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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Octel Corp.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:
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[OCTEL LOGO]
200 Executive Drive Dennis J Kerrison
Newark, DE 19702 President and Chief Executive Officer
Dear Stockholder: March 27, 2000
You are cordially invited to attend the Annual Meeting of Stockholders of
Octel Corp. (the "Corporation"), which will be held on Tuesday, May 9, 2000 at
10:00 a.m., local time, at The Drake Hotel, 140 E. Walton Place, Chicago, IL
60611-1545, USA.
The Notice of Meeting, Proxy Statement, Proxy Form and Annual Report of the
Corporation are included with this letter. The matters listed in the Notice of
Meeting are more fully described in the Proxy Statement.
It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed Proxy Form and return it promptly in the enclosed
reply envelope which requires no postage if mailed in the United States of
America.
Sincerely,
/s/ Dennis J. Kerrison
Dennis J Kerrison
President and Chief Executive
Officer
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OCTEL CORP.
200 Executive Drive
Newark, Delaware 19702
U.S.A.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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May 9, 2000
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Stockholders of
OCTEL CORP. (the "Corporation") will be held at The Drake Hotel, 140 E. Walton
Place, Chicago, IL 60611-1545, USA on Tuesday May 9, 2000 at 10.00am (Local
Time) for the following purposes:
1. To elect two directors to serve until the 2003 Annual Meeting;
2. To ratify the appointment of PricewaterhouseCoopers as the Corporation's
independent public accountants for the fiscal year ending December 31,
2000; and
3. The approval of the first amendment and restatement of the Octel Corp.
Performance Related Stock Option Plan, the Octel Corp. Company Share
Option Plan, the Octel Corp. Non-Employee Directors' Stock Option Plan,
and the Octel Corp. Savings-Related Share Option Scheme (the "Stock
Plans").
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed March 14, 2000 as the date of record for
the meeting, and only stockholders of record at the close of business on that
date will be entitled to vote at the meeting or any adjournment thereof. A
list of such stockholders will be available for examination by any stockholder
for any purpose germane to the meeting during normal business hours at the
Corporation's offices at 200 Executive Drive, Newark, Delaware 19702 for a
period of 10 days prior to the meeting.
A proxy statement, form of proxy and a copy of the annual report of the
Corporation for the year ended December 31, 1999 are enclosed.
By Order of the Board of Directors,
/S/ JOHN P TAYLER
John P Tayler
Corporate Secretary
March 27, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON AND
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY FORM AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE
THAT YOUR SHARES WILL BE REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSON IF
YOU ATTEND THE ANNUAL MEETING. IN ADDITION, YOUR PROXY IS REVOCABLE AT ANY
TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY OR
BY DELIVERY OF A LATER-DATED PROXY.
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OCTEL CORP.
200 Executive Drive
Newark, Delaware 19702
U.S.A.
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PROXY STATEMENT
March 27, 2000
For
Annual Meeting of Stockholders
To be held on May 9, 2000
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This proxy statement (the "Proxy Statement") is being furnished to the
holders of common stock, par value $0.01 per share (the "Common Stock") of
Octel Corp. (the "Corporation") in connection with the solicitation of proxies
by and on behalf of the Board of Directors of the Corporation (the "Board of
Directors" or the "Board") for use at the annual meeting of stockholders to be
held on May 9, 2000 at 10.00am, local time, and at any adjournments or
postponements thereof (the "Annual Meeting"). The purpose of the Annual
Meeting is to elect two directors to the Board, ratify the appointment of
PricewaterhouseCoopers as the Corporation's independent public accountants for
the 2000 fiscal year, and approve the first amendment and restatement of the
Stock Plans.
This Proxy Statement, the Proxy Form and the Corporation's Annual Report to
Stockholders are being mailed on or about March 27, 2000 to holders of record
of the Common Stock at the close of business on March 14, 2000 (the "Record
Date").
If the enclosed proxy form (the "Proxy Form") is properly signed, dated and
returned to the Corporation, the individuals identified as proxies thereon
will vote the shares represented by the Proxy Form in accordance with the
directions noted thereon. If no direction is indicated, the proxies will vote
FOR the election of the nominees named herein as directors, FOR the
ratification of the appointment of PricewaterhouseCoopers as the Corporation's
independent public accountants for the 2000 fiscal year, and FOR the approval
of the first amendment and restatement of the Stock Plans. The Corporation's
management does not know of any matters other than those discussed in this
Proxy Statement that will be presented at the Annual Meeting. If other matters
are presented, all proxies will be voted in accordance with the
recommendations of the Corporation's management.
Returning your completed Proxy Form will not prevent you from voting in
person at the Annual Meeting if you are present and wish to vote. In addition,
you may revoke your proxy at any time before it is voted by written notice to
the Secretary of the Corporation prior to the Annual Meeting at the
Corporation's principal executive offices at the address above or by
submission of a later-dated proxy.
Each outstanding share of Common Stock entitles the holder thereof to one
vote (or where a part share shall be owned a proportionate part of the vote of
one share) on each matter to come before the Annual Meeting. As of the Record
Date, excluding treasury stock, there were 13,406,376 shares of Common Stock
outstanding. The presence in person or by proxy of a majority of the shares of
Common Stock outstanding will constitute a quorum for the transaction of
business. Pursuant to Delaware law, abstentions are treated as present and
entitled to vote, and therefore are counted in determining the existence of a
quorum and will have the effect of a vote against any matter requiring the
affirmative vote of a majority of the shares present and entitled to vote at
the Annual Meeting. Under Delaware law, broker "non votes" are considered
present but not entitled to vote, and thus will be counted in determining the
existence of a quorum but will not be counted in determining whether a matter
requiring approval of a majority of the shares present and entitled to vote
has been approved or whether a plurality of the vote of the shares present and
entitled to vote has been cast.
