Registration of Securities to be Offered to Employees Pursuant to an Employee Benefit Plan — Form S-8 Filing Table of Contents
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1: S-8 Registration of Securities to be Offered to HTML 72K
Employees Pursuant to an Employee
Benefit Plan
2: EX-4.1 Instrument Defining the Rights of Security Holders HTML 187K
3: EX-15 Letter re: Unaudited Interim Financial Information HTML 12K
4: EX-23 Consent of Experts or Counsel HTML 7K
EX-4.1 — Instrument Defining the Rights of Security Holders
Trust
Deed and Rules of the Morgan Stanley UK Share Ownership Plan
This
Trust Deed and Rules
of the
Morgan Stanley UK Share Ownership Plan are made as a deed on the date set out below
between:
(1)
Morgan Stanley International Incorporated a company incorporated in
Delaware of 1585 Broadway, New York, New York (the
“Company”) and
(2)
Hill Samuel ESOP Trustees Limited of 25 Gresham Street, London, EC2V
7HN (the “Trustees”)
to set up
the Plan with effect from the date of formal approval of the Plan by HMRC.
1
Part
A - Definitions
1
Meaning of words used
“
Award Day” means the date on which Bonus Shares are awarded under the
Plan.
“
Award System” means the system of calculating the number of Bonus Shares
to be awarded from time to time, adopted by the Plan Administrators and which satisfies
paragraph 9 of Schedule 2 (participation on same terms).
“the Company” means Morgan Stanley International Incorporated.
“Connected
Share Incentive Plan”
means a
Share Incentive Plan (other than the Plan) established by the Company or a connected
company (as defined in paragraph 18 of Schedule 2) of the Company which has been
approved under Schedule 2.
“
Contributions” means deductions from a Participant’s Salary for
the purpose of acquiring Purchased Shares.
“
Dividend Shares” means Shares which the Trustees acquire by reinvesting
Participants’ cash dividends from their Plan Shares.
“
Employee” means, except for the purposes of Rule
9.5, an
employee of a Participating Company.
“
Employment” means employment by the Company or any associated company
(within the meaning of paragraph 94 of Schedule 2).
“
Bonus Shares” means Shares awarded to Participants without payment under
Rule
4.
“
Holding Period” means the period for holding Bonus Shares and Dividend
Shares in the Plan.
“HMRC”
means Her
Majesty’s Revenue and Customs;
“
ITEPA” means the Income Tax (Earnings and Pensions) Act 2003.
“
Market Value” means on any day on which Shares are admitted to trading
on the NYSE the value per share fixed at the mid market price of the Shares on the NYSE
quoted in the Wall Street Journal on the preceding day or where Shares are admitted to
the Official List of the UK Listing Authority and traded on the London Stock Exchange,
the mid market price derived from the Daily Official List of the London Stock Exchange
on the preceding day. Where Shares are not so admitted, “Market Value” has
the meaning given by virtue of Part VIII of the Taxation of Chargeable Gains Act 1992
and as agreed in advance with HMRC Shares & Assets Valuation.
“NYSE”
means the
New York Stock Exchange.
“
Participant” means any Employee who has joined the Plan.
“
Participating Company” means an employer participating in the Plan being
the Company, any Subsidiary and any other company which (if required) HMRC agrees may
participate and which in both cases is so designated by the Plan Administrators and
which has entered into a deed of participation with the Company and the Trustees under
Rule
12.1.
“
Purchased Shares” means Shares which the Trustees allocate to
Participants in respect of their Contributions.
2
“
Plan” means the Morgan Stanley UK Share Ownership Plan as changed from
time to time.
“
Plan Administrator” means the person or persons authorised to operate
the Plan.
“
Plan Shares” mean the Shares awarded or allocated to Participants under
the Plan.
“
Reconstruction or Takeover” means a transaction affecting any Shares as
described in Paragraph 86 of Schedule 2.
“
Salary” has the meaning in paragraph 43(4) of Schedule 2.
“
Schedule 2” means Schedule 2 to ITEPA.
“
Share” means a share of Common Stock of Morgan Stanley which meets the
requirements of Part 4 of Schedule 2, and any security which forms part of any new
holding referred to in paragraph 86, of Schedule 2.
“
Subsidiary” means a company which is under the control of the Company
within the meaning of Section 840 of the Taxes Act (as extended by paragraph 91 of
Schedule 2).
“
Taxes Act” means the Income and Corporation Taxes Act 1988.
“
Trustee” means Hill Samuel ESOP Trustees Limited or the trustees for the
time being of the Plan.
Words of
the masculine gender shall include the feminine and vice versa.
3
Part
B - Operation of the Plan and Joining the Plan
2
Operation of the Plan
2.1
Purpose of the Plan
The
purpose of the Plan is to help and encourage the holding of Shares by Participants or
for their benefit through an employee Share Incentive Plan approved under the
provisions of paragraph 81 of Schedule 2.
The
Trustees may achieve the purpose of the Plan by applying the capital and income of the
Plan assets to or for the benefit of Participants as described in the Plan
rules.
2.2
Time of Operation
The Plan
Administrators can only operate the Plan at any time after its approval by HMRC.
3
Joining the Plan
3.1
Employees to be invited
Subject to
Rules
3.2
and
3.3,
whenever the Plan Administrators decide to operate the Plan, they must invite all
Employees who:
3.1.1
are UK resident taxpayers (within the meaning of paragraph 8(2) of
Schedule 2); and
3.1.2
have been employees of a qualifying company (within the meaning of
paragraph 17 of Schedule 2) throughout any qualifying period of service
set under Rule
3.5.
