OF OPTIONS
5.1 Subject to Rule 8 below any Subsisting Option may be exercised in whole or
in part by the Option Holder or, if deceased, by his personal
representatives in whole or in part at any time following the Date of
Grant.
5.2 An Option shall lapse on the earliest of the following events:
(i) the seventh anniversary of the Date of Grant;
(ii) the first anniversary of the Option Holder's death;
(iii) where an Option Holder ceases to be a Group Employee other than by
reason of death, six months following such cessation;
(iv) the end of the periods of exercisability determined in accordance
with Rule 6;
(v) where the Option Holder is offered a New Option in consideration for
the release of an Option pursuant to Rule 6.5 at the end of the
period in which that company's offer may be accepted;
(vi) the Option Holder being adjudicated bankrupt;
(vii) the surrender of the Option by the Option Holder.
6. TAKE-OVERS, RECONSTRUCTIONS AND LIQUIDATIONS
6.1 If in circumstances other than a Merger any person not being a company
under the same Control as the Company obtains Control of the Company as a
result of making a general offer to acquire the whole of the issued share
capital of the Company (other than that which is already owned by him)
which is unconditional or which is made on a condition such that if it is
satisfied the person making the offer will have Control of the Company then
the Board shall notify all Option Holders as soon as is practicable of the
offer in accordance with Rule 9.4 and any Subsisting Option shall lapse six
months from 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.
6.2 If in circumstances other than a Merger any person not being a company
under the same Control as the Company obtains Control of the Company other
than as a result of the events specified in Rules 6.1 then the Board shall
notify all Option Holders as soon as practicable after the change of
Control in accordance with Rule 9.4 and any Subsisting Option shall lapse
six months from the time when the person obtains Control of the Company.
6.3 If in circumstances other than a Merger under Section 425 of the Companies
Act 1985 the Court sanctions a compromise or arrangement which affects the
shares comprised within Units then the Board shall notify all Option
Holders as soon as practicable after such compromise or arrangement is
sanctioned in accordance with Rule 9.4 and any Subsisting Option shall
lapse six months from the time the Court sanctions such compromise or
arrangement.
6.4 If in circumstances other than a Merger any person becomes bound or
entitled to acquire shares comprised within Units in the Company under
sections 428 to 430 of the Companies Act 1985 any Subsisting Option shall
remain exercisable at any time when that person remains so bound or
entitled.
6.5 If as a result of the occurrence of one or more of the events specified in
Rules 6.1, 6.2, 6.3 or 6.4 or as a result of a Merger a company whether or
not under the same Control as the Company has obtained Control of the
Company the Option Holder may, if the other company (the Acquiring Company)
so agrees, release any Subsisting Option he holds in consideration for the
grant of a New Option.
A New Option issued in consideration of the release of an Option shall be
evidenced by an Option Certificate which shall import the relevant
provisions of these Rules.
A New Option shall, for all other purposes of this Plan, be treated as
having been acquired at the same time as the corresponding released Option.
6.6 If notice is duly given of a general meeting at which a resolution will be
proposed for the voluntary winding-up of the Company, an Option shall be
exercisable in whole or in part (but so that any exercise hereunder shall
be conditional upon such resolution being passed) at any time thereafter
until the resolution is duly passed or defeated or the general meeting is
concluded or adjourned, whichever shall first occur. If such resolution is
passed an Option shall to the extent unexercised thereupon lapse.
6.7 The date of lapse under Rule 5.2(iv) and (v) depends on whichever of the
pre-conditions of Rules 6.1, 6.2, 6.3, 6.4, or 6.5 are first achieved. The
subsequent achievement of any other pre-conditions will not cause a date of
lapse to arise.
6.8 For the purpose of this Rule 6 a person shall be deemed to have obtained
Control of a Company if he and others acting in concert with him have
together obtained Control of it.
6.9 The exercise of an Option pursuant to the preceding provisions of this Rule
6 shall be subject to the provisions of Rule 8.
6.10 A New Option shall not be exercisable by virtue of the event pursuant to
which it was granted.
7. VARIATION OF SHARE CAPITAL
7.1 In the event of any variation of the share capital of the Company,
including, but without prejudice to the generality of the preceding words,
any capitalisation or rights issue or any consolidation, sub-division,
redemption or reduction of capital the definition of Unit and hence the
class of shares comprising an Option and the number of shares subject to
any Option may be adjusted by the Trustees in such manner as the Auditors
confirm in writing to be, in their opinion, fair and reasonable. Where any
preference shares of the same class as are comprised within a Unit are
redeemed, the nature of the adjustment required to an Option and the cash
sum, if any, payable to an Option Holder (to reflect the redemption of the
appropriate proportion of the total shares comprised within each Unit)
shall be determined by reference to the extent, if any, to which the
Trustees apply the redemption proceeds they receive in the subscription for
shares in the Company or such company as may acquire Control of the Company
in consequence of any opportunity made available to the Trustees at the
time of the redemption.