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PROPOSAL ONE
Election of Directors
The Certificate of Incorporation of the Corporation provides that the number
of directors shall be not less than three nor more than twelve members, the
exact number of which shall be determined from time to time by resolution
adopted by the Board of Directors, and be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The Board is currently comprised
of seven members, two in Class I, two in Class II and three in Class III and
the appointments of the Directors in the said Classes expire at the Annual
Meetings of the Corporation in 2002, 2000 and 2001 respectively.
Directors in Class II, James M C Puckridge and Dr Benito Fiore, whose terms
expire at the upcoming Annual Meeting, have been nominated for re-election.
See "Management--Nominees for Directors" for information with respect to
Messrs. Puckridge and Fiore. The Corporation believes that each nominee is
willing to be elected and to serve. In the event that any nominee is unable to
serve or is otherwise unavailable for election, which is not now contemplated,
the incumbent Board may or may not select a substitute nominee. If a
substituted nominee is selected, all proxies will be voted for the person
selected.
The election of directors at the Annual Meeting requires a plurality of the
votes actually cast by the stockholders present (in person or by proxy) at the
meeting and entitled to vote. There is no cumulative voting as to any matter,
including the election of directors. A withheld vote will have no effect on
the outcome of the election. If no voting instruction is given, the
accompanying proxy will be voted FOR such election. Under the New York Stock
Exchange rules, brokers who hold street name shares can vote in their
discretion in the election of Directors.
The Board of Directors recommends a vote "FOR" the election of the nominee
directors.
PROPOSAL TWO
Ratification of Appointment of Independent Public Accountants
PricewaterhouseCoopers have served as independent public accountants for
fiscal year 1999.
The Board of Directors, upon recommendation of its Audit Committee, has
selected the accounting firm of PricewaterhouseCoopers to serve as independent
auditors of the Corporation with respect to the 2000 fiscal year to examine
the financial statements of the Corporation for the fiscal year ending
December 31, 2000 and to perform other appropriate accounting services.
A representative of PricewaterhouseCoopers is expected to be present at the
Annual Meeting to respond to questions and to make a statement if such
representative desires to do so. If the stockholders do not ratify this
appointment by the affirmative vote of a majority of the shares represented in
person or by proxy at the Annual Meeting, other independent public accountants
will be considered by the Board of Directors upon recommendation by the Audit
Committee.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of PricewaterhouseCoopers as the Corporation's independent public
accountants for fiscal year 2000.
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PROPOSAL THREE
Approval of the First Amendment and Restatement of the Stock Plans
Introduction:
The Board of Directors (the "Board") of Octel Corp. (the "Corporation")
initially adopted in May 1998, and the stockholders initially approved in May
1998, six stock option plans: The Octel Corp. Performance Related Stock Option
Plan ("PRSOP"), The Octel Corp. Time Restricted Stock Option Plan ("TRSOP"),
The Octel Corp. Company Share Option Plan ("CSOP"), The Octel Corp. Non-
Employee Directors' Stock Option Plan ("NED's Plan"), The Octel Corp. Savings-
Related Share Option Scheme ("Savings Related Plan"), and The Octel Profit
Sharing Scheme ("Profit Sharing Plan") (collectively the "Current Plans"). The
Current Plans provide for the issuance of options for an aggregate of
1,175,000 shares of Common Stock for directors, officers, and employees of the
Corporation. The Corporation has granted options over substantially all of the
shares available under the Current Plans.
The Board has approved the first amendment and restatement of the PRSOP, the
CSOP, the NED's Plan, and the Savings Related Plan (as so amended and
restated, the "Stock Plans") and directed that the Stock Plans be submitted
for approval to the Corporation's Stockholders at the Annual Meeting. The
Stock Plans authorize the Board to issue an aggregate of 2,075,000 shares of
Common Stock, which is an additional 900,000 shares of Common Stock to the
1,175,000 shares that are authorized under the Current Plans.
The stock option grants to date were made in the context of the
Corporation's spin-off from Great Lakes Chemical Corporation in May 1998. The
Corporation made such grants at the time of spin-off, and in the years
immediately following, in order to align the rewards of directors, officers
and employees with the interests of stockholders. The aim was to provide
significant stockholding opportunities, which would serve to motivate and
retain executives and employees through a transition period.
The Corporation has granted substantially all of the shares available under
the Current Plans, and therefore now seeks authorization for additional
shares. The Corporation intends for its future stock option grants to reflect
levels seen in ongoing concerns, rather than the levels found in spin-offs and
initial listings.
The Corporation believes that the 900,000 additional shares requested are,
in terms of dilution, in line with competitive norms. At the request of the
Corporation, a global management consulting firm advised that such a number of
shares would enable the Corporation to grant stock options and performance
shares at levels consistent with median practice among firms of a similar size
to the Corporation. Furthermore, the consultants determined that this total
number of shares was consistent with typical practice among companies in
similar industries.
The two plans not being amended and restated, the TRSOP and Profit Sharing
Plan, were adopted solely to provide incentives to stay with the Corporation
following the spin-off, and as such, the Corporation does not intend to make
further option grants pursuant to these plans.
The Board approved the Stock Plans to increase the number of options for
shares of Common Stock available for equity based incentive grants to enable
the Corporation to continue to attract, motivate and retain qualified
employees, officers and directors. More specifically, the goals of the Stock
Plans are:
.to more closely align director and employee compensation with the
interests of the shareholders;
.to establish compensation levels that are necessary to attract and retain
highly qualified executives;
.to provide performance share options as a reward for meeting strategic
long-term objectives; and
.to encourage stock ownership by executives.
The closing price of the Corporation's Common Stock on the New York Stock
Exchange on March 14, 2000 was $10.125. Copies of the Stock Plans, summaries
of which appear below, have been filed with the
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Securities and Exchange Commission and will be provided to security holders at
no charge upon request to John Tayler, Corporate Secretary and General
Counsel, Octel Corp., 200 Executive Drive, Newark, Delaware 19702, USA. Tel.
302 454 8100.
Common Features of the Stock Plans
Term
The Stock Plans will terminate on 11th May 2008, the tenth anniversary of
the date of their original approval, unless sooner terminated by the Board.