They may
also invite other Employees, provided that if there is a qualifying period of service,
the Employees satisfy Rule
3.1.2.
Every
Employee who is invited to participate must be invited on the same terms, in accordance
with paragraph 9 of Schedule 2.
3.2
Prohibited invitations
However,
the Plan Administrators must not invite anyone:
3.2.1
who is to participate at the same time in another Share Incentive Plan
approved under Schedule 2 which has been established by the Company or
a connected company (within the meaning of paragraph 18(3) of Schedule
2) or would have so participated but for the failure to meet a
performance target; or
3.2.2
who is excluded from participating under paragraph 19 of Schedule 2 (no
material interest requirement).
3.3
Bonus share invitations - Employees under
notice
The Plan
Administrators may decide not to invite Employees to participate in an award of Bonus
Shares who have given or received notice of termination of employment on or before the
Award Day relating to that award.
4
3.4
Form of invitation and application
The
invitation and application to join the Plan must be made in the form determined by the
Plan Administrators, and approved by HMRC (if necessary). This may include invitations
and applications by writing or by email, internet (or other electronic means) or
interactive voice response.
The
invitation and the application will, if applicable, specify whether for that operation
of the Plan, Bonus Shares and/or Purchased Shares (and, where relevant, Dividend
Shares) may be acquired. If Purchased Shares are offered, the application form will
comply with Rule
5.
3.5
Qualifying period of service
The Plan
Administrators may set a qualifying period of service for any operation of the Plan,
and if they do it must apply in relation to, and be the same for, all Employees.
If Bonus
Shares are offered, the qualifying period of service must not be more than 18 months,
ending with the Award Day of those Bonus Shares.
If
Purchased Shares are offered and there is no Accumulation Period, the qualifying period
of service must not be more than 18 months, ending with the start of
Contributions.
3.6
Submission of Applications
Employees
invited to participate in the Plan and who wish to do so, must submit the completed
application by the date specified, if any. In doing so they agree to the terms and
conditions of participation set out in the application. Anyone who has not submitted a
completed application form as required will not participate in the Plan.
5
Part
C - Bonus Shares
4
Bonus Shares
4.1
Limit
4.1.1
If the Plan is operated to provide Bonus Shares, Bonus Shares awarded
to each Employee participating in the Plan must not have an initial
market value of more than £3,000 in any tax year, or any greater
amount specified for the purposes of paragraph 35(1) of Schedule
2.
4.1.2
Where, in a tax year, an Employee participating in the Plan has been
awarded Bonus Shares and has, in the same tax year, been awarded Bonus
Shares under any Connected Share Incentive Plan, those Bonus Shares
will count, for the purposes of this Rule
4.1
as if they were Bonus Shares awarded under this Plan.
4.1.3
“Initial market value” means the Market Value of the Bonus
Shares on the Award Day and, the market value of Shares subject to
restrictions or risk of forfeiture shall be determined as if there were
no restriction or risk.
4.2
Terms relating to Bonus Shares
The Plan
Administrators will set the following:
4.2.1
the Award System for that operation of the Plan;
4.2.2
the Holding Period, which must be at least three years but not more
than five years beginning with the Award Day, must be the same for all
Bonus Shares in an award and cannot be increased once that award has
been made; and
4.2.3
any forfeiture provisions under Rule
4.3.
During
this Holding Period, Rule
7.4
applies in
relation to the Bonus Shares.
4.3
Forfeiture ofBonus Shares(not currently used)
The Plan
Administrators may decide that an award of Bonus Shares will be made on the basis that
if Participants leave Employment for a specified reason (other than for a reason set
out in paragraph 32(2) of Schedule 2) within a specified period (not exceeding 3 years
from the Award Day) they will lose any right to receive Bonus Shares.
4.4
Payments by Participating Companies and acquiring
Shares
The Plan
Administrators will notify each Participating Company of the amount it is required to
contribute in respect of an award of Bonus Shares. Each Participating Company will pay
this amount to the Trustees and the Trustees will use the funds to purchase or
subscribe for Shares, as agreed with the Plan Administrators.
4.5
Awards of Bonus Shares
The
Trustees will award Bonus Shares to each Participant on the basis set out in the Award
System.
6
4.6
Award Eligibility Requirement
The
Trustees will not award Bonus Shares to a Participant who is not an Employee on the
Award Day. Bonus Shares will not be awarded to Employees who have given or received
notice of termination of Employment on or before the Award Day.
4.7
Notification by Trustees
As soon as
practicable after the award of Bonus Shares, the Trustees will write and tell each
Participant of the award. The Trustees will include in the notification the number and
description of the Bonus Shares, the Holding Period applying to the Bonus Shares and
their Market Value on the Award Day.
4.8
Transfer of legal title
After the
end of the Holding Period, the Participant may at any time direct the Trustees to
transfer legal title of Bonus Shares to him or as he may direct.
7
Part
D - Purchased Shares
5
Purchased Shares
5.1
Application for Purchased Shares
If the
Plan is operated to provide Purchased Shares, Employees invited must complete the
relevant section of the application form. This section will satisfy the requirements of
Part 6 of Schedule 2 and will include the notice required under paragraph 48 of
Schedule 2 (notice of possible effect of deductions on benefit entitlement).
