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EXHIBIT 10.3
SYNON CORPORATION
EXHIBITS
4.2 Rules of the Executive Share Option Scheme
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RULES OF
THE EXECUTIVE SHARE OPTION SCHEME
OF
SYNON CORPORATION
BAILEYS SHAW & GILLETT
17 QUEENS SQUARE
LONDON
WCIN 3RH
Tel No: 071 837 5455
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SYNON CORPORATION
Definitions
In these Rules, unless the context otherwise requires, the following
words and expressions shall have the following meanings:-
(a) "Act": the Income and Corporation Taxes Act 1988
(b) "Auditors": the Auditors of the Corporation for the time being
and from time to time.
(c) "Corporation": SYNON CORPORATION (otherwise than as provided
in Rule 6(J).
(d) "Date of Commencement": the date on which the scheme is
approved by the Corporation in general meeting.
(e) "Directors": the Board of Directors of the Corporation for the
time being and from time to time or a duly authorised committee thereof.
(f) "Executive": a full-time director of any member of the Group
who is required under the terms of his contract of employment to work for such
member or members of the Group for the whole or substantially the whole of his
working time and in any event for at least 25 hours per week in aggregate
(excluding meal breaks) or an employee of any member of the Group (other than
an employee who is a director of any member of the Group) who is required under
the terms of his contract of employment to work for a member or members of the
Group for the whole or substantially the whole of his working time and in any
event for at least 20 hours per week in aggregate (excluding meal breaks)
Provided that such director or employee is not at the date of offer of an
Option within two years of his normal retirement date or of such other date of
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retirement as may have been already determined and excluding any director or
employee who is precluded from participation by paragraph 8 of Schedule 9 to
the Act or who owns Ordinary Shares comprising more than ten per cent of the
total combined voting power of all classes of stock of the Corporation or any
corporation in the Group
(g) "Group": the Corporation and any corporation or corporations
for the time being under the control of the Corporation ("control" having the
meaning given to the expression in Section 840 of the Act).
(h) "Option": a right to subscribe for or acquire Ordinary Shares
pursuant to the Scheme.
(i) "Option Holder": an Executive to whom an Option has been
granted in accordance with the Scheme and in whom rights under the Scheme are
still vested or (where the context so requires) the legal personal
representatives of such a person.
(j) "Option Price": the price at which an Option Holder may
subscribe for or acquire an Ordinary Share as determined pursuant to Clause 4
hereof.
(k) "Ordinary Shares": shares of common stock of $0.001 par value
in the capital of the Corporation which satisfy the conditions of paragraphs 10
to 14 of Schedule 9 to the Act. "Ordinary Shareholder" shall be construed
accordingly.
(l) "Relevant Emoluments": such of the Executive's emoluments in
respect of his office or employment with the Group as are liable to be paid
under deduction of tax pursuant to Section 203 of the Act after deducting from
them amounts included by virtue of Chapter II Part V of the Act.
(m) "Relevant Limit": the Relevant Emoluments for the
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current or preceding Year of Assessment (whichever shall be the greater) or
where there were no Relevant Emoluments for the preceding Year of Assessment
the amount of the Relevant Emoluments for the period of twelve months beginning
with the first day during the current Year of Assessment in respect of which
there are Relevant Emoluments.
(n) "Redundancy": dismissal for redundancy within the meaning of
the Employment Protection (Consolidation) Act 1978.
(o) "Rules": the rules for the administration of the Scheme
contained herein or which are laid down by the Directors and which may be
amended by them in accordance with the provisions of Clause 9 hereof.
(p) "Scheme": the Executive Share Option Scheme set out herein.
(q) "Year of Assessment": the meaning ascribed to it by Section
832 of the Act.
(r) "Subsisting Option": an Option that has not lapsed, been
renounced or exercised.
Any reference to a statutory provision shall be deemed to include that
provision as the same may from time to time be amended or re-enacted, any
reference to a Corporation share option scheme includes that scheme as the same
may be varied from time to time in accordance with its terms, and wherever the
context so admits or requires the singular shall include the plural and vice
versa and the masculine shall include the feminine.
2. Commencement
The Scheme shall commence on the Date of Commencement.
3. Offer and Grant of Options
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(A) The Directors may, subject to the Rules, in their absolute
discretion offer Options to Executives.
(B) Options may be granted hereunder at any time following the
date that the Board of Inland Revenue approve the Scheme.