Termination of the Stock Plans will not affect grants made prior to
termination, but no grants will be made after termination. Options granted
under the PRSOP are non-transferable and vest only following the attainment of
the performance conditions set by the Compensation Committee at the date of
the grant. Options granted under the NED's Plan, CSOP and the Savings Plan are
non-transferable and, subject to the description of the exercise dates under
each of the Stock Plans below, are usually exercisable three years from the
date of the grant. Options granted under the Stock Plans may not be exercised
later than the day preceding the tenth anniversary of the date of grant.
Administration
The Stock Plans are administered by the Compensation Committee, which is a
committee of the Board consisting of two or more Non-Employee directors of the
Corporation. Currently, the Compensation Committee consists of Mr. Martin Hale
and Dr. Benito Fiore. Under the terms of the CSOP and Savings Related Plan,
the powers of administration are entrusted to the Board, or a duly authorized
committee thereof, and the Compensation Committee has been entrusted with the
powers of administration. Subject to the terms of the Stock Plans, the
Compensation Committee has been authorized to (i) select persons to
participate in the plans, (ii) determine the form and substance of the options
granted under the plans, (iii) interpret the plans, and (iv) adopt, amend or
rescind such rules and regulations for carrying out such plans as the
Compensation Committee deems appropriate.
Securities Subject to the Stock Plans
An aggregate of 2,075,000 shares of Common Stock may be issued pursuant to
the Stock Plans (of which 1,175,000 shares were authorized under the Current
Plans). In order to prevent dilution or enlargement of rights under the
options, in the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, distribution of
assets or other change in the corporate structure of shares of the
Corporation, the type and number of shares available upon exercise and the
exercise price will be adjusted accordingly. Depending on the terms of the
plan, the Compensation Committee, subject to specified limitations, may
advance the date on which an option shall become exercisable.
The Corporation is required at all times either to keep available sufficient
unissued shares of Common Stock to satisfy the exercise of all of the options
granted which have neither lapsed or been exercised or to ensure that
sufficient issued shares of Common Stock will be available to satisfy the
exercise of granted options.
Effect of Cessation of Employment
Subject to the following, under the Stock Plans, vested options can be
exercised by a participant only while he or she is a director or employee of
the Corporation or its subsidiaries.
In the event of the death of the participant, under the PRSOP, NED's Plan
and CSOP, all of the deceased participant's options that have become fully
vested and exercisable may be exercised by his personal representatives for a
period of one year following the death of the participant. Under the Savings
Related Plan, this one year period is limited to the situation where the
participant's death occurred before the Bonus Date (defined as the earliest
date on which a bonus is payable following 36 monthly payments under a
certified contractual savings scheme approved by the UK Board of Inland
Revenue (the "Inland Revenue") (a "Savings
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Contract")). If the date of death was on or within six months after the Bonus
Date, the personal representatives may exercise the options only during a
period of one year from the Bonus Date.
If the participant, under the NED's Plan and CSOP, ceases to hold office or
employment due to injury, ill-health or disability, redundancy (as defined by
the UK Employment Rights Act 1996), or change of control or transfer of an
undertaking of the participant's employer, the participant may exercise his
options within one year of his cessation of office or employment. Under the
Savings Related Plan, retirement at the age of 65, in addition to the above
conditions, entitles the participant to exercise his options, and such
exercise must be made within six months of the participant attaining the age
of 65. Options granted under the PRSOP lapse upon the cessation of the
participant's employment upon the occurrence of the grounds mentioned therein
(identical to those listed under the NED's Plan and CSOP above) unless
exercise is permitted by the Compensation Committee in its absolute
discretion, in which case the options must be exercised within one year of the
cessation of employment.
The PRSOP and CSOP allow for premature exercise of options upon the
retirement of the participant, or for any other reason in the absolute
discretion of the Compensation Committee if the conditions imposed on grant
have been satisfied.
Effect of Take-Over, Scheme of Arrangement and Winding-Up
In the event any company becomes a parent of the Corporation as a result of
a tender offer for all of the shares of the Corporation or all of the shares
of the same class as the shares underlying the options, under the PRSOP and
NED's Plan, options may be exercised within six months of the acquiring
company becoming the parent provided conditions attached to the options have
been satisfied. In the case of the CSOP and Savings Related Plan, a change of
control by a tender offer in the manner described above triggers the right to
exercise options within six months of the change of control, provided
conditions attached to the options have been satisfied.
Under the CSOP and Savings Related Plan, a scheme of arrangement, resulting
in change of control or otherwise, allows exercise of options within six
months of the approval or effectiveness of the scheme of arrangement as the
case may be.
Under all the Stock Plans, options may be exercised within six months of a
resolution for voluntary winding-up of the Corporation.
Description of each of the Stock Plans
i) The Octel Corp. Performance Related Stock Option Plan
The "PRSOP" provides stock options, the number of options granted being
proportionate to salary. They are exercisable subject to the Corporation
meeting certain performance targets. The performance targets are set at the
absolute discretion of the Compensation Committee, and may be amended,
relaxed, waived, or substituted as the Compensation Committee sees fit after
the grant of the option. Eligible recipients include members of top management
and directors. Initially "Cliff Edge" options were granted but in the future
the Corporation may vary the type of options granted under the PRSOP.
Options granted by the Corporation pursuant to the PRSOP are exercisable
during the employee's lifetime only by him and are not transferable by an
employee other than by operation of a death beneficiary designation made by
the participant in accordance with rules established by the Compensation
Committee.
The Compensation Committee may amend the rules of the PRSOP and the terms of
any outstanding award thereunder from time to time in its discretion in any
manner that it deems appropriate provided that no alteration may be made which
would abrogate or adversely affect the subsisting rights of the participant.
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The earliest date of exercise of the options is the latest of either the
date mentioned in the option certificate at grant, the satisfaction of the
performance criteria or January 1, 2001. The participant would exercise the
options without any payment. The number of eligible participants is
approximately 50.
