‘B’
RIO TINTO PLC
RULES
OF
THE RIO TINTO SHARE SAVINGS PLAN
Shareholders' Approval:
Shareholders’ Re-Approval:
Directors' Adoption:
HMRC Approval:
HMRC Ref:
Expiry Date:
Amended:
One Silk Street
London EC2Y 8HQ
Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
11 April 2002
19 April 2012
28 June 2002
26 July 2002
SRS 2756/ABM
19 April 2022
10 October 2005 and March 2011
Table of Contents
Contents
Page
1
Definitions ................................................................................................................................ 2
2
The Plan .................................................................................................................................. 3
3
Additional Parts ....................................................................................................................... 3
4
Plan limits ................................................................................................................................ 3
5
Invitations under the Plan ........................................................................................................ 4
6
Application ............................................................................................................................... 4
7
Scaling down ........................................................................................................................... 5
8
Option Price............................................................................................................................. 6
9
Grant of Options ...................................................................................................................... 6
10
Variations in share capital ....................................................................................................... 7
11
Exercise and lapse - general rules .......................................................................................... 7
12
Exercise and lapse - exceptions to the general rules ............................................................. 8
13
Exchange of Options ............................................................................................................... 9
14
Exercise of Options ............................................................................................................... 10
15
Share Appreciation Rights ..................................................................................................... 12
16
Exercise of Share Appreciation Rights .................................................................................. 12
17
General .................................................................................................................................. 13
18
Changing the Plan and termination ....................................................................................... 15
19
Governing law ....................................................................................................................... 16
i
Rules of the Rio Tinto Share Savings Plan
Principal Terms
1
Definitions
The following definitions apply throughout the Plan, except to the extent specified in any
Part:
“Business Day” means a day on which any stock exchange nominated by the Directors,
and on which the Shares are traded, is open for the transaction of business;
“Company” means Rio Tinto plc;
“Contribution” means a regular amount saved by an Optionholder under a Savings
Contract;
“Control” has the meaning specified in section 995 of the Income Tax Act 2007;
“Date of Grant” means the date on which the Directors resolve to grant an Option;
“Directors” means the board of directors of the Company or a duly authorised committee
of it or any person with the delegated authority of that committee;
“Eligible Employee” means any person who:
(a)
either is an employee of a Group Company, or is a director of a Group Company
who is required to work for at least 25 hours a week; and
(b)
has such qualifying period (if any) of continuous service (not exceeding five years
before the Date of Grant) with any one or more Group Companies as the Directors
may from time to time determine.
In addition it means any person who is an executive director or employee of a Group
Company and is nominated by the Directors (or is nominated as a member of a category of
such executive directors or employees).
“End Date” means the last day of the month in which the last Contribution is due to be
made under the relevant Savings Contract;
“Expiry Date” means the tenth anniversary of the date of the shareholders’ re-approval of
the Plan;
“Group Company” means the Company and any subsidiary (and the term “Group” shall be
construed accordingly);
“HMRC” means Her Majesty’s Revenue and Customs;
“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;
“London Stock Exchange” means London Stock Exchange plc;
“Model Code” means the UK Listing Authority Model Code for transactions in securities by
directors, certain employees and persons connected with them;
“Notional Repayment Amount” means, for the purposes of calculating the number of
Shares to be comprised in an Option, the total Contributions payable under a Savings
2
Contract plus such number of Contributions as the Directors may determine not exceeding
the number of Contributions payable as a bonus under an equivalent UK HMRC approved
savings related scheme;
“Option” means a right to acquire Shares granted under the Plan and subject to the Rules;
“Optionholder” means a person holding an Option, including his personal representatives;
“Option Price” means the amount payable for each Share on the exercise of an Option;
“Shares” means fully paid Ordinary Shares in the capital of the Company for the time
being;
“Part” means the Principal Terms, the UK Plan, the French Plan, the US Plan, and such
other Plans as may be adopted by the Directors under Rule 3;
“Plan” means this plan known as “The Rio Tinto Share Savings Plan”, or, as the context
may require, any Part of the Plan;
“Rules” means the rules of the Plan as amended from time to time;
“Savings Contract” means a contract which is approved by the Directors for the purposes
of the Plan with a savings institution as may be nominated by the Directors from time to
time;
“Specified Age” means 65.
2
The Plan
The Plan is designed to allow employees of the Group to buy Shares in the Company,
using savings deducted from their pay. The Plan comprises these Principal Terms, the UK
Plan, the French Plan, the US Plan, and such other Parts as may be adopted by the
Directors under Rule 3. The Principal Terms apply to all the Parts, unless specified
otherwise.
3
Additional Parts
The Directors may adopt additional Parts to the Plan for use in any other jurisdiction in
which Options are to be granted under the Plan. All additional Parts must be subject to the
Plan limits in rule 4.
4
Plan limits
4.1
10 per cent in 10 years limit
The number of Shares which may be allocated under the Plan on any day must not exceed
10 per cent of the share capital of the Company in issue immediately before that day, when
added to the total number of Shares which have been allocated in the previous 10 years
under the Plan and any other employee share plan operated by the Company.
4.2
Exclusions
Where the right to acquire Shares is released or lapses without being exercised, these
Shares are ignored when calculating the limits in this Rule.