(C) Subject to the limitations hereinafter set out, Options may be
granted to such Executives in such amounts as the Directors shall in their
absolute discretion from time to time determine. No person shall be entitled
as of right to participate in the Scheme.
(D) If the Directors determine to offer participation in the
Scheme to an Executive they shall give him notice in writing of such offer
specifying the number of Ordinary Shares over which he may take up an Option
and the Option Price thereof. Any such offer shall be personal to the
Executive to whom it is made and shall remain open for acceptance for a period
of 25 days from the date it is made. An offer not accepted within such 25 day
period shall be deemed to have been declined and shall thereupon lapse. If
accepted within the due period the Option shall be granted on the last day of
such period.
(E) Acceptance of an offer of an Option by an Executive shall be
in such manner as the Directors may require and upon and by such acceptance the
Executive shall be bound by the Rules. An offer may be accepted in part. The
consideration payable by an Executive for the grant of an Option to him shall
be the sum of $1 payable upon acceptance (regardless of the number of Ordinary
Shares subject thereto) unless the option is granted under seal or as a Deed.
(F) An Option shall be personal to the Option Holder
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and accordingly, save in the specific situations described in the Rules where
the Option may be exercised by personal representatives, shall not be capable of
being transferred, assigned, charged or otherwise encumbered by the Option
Holder. Any breach of this provision shall entitle the Directors to cancel the
Option.
4. The Option Price
The Option Price shall be determined by the Directors but shall in no
event be less than the greater of:-
(a) the nominal value of an Ordinary Share; or
(b) a price equal to the market value (as the same is
defined in Section 187 of the Act) of an Ordinary
Share on the day prior to the day on which the offer
is made as determined by agreement between the
Corporation and the Shares Valuation Division of the
Board of Inland Revenue on or before that day
PROVIDED THAT if the Ordinary Shares have been
admitted to the Official List of The Stock Exchange
the price falling to be determined within this
paragraph (b) shall be a price equal to the average
of the middle market quotations for an Ordinary Share
on The Stock Exchange on the three dealing days
immediately prior to the day on which the offer is
made as derived from The Stock Exchange Daily
Official List and if the Ordinary Shares have been
admitted to the New York Stock Exchange the price
falling to be determined within this paragraph (b)
shall be the closing sales price of such Ordinary
Share (or the closing bid, if no sales were reported,
as quoted on such exchange) as
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reported in the Wall Street Journal on the day prior
to the date such Option is granted. The Option Price
shall be subject to variation pursuant to Rule 8.
5. Limitations of the Scheme
(A) No Executive shall obtain rights under the Scheme which will,
at the time they are obtained, cause the aggregate market value of the Ordinary
Shares which he may acquire in pursuance of rights obtained under the Scheme or
under any other share option or share incentive scheme approved under Schedule
9 to the Act (as amended from time to time), and any other executive share
option scheme established for any directors or employees of members of the
Group or any associated corporation of the Corporation (as the same is defined
in Section 416 of the Act) and whether exercised or not, to exceed four times
the Executive's Relevant Limit or Pound 100,000 which ever is the greater.
Provided that no account shall be taken of subscription or acquisition moneys
for shares comprised in such options granted more than ten years prior to the
date of the proposed grant of such Option, whether exercised or not.
(B) Subject to paragraph 5(C) below the total number of Ordinary
Shares over which Options may be granted at any date under the Scheme shall not
exceed five million (except to the extent that such options have lapsed or been
renounced).
(C) The total number of Ordinary Shares over which Options may be
granted under the Scheme at any date, when aggregated with the total number of
Ordinary Shares in respect of which rights of subscription have been granted in
the previous ten years under the Scheme and any other share
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option or share incentive scheme established for any directors or employees of
members of the Group (except to the extent to which they have lapsed or been
renounced or released), shall not exceed twenty per cent of the aggregate of
the issued Ordinary Shares and "A" Preferred Stock and Ordinary Shares already
put under option (and which have not lapsed or been renounced or been
exercised) from time to time.
(D) No Option may be granted under the Scheme more than ten years
after the Date of Commencement.