As of the date hereof, 274,405 options have been issued and are outstanding
pursuant to this plan.
ii) The Octel Corp. Company Share Option Plan
The "CSOP" is divided into Parts A and B and is administered by the
Compensation Committee. Part A is approved by the Inland Revenue and stock
options are granted at fair market value at the time of grant up to a
statutory limit of $48,600, or such amount fixed by the UK Income and
Corporations Taxes Act 1988. Part B of the CSOP which also provides for the
granting of options at fair market value at the time of grant is not approved
by the Inland Revenue. It does not contain the statutory limits mentioned
above. In addition, the requirement to solicit shareholder approval, if any,
for an amendment to Part A in a manner required by Section 14(a) of the
Securities Exchange Act of 1934 or by furnishing information required by
Section 14(a) is not applicable to Part B. The rules do not permit the
repricing of options granted under either Part A or Part B. Eligible
recipients are executive directors and middle to senior management and are
targeted to encourage performance, recruitment, retention and stock ownership.
Options granted by the Corporation pursuant to the CSOP are exercisable
during the employee's lifetime only by him and are not transferable by an
employee other than by operation of a death beneficiary designation made by
the participant in accordance with rules established by the Compensation
Committee.
The Compensation Committee may amend the terms of any outstanding award
under the CSOP from time to time in its discretion in any manner that it deems
appropriate provided that such alteration is subject to the prior approval of
the Inland Revenue. The Compensation Committee may also amend the terms of the
plan provided approval of the Inland Revenue is also obtained if such
amendment relates to Part A.
The Compensation Committee may also add additional conditions and
limitations that it considers appropriate in granting options, provided that
such additional conditions and limitations shall (i) be objective and set out
in full at the date of the grant, (ii) be such that the right to exercise the
option shall not be dependent upon the further discretion of any person, and
(iii) not be capable of amendment, variation or waiver unless an event occurs
which causes the Compensation Committee to consider that a waived, varied or
amended condition would be a fairer measure of performance and would be no
more difficult to satisfy.
The earliest date of exercise of the options is the latest of the third
anniversary of the grant or the date mentioned in the option certificate at
grant. The options granted under Part A may be exercised by payment of an
exercise price per share not less than the market value of a Corporation's
share at grant. If the shares are subscribed, the exercise price would be the
greater of the nominal price or the market price at grant. For options grant
under Part B, the Corporation has the option of paying a cash sum equivalent
to the difference between the market value of the shares at exercise and the
exercise price calculated in the manner described above.
As of the date hereof, 405,636 options have been issued and are outstanding
pursuant to this plan.
iii) The Octel Corp. Non Employee Directors' Stock Option Plan
The "NED's Plan" was established to encourage Non-Employee Directors to
become stockholders and focus on improving stockholder value, and to provide
commitment to the Corporation in the longer term. The Compensation Committee
administers the NED's Plan. Eligible recipients are directors not employed by
the Corporation. Multiples of annual fees are used to determine the levels of
grants.
Options granted by the Corporation pursuant to the NED's Plan are
exercisable during the Non- Employee Director's lifetime only by him and are
not transferable other than by operation of a death beneficiary designation
made by the participant in accordance with rules established by the
Compensation Committee.
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The Compensation Committee may amend the rules of the NED's Plan and the
terms of any outstanding award thereunder from time to time in its discretion
in any manner that it deems appropriate provided that no alteration may be
made which would abrogate or adversely affect the subsisting rights of the
participant.
The earliest date of exercise of the options is the latest of the date
mentioned in the option certificate at grant or January 1, 2001. The options
granted may be exercised by payment of an exercise price per share as
determined by the Compensation Committee not less than the nominal value of a
share. If a director exercises an option awarded under the NED's Plan, the
Committee may in lieu of allotting the transfer of shares pay to such director
a cash sum equivalent to the difference between the market value of the shares
at exercise and the exercise price. The number of eligible participants is 6.
As of the date hereof, 127,373 options have been issued and are outstanding
pursuant to this plan.
iv) The Octel Corp. Savings-Related Stock Option Scheme
Under the "Savings Related Plan", all UK-based employees are eligible to
participate. The options are linked to a savings scheme for three years, of up
to $405 per month, which is approved by the Inland Revenue. The Savings
Related Plan is administered by the Compensation Committee.
Options granted by the Corporation pursuant to the Savings Related Plan are
exercisable during the employee's lifetime only by him and are not
transferable by an employee other than by operation of a death beneficiary
designation made by the participant in accordance with rules established by
the Compensation Committee. In addition, a holder may exercise an option
within a period of six months following the date on which he reaches the age
of 65 if he continues to hold office or employment with the Corporation after
that date.
The Board may amend the terms of any outstanding award under the Savings
Related Plan from time to time in its discretion in any manner that it deems
appropriate provided that such alteration is subject to the prior approval of
the Inland Revenue. The Board may also amend the terms of the plan provided,
however, if such amendment is made subsequent to the approval of the Savings
Related Plan by the Inland Revenue, such an amendment would not be effective
until approved by the Inland Revenue. No alteration made by the Board may
abrogate or adversely affect the subsisting rights of option holders.
The exercise period of the options is the six months subsequent to the Bonus
Date under the relevant Savings Contract. The options granted may be exercised
by payment of an exercise price per share, specified at the date of grant,
being not less than the 80% of the market value of a Corporation's share at
grant (the "Option Price"). If the shares are subscribed, the exercise price
would be the greater of the nominal price or the Option Price.
The total number of stock options issued and outstanding under this scheme
as of the date hereof is 126,739 shared between 275 employees.
Certain U.S. Federal Income Tax Consequences
The following is a brief summary of certain U.S. federal income tax
consequences to recipients of option awards under the Stock Plans (the
"Recipients") and the Corporation and does not purport to be a complete
enumeration or analysis of all potential relevant tax effects. This summary is
based upon the current provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Department regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all of
which are subject to change, possibly on a retroactive basis.