3
4.3
Meaning of “allocate”
“Allocate” means the grant of an option or other right to acquire unissued Shares, or if
there is no such grant, the issue and allotment of Shares.
5
Invitations under the Plan
5.1
Invitations
The Directors have discretion to decide whether the Plan will be operated. When they
operate the Plan they may send invitations to all or some Eligible Employees.
5.2
Time when invitations may be made
5.2.1
5.2.2
5.3
Invitations may only be made within 42 days starting on any of the following:
(i)
the day after the announcement of the Company’s results for any period;
(ii)
any day on which the Directors resolve that exceptional circumstances exist
which justify the making of invitations;
(iii)
any day on which changes to the legislation or regulations affecting savings
related share option plans are announced, effected or made;
If the Directors cannot make invitations due to restrictions imposed by statute,
order, regulation or Government directive, or by any code adopted by the Company
based on the Model Code, the Directors may make the invitations within 42 days
after the lifting of such restrictions.
Form of invitations
An invitation will specify:
5.3.1
the Option Price or how it is to be calculated;
5.3.2
the form of application and the date by which applications must be received;
5.3.3
the length of the Savings Contract and the anticipated date savings will start;
5.3.4
the maximum number, if any, of Shares over which Options may be granted;
5.3.5
the maximum permitted Contribution, which must not be more than £250 per month
(or the local currency equivalent as determined by the Company);
5.3.6
the minimum permitted Contribution, if any, which must not be more than £10 per
month (or the local currency equivalent as determined by the Company); and
5.3.7
how the Notional Repayment Amount is calculated.
6
Application
6.1
Form of Application
An application for an Option must include an application for a Savings Contract. The
application will be made in writing, or electronically, in a form specified by the Directors and
will require the Eligible Employee to specify:
6.1.1
the Contribution he wishes to make;
4
6.2
6.1.2
that his proposed Contribution, when added to any Contributions he makes under
any other Savings Contract, will not exceed the maximum permitted; and
6.1.3
the length of the Savings Contract (if a choice is offered).
Number of Shares
Each Eligible Employee’s application will be for an Option over the largest whole number of
Shares which he can acquire at the Option Price with the Notional Repayment Amount
under the related Savings Contract.
6.3
Modification of application and proposals
6.3.1
If there are applications for Options over more Shares than the maximum specified
in the invitation, each application and proposal for a Savings Contract will be
deemed to have been modified or withdrawn as described in Rule 7.
6.3.2
If an application for a Savings Contract specifies a Contribution which, when added
to any other Contributions already being made by the Eligible Employee, exceeds
the maximum permitted (whether under ITEPA, the Savings Contract or any limit
specified in the invitation), the Directors are authorised to modify it by reducing the
Contribution to the maximum possible amount. Any such modification must be
made before the Option is granted and before the application for the Savings
Contract is accepted.
7
Scaling down
7.1
Method
If valid applications are received for a total number of Shares in excess of any maximum
number specified in the invitation or any limit under Rule 4, the Directors will scale down
applications by one or more of the following methods:
7.2
7.1.1
reducing the proposed Contributions of each Eligible Employee by the same
proportion to an amount not less than the minimum amount permitted;
7.1.2
reducing the proposed Contributions of each Eligible Employee in excess of an
amount chosen by the Directors, which must not be less than the minimum amount
permitted, to an amount which is not less than the amount chosen by the Directors;
7.1.3
reducing the proposed Contributions of each Eligible Employee by a fixed amount,
provided that no Eligible Employee’s Contributions may be reduced below the
minimum amount permitted;
7.1.4
reducing the proposed Contributions of each Eligible Employee to a fixed amount
which must not be less than the minimum amount permitted;
7.1.5
any other method the Directors think is fair.
Insufficient Shares
If, having scaled down as described in Rule 4.1, the number of Shares available is
insufficient to enable Options to be granted to all Eligible Employees making valid
applications, the Directors may either select by lot, or decide not to grant any Options.
5
8
Option Price
8.1
Setting the price
The Directors will set the Option Price which must be:
8.2
8.1.1
not manifestly less than 80 per cent of the Market Value of a Share either on the
date on which invitations are sent out to eligible employees or on the date, (not
later than the Date of Grant), specified in the invitation; and
8.1.2
if the Shares are to be subscribed, not less than the nominal value of a Share.
Market Value
“Market Value” on any particular day means:
8.2.1
where Shares of the same class are admitted to the Official List of the UK Listing
Authority and traded on the London Stock Exchange:
(i)
if the Directors decide, the average price for the 3 immediately preceding
Business Days or
(ii)
their price for the immediately preceding Business Day.
The “price” is the middle market quotation taken from the Daily Official List of the
London Stock Exchange.
9
Grant of Options
9.1
Time of grant
The Directors must grant an Option to each Eligible Employee who has submitted and not
withdrawn a valid application. Subject to the scaling down provisions, the Option is to
acquire, at the Option Price, the number of Shares for which the Eligible Employee has
applied. The grant must be made within 30 days (or 42 days if applications are scaled
down) of the first date by reference to which the Option Price was set.
9.2
9.3
Restrictions on grant
9.2.1
If the Directors grant an Option to a person who is not an Eligible Employee on the
Date of Grant, that Option is void.