5.2
Amount of Contributions
5.2.1
The Plan Administrators will determine the maximum Contribution which
will apply in relation to that operation of the Plan which will not be
more than the lower of:
(i)
10% of Salary for that tax year; or
(ii)
£1,500 in any tax year; or
(iii)
a greater percentage or amount specified for the purposes of paragraph
46 of Schedule 2 from time to time.
5.2.2
If Contributions exceed these limits, the excess amount will be repaid
to the Participant as soon as practicable (after deducting any income
tax and national insurance contributions due).
5.2.3
If a Participant makes Contributions under this Plan in a tax year and,
in the same tax year, has made contributions under any Connected Share
Incentive Plan, those Contributions will count, for the purposes of
this Rule
5.2, as if they were Contributions under this Plan.
5.3
Minimum Contribution
The Plan
Administrators may set from time to time a minimum amount (not more than £10) for
Contributions on any occasion. If there is such a minimum amount, it will be set out in
the application.
5.4
Limit on Purchased Shares
The Plan
Administrators may set from time to time a limit on the number of Shares which may be
acquired as Purchased Shares. If there is such a limit, it will be set out in the
application.
5.5
Scaling down
If there
is a limit on the number of Shares which may be acquired as Purchased Shares and the
Contributions set out in the application forms exceed that number, the Plan
Administrators will scale down applications by taking any one or more of the following
steps in turn:
5.5.1
reduce the excess of Contributions over any set minimum amount for
Contributions proportionately; then
5.5.2
reduce all monthly Contributions to any set minimum amount for
Contributions; then
8
5.5.3
select applications to contribute the minimum amount for Contributions
by lot.
The Plan
Administrators will notify Participants of the scaling down and their application will
be deemed changed or withdrawn.
5.6
Holding Contributions
The
Participants’ Contributions will be transferred to the Trustees as soon as
practicable. The Trustees will hold the Contributions in an account with:
5.6.1
a person falling within section 840A(1)(b) of the Taxes Act; or
5.6.2
a building society; or
5.6.3
a firm falling within section 840A(1)(c) of the Taxes Act.
The
account may, but need not, pay interest on the Contributions held. If it does, the
Trustees must account to each Participant for the interest earned on his
Contributions.
5.7
Repayment of Contributions
The
Trustees must pay to a Participant any Contributions it holds (after deducting any
income tax and national insurance contributions due) together with any interest if,
before acquiring Purchased Shares on behalf of the Participant;
5.7.1
they receive a termination notice under Rule
14.1
(Termination); or
5.7.2
HMRC notifies the Company that it has withdrawn the approval of the
Plan under Schedule 2; or
5.8
Excess Contributions
If the
Participant agrees when completing the application, the Trustees may carry forward and
add to the amount of the next Contribution any Contributions not used to acquire
Purchased Shares. If there is no such agreement, the Trustees must pay the excess to
the Participant as soon as practicable after deducting any income tax and national
insurance contributions due.
5.9
Stopping and re-starting Contributions
A
Participant may give notice to the Company to stop making Contributions. He may also
give notice to the Company at any time that he wishes Contributions to re-start, but he
may not make up any missed Contributions.
The
Company will arrange for Contributions to stop within 30 days of receiving the notice,
unless the notice specifies a later date. The Company will arrange for Contributions to
re-start by the next due date for Contributions which is more than 30 days after
receipt of the notice to re-start, unless the notice specifies a later date.
5.10
Varying Contributions
A
Participant may vary his Contributions with the agreement of the Company.
5.11
Withdrawal from agreement to make Contributions
A
Participant may at any time withdraw from the agreement to make Contributions made at
the time of joining the Plan and ask for the return of any Contributions which have not
been used to acquire Purchased Shares by giving notice to the Company. The Participant
will be
9
treated as
having stopped Contributions 30 days after the receipt of the notice, unless a later
date is specified in the notice. The Trustees must pay to the Participant any
Contributions they hold as soon as practicable (after deducting any income tax and
national insurance contributions due) together with any interest, if payable. Any
Purchased Shares already allocated will not cease to be subject to the Plan as a result
of such a withdrawal.
5.12
Allocating shares
5.12.1
The Trustees must allocate Purchased Shares to the Participants by a
date set by the Trustees. This date must be not later than 30 days
after the last day on which the relevant deduction of Contributions
takes place.
5.12.2
If all the Purchased Shares to be allocated to Employees on that
occasion are purchased by the Trustees on the date of allocation or
over five or fewer consecutive dealing days ending on the date of
allocation or the immediately preceding dealing day, and provided the
Company is quoted on NYSE and/or the Daily Official List of the London
Stock Exchange, the number of Shares allocated to each Participant will
be calculated using the average price actually paid by the Trustees for
the Shares.
5.12.3
If all the Purchased Shares to be allocated to Employees on that
occasion are not purchased by the Trustees on the date of allocation or
over five or fewer consecutive dealing days ending on the date of
allocation or the immediately preceding dealing day, the number of
Shares allocated to each Participant will be calculated using the
Market Value on the date of allocation.
5.12.4
All Purchased Shares must be allocated on the same date.
5.13
Allocation Eligibility Requirement
The
Trustees will not allocate Purchased Shares to an individual who is not an Employee at
the time the related Contributions are deducted.
Rule
8.1
applies if
an Employee leaves Employment during the acquisition period for an award of Purchased
Shares.