Nonqualified Stock Options. A Recipient who is granted a nonqualified stock
option, which generally is a stock option that is not an ISO as defined below
(an "NQO"), generally does not recognize any taxable income, and the company
that is deemed to grant such NQO is generally not entitled to a corresponding
deduction. Upon exercising such NQO, the Recipient generally recognizes
ordinary income (subject to wage and employment tax
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withholding) equal to the excess of the fair market value of the stock
acquired over the option price of such NQO. The amount of such excess is
generally determined by reference to the fair market value of the applicable
stock on the date of exercise. The Recipient's basis in the stock received is
generally equal to such stock's fair market value on the date of exercise.
Generally, the company that is deemed to grant such NQO is entitled to a
deduction equal to the compensation taxable to the Recipient.
Incentive Stock Options. A Recipient who is granted, or exercises, an
incentive stock option within the meaning of Code section 422 (an "ISO")
generally does not recognize taxable income. However, when a Recipient
exercises an ISO, the excess of the corresponding stock's fair market value on
the exercise date over the option price of such ISO will be included in the
Recipient's alternative minimum taxable income and thereby may subject the
Recipient to an alternative minimum tax. Such alternative minimum tax may be
payable even though the Recipient receives no cash upon the exercise of such
ISO with which to pay such tax. Upon a Recipient's disposition of stock
acquired pursuant to the exercise of an ISO (i) more than one year after the
date of exercise of the ISO, and (ii) more than two years after the date of
grant of the ISO (collectively, the "Required Holding Periods"), the Recipient
generally recognizes long-term capital gain or loss, as the case may be,
measured by the excess of the amount realized by the Recipient from such
disposition over the exercise price of such ISO. The company that is deemed to
grant such ISO is not entitled to any tax deduction by reason of the grant of
exercise of such ISO, or a disposition of stock acquired upon the exercise of
such ISO after the Required Holding Periods have been satisfied.
Generally, if a Recipient disposes of stock acquired pursuant to the
exercise of an ISO before the expiration of the Required Holding Periods (a
"Disqualifying Disposition"), the difference between the exercise price of
such ISO and the lesser of (i) the fair market value of the corresponding
stock upon the date of exercise, and (ii) the selling price of the
corresponding stock, will constitute compensation taxable to the Recipient as
ordinary income. The company that is deemed to grant such ISO generally is
allowed a corresponding tax deduction equal to the amount of compensation
taxable to the Recipient. The excess, if any, of such selling price over such
fair market value should be taxable to the Recipient as capital gain (long-
term or short-term, depending upon whether the Recipient held the stock for
more than one year). The company that is deemed to grant the ISO is not
allowed a deduction with respect to any such capital gain recognized by the
Recipient.
General. The foregoing discussion deals only with certain U.S. federal
income tax consequences to Recipients and the Corporation. The laws of any
other jurisdiction that could be relevant either to the Corporation, a
subsidiary of the Corporation, or a Recipient are not discussed herein. In
particular, the tax consequences under the laws of the U.K., where a
substantial number of the Recipients will reside and a substantial portion of
the Corporation's operations occur, are not addressed herein. Moreover, the
discussion above is relevant to the Corporation only to the extent option
awards are made with respect to services performed in the United States, and
is relevant to a Recipient only to the extent the Recipient either performs
services for the Corporation in the United States or is a citizen or resident
of the United States.
Voting. The affirmative vote of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock represented in person or
proxy is required for the approval of the Stock Plans, provided that the total
vote cast on this proposal represents a majority of the shares of Common Stock
entitled to vote.
The Board of Directors recommends a vote "FOR" the approval of the Stock
Plans.
8
<PAGE>
MANAGEMENT
The following sets forth certain information as of March 14, 2000 with
respect to the Corporation's nominees for director, the Corporation's
continuing directors, and certain officers of the Corporation and its
subsidiaries (including all executive officers of the Corporation). Officers
of the Corporation serve at the discretion of the Board of Directors.
A. Nominees for Directors
Class II Directors who will serve until the 2000 Annual Meeting and are
seeking re-election
Mr James M C Puckridge - Director since May 7, 1998. Age: 64
James Puckridge was Chairman of Elf Atochem UK Ltd., a position he assumed in
1990 until his retirement on December 31, 1998. Prior to that he was Managing
Director of the same organization. He is also Chairman of Ato Findley UK Ltd
and Elf Atochem UK Pension Fund Trustee Co. Ltd. He is a Non-Executive
Director of LINPAC Group Ltd, an international manufacturer and converter of
paper, plastics and metal products primarily for the packaging industry, and
Thomas Swan and Co Ltd, a UK based specialty chemical corporation. He is a
past President of the British Plastics Federation and a former Council Member
of the Chemicals Industries Association, where he was Chairman of the General
Purpose and Finance Committee.
Dr Benito Fiore - Director since May 7, 1998. Age: 62
Benito Fiore is a specialist in the chemical industry retained by the chemical
practices division of A T Kearney Limited, part of a global consultancy
organization. Between 1990 and 1995 he was Chairman and Chief Executive
Officer of Enichem UK Ltd. Prior to this he held a number of executive
directorships in the Montedison Group working in Denmark, Canada, Italy and
the USA. He is a Member of the Council of the Italian Chamber of Commerce, an
Associate Member of the Council of the Chemical Industries Association and a
Fellow of the Institute of Directors.
B. Continuing Directors
Class I Directors who will serve until the 2002 Annual Meeting
Mr Thomas M Fulton - Director since February 27, 1998. Age: 66
Thomas Fulton served as President and Chief Executive Officer of Landauer
Inc., a provider of radiation monitoring services until his retirement on
December 31, 1998. He remains a Director of that Company. Prior to joining
Landauer in 1978, his career included various management positions at Union
Carbide Corporation, BASF Corporation and ICN Pharmaceuticals, Inc. Mr Fulton
has also served on the Board of Great Lakes Chemical Corporation since 1995
and is on the Boards of The Advocate South Suburban Hospital and the Bethel
Community Facility and is Chairman of the Board of Trustees of the Chicago
Theological Seminary.