9.2.2
If the Directors grant an Option in excess of the Plan limits in Rule 4 of the Principal
Terms, it will take effect as an Option which would not exceed those limits.
9.2.3
Options must not be granted after the tenth anniversary of the adoption of the Plan.
Option certificates
Options will be evidenced in such form as the Directors may specify.
9.4
No payment for Options
Optionholders are not required to pay for the grant of any Option.
6
9.5
Disposal restrictions
An Optionholder may not transfer, assign or otherwise dispose of an Option or any rights in
respect of it. If an Optionholder tries to do so, whether voluntarily or involuntarily, the
Option will immediately lapse. This does not apply to the transmission of an Option on the
death of an Optionholder to his personal representatives.
9.6
Administrative errors
If any Option is granted on terms which are not in accordance with the provisions in these
Rules, including the limits on participation, it shall be limited and take effect from the Date
of Grant as being granted within the provisions of these Rules.
9.7
Contributions
Where any Contribution is paid in a currency other than sterling, and when converted into
sterling is less or more than the intended Contribution, the excess or deficit may be held
over and adjusted as appropriate.
10
Variations in share capital
10.1
Adjustment of Options
If there is:
10.1.1
a variation in the equity share capital of the Company, including a capitalisation or
rights issue, sub-division, consolidation or reduction of share capital; or
10.1.2
a demerger (in whatever form) or exempt distribution by virtue of Section 213 of the
Income and Corporation Taxes Act 1988; or
10.1.3
a special dividend or distribution,
the Directors may adjust the number or class of Shares or securities comprised in an
Option and/or the Option Price.
10.2
Notice
The Company may notify Opionholders of any adjustment made under this rule 10.
11
Exercise and lapse - general rules
11.1
Exercise
Except where exercise is permitted under Rule 12, an Option can only be exercised:
11.2
11.1.1
during the period of six months after the End Date; and
11.1.2
so long as the Optionholder is a director or employee of a Group Company.
Lapse
An Option will lapse on the earliest of:
11.2.1
the date the Optionholder ceases to be a director or employee of a Group
Company, unless any of the provisions of Rule 12 apply;
7
11.2.2
the date on which the Optionholder stops paying Contributions or applies for
repayment of all or any Contributions;
11.2.3
the expiry of any period specified in Rule 12 (except 12.3: specified age); or
11.2.4
six months after the End Date unless Rule 12.2 (death) applies.
12
Exercise and lapse - exceptions to the general rules
12.1
Cessation of employment
12.1.1
12.1.2
12.2
An Optionholder may exercise his Option within 6 months after ceasing to be a
director or employee of a Group Company for one of the following reasons:
(i)
injury, disability, redundancy or retirement on reaching the Specified Age or
any other age at which he is bound to retire under the terms of his contract
of employment;
(ii)
his office or employment ceasing to be in a Group Company;
(iii)
the business or part of a business in which he works being transferred to a
company which is not in the Group; or
(iv)
retirement with the agreement of the Optionholder’s employer.
If the Optionholder ceases to be a director or an employee of a Group Company
more than three years after the Date of Grant for one of the following reasons he
may exercise his Option within six months after cessation:
(i)
on grounds of resignation and
(ii)
for any other reason permitted by the Directors
12.1.3
An Optionholder who ceases to be a director or employee of a Group Company
and simultaneously becomes a director or employee of Rio Tinto Limited or a
subsidiary of Rio Tinto Limited shall be deemed, for the purposes of this Rule 12.1,
not to have ceased to be a director or employee of a Group Company, until such
time as he ceases to be a director or employee of Rio Tinto Limited or a subsidiary
of Rio Tinto Limited. This provision shall not apply to an Optionholder under the UK
Plan.
12.1.4
To the extent that any Option exercisable under this Rule is not exercised within
the period specified, it will lapse at the end of the period.
Death
If an Optionholder dies, his Option may be exercised by his personal representatives within
one year after:
12.3
12.2.1
the date of his death, if death occurred before the End Date; or
12.2.2
the End Date, if death occurred on or within six months after the End Date.
Specified Age
If an Optionholder continues to be a director or employee of a Group Company after the
date on which he reaches the Specified Age, he may exercise his Option within 6 months
after reaching the Specified Age.
8
12.4
Takeovers
If a person (or a group of persons acting in concert) obtains Control of the Company as a
result of making a general offer to acquire Shares, Options may be exercised within the 6
month period after the person making the offer has obtained Control of the Company. If not
exercised, the Options will lapse at the end of the 6 month period, unless the Directors give
written notice to all the Optionholders before the end of the 6 month period that the Options
will not lapse.
12.5
Section 979 notice
If a person (or a group of persons acting in concert) becomes bound or entitled to acquire
Shares by serving a notice under section 979 of the Companies Act 2006, Options may be
exercised at any time when that person remains so bound or entitled, and lapse at the end
of that time.
12.6
Company reconstructions
If under section 899 of the Companies Act 2006 a court sanctions a compromise or
arrangement in connection with the acquisition of Shares, Options may be exercised within
the 6 month period after the date of the court sanction, unless the Acquiring Company
makes an offer to exchange options in accordance with Rule 13 (Exchange of Options).