5.14
Notification by Trustees
As soon as
reasonably practicable after the Trustees have allocated Purchased Shares to a
Participant, the Trustees will notify that Participant in writing. The Trustees will
set out the number and description of the Purchased Shares, the amount of Contributions
used to acquire the Shares and the price per Share which was used to calculate the
number of Purchased Shares allocated in accordance with Rule
5.13
or
5.14.
5.15
Access to Purchased Shares
A
Participant may at any time take out of the Plan any Purchased Shares allocated to him.
This is subject to any income tax and national insurance due.
A
Participant may, at any time, direct the Trustees to transfer legal title of Purchased
Shares to him or as he may direct.
10
Part
E - Dividends
6
Dividends
6.1
Dividend Shares(not currently used)
6.1.1
The Plan Administrators may from time to time decide that instead of
Participants receiving cash dividends:
(i)
the Trustees must re-invest cash dividends they receive in respect of
Plan Shares in additional Shares to be held on behalf of Participants;
or
(ii)
the Trustees must re-invest cash dividends as set out in Rule
6.1.1
but only in respect of Plan Shares of Participants who have chosen this
by completing the relevant section on the application.
6.1.2
The total amount so reinvested cannot exceed £1,500 in each tax
year (or such greater amount specified for the purposes of paragraph
64(1) of Schedule 2).
6.1.3
If a Participant reinvests an amount under this Rule
6.1
in a tax year and, in the same tax year, has reinvested an amount in
dividend shares under any Connected Share Incentive Plan, that amount
will count, for the purposes of this Rule
6.1.2, as if it were reinvested under this Plan.
6.1.4
If the Plan Administrators have not made such decisions, or to the
extent that the cash dividends exceed the limit, the Trustees must pay
over cash dividends to the relevant Participant as soon as
practicable.
6.2
Allocating Dividend
Shares(not currently used)
6.2.1
If all the Dividend Shares to be allocated to Employees on any occasion
are purchased by the Trustees on the date of allocation or over five or
fewer consecutive dealing days ending on the date of allocation or the
immediately preceding dealing day, and provided the Company is quoted
on NYSE and/or the London Stock Exchange then the number of Dividend
Shares allocated to each Participant will be calculated using the
average price actually paid by the Trustees for the Shares.
6.2.2
If all the Dividend Shares to be allocated to Employees on any occasion
are not purchased by the Trustees on the date of allocation or over
five or fewer consecutive dealing days ending on the date of allocation
or the immediately preceding dealing day, then the number of Dividend
Shares allocated to each Participant will be calculated using the
Market Value on the date of allocation.
6.2.3
Dividend Shares must be allocated on or before a date set by the
Trustees. This date must be no later than 30 days after the date they
receive cash dividend.
All the
Dividend Shares must be allocated on the same date. In allocating Shares the Trustees
must treat Participants fairly and equally.
6.3
Cash dividends carried forward and
paid(not currently used)
The
Trustees may retain, carry forward and add to the amount of the next cash dividend to
be reinvested the amount of any cash dividend which is not sufficient for the
allocation of one or more Dividend Shares. But the Trustees must keep these amounts
separately
11
identifiable
and amounts derived from an earlier cash dividend are treated as reinvested before an
amount derived from a later cash dividend.
The
Trustees must pay to the Participant, as soon as practicable, any cash amounts referred
to above:
6.3.1
which are not reinvested in Dividend Shares within 3 years of payment
of the dividend; or
6.3.2
if the Participant ceases to be in Employment; or
6.3.3
if the Trustees receive a termination notice under Rule
14.1.
When
making the payment, the Trustees will supply to the Participant the information
referred to in paragraph 80(4) of Schedule 2.
6.4
Notification(not currently used)
As soon as
practicable after the Trustees have allocated any Dividend Shares to a Participant, the
Trustees will notify the Participant in writing. The Trustees will set out the number
and description of those Dividend Shares, the price per Share which was used to
calculate the number of Dividend Shares allocated in accordance with Rule
6.2.1
or
6.2.2, the
Holding Period and any cash dividends carried forward as described in Rule
6.3.
6.5
Rights and restrictions(not currently used)
Dividend
Shares must be shares of the same class and carry the same rights as the Shares in
respect of which the dividend is paid. They must not be subject to any
forfeiture.
Rule
4.2.2
applies to
Dividend Shares but the Holding Period must be 3 years starting on the date the
Trustees allocated the Dividend Shares as described in Rule
6.2.
Rule
7.4
also
applies to Dividend Shares.
6.6
Transfer of legal title(not currently used)
After the
end of the Holding Period the Participant may at any time direct the Trustees to
transfer legal title of Dividend Shares to him or as he may direct.
6.7
Other dividends
Cash
dividends payable in respect of Plan Shares and not reinvested in Dividend Shares
(because they exceed the limit set out in Rule
6.1
or for any
other reason) will belong to the relevant Participant. The Trustees will pay those
dividends to the Participant as soon as practicable after receipt.
The
Trustees are not required to pay a Participant any interest earned on any dividend to
which the Participant is entitled.
The
Trustees must hold unclaimed dividends for at least 12 years from the date of
declaration of the dividend. If any dividends are unclaimed after this period, the
Trustees may keep them and use them for the purposes of the Plan.
Where any
dividends received are foreign cash dividends within the meaning of paragraph 75(6) of
Schedule 2 the Trustees will notify the Participant of the amount of any foreign tax
deducted from the dividend before it was paid.