Mr Charles M Hale - Director since May 7, 1998. Age: 64
Charles Hale is Chairman of Donaldson, Lufkin & Jenrette International, the
London based subsidiary of Donaldson, Lufkin & Jenrette Inc., a major New York
based investment bank. Prior to 1984, he was a general partner of Lehman
Brothers Kuhn Leob and Managing Director of AG Becker International. Mr Hale
is a graduate of Stanford University and Harvard Business School. Charles Hale
is the brother of Martin Hale who is also a Director of the Corporation.
Class III members who will serve until the 2001 Annual Meeting
Dr Robert E Bew - Director and Chairman since May 7, 1998. Age: 63
Robert Bew serves as Non-Employee Chairman of the Corporation and since
October 1, 1999 has provided additional advice and services to the Corporation
on corporate development matters. He is also currently Chairman of the
European Process Industries Competitiveness Centre, an organization
specializing in increasing
9
<PAGE>
competitiveness in process industries. He spent 35 years with ICI, most
recently as CEO of ICI's Chemical & Polymer division in Teesside, UK.
Previously he served as head of Corporate Planning and between 1995 and 1997
was also Chairman of Phillips Imperial Petroleum Ltd., a refinery joint
venture between ICI and Phillips Petroleum.
Mr Dennis J Kerrison - Director since February 27, 1998. Age: 55
Dennis Kerrison serves as President and Chief Executive Officer of the
Corporation. He joined the Corporation's wholly owned subsidiary The
Associated Octel Company Limited as Managing Director in May 1996 as well as
serving as a Group Vice President and Officer of that Corporation's then
owners, Great Lakes Chemical Corporation. Between 1992 and 1996 he was a
Director and Officer of Hickson International plc, lastly as Chief Executive
Officer. Prior to this he worked in senior management roles for specialty
chemical companies, in Europe and the United States, notably Rhone Poulenc,
Rohm & Haas and RTZ Chemicals.
Mr Martin M Hale - Director since February 27, 1998. Age: 59
Martin Hale is Chairman of the Board of Directors of Great Lakes Chemical
Corporation, a position he has held since 1995. He has served on the Great
Lakes Board of Directors since 1978. Mr Hale is also a director of OSCA Corp.,
a company engaged in the provision of services to the oil and gas drilling
industries, having been appointed to that position in February 2000. From 1983
until December 31, 1999 Mr Hale was the Executive Vice President and a
Director of Hellman Jordan Management Co. Inc., a registered investment
advisor specialising in asset management and a wholly owned subsidiary of
United Asset Management Corporation. Prior to 1983 Mr Hale was President and
Chief Executive Officer of Marsh & McClennan Asset Management Company. He also
serves as a Director of the Student Conservation Association, as Chairman of
the Board of Governors of the School of The Museum of Fine Arts, Boston and as
a Trustee of the Museum of Fine Arts. Martin Hale is the brother of Charles
Hale who is also a director of the Corporation.
C. Officers (Other than those who are Directors and Listed above)
H Alan Hanslip (Appointed December 22, 1998) Age: 52
Alan Hanslip currently serves as Vice President, Human Resources of the
Corporation having joined its subsidiary The Associated Octel Company Limited
in a similar capacity in November 1996. Previously, Mr Hanslip served as
Director of Human Resources for British Nuclear Fuels plc.
Dr Geoffrey J Hignett (Appointed December 22, 1998) Age: 49
Geoffrey Hignett serves as Vice President, Specialty Chemicals, of the
Corporation having joined its subsidiary The Associated Octel Company Limited
in February 1997 as Business Director, Petroleum Specialties. From May 1993 to
January 1997 he served as Director of Technology and Business Director of
Water Additives for a division of FMC Corporation, a multinational
engineering, manufacturing and chemicals company and prior to that as
Technical Director of the Metals and Electronics Division of Laporte plc.
Alan G Jarvis (Appointed April 1, 1998) Age: 50
Alan Jarvis serves as Vice President and Chief Financial Officer of the
Corporation having joined its subsidiary The Associated Octel Company Limited
in a similar capacity in October 1997. Prior to this Mr Jarvis served as Group
Finance Director of the Power Plant Group of GEC Alsthom, a world-wide Anglo-
French joint venture in the power generation business. From 1987 to 1994, Mr
Jarvis served at different times as Property Director, Group Finance Director
and Group Financial Controller for Simon Engineering PLC, a British
engineering corporation specializing in hydraulic platforms, process plant
contracting and chemical storage.
John P Tayler (Appointed May 11, 1999) Age: 44
John Tayler serves as Corporate Secretary and General Counsel to the
Corporation having been appointed Corporate Secretary on May 11, 1999 and
Corporate Secretary and General Counsel on February 21, 2000. Prior to this Mr
Tayler was Company Secretary of Creative Publishing plc having joined them in
1997 from Allied Colloids Group plc where he had been Company Secretary from
1988.
10
<PAGE>
Steven W Williams (Appointed December 22, 1998) Age: 44
Steven Williams serves as Vice President, Group Operations of the Corporation
having joined its subsidiary The Associated Octel Company Limited as Director
of Manufacturing in November 1995. Prior to this he acted as Operations
Manager for Esso at their Fawley Oil Refinery.
D. Family Relationships
Charles Hale who is a Director of the Corporation is the brother of Martin
Hale who is also a Director of the Corporation. There are no other family
relationships between any of the persons referred to in sections (A), (B) or
(C) above.
Information about the Board of Directors
The Board of Directors met four times during fiscal 1999. Each Director
attended all of the meetings of the Board of Directors and any committees on
which such director served in fiscal 1999. The Corporation has Executive,
Finance, Audit, Safety Health and Environmental, and Compensation Committees,
the members of which are as shown below.