Any options not exercised will lapse at the end of that period.
12.7
Winding-up
If the Company passes a resolution for its voluntary winding-up, Options may be exercised
within six months after the date of the resolution. However, the issue of Shares after such
exercise has to be authorised by the liquidator or the court (if appropriate), and the
Optionholder must apply for this authority and pay his application costs. Any Options not
exercised during that period will lapse at the end of the period.
12.8
Priority
If there is any conflict between any of the provisions in Rules11 and 12, the provision which
results in the shortest exercise period will prevail.
13
Exchange of Options
13.1
Application
This Rule applies to all Options (whether or not already exercisable) if any of the following
occur:
13.1.1
a general offer to obtain Control of the Company is or becomes or is declared
wholly unconditional;
13.1.2
a company obtains Control of the Company under a scheme of arrangement
sanctioned by the court under Section 899 Companies Act 2006; or
13.1.3
any person becomes entitled or bound to acquire Shares under Section 981 of the
Companies Act 2006.
9
13.2
Agreement to exchange
If this Rule 13 applies, the Optionholder may, with the agreement of the Acquiring
Company, exchange his Options under Rule 13.3 during the appropriate period set out in
paragraph 38(3) of Schedule 3 to ITEPA. For this purpose the Acquiring Company is the
company which has obtained Control of the Company, or has become entitled and bound
as mentioned in Rule 13.1.3.
13.3
Exchange
Where an Option is to be exchanged the Optionholder will be granted a new option to
replace it, on the following basis:
13.4
13.3.1
the new option will be in respect of Shares which satisfy the conditions of
paragraph 39 of Schedule 3 to ITEPA, in any company determined by the Directors
which fall with paragraph 18(b) or (c) of Schedule 3 to ITEPA, or in the absence of
any such determination, in the Acquiring Company.
13.3.2
the new option will be equivalent to the Option that was exchanged as provided in
paragraph 39(4) of Schedule 3 to ITEPA;
13.3.3
the new option will be treated as having been acquired at the same time as the
Option that was exchanged and be exercisable in the same manner and at the
same time;
13.3.4
the new option will be subject to the Rules as they last had effect in relation to the
Option that was exchanged;
13.3.5
with effect from the exchange, the Rules will be construed in relation to the new
option as if references to Shares were references to the Shares over which the
new option is granted and references to the Company were references to any
company determined by the Directors under Rule 13.3.1.
13.3.6
these Rules will in relation to the new option be construed as if references to the
Company and to the Shares were references to the Acquiring Company, but
references to the Group Company shall continue to be construed as if references
to the Company were references to Rio Tinto plc.
Directors
The determination made in Rule 13.3.1 will be made by those people who were Directors
immediately before the relevant event in Rule 13.1.
14
Exercise of Options
14.1
Limit on exercise
Where an Option is exercisable early under Rule 12, it may only be exercised in respect of
the number of Shares produced by applying the following formula:
A x (B/C)
Where:
A = the number of Shares comprised in the Option.
10
B = the number of whole months between the start of the Savings Contract and the date
the employee ceases employment under the relevant provision in Rule 12, subject to the
limitation that B cannot exceed C.
C = the duration of the Savings Contract (had it been completed) expressed in months.
The remainder of the Option which cannot be exercised will lapse. A purported exercise to
an extent greater than that provided above will be deemed to be an exercise only to the
extent permitted.
14.2
Manner of exercise
Options must be exercised by notice in writing or by e-mail in a form specified by the
Company signed by the Optionholder or by his agent and delivered to the Company or its
agent. The Optionholder must also send:
14.2.1
if the Company so requires, the relevant option certificate; and either
14.2.2
payment in full and evidence of the termination of the Savings Contract; or
14.2.3
authority to terminate the Savings Contract and use a specified amount to acquire
the number of Shares over which the Option is being exercised.
The exercise of the Option is effective on the date of receipt by the Company or its agent of
the notice, the option certificate (if required) and the relevant payment or authority.
14.3
Part exercise
Options may be exercised in respect of all the Shares under the Option or some only of the
Shares and the unexercised options will lapse.
14.4
Issue or transfer
Subject to Rule 14.7 (Consents):
14.5
14.6
14.4.1
Shares to be issued following the exercise of an Option must be issued within 30
days of the date of exercise; and
14.4.2
If Shares are to be transferred following the exercise of an Option, the Directors
must procure this transfer within 30 days of the date of exercise.
Rights
14.5.1
Shares issued on exercise of an Option rank equally in all respects with the Shares
in issue on the date of allotment. They do not rank for any rights attaching to
Shares by reference to a record date preceding the date of allotment.
14.5.2
Where Sharesare to be transferred on the exercise of an Option, Optionholders are
entitled to all rights attaching to the Shares by reference to a record date after the
transfer date. They are not entitled to rights before that date.
Local restrictions
Where there are any local legal restrictions on the Optionholder holding Shares, the
Shares may, at the discretion of the Directors, be issued or transferred to a person
determined by the Directors to be held on behalf of the Optionholder.
11
14.7
Consents
All allotments, issues and transfers of Sharesare subject to any necessary consents under
any relevant enactments or regulations for the time being in force in the United Kingdom or
elsewhere. The Optionholder is responsible for complying with any requirements to obtain
or avoid the need for any such consent.