12
6.8
Scrip dividends
The
Trustees may receive, following a direction from the Participant, Shares credited as
fully paid in whole or in part instead of a cash dividend (a scrip dividend). These
Shares will not form part of the Participant’s Plan Shares. The Trustees will
take all reasonable steps to transfer such Shares to the Participant.
13
Part
F - General Rules
7
General rules about
Shares
7.1
Listing
If and so
long as Shares are admitted to trading on the NYSE and/or listing on the Official List
and to dealing on the London Stock Exchange, Morgan Stanley International Incorporated
will, where relevant, apply for listing of any Shares subscribed under the Plan as soon
as practicable after their allotment.
7.2
Rights
Shares
issued on subscription will rank equally in all respects with the Shares. However, the
Plan Administrators may determine that they will not rank equally in all respects for
any dividends or other distributions payable or made in respect of a period beginning
before their date of issue.
Where
Shares are transferred they will have the benefit of all rights attaching to the Shares
by reference to a record date on or after the date on which they are allocated or
awarded.
The
Trustees may award Shares, a proportion of which will rank for dividends or other
rights attaching to Shares by reference to a record date preceding the relevant Award
Day and a proportion of which will not. If this happens, the Trustees will award the
Shares to each Participant as far as practicable in those same proportions.
7.3
Acquisition of Shares(not currently used)
The
Company may from time to time ask the Trustees to acquire any number of Shares
specified by it for award or allocation to Participants on a later operation of the
Plan. If the Trustees agree to acquire Shares, the Company will ensure that the
Trustees have sufficient funds to do so. The Trustees may also acquire Shares at any
other time, if they have sufficient funds to do so. These Shares must satisfy the
conditions specified in Part 4 of Schedule 2. Before any such Shares are awarded or
allocated under the Plan, they will be held on general trust for the purposes of the
Plan.
7.4
Restrictions on disposals of Shares
The
Participant must permit the Trustees to retain his Bonus Shares and Dividend Shares
throughout the Holding Period and the Trustees must retain them. The Participant cannot
assign, charge or otherwise dispose of his beneficial interests in the Bonus Shares and
Dividend Shares in any way during the Holding Period, and the Trustees shall not
dispose of the Bonus Shares and Dividend Shares (whether by transfer to the Participant
or otherwise) during the Holding Period, unless the Participant has ceased to be in
Employment, or if the circumstances set out in paragraphs 36(4) or 77 of Schedule 2
apply.
7.5
Voting
The
Trustees will invite Participants to direct them on the exercise of any voting rights
attaching to Plan Shares held by the Trustees on their behalf. The Trustees will only
be entitled to vote on a show of hands if all directions received from Participants who
have given directions in respect of a particular resolution are identical. The Trustees
will not be under any obligation to call for a poll. In the event of a poll the
Trustees will follow the directions of Participants.
14
The
Trustees must not vote in respect of unallocated Shares or any Shares they hold under
the Plan which have not been registered in their name.
7.6
Offers
The
Participant (or anyone properly authorised) may direct the Trustees on the appropriate
action to take in relation to any right relating to a Participant’s Plan Shares
to receive other shares, securities or rights of any description, and in relation to a
Reconstruction or Takeover. The Trustees may not take any action without such a
direction. If the Trustees are to be involved in any liability they may require an
indemnity from the Participant which they consider appropriate.
Where the
Trustees exercise rights under a rights issue in respect of a Participant’s Plan
Shares, any shares, securities or rights allotted as a result shall be treated as if
they were Plan Shares identical to the Shares in respect of which the rights were
conferred and as if they were awarded to the Participant under the Plan in the same way
and at the same time as those Shares. But this only applies if the rights issue is
offered in respect of all ordinary shares in the company and is subject to paragraphs
88(3) to 88(5) of Schedule 2.
On a
Reconstruction or a Takeover, the Trustees will hold any new shares (as described in
paragraph 87 of Schedule 2) as Shares subject to the Plan, as if they were the original
Shares.
7.7
Fractional entitlements
Where,
following any offer described in Rule
7.6, the
Trustees receive rights or securities, they will allocate them among the Participants
concerned on a proportionate basis, rounding down if necessary. The Trustees will then
add the fractions not allocated and sell the unallocated rights and securities. The
Trustees will deduct all expenses of sale and applicable tax from the proceeds of sale
and distribute the net proceeds of sale proportionately among the Participants whose
allocation was rounded down. However, if a Participant’s entitlement is under
£3 the Trustees may retain that sum and hold it on trust for the purposes of the
Plan.
7.8
Capital Receipts and other amounts
When the
Trustees receive money which is a capital receipt (within the meaning of Section 502 of
ITEPA) or the proceeds of any disposal, they will transfer the sum to the Participant
after complying with their PAYE obligations. The Trustees may, however, retain any
capital receipt under £3 due to any Participant and hold it on trust for the
purposes of the Plan.
The
Trustees must also pay over to each Participant any money or money’s worth
relating to any of his Plan Shares, apart from money’s worth consisting of new
shares as described in Rule [7.6]. But the Trustees are entitled to retain any amounts
needed to discharge their PAYE obligations and cash dividends reinvested or carried
forward under Rule
6.3.
7.9
Tax liabilities
The
Trustees will maintain the necessary records to comply with their PAYE obligations and
those of the Participating Companies so far as they relate to the Plan.