The Executive Committee has all the powers and authority of the Board of
Directors, except those powers specifically reserved to the Board of Directors
by Delaware law, the Certificate of Incorporation or the Bylaws of the
Corporation or otherwise to act for the Board, with certain restrictions, on
behalf of the Corporation. Dr Robert Bew, Dennis Kerrison, Martin Hale and
James Puckridge have served as members of this Committee since its formation
on May 11, 1998. The Committee met three times during fiscal 1999.
The Finance Committee reviews and assesses the financial affairs of the
Corporation and provides advice to the Board of Directors on financial
policies and the financial condition of the Corporation. Dr Robert Bew, Dennis
Kerrison and Charles Hale have served as members of this Committee since its
formation on May 11, 1998. The Committee met once during fiscal 1999.
The Audit Committee reviews the adequacy of internal controls and the work
of both the independent and internal auditors, consults with the independent
public accountants concerning the audit report and the related management
letter, and makes recommendations to the Board concerning the selection of
independent accountants. Dr Benito Fiore, Thomas Fulton and Charles Hale have
served as members of this Committee since its formation on May 11, 1998. The
Committee met five times during fiscal 1999.
The Safety, Health and Environmental Committee assesses the Corporation's
safety, health and environmental policies and performance and makes
recommendations to management regarding the promotion and maintenance of
standards of compliance and performance. Dr Benito Fiore, Thomas Fulton and
James Puckridge have served as members of this Committee since its formation
on May 11, 1998. The Committee met twice during fiscal 1999.
The Compensation Committee reviews management compensation programs,
approves compensation terms and agreements for senior executive officers,
reviews changes in compensation for senior executive officers and administers
the Corporation's restricted stock and stock option plans. Martin Hale and Dr
Benito Fiore have served as members of this Committee since its formation on
May 11, 1998. Dr Robert Bew served as a member of this Committee from its
formation on May 11, 1998, but resigned from the Committee on December 31,
1999 in view of his receipt of additional remuneration from the Corporation
pursuant to a consultancy agreement. The Committee met four times during
fiscal 1999.
The Corporation does not have a Nominating Committee.
11
<PAGE>
Compensation of Directors
Retainer, Committee and Meetings Fees
Non-employee Directors receive compensation for their services in the form
of an annual retainer, Committee Chairman fees and meeting fees. Octel Corp.
employees are not paid any fees or compensation for being on the Board or on
any Board committee.
The Non-employee Chairman of the Board receives an annual retainer of
$115,000 to recognize his responsibilities to Octel Corp. In addition, the
current Non-employee Chairman receives fees in respect of a consultancy
agreement at the rate of $97,200 per annum. All other Non-employee Directors
receive an annual retainer of $23,000. All Non-employee Directors receive an
annual retainer of $5,000 for each committee they chair, $1,650 per day for
attendance at Board Meetings and $825 per day for attendance at Committee
Meetings and for special assignments. They are also reimbursed out of pocket
expenses. It is the policy of the Board to ask the Compensation Committee to
review the fees paid to Directors each year.
Non-employee Directors received stock options to the equivalent of three
times their annual fees at an option price of $13.275 during fiscal 1999. See
"Executive Compensation and Other Information--Stock Option Plans." The stock
options granted to the Non-employee Directors were:
<TABLE>
<CAPTION>
April 14, August 9,
1999 1999
--------- ---------
<S> <C> <C>
Dr Robert Bew.......................................... 20,557 10,278
Martin Hale............................................ 7,450 3,725
Thomas Fulton.......................................... 7,450 3,725
Charles Hale........................................... 7,450 3,725
James Puckridge........................................ 7,450 3,725
Dr Benito Fiore........................................ 7,450 3,725
</TABLE>
The options granted on April 14, 1999 vest on January 1, 2002 and are
exercisable until December 31, 2008. The options granted on August 9, 1999
vest on January 1, 2003 and are exercisable until August 8, 2009.
Deferred and Long-Term Compensation
None were awarded or in place in the last fiscal year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act 1934, as amended, requires the
Corporation's directors and officers, and persons who beneficially own more
than ten percent of a registered class of the Corporation's equity securities,
to file initial reports of ownership and reports of changes in ownership of
the Corporation's equity securities with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulations to
furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Corporation, or written representations that no Form 5 filings were required,
the Corporation believes that each of its officers, directors and greater than
ten percent beneficial owners complied with all Section 16(a) filing
requirements applicable to them during fiscal 1999.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Corporation's Common Stock as of February 29, 2000
by holders of more than five percent of its Common Stock, the directors of the
Corporation, the executive officers of the Corporation included in the summary
Compensation Table ("Named Executives") set forth under the caption "Executive
Compensation and Other Information" who were employed by the Corporation as of
February 29, 2000, and all directors and executive officers of the Corporation
as a group. As of February 29, 2000, excluding treasury stock, there were
13,451,522 shares of Common Stock outstanding. To the knowledge of the
Corporation, each stockholder has sole voting and investment power with
respect to the shares indicated as beneficially owned, unless otherwise
indicated in a footnote. Unless otherwise indicated, the business address of
each person is the Corporation's corporate address.
BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
- ------------------------------------ ---------- ----------
<S> <C> <C>
Baupost Group Inc. (1)................................... 2,086,000 15.29
44 Brattle St., 5th Floor,
Cambridge, MA 02138
T Rowe Price Associates, Inc. (2)........................ 1,789,825 13.1
100 E. Pratt Street
Baltimore, Maryland 21202
FMR Corp. (3)............................................ 1,472,000 10.79
82 Devonshire Street,
Boston, MA 02109
Kestrel Investment Management Corp. (4).................. 945,600 6.8
411 Borel Avenue, Suite 403,
San Mateo, CA 94402
Jeffrey S Halis (5)...................................... 832,260 6.1
500 Park Avenue, 5th Floor
New York, NY 10022
</TABLE>
MANAGEMENT
<TABLE>
<CAPTION>
Shares
Underlying
Shares Options
Owned Exercisable
Directly or Within Percent of
Name Indirectly 60 Days Total Class
---- ----------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Dr Robert E Bew.................... 2,051 2,051 *
Dr Benito Fiore.................... 500 500 *
Thomas M Fulton.................... 825 825 *
Charles M Hale (6)................. 49,960 49,960 *
Martin M Hale (6).................. 54,370 54,370 *
James M C Puckridge................ 500 500 *
Dennis J Kerrison.................. 22,690 45,158 67,848 *
Alan G Jarvis...................... 11,135 19,171 30,306 *
H Alan Hanslip..................... 8,090 13,036 21,126 *
Dr Geoffrey J Hignett.............. 9,664 16,231 25,895 *
Steven W Williams.................. 11,135 19,171 30,306 *
Directors and Executive Officers as
a group (11 persons).............. 170,920 112,767 283,687 2.11%
</TABLE>
13
<PAGE>
- --------
Notes:
*Less than 1%.