14.8
Articles of Association
Any Shares acquired on the exercise of Options are subject to the Articles of Association of
the Company from time to time in force.
14.9
Listing
If and so long as the Shares are listed on the Official List of the UK Listing Authority or of
any other stock exchange where Shares are traded, the Company must apply for listing of
any Shares issued pursuant to the Plan as soon as practicable after their allotment.
15
Share Appreciation Rights
15.1
Number of Share Appreciation Rights
Each Eligible Employee’s application will be for a Share Appreciation Right in respect of
the largest whole number of Shares which could be acquired at the Option Price with the
Notional Repayment Amount under the related Savings Contract.
15.2
Modification of application and proposals
If there are applications for Share Appreciation Rights over more Shares than the
maximum specified in the invitation, each application and proposal for a Savings Contract
will be deemed to have been modified or withdrawn as described in Rule 7.
16
Exercise of Share Appreciation Rights
16.1
Limit on exercise
The extent to which an Optionholder may exercise his Share Appreciation Right is
determined by the amount repayable under his Savings Contract, including any interest.
Contributions made after the date of exercise of the Option are not included. However, if
the amount repaid at the End Date is less than the Notional Repayment Amount, the
Optionholder may make up the shortfall from his own funds in order to exercise the Share
Appreciation Right to the full extent permitted.
16.2
Manner of exercise
Share Appreciation Rights must be exercised by notice in writing or by e-mail in a form
specified by the Company signed by the Optionholder or by his agent and delivered to the
Company or its agent. The Optionholder must also send;
16.2.1
if the Company so requires, the relevant certificate or other evidence of the Option;
and
16.2.2
evidence of the termination of the Savings Contract.
12
For the avoidance of doubt, the Option Price shall not be payable. The exercise of the
Option is effective on the date of receipt by the Company or its agent of the notice, the
certificate (if required).
16.3
Part exercise.
The Share Appreciation Right may be exercised in whole or in part.
16.4
Cash alternative
The Directors may in their discretion determine not to procure the transfer or issue of
Shares in satisfaction of a Share Appreciation Right, but instead pay to him (subject to
Rule 17.8 (Withholding)) a cash amount equal to the Gain.
For the purposes of Rules 15 and 16:
“Gain” in relation to a Share Appreciation Right, means the amount by which the market
value of a Share on the date of exercise of the Share Appreciation Right exceeds the
Option Price, multiplied by the number of Shares subject to the Share Appreciation Right;
“Option” means Share Appreciation Right, and “Optionholder” shall be construed
accordingly;
“Share Appreciation Right” means the right to receive a number of Shares of a value
equal to the Gain, or an equivalent amount in cash;
17
General
17.1
Notices
17.1.1
Any notice or other document which has to be given to an Eligible Employee or
Optionholder under or in connection with the Plan may be:
(i)
delivered or sent by post to him at his home address according to the
records of his employing company; or
(ii)
sent by e-mail or fax to any e-mail address or fax number which, according
to the records of his employing company, is used by him;
or in either case such other address which the Company considers appropriate.
17.2
17.1.2
Any notice or other document which has to be given to the Company or other duly
appointed agent under or in connection with the Plan may be delivered or sent by
post to it at its respective registered office (or such other place as the Directors or
the duly appointed agent may from time to time decide and notify to Optionholders)
or sent by e-mail or fax to any e-mail address or fax number notified to the sender.
17.1.3
Subject to evidence to the contrary, notices sent by or to an Optionholder by post
(whether in or from the UK or overseas), e-mail or fax, will be deemed to have
been given on the fifth day after the date the notice was sent.
Documents sent to shareholders
The Company may send to Optionholders copies of any documents or notices normally
sent to the holders of its Shares.
13
17.3
Directors’ decisions final and binding
The decision of the Directors on the interpretation of the Rules or in any dispute relating to
an Option or matter relating to the Plan is conclusive.
17.4
Costs
The Company will pay the costs of introducing and administering the Plan. The Company
may require each Group Company to reimburse the Company for any costs incurred in
connection with the grant of Options to, or exercise of Options by, employees of that Group
Company.
17.5
Administration
The Directors have the power from time to time to make or vary regulations for the
administration and operation of the Plan.
17.6
Terms of employment
17.6.1
For the purposes of this rule, “Employee” means any employee of a Group
Company.
17.6.2
This rule applies during an Employee’s employment and after the termination of an
Employee’s employment, whether or not the termination is lawful.
17.6.3
Nothing in the Plan 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.
17.6.4
No employee has a right to participate in the Plan. Participation in the Plan or the
grant of Options on a particular basis in any year does not create any right to or
expectation of participation in the Plan or the grant of Options on the same basis,
or at all, in any future year.
17.6.5
The terms of the Plan do not entitle the Employee to the exercise of any discretion
relating to a subsisting Option in his favour.
17.6.6
The Employee will have no claim or right of action in respect of any decision,
omission or discretion, which may operate to the disadvantage of the Employee
even if it is unreasonable, irrational or might otherwise be regarded as being in
breach of the duty of trust and confidence (and/or any other implied duty) between
the Employee and his employer.