The
Trustees will pay to the relevant employing companies sufficient sums to enable the
employing companies to discharge any obligations to make PAYE deductions for income tax
or national insurance contributions which arise in the circumstances in Section 510(1)
of ITEPA.
15
The
Trustees may dispose of a Participant’s Plan Shares in order to raise sufficient
sums in order to meet any obligation under this Rule
7.9
unless the
Participant makes a payment in advance to the Trustees of a sum equal to the amount
required to discharge the obligation.
When a
Participant becomes liable to tax under ITEPA or Chapter 3 or 4 of part 4 of the Income
Tax (Trading and Other Income) Act 2005 in relation to his Plan Shares, the Trustees
must give the Participant any information relevant to determining that
liability.
8
Leaving Employment
8.1
Leaving Employment
8.1.1
Subject to Rule
4.3
(dealing with forfeiture), if a Participant leaves Employment, his Plan
Shares will cease to be subject to the Plan.
8.1.2
Subject to Rule
4.3
(dealing with forfeiture), unless the Plan Administrators decide
otherwise, the Plan will operate on the basis that if a Participant
leaves Employment for any reason, the Trustees will transfer the
Participant’s Plan Shares to the Participant or as he may direct
(or, if the Participant has died, to the personal representatives) as
soon as reasonably practicable.
8.1.3
If a Participant leaves Employment during the acquisition period
relating to an allocation of Purchased Shares, he shall:
(i)
for the purpose of awards of Purchased Shares be treated as ceasing to
be in Employment immediately after the allocation of Purchased Shares;
and
(ii)
for the purpose of determining when his Plan Shares cease to be subject
to the Plan, be treated as ceasing to be in Employment immediately
after the allocation of Purchased Shares.
8.1.4
For the purposes of this Rule
8.1“acquisition period” has the meaning given to it in
paragraph 97(3) of Schedule 2.
8.2
Tax free withdrawal of Plan Shares
In
accordance with paragraph 498 of ITEPA, a Participant is not liable to income tax or
national insurance contributions on his Shares ceasing to be subject to the Plan on
leaving Employment for any of the following reasons:
8.2.1
because of injury or disability;
8.2.2
on being dismissed by reason of redundancy;
8.2.3
by reason of a transfer to which the Transfer of Undertakings
(Protection of Employment) Regulations 1981 (S.I. 1981/1794)
applies;
8.2.4
if the relevant employment is employment by an associated company (see
paragraph 95(2) of Schedule 2), by reason of a change of control or
other circumstances ending that company’s status as an associated
company;
8.2.5
by reason of the Participant’s retirement on or after reaching
the specified retirement age of 50; or
8.2.6
on the Participant’s death.
16
9
General rules relating to the Plan
9.1
Notices
Any notice
or other document which has to be given in connection with the Plan may be delivered to
a Participant or sent by post to him at his home address using the records of that
Participant’s employing company, or such other address as the Company or the
Trustees consider appropriate or sent by e-mail (or other electronic means) to any
address which according to the records of his employing company is used by him (or such
other e-mail (or electronic) address as he may from time to time specify). Any notice
or other document which has to be given to the Company or the Trustees in connection
with the Plan may be delivered or sent by post to them at their registered offices (or
such other place as the Plan Administrators or the Trustees may from time to time write
and tell the Participants) or if the Plan Administrators allow and subject to such
conditions as they may specify, sent by e-mail (or other electronic means) to the
e-mail (or electronic) address for the time being notified by the Company. Notices sent
by post will be deemed to have been given on the second day following the date of
posting. Notices sent by e-mail (or other electronic means), in the absence of evidence
to the contrary, will be deemed to have been received on the first day after
sending.
9.2
Documents sent to Shareholders
The
Company may send to Participants copies of any documents or notices normally sent to
the holders of Shares.
9.3
Plan Administrators’ and Trustees’
decisions
The
decision of the Plan Administrators (or of the Trustees if the Plan Administrators so
decide) in any dispute or question affecting any Employee or Participant will be final
and binding on the parties concerned.
9.4
Regulations
The Plan
Administrators and the Trustees will have the power from time to time to make or vary
regulations for the administration and operation of the Plan, but these must be
consistent with this Deed.
9.5
Terms of employment
9.5.1
For the purposes of this Rule
9.5, “Employee” means any Participant, any Employee (within
the meaning of Rule
1) or any other person.
9.5.2
This Rule
9.5
applies during an Employee’s employment and after the termination
of an Employee’s employment, whether or not the termination is
lawful.
9.5.3
Nothing in the Rules or the operation of the Plan forms part of the
contract of employment of an Employee. The rights and obligations
arising from the employment relationship between the Employee and the
Company are separate from, and are not affected by, the Plan.
Participation in the Plan does not create any right to, or expectation
of, continued employment.
9.5.4
Operation of the Plan on a particular basis in any year does not create
any right to or expectation of operation of the Plan or the award or
allocation of Plan Shares on the same basis, or at all, in any future
year. In particular, a company which has
17
been a
Participating Company repeatedly may cease to be a Participating Company for any reason
or no reason.
9.5.5
The terms of the Plan do not entitle the Employee to the exercise of
any discretion in his favour.