6. Exercise, Lapse and Renunciation of Options
(A) Subject to the following provisions of Rule 6(A) a subsisting
Option may only be exercised in whole or in part by an Option Holder during the
seven years following the expiration of a period of three years from the grant
thereof. Notwithstanding the foregoing but subject to Rule 6(B) below a
subsisting Option may nevertheless be exercised within such three year period
if:-
(i) the Option Holder ceases to be in the full time
employment of a member of the Group by reason of his injury,
disability, retirement, dismissal by reason of redundancy or
because the corporation employing him ceases to be a member of
the Group (unless the Option Holder is immediately employed by
another member of the Group), in any of which events the
Option Holder shall have the right to exercise the Option
during the period of three months from the date of such
cessation; or
(ii) the Option Holder dies whilst in the full time
employment of a member of the Group in which event his legal
personal representatives shall have the right to exercise the
Option during the period of six months from
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the date of his death; or
(iii) the Option Holder dies within three months of ceasing
to be in the full time employment of a member of the Group for
one of the reasons described in (A)(i) above, in which event
his legal personal representatives shall have the right to
exercise the Option during the period of six months from the
date of such cessation; or
(iv) a general offer is made to all the holders of
Ordinary Shares (or all such holders other than the offeror
and/or any person controlled by the offeror and/or any person
acting in association or concert with the offeror) and such
offer becomes or is declared unconditional in which event the
Option Holder may at any time within three months after the
date on which such offer is made exercise without restriction
all or any part of his Option; or
(v) notice of a meeting to consider a resolution for the
voluntary winding up of the Corporation is given, in which
event the Option Holder shall have the right to exercise the
Option at any time before the resolution is duly passed or
defeated or the meeting concluded or adjourned sine die.
(B) Notwithstanding the terms of Rule 6(A) above an
Option shall lapse automatically insofar as it is capable of exercise if it has
not been exercised by the earlier of:-
(i) the expiration of ten years from the date of grant
thereof;
(ii) the expiration of three months from the date on which
an Option Holder ceases to be in the full-time
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employment of a member of the Group for the reasons described
in (A)(i) or above;
(iii) the expiration of six months from the date of the
death of the Option Holder whilst in the full-time employment
of a member of the Group;
(iv) where the Option Holder dies within three months of
ceasing to be in the full-time employment of a member of the
Group for the reasons described in 6(A)(i) above, the
expiration of six months from the date of such cessation;
(v) the date on which an Option Holder is dismissed or
leaves the employment of a member of the Group for any reason
other than for those reasons or in the circumstances described
in 6(A)(i) or 6(A)(ii) above;
(vi) providing that a subsisting Option is not released
for a new Option pursuant to Rule 6 (F), three months after
the date of any offer in writing given to the holders of
Ordinary Shares pursuant to Rule 6A(iv);
(vii) the date of commencement of a winding up of the
Corporation;
(ix) the date the Option Holder is adjudicated bankrupt;
(x) upon cancellation of the Option by the Directors
pursuant to Clause 3(F) hereof.
(C) It shall be a condition of the Scheme that in the event of the
termination of an Option Holder's full time employment with a member of the
Group (for whatever reason) he shall not be entitled to any compensation
whatsoever by reason of any alteration or determination thereon of his rights
or expectations under the Scheme.
(D) An Option Holder may at any time renounce his
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Option by serving notice in writing on the Corporation of his intention to so
renounce. The renunciation shall be effective from the date of receipt of such
notice by the Corporation, upon which date the Option Holder's Option shall be
deemed to have lapsed.
(E) No Option may be exercised by an Option Holder at any time
when he is precluded by paragraph 8 of Schedule 9 to the Act from participating
in the Scheme.
(F) If any corporation (in this Rule 6(F) referred to as the
acquiring corporation) obtains control of the Corporation as a result of the
event specified in Rule 6(A)(iv) the Directors shall seek the agreement of the
acquiring corporation for Option Holders to release subsisting Options to the
acquiring Corporation in consideration of the acquiring Corporation granting
new Options which relate to shares in the acquiring Corporation or any other
corporation falling within Paragraph 10 of Schedule 9 to the Act. If such
agreement is obtained every Option Holder shall be entitled to release every
subsisting Option held by him in consideration of the grant of new Option which
satisfies the following conditions and providing that such transfer is within
the appropriate period a set out in Rule 6 (G):-
(i) is over shares in the acquiring corporation or a corporation
controlling the acquiring corporation which satisfy the
conditions specified in paragraphs 10 to 14 inclusive of
Schedule 9 to the Act (and the term "Ordinary Shares" in these
Rules shall thereafter be construed accordingly)
(ii) is a right to acquire such number of such common stock as has
on acquisition of the new Option an
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aggregate market value equal to the aggregate market value of
the Ordinary Shares subject to the old Option on its disposal
(iii) has an Option Price per Ordinary Share such that the aggregate
price payable on complete exercise of the Option equals the
aggregate price that would have been payable on complete
exercise of the old Option; and
(iv) is otherwise identical in terms to the old Option.