17.6.7
No Employee has any right to compensation for any loss in relation to the Plan,
including any loss in relation to:
(i)
any loss or reduction of rights or expectations under the Plan in any
circumstances (including lawful or unlawful termination of employment);
(ii)
any exercise of a discretion or a decision taken in relation to an Award or to
the Plan, or any failure to exercise a discretion or take a decision; or
(iii)
the operation, suspension, termination or amendment of the Plan.
14
17.7
17.6.8
Participation in the Plan is permitted only on the basis that the Optionholder
accepts all the provisions of the rules, including this rule 17.6 (Terms of
employment). By participating in the Plan, an Employee waives all rights under the
Plan, other than the right to acquire Shares subject to and in accordance with the
express terms of the Plan and the Vesting Condition, in consideration for, and as a
condition of, the grant of an Award under the Plan.
17.6.9
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.
Employee trust
The Company and any Subsidiary of the Company may provide money to the trustee of
any trust or any other person to enable them or him to acquire Shares to be held for the
purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the
extent permitted by Section 682 of the Companies Act 2006.
17.8
Withholding
Unless the Optionholder discharges the liability himself, the Company, any employing
company or the trustee of any employee benefit trust may withhold any amount and make
any arrangements as it considers necessary to meet any liability of the Optionholder to
taxation or social security contributions in respect of Options. These arrangements include
the sale of any Shares on behalf of an Optionholder.
17.9
Data protection
By participating in the Plan the Optionholder consents to the holding and processing of
personal data provided by the Optionholder to any Group Company, trustee or third party
service provider, for all purposes relating to the operation of the Plan. These include, but
are not limited to:
17.9.1
administering and maintaining Optionholder records;
17.9.2
providing information to Group Companies, Rio Tinto Limited and its subsidiaries,
trustees of any employee benefit trust, registrars, brokers or third party
administrators of the Plan;
17.9.3
providing information to future purchasers of the Company or the business in which
the Optionholder works; and
17.9.4
transferring information about the Optionholder to a country or territory outside the
European Economic Area that may not provide the same statutory protection for
the information as the Optionholder’s home country.
18
Changing the Plan and termination
18.1
Directors’ powers
Except as described in the rest of this Rule, the Directors may at any time change the Plan
in any way.
15
18.2
Shareholders’ approval
Except as described in Rule 18.3, the Company in general meeting must approve in
advance by resolution any proposed change to the advantage of present or future
Optionholders which relate to the following:
18.3
18.2.1
the persons to whom or for whom Shares may be provided under the Plan;
18.2.2
the limitations on the number of Shares which may be issued under the Plan;
18.2.3
the maximum Contribution which may be made under the Plan;
18.2.4
the determination of the Option Price;
18.2.5
any rights attaching to the Options and the Shares;
18.2.6
the rights of Optionholders in the event of a capitalisation issue, rights issue, subdivision or consolidation of Shares or reduction or any other variation of capital of
the Company;
18.2.7
the terms of this Rule 18.2.
Minor changes
The Directors need not obtain the approval of the Company in general meeting for any
minor changes:
18.4
18.3.1
to benefit the administration of the Plan;
18.3.2
to comply with or take account of the provisions of any proposed or existing
legislation;
18.3.3
to take account of any changes to relevant legislation or regulation other than those
which materially effects either the terms of the Plan or the operation of the Plan; or
18.3.4
to obtain or maintain favourable tax, exchange control or regulatory treatment of
the Company, any subsidiary or any present or future Optionholder.
Additional Parts
For the avoidance of doubt, the Directors need not obtain the approval of shareholders for
the adoption of additional Parts under Rule 18.3.
18.5
Termination of the Plan
The Plan will terminate on the Expiry Date, but the Directors may terminate the Plan at any
time before that date. However, Options granted before such termination will continue to
be valid and exercisable as described in these Rules.
19
Governing law
English law governs the Plan and all Options and their construction. The English Courts
have non-exclusive jurisdiction in respect of disputes arising under or in connection with
the Plan or any Option.
16
UK Plan
The rules of the UK Plan consist of the Principal Terms, amended as specified below.
1
Definitions
“End Date” means the date on which the bonus becomes payable under the terms of the
relevant Savings Contract;
“Eligible Employee” means any person who satisfies the additional condition that he has
earnings in respect of his office or employment which are general earnings (or would be if
there were any) as described in paragraphs 6(2)(c) and 6(2)(ca) of Schedule 3 to ITEPA.
However, the definition of “Eligible Employee” does not include anyone who is excluded
from participation because of paragraph 11 of Schedule 3 to ITEPA (Material interest
provisions);
“Notional Repayment” - this term will be disapplied for the purposes of the UK Plan;
“Participating Company” means:
(i)
the Company; and
(ii)
any Subsidiary and any other company which is permitted by HMRC to participate
in the Plan and which in both cases is designated by the Directors as a
Participating Company;
all references to “Group Company” under the Principal Terms shall be construed
accordingly for the purposes of the UK Plan.
“Savings Contract” means a contract under a certified SAYE savings arrangement within
the meaning of paragraph 24(1) of Schedule 3 to ITEPA;
“Shares” means fully paid ordinary shares in the capital for the time being of the Company
which satisfy paragraphs 18 to 22 of Schedule 3 to ITEPA.