9.5.6
Without prejudice to an Employee’s right to receive any Bonus
Shares awarded to him or any Purchased Shares or Dividend Shares
allocated to him subject to and in accordance with the express terms of
the Rules, no Employee has any rights in respect of the exercise or
omission to exercise any discretion, or the making or omission to make
any decision, relating to the Plan. Subject to the provisions of
Schedule 2, any and all discretions, decisions or omissions relating to
the invitation and application of Employees to join the Plan on any
particular occasion may operate to the disadvantage of the Employee,
even if this could be regarded as in breach of any implied term between
the Employee and his employer, including any implied duty of trust and
confidence. Any such implied term is excluded and overridden by this
Rule
9.5
9.5.7
Participation in the Plan is permitted only on the basis that the
Participant accepts all the provisions of the Rules, including this
Rule
9.5. By participating in the Plan, an Employee waives all rights under
the Plan, other than the right to receive any Bonus Shares awarded to
him or any Purchased Shares or Dividend Shares allocated to him subject
to and in accordance with the express terms of the Rules, in
consideration for, and as a condition of, his participation in the
Plan.
9.5.8
Nothing in this Plan confers any benefit, right or expectation on a
person who is not an Employee. No such third party has any rights under
the Contracts (Rights of Third Parties) Act 1999 to enforce any term of
this Plan. This does not affect any other right or remedy of a third
party which may exist.
9.5.9
Each of the provisions of this Rule
9.5
is entirely separate and independent from each of the other provisions.
If any provision is found to be invalid then it will be deemed never to
have been part of these Rules and to the extent that it is possible to
do so, this will not affect the validity or enforceability of any of
the remaining provisions.
9.6
Beneficiary who is incapable
If the
Trustees consider that a person cannot look after his affairs (because of illness,
mental disorder, age or other reason) they may use any amounts or Shares due to that
person for his or her benefit, or may pay or transfer them to some other person to do
so. The receipt of the person to whom the Trustees make payments or transfer Shares
will discharge the Trustees from any obligation in respect of the amounts or Shares
concerned.
9.7
Setting up costs
The
Company will pay the costs and expenses of the preparation and execution of these Plan
rules.
9.8
Errors and omissions
If as a
result of an error or omission Bonus Shares, Purchased Shares or Dividend Shares are
not awarded to a Participant in accordance with the Plan rules, the Trustees may, but
without any obligation to do so, do all such acts or things as may be agreed with HMRC
to
18
rectify
the error or omission notwithstanding that such actions may fall outside the time
limits contemplated by or otherwise conflict with the other provisions of the Plan
rules.
9.9
Data protection
By
participating in the Plan the Participant consents to the holding and processing of
personal data provided by him to the Company, any Participating Company, the Trustees
or third party service provider for all purposes relating to the operation of the Plan.
These include, but are not limited to:
9.9.1
administering and maintaining records;
9.9.2
providing information to the Company, any Participating Company, the
Trustees, registrars, brokers or third party administrators of the
Plan;
9.9.3
providing information to future purchasers of the Company or the
business in which the Participant works;
9.9.4
transferring information about the Participant to a country or
territory outside the European Economic Area that may not provide the
same statutory protection for the information as the
Participant’s home country.
10
Assets of the Plan
10.1
Assets held on trust
The
Trustees will hold all the payments they receive and the assets representing them from
time to time and all income on trust for the purposes of the Plan. The Trustees may
also accept gifts of cash and Shares which will be held on trust for the purposes of
the Plan.
10.2
Use of assets
The
Trustees may invest any moneys held by them and not immediately required for the
purpose of the Plan in such manner as they may choose. The Trustees are not under a
duty to invest trust property.
The
Trustees may borrow in order to acquire Shares for the purposes of the Plan or, but
only after getting the written consent of the Company, for any other purpose.
10.3
Plan expenses
The
Trustees will pay the expenses of the Plan (including their own expenses incurred in
attending to Plan business) from the Plan's assets, if the assets are sufficient and
the Company decides in writing. If there is no such direction, the expenses of the Plan
will be met by the Participating Companies in proportion to the amounts paid by them
under the Plan or (if the Trustees decide) in proportion to the number of Shares
awarded to their Participants under the Plan in the related year, or in proportion to
both.
10.4
Trustees’ duties relating to Shares
During the
Holding Period, the Trustees may only sell or transfer any Bonus Shares or Dividend
Shares in the following circumstances:
10.4.1
if a Participant instructs this as described in Rule
7.7; or
19
10.4.2
to obtain sufficient funds to secure rights arising under a rights
issue affecting Plan Shares; or
10.4.3
to discharge PAYE obligations under Rule
7.9; or
10.4.4
if they receive a termination notice as described in Rule
14.1.
10.5
Trustees holding Shares
Where a
Participant loses any right to receive Shares under the Plan, the Trustees will hold
those Shares on general trusts for the purposes of the Plan.
11
Trustees
11.1
Appointment and removal
The
Company may by resolution appoint new or additional trustees or a body corporate as a
sole trustee. The Company may also remove trustees.
These
powers may be exercised without giving a reason.
There must
be at least two trustees, except when there is a sole corporate trustee.
All the
trustees must be resident in the United Kingdom for United Kingdom tax purposes at all
times.
11.2
Retirement
A trustee
may retire by giving to the Company written notice of his wish to retire. The notice
will take effect at the expiry of 3 months after the date of the notice, or on any
other date agreed with the Company. The retiring trustee need not give a reason for
retiring and will not be responsible for any costs arising from his retirement. The
retiring trustee will take the necessary action, as directed by the Company, to give
effect to his retirement including delivering all documents which he has relating to
the Plan. Any continuing trustee is authorised to effect the transfer of Plan assets on
behalf of a retiring trustee.