The new Option shall, for all other purposes of these Rules, be treated as
having been acquired at the same time as the old Option for which it is
released.
(G) The "appropriate period" referred to in Rule 6(F) above means
the period of three months beginning when the offeror has obtained control of
the Corporation and any conditions subject to which the offer is made are
satisfied.
(H) Rules 6(F) and 6(G) above apply to all Options granted on or
after the Date of Commencement.
(I) The exercise of an Option pursuant to the preceding provisions
of this Rule 6 shall be subject to the provisions of Rule 7 below.
(J) Following the release of subsisting Options and the grant of
new Options the term "Corporation shall for the purposes only of Rules 6(A)(v),
(vi), 6(B)(i) (vi) (vii) (viii), 6(D), 6(E), 6(F), 6(G), 7, 8, 9, 10, 11, and
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which includes shares over which new Options have been granted and for the
purposes of Rules 6(D) and 9(D) shall mean Synon Corporation and the acquiring
corporation and the term "Directors" in Rules 6, 7, 8, 9 (E), 10 and 11
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shall mean in relation to the new Options the Directors of such corporation.
(K) Where in accordance with Rule 6(F) subsisting Options are
released and new Options granted the new Options shall not be exercisable in
accordance with Rule 6(A) (iv) by virtue of the event on which new Options were
granted.
7. Manner of Exercise of Options
(A) An Option may be exercised in whole or part by the Option
Holder giving notice in writing to the Corporation stating that the Option is
thereby exercised and the number of Ordinary Shares in respect of which it is
exercised. With such notice the Option Holder shall forward to the Corporation
in a form acceptable to the Directors the consideration for the Ordinary Shares
in respect of which the Option is exercised calculated by reference to the
Option Price. An Option (or part thereof) shall be deemed to have been
exercised when the said notice together with the said consideration is received
by the Corporation. If the consideration is paid other than in cash, such
consideration shall be deemed to have been received by the Corporation upon the
bank of the Corporation confirming that such cash consideration has been
credited to the bank account of the Corporation or to such other account as the
Corporation shall direct. As soon as practicable and in any event within 30
days of receipt of the said notice and consideration the Corporation will send
or cause to be sent to the Option Holder or his legal personal representatives
(as the case may be) a definitive share certificate for the Ordinary Shares in
respect of which the Option is exercised.
(B) Any Ordinary Shares allotted on the exercise of an
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Option shall rank pari passu in all respects with the Ordinary Shares in issue
at the date of exercise of such Option and shall participate in all dividends
or other distributions which may be declared, made or paid by reference to a
record date after such date.
(C) Any partial exercise of an Option (other than such partial
exercise as completes the exercise of the said Option) shall be in respect of
ten Ordinary Shares or an integral multiple thereof.
8. Issue or Reorganisation
In the event of any capitalisation issue or rights issue or any
subdivision or consolidation of the Ordinary Shares or any reduction of the
Ordinary Share capital of the Corporation then the number of Ordinary Shares
comprised in any Option, the number of Ordinary Shares which may be issued or
made available pursuant to rights granted under the Scheme and the Option Price
thereof may be adjusted by the Directors (subject to obtaining prior Board of
Inland Revenue approval to such adjustment) in such manner and with effect from
such date as they may in their absolute discretion determine to be appropriate
Provided that the Auditors shall have confirmed in writing that in their
opinion such adjustments are fair and reasonable. Any such adjustments shall
be made on the basis that the total moneys originally payable by an Option
Holder on full exercise of his Option rights shall remain unchanged.
9. Administration and Amendment
(A) The Scheme shall in all respects be administered by the
Directors who may at any time and from time to time by resolution (and without
other formality) amend or augment the
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Scheme in any respect Provided that:-
(i) no amendment shall operate to affect adversely any rights
already acquired by an Option Holder under the Scheme;
(ii) no amendment may be made except by the Corporation in general
meeting to nullify or override any of the provisions of Clauses 1(f),
1(k), 1(1) 1(m) 3(A), 3(B), 3(D), 3(E), 3(F), 4, 5, 6, 7(B), 8 and
this Clause.
Notwithstanding anything to the contrary contained herein the
Directors may at any time amend the Scheme in any way to the extent necessary
either to secure the approval of the Scheme by the Board of Inland Revenue or
to ensure that such approval is not withdrawn pursuant to any statutory
modifications to the Act.