“Subsidiary” means a company which is:
(i)
a subsidiary of the Company within the meaning of Section 1159 of the Companies
Act 2006; and
(ii)
under the Control of the Company.
2
Invitations
2.1
Invitations
When the Directors operate the Plan they must send invitations to all Eligible Employees
on similar terms.
2.2
Time when invitations may be made
In addition to the times specified in the Principal Terms, invitations may be made within 42
days of the day on which the Plan is formally approved by HMRC and invitations will not be
sent until prior HMRC approval to the Plan is obtained.
2.3
Form of invitation
2.3.1
All applications for UK Eligible Employees must be made on similar terms.
17
2.3.2
The date by which applications must be received must be at least 14 days after the
date of the invitation unless otherwise agreed in advance with HMRC.
2.3.3
The maximum permitted Contribution may not be more than the maximum
specified in ITEPA.
2.3.4
There shall be no reference to a Notional Repayment Amount for the purposes of
the UK Plan.
3
Application
3.1
Form of Application
If a choice is offered, the Eligible Employee may state whether he wishes to defer receipt
of his bonus at the end of the savings period in order to receive an increased bonus.
3.2
Number of Shares
Each Eligible Employee’s application will be for an Option over the largest whole number of
Shares which he can acquire at the Option Price with the expected repayment under the
related Savings Contract.
3.3
Scaling down
The Directors may only use other methods if they agree them in advance with HMRC.
4
Option Price
Where Rule 8.2.1 of the Principal Terms do not apply, where Shares are not so listed, the
Market Value of a Share is calculated as described in Part VIII of the Taxation of
Chargeable Gains Act 1992 and agreed in advance with HMRC Shares and Assets
Valuation.
5
Administrative errors and Contributions
Rules 9.6 and 9.7 of the Principal Terms shall not apply.
6
Variations in share capital
No adjustment may be made to Options under rule 10 without the prior approval of HMRC
and the Directors may not make an adjustment in the circumstances described in rules
10.1.2 or 10.1.3 or to the class of securities subject to an Option.
7
Exercise and lapse - general rules
7.1
Exercise
An Option can also only be exercised so long as the Optionholder is a director or employee
of a Participating Company. For the purpose of the UK Plan an Optionholder is not treated
as ceasing to be a director or employee of a Participating Company until he has ceased to
be a director or employee of the Company, any associated company (as defined in
paragraph 47(1) of Schedule 3 to ITEPA), and any company under the Control of the
Company.
7.2
Material interest
An Optionholder cannot exercise an Option if he is (or was at the date of his death),
ineligible to participate in the Plan because of paragraph 11 of Schedule 3 to ITEPA
(Material interest provisions).
18
7.3
Lapse
An Option will also lapse, if earlier than the dates specified in the Principal Terms, on:
7.3.1
the date on which the Optionholder is deemed to give notice under the Savings
Contract that he intends to stop paying contributions under his Savings Contract;
7.3.2
the date on which the Optionholder stops paying contributions under his Savings
Contract, unless any of the provisions of Rule 12 of the Principal Terms apply.
8
Exercise and lapse - exceptions to the general rules
8.1
Cessation of employment
8.2
8.1.1
An Optionholder may only exercise his Option in the manner specified in Rules
11.1, 11.2 and 12.1 of the Principal Terms if he ceases to be a director or employee
of a Participating Company (rather than a Group Company), as determined under
Rule 8.1.
8.1.2
Paragraphs (iv) and (v) of Rule 12.1.1 of the Principal Terms will not apply to the
UK Plan.
8.1.3
For the purposes of the UK Plan, the following 2 paragraphs are added to Rule
12.1.2 of the Principal Terms:
(i)
early retirement with the agreement of the employer;
(ii)
resigning while pregnant or failing to return to work following maternity
leave.
Employment with an Associated Company
If an Optionholder ceases to be a director or employee of a Participating Company but, on
the End Date, is an employee or director of an Associated Company or a company of
which the Company has Control, he may exercise his Option within six months of that date.
9
Exercise of Options
9.1
Limit on exercise
An Optionholder may exercise his Option using funds equal to or less than the amount
repayable under his Savings Contract, including any bonus or interest. Contributions made
after the date of exercise of the Option may not be used. For the avoidance of doubt, the
Optionholder may not make up any shortfall from his own funds.
10
Share Appreciation Right
Rules 15 and 16 of the Principal Terms shall not apply.
11
Changing the Plan
11.1
HMRC approval
If the approved status of the Plan is to be maintained, any change to a “key feature” of the
Rules after they have been approved under Schedule 3 to ITEPA will take effect from the
later of:
11.1.1
the date that the change is approved by HMRC; and
11.1.2
the date the Directors resolve to approve the amendment.
19
The Company will notify HMRC as soon as it becomes aware that the approval status of
the Plan will be affected.
12
Limit on exercise
Rule 14.1 of the Principal Terms shall not apply.
20
French Plan
The Rules of the French Plan consist of the Principal Terms, amended as specified below.
1
Definitions
“Eligible Employee” means any person who, in addition, does not own more than 10% of
the issued share capital of the Company;
“Participating Company” means, in addition, a subsidiary of which at least 10% of the
share capital is held, directly or indirectly, by the Company, or companies holding at least,
directly or indirectly, 10% of the share capital of the Company;
2
Plan Limits
The number of Shares which may be allocated under the Plan when added to the number
of Shares which may be allocated under any other employee share scheme operated by
the Company, must not exceed one third of the share capital of the Company from time to
time.