11.3
Exercise of powers
If there
is more than one trustee, the Trustees may act by majority vote and may delegate powers
duties or discretions to any persons and on any terms (including terms which allow the
delegate to sub-delegate).
The
Trustees may allow any Shares to be registered in the name of an appointed nominee but
these Shares must be registered in a designated account.
Trustees
who delegate powers or use a nominee are not divested of any responsibility under the
Rules or under Schedule 2.
The
Trustees may at any time, and must if the Company so directs, revoke any delegation
made under this Rule, or require any Plan assets held by another person to be returned
to the Trustees, or both.
11.4
Trustees’ charges
A trustee
who carries on a profession or business may charge for services provided on a basis
agreed with the Company, as also may a company or firm in which a trustee is
20
interested.
These charges will also be paid from the Plan assets, if available, unless the Plan
Administrators decide otherwise.
11.5
Limit of Liability
A trustee
will not be liable for any breach of trust except wilful wrongdoing (but a paid trustee
will also be liable for negligence).
11.6
Indemnity
The
Participating Companies will jointly and severally indemnify each of the trustees
(except a paid trustee) against any expenses and liabilities which are incurred through
acting as a trustee of the Plan but which cannot, for any reason, be met from the
Plan’s assets. But this does not apply to expenses and liabilities which are
incurred through wilful wrongdoing (or negligence in the case of a paid trustee) or
covered by insurance under Rule
11.7. The
indemnity in this Rule
11.6
is in
addition to and without prejudice to the right which the Trustees have under general
law and the Trustee Act 2000 to be indemnified out of the Plan’s assets.
11.7
Insurance
The
Trustees may insure the Plan against any loss caused by it or any of its employees,
officers, agents or delegates. They may also insure themselves and any of these persons
against liability for breach of trust not involving wilful wrongdoing. Except in the
case of a paid trustee, the premiums may be paid from the Plan assets.
If the
Trustees are insured, they will waive the protection of Rule
11.5.
11.8
Personal Interest
The
Trustees and any director, officer or employee of a corporation acting as trustee, may
be interested in any securities of a Participating Company or any company in which a
Participating Company may be interested. Such person may enter into a contract with any
such companies and will not be liable to account for any profits obtained.
12
Participating Companies
12.1
Inclusion in the Plan
An
employer wishing to participate in the Plan must enter into a deed with the Company and
the Trustees agreeing to comply with the rules of the Plan. The deed must be in a form
agreed by HMRC.
12.2
Ceasing to participate
Any
Participating Company will cease to participate in the Plan:
12.2.1
when it ceases to be a Subsidiary; or
12.2.2
if and during any times when the Plan Administrators decide that the
Plan will not apply to it. (But in making this decision the Plan
Administrators must ensure that the conditions in paragraph 10 of
Schedule 2 are still satisfied. These conditions are that the Plan must
not have any features which may discourage certain employees from
participating and that the Plan cannot benefit mainly directors or
higher paid employees).
21
13
Changing the Rules
13.1
Before HMRC approval
Before
HMRC approves the Plan under Schedule 2 the Plan Administrators can change the Rules as
necessary in order to obtain approval.
13.2
After HMRC approval
After the
Plan is approved by HMRC, the Plan Administrators and the Trustees may, together by
deed at any time, change the Plan Rules. But if a key feature of the Plan is to be
changed at a time when the Plan is approved by HMRC under Schedule 2, and the approved
status of the Plan is to be maintained, the change will not have effect until it has
been approved by HMRC.
A
“key feature” is any provision needed to comply with the requirements of
Schedule 2.
The Plan
Administrators must not make any changes to the Plan which would breach the rule
against perpetuities (see Rule
14.4).
14
Termination
14.1
Termination notice
The
Company in general meeting or the Plan Administrators may at any time resolve to
terminate the Plan. If they so resolve, they must issue a termination notice and give
it without delay to:
14.1.1
HMRC;
14.1.2
the Trustees; and
14.1.3
all individuals who have Plan Shares, and all Employees who have
returned valid application forms but have not been awarded or allocated
any Shares.
14.2
Effect of termination notice
Once the
Trustees receive the termination notice, they must not award or acquire any more Shares
on behalf of Participants.
The
Trustees must remove each Participant’s Plan Shares from the Plan by either
transferring them or the proceeds of their sale to the Participant or as he may direct.
(If the Participant has died, his personal representatives may give these
instructions.) This should be done as soon as practicable once three months have passed
from the date the termination notice was given under Rule
14. But
the Trustees may delay the removal of Plan Shares until this can be done without any
liabilities to income tax under Sections 501 to 507 of ITEPA. The Trustees may also
remove Plan Shares at an earlier time if the Participant agrees after receiving the
termination notice.
The
Trustees must also pay to Participants, as soon as they receive the termination notice,
any cash dividends they are holding (Rule
6.3) or
any Contributions they are holding (Rule
5.7).
14.3
Surplus Assets
Any
surplus assets left after the Trustees have decided when Plan Shares will be removed
under Rule
14.2
will be
paid to a charity of the choice of the Trustees.
22
14.4
Perpetuity Period
The
perpetuity period relating to the Plan is eighty years. The Trustees may not award
Shares more than seventy six years after the date of these Plan rules.
The end of
the “perpetuity period” is the time by which Participants or other persons
must have an interest in Shares, without risk of loss of any rights.
15
Governing Law
English
law governs the Plan and its administration.