Such variation shall be deemed to be effective from the record date at
which the respective variation applied to other shares of the same class as
the shares comprised within the Units. Any Options exercised within that
period shall be treated as exercised with the benefit of the variation
confirmed by the Auditors.
7.2 The Trustees shall take such steps as it considers necessary to notifyH
Option Holders of any adjustment made under Rule 7.1 and may call in,
cancel, endorse, issue or reissue any Option Certificate consequent upon
such adjustment. Any cash sum payable to an Option Holder as a result of a
redemption of shares determined pursuant to Rule 7.1 shall be payable by
the Trustees as soon as practicable after the redemption.
8. MANNER OF EXERCISE OF OPTIONS
8.1 An Option may be exercised in whole or in part by the Option Holder giving
notice in writing to the Trustees detailing the number of Units in respect
of which he wishes to exercise the Option accompanied by the relevant
Option Certificate, and a payment of (Pounds)1 and shall be effective on
the date of its receipt by the Trustees.
8.2 Subject to Rule 8.6, the shares comprised within the Units specified in the
notice of exercise given in accordance with Rule 8.1 shall be transferred
to the Option Holder (or to a person nominated by the Option Holder) within
30 days of the date of exercise and the Trustees shall arrange for the
delivery of evidence of title in respect thereof. Save for any rights
determined by reference to a record date preceding the date of transfer,
such shares shall rank pari passu with the other shares of the same class
then in issue.
8.3 When an Option is exercised in part, the balance shall remain exercisable
on the same terms as originally applied to the Option and a new Option
Certificate in respect of the balance shall be issued by the Trustees as
soon as possible after the partial exercise.
8.4 Where shares comprised within a Unit in respect of which an Option has been
granted are or become listed on any Recognised Exchange, the Company shall
apply for shares in respect of which an Option has been exercised to be so
listed, if they were not so listed already.
8.5 Where shares comprised within a Unit are listed on any Recognised Exchange
then no Option may be exercised in contravention of the terms of such
securities transactions rules of the Recognised Exchange as may from time
to time be in force.
8.6 If an Option is exercised and the Option Holder is liable to tax, duties or
other amounts on such exercise and his employer or former employer being a
member of the Group is liable to make a payment to the appropriate
authorities on account of that liability the Option Holder shall make a
payment to his employer or former employer equal to the amount which the
employer or former employer is required to pay to the appropriate
authorities. No shares comprised within a Unit shall be transferred to the
Option Holder until the employer or former employer has received payment
from the Option Holder. This rule 8.6 shall not apply if the Option Holder
makes alternative arrangements to the satisfaction of his employer or
former employer and the Trustees are informed by the employer or former
employer that the arrangements are satisfactory.
9. ADMINISTRATION AND AMENDMENT
9.1 The Plan shall be administered by the Board whose decision on all disputes
shall be final save where the Rules require the concurrence of the
Auditors.
9.2 The approval of the Board and the Trustees is required to amend these Rules
provided that no amendment may materially affect an Option Holder as
regards an Option granted prior to the amendment being made.
9.3 The cost of establishing and operating the Plan shall be borne by any
companies in the Group in such proportions as the Board shall determine.
9.4 Any notice or other communication under or in connection with the Plan may
be given by the Board or the Trustees either personally or by post, and to
the Board or the Trustees either personally or by post to the Secretary of
the Board; items sent by post shall be pre-paid and shall be deemed to have
been received 72 hours after posting.
9.5 The Trustees shall at all times keep available sufficient shares to satisfy
the exercise to the full extent of all Subsisting Options, taking account
of any other obligations of the Trust to transfer shares, provided that if
an Option ceases to be exercisable under these Rules or where an agreement
is reached to grant a New Option in accordance with Rule 6.5, the Trustees
shall be free to deal with the shares comprised within Units which were
subject to Option as they see fit, subject to the trust deed.
10. MISCELLANEOUS
10.1 The rights and obligations of any individual under the of his office or
employment with any Group Company shall not be affected by his
participation in the Scheme or any right which he may have to participate
therein, and an individual who participates therein shall waive any and all
rights to compensation or damages in consequence of the termination of his
office or employment for any reason whatsoever insofar as those rights
arise or may arise from his ceasing to have rights under or be entitled to
exercise any Option under the Scheme as a result of such termination.