3
Option Price
The option Price must be not less than 80% of the average market quotation per Share as
derived from the Official List of the London Stock Exchange for the 20 Business Days
immediately preceding the Date of Grant.
4
Grant of Options
No Option shall be granted less than 20 Business Days after either a dividend record date
or a date on which the Shares become ex-rights in relation to an increase in capital.
No option shall be granted, within 10 Business Days before or after both the preliminary
announcement and the release of the report and accounts, and/or before the release of
any information which will have an impact on the share price of the Company or within 10
Business Days after release of such information.
5
Restrictions on Grant
Options must not be granted after 38 months as from the adoption of the Plan.
6
Limit on Contributions
Contributions may not exceed the maximum permitted under French labour law.
7
Exercise of Options on death
If an Optionholder dies, his Options may be exercised by his personal representatives
within one year after his death.
8
Adjustment of Options
The Option Price after any such event shall, as the case may be, be reduced or increased
in the same proportion as the value of the Shares of the Company is reduced or increased
by reason of the event.
The number of Shares in respect of which Options may be exercised shall be adjusted
such that the aggregate Option Price remains the same, such number being rounded up to
the nearest whole number, if necessary.
21
Adjustments pursuant to this Rule must also be made in respect of Options which have
been exercised but, where no Shares have yet been issued or transferred to the Option
Holder pursuant to such exercise.
The Option Price of an Option to subscribe for Shares shall not be adjusted below the
nominal value of a Share.
9
Share Appreciation Rights
Rules 15 and 16 of the Principal Terms shall not apply.
10
Changing the Plan and Termination
The Option Price shall not be amended.
11
Exercise and Lapse - General rules
Rule 11.3 of the Principal Terms shall not apply.
12
General - Data Protection
In addition, by participating in the Plan, the Optionholder consents to the transfer of
personal data as set out in Rule 17.9 and within the filing made by Rio Tinto with the
Commission Nationale de l’informatique et des Libertes (CNIL).
Pursuant to the Law of 6 January 1978, the Optionholder will have the right to request
communication of his personal data and to request a modification of this information.
22
US Plan
The Rules of the US Plan consist of the Principal Terms, amended as specified below.
1
Definitions
“Eligible Employee” means US Qualifying Employee.
“Option Period” means the period of 27 months which starts on the Date of Grant.
“US Qualifying Employee” means any person who is employed by a Group Company
organised in the United States and who on the relevant Date of Grant:
2
(i)
has been employed by the Group Company for at least 6 months or such other
period as the Directors determine (not exceeding two years); and
(ii)
is customarily employed for more than 20 hours per week (or such shorter number
of hours as the Directors determine).
Operation of the US Plan
The Company intends that the US Plan constitute a separate employee share purchase
plan which satisfies the requirements of Section 423 of the United States Internal Revenue
Code of 1986, as amended (the “Code”). If any provision of the US Plan conflicts with the
Principal Terms, the provision in the US Plan will prevail.
The US Plan must be administered in a manner that gives all Optionholders the same
rights and privileges to the extent required under Section 423(b)(5) of the Code and the
related regulations.
3
Option Price
The Option Price must not be less than 85% of the average of the Market Values on the
three Business Days immediately preceding the Date of Grant or such other date
determined by the Directors.
4
Limits
4.1
US Plan Limit
Subject to Rule 10 of the Principal Terms, the number of Shares over which options may
be granted under the US Plan will not exceed £100,000,000 Shares which represents
approximately 10% of the issued share capital of the Company at 30 June 2001.
4.2
5% Owners
No US Qualifying Employee may be granted an Option under the US Plan if such US
Qualifying Employee, immediately after the grant of the Option, owns Shares possessing
5% or more of the total combined voting power or value of all classes of Shares of the
Company or any parent or subsidiary corporation (within the meaning of Section 424 of the
Code).
4.3
$25,000 Limit
No US Qualifying Employee may be granted an Option which would permit the US
Qualifying Employee rights to purchase Shares, under all plans of the Company and any
parent or subsidiary corporation (within the meaning of Section 424 of the Code) which are
intended to satisfy Section 423 of the Code, to accrue at a rate which exceeds $25,000 of
23
the fair market value of the Shares (determined at the time the option is granted) for each
calendar year in which the Option is outstanding at any time. For this purpose, the right to
purchase Shares accrues when the Option (or any portion thereof) becomes first
exercisable during the calendar year.”
5
Exercise and Lapse - General Rules
No Option may be exercised later than the expiry of the Option Period. To the extent not
exercised, the Option will lapse on the expiry of the Option Period.
6
Exercise and Lapse - Exceptions to the General Rules
When an Option is exercisable following termination of employment with a Group
Company, or on death, it may only be exercised in the period of three months following the
date of termination or death.
7
Share Appreciation Rights
Rules 15 and 16 of the Principal Terms shall not apply.
8
Shareholders approval
The US Plan must be approved by the shareholders within 12 months before or after the
date on which the US Plan is adopted.
24