(B) No amendment or alteration to the Scheme made after it has
been approved under the provisions of Schedule 9 to the Act shall have effect
unless such amendment or alteration has been approved by the Board of Inland
Revenue.
(C) The Corporation shall bear the costs of setting up and
administering the Scheme.
(D) The Corporation shall maintain all necessary books of account
and records relating to the Scheme.
(E) The Directors shall be entitled to authorise any person to
execute on behalf of an Option Holder, at the request of the Option Holder, any
document relating to the Scheme insofar as such document is required to be
executed pursuant hereto.
10. Availability of Shares
Subject to the provisions of this Clause the Corporation shall have
available at all times sufficient authorised but
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unissued Ordinary Shares necessary to satisfy Options which have been granted
but not exercised.
On the exercise of an Option the Directors may satisfy the requirement
for Ordinary Shares by allotment of Ordinary Shares, by purchasing Ordinary
Shares or by such other means as they may determine.
11. Admission to the Official List
If at any time prior to exercise of a Subsisting Option the Ordinary
Share capital of the Corporation shall be admitted to the Official List of The
Stock Exchange or if such shares shall be listed for trading on the New York
Stock Exchange the Corporation shall within one month after the date of
exercise of an Option apply to the Council of either above referenced Stock
Exchanges for permission for the Ordinary Shares the subject of such exercise
to be admitted to the Official List or to the New York market as the case may
be.
12. Termination
The Directors may at any time resolve not to grant further Options
under the Scheme but the subsisting rights of Option Holders under the Scheme
shall remain in force.
13. Notices
(A) Option Holders shall be entitled while they have subsisting
rights under the Scheme to receive copies of all notices and other documents
sent by the Corporation to its Ordinary Shareholders.
(B) Any notice or other communication between the Corporation and
an Option Holder shall be given by sending the same by post or by personal
delivery to, in the case of the Corporation, its principal place of business in
the
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United Kingdom and in the case of the Option Holder, his address as notified to
the Corporation from time to time.
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Date _________________________
To:
SYNON CORPORATION ("the Corporation")
EXECUTIVE SHARE OPTION SCHEME
LETTER OF OFFER
The Directors of the Corporation hereby offer you an option ("the Option") to
subscribe for or a acquire up to { } shares of common stock in the Corporation
at a price of ${ } per share on the terms and conditions set out in the Rules
of the Synon Corporation Executive Share Option Scheme. This offer is personal
to you and may not be transferred, assigned or pledged to any other person. If
you wish to accept this offer of an Option you must send the Form of Acceptance
attached to this letter, duly signed and completed to:
The Company Secretary
Synon Corporation
{ADDRESS}
on behalf of the Corporation to reach him not later than the twenty fifth day
following the date of this letter. Subject to your completing and returning a
valid Form of
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Acceptance within the time specified above, you will, in due course, be sent an
Option certificate evidencing the principal terms of the Option (including the
Date of Grant of the Option).
The detailed terms governing the Option are set out in the Rules of the Scheme,
a copy of which is attached. The Rules are legally binding and are deemed to
be incorporated in this letter of offer.
If you leave the employment, or give notice of your intention to leave the
employment of the Corporation within the 25 day period mentioned above, this
offer will automatically lapse.
For and on behalf of
Synon Corporation
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Secretary
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SYNON CORPORATION
EXECUTIVE SHARE OPTION SCHEME
FORM OF ACCEPTANCE
TO: Synon Corporation ("the Corporation")
(address)
1. Pursuant to the letter of Offer from the Corporation to which this
Form of Acceptance is attached I hereby accept the offer of an Option
to subscribe for or acquire the number of shares of common stock in
the Corporation stated at A below at the subscription price per share
stated at B below.
2. I hereby acknowledge that an Option granted to me pursuant to the
Letter of Offer and this Form of Acceptance will be governed by the
Rules of the Scheme and I agree to be bound thereby.
3. I hereby declare that I am applying for an Option on my own behalf and
not as trustee or nominee for any other person(s).
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A Number of shares of common stock in the Corporation comprised in the
Option: { }
B Subscription price per share: ${ }
IN WITNESS whereof I have hereto executed this document as a deed this day
of 19{ }
SIGNED AS A DEED and DELIVERED by
the said { } in
the presence of
Witness
signature:
Witness
name:
Witness
address:
Witness
occupation:
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