(1) Based solely upon a Schedule 13G dated February 10, 2000 filed jointly by
The Baupost Group LLC ("Baupost"), SAK Corporation and Seth A Klarman,
Baupost has sole voting and dispositive power with respect to 2,086,000
shares of Common Stock, SAK Corporation is the manager of Baupost and Seth
A Klarman, as the sole director of SAK Corporation and a controlling
person of Baupost, may be deemed to have beneficial ownership of the
securities beneficially owned by Baupost. Furthermore, based solely upon
such Schedule 13G, securities reported as being beneficially owned by
Baupost include securities purchased on behalf of a registered investment
company and various limited partnerships.
(2) Based solely upon a Schedule 13G dated February 14, 2000 filed jointly by
each of T. Rowe Price Associates, Inc. ("Price Associates") and T. Rowe
Price Capital Appreciation Fund ("Capital Appreciation"), the shares of
Common Stock shown as beneficially owned by Price Associates are owned by
various individual and institutional investors including Capital
Appreciation (which owns 835,000 shares, representing 6.1% of the shares
of Common Stock outstanding), to which Price Associates serves as an
investment advisor with power to direct investments and/or sole power to
vote the securities. For the purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(3) Based solely upon a Schedule 13G dated February 14, 2000 filed jointly by
FMR Corp. ("FMR"), Edward C Johnson 3d ("Mr Johnson"), Abigail P Johnson
("Ms Johnson"), Fidelity Management & Research Company ("FM&R") and
Fidelity Low-Priced Stock Fund ("Fidelity Stock"), various persons have
the right to receive or the power to direct the receipt of dividends from,
or the proceeds for the sale of, the Common Stock shown as beneficially
owned by FMR, including Fidelity Stock (which owns 1,472,000 shares,
representing 10.79% of the shares of Common Stock outstanding).
(4) Based solely upon a Schedule 13G dated February 14, 2000 filed jointly by
Kestrel Investment Management Corporation ("Kestrel"), David J Steirman
and Abbot Keller, Kestrel is deemed to be the beneficial owner of 945,600
shares of Common Stock with sole voting power for 770,400 of such shares
and sole dispositive power for all 945,600 of such shares, pursuant to
separate arrangements whereby it acts as investment advisor to certain
persons in which it also holds an ownership interest, which persons have
the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, such Common Stock. Furthermore, based
solely upon such Schedule 13G, David J Steirman and Abbot J. Keller are
deemed to be the beneficial owners of 945,600 shares of Common Stock
pursuant to their 100% ownership of Kestrel.
(5) Based solely upon a Schedule 13D dated January 5, 2000 the shares of
Common Stock shown as being beneficially owned by Jeffrey S Halis include
411,300 shares owned by Tyndall Partners, L.P. ("Tyndall"), 392,500 shares
owned by Tyndall Institutional Partners, L.P. ("Tyndall Institutional"),
and 28,460 shares owned by Madison Avenue Partners, L.P. ("Madison").
Furthermore, based solely upon such Schedule 13D, pursuant to the
Agreement of Limited Partnership of each of Tyndall, Tyndall Institutional
and Madison, and the Investment Management Agreement of Halo
International, Jeffrey S. Halis possesses sole power to vote and direct
the disposition of all the shares of Common Stock owned by each of
Tyndall, Tyndall Institutional, Madison, and Halo International,
respectively. Jeffrey S Halis' interest in the Common Stock as set forth
herein is limited to the extent of his pecuniary interest, if any, in
Tyndall, Tyndall Institutional, Madison and Halo International
respectively.
(6) In the case of Charles Hale and Martin Hale, the figures shown above for
each of them include 47,690 shares held by them as trustees in family
trusts. Charles Hale and Martin Hale disclaim beneficial ownership of
these 47,960 shares held in a trustee capacity.
14
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth certain information regarding compensation
paid or accrued to Dennis J Kerrison, President and Chief Executive Officer of
the Corporation, and to each of the Corporation's four next most highly
compensated executive officers for services rendered to the Corporation and
the previous owners of Octel during fiscal 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term
(1) Compensation (1)
---------------------- -----------------------
Securities, Restricted All Other
Fiscal Salary Bonus Underlying Stock Compensation
Name & Principal Position Year ($) ($) Options/SARs Awards ($) (1)
- ------------------------- ------ ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dennis J Kerrison........ 1999 462,327 335,283 208,596 -- 409,272(2)
President and Chief
Executive Officer 1998 389,721 334,980 1,242 -- 521,242
1997 283,503 127,656 -- 69,274
Alan G Jarvis (3)........ 1999 256,760 128,304 80,845 -- 165,989(4)
Vice President and Chief
Financial Officer 1998 221,164 112,692 -- -- 274,902
1997 39,058 15,593 -- 12,390
Steven W Williams........ 1999 243,000 134,136 80,845 -- 148,948(5)
Vice President, Group
Operations 1998 215,019 121,281 1,242 -- 264,296
1997 149,853 44,186 -- -- 55,136
Dr Geoffrey J Hignett
(6)..................... 1999 205,743 116,860 68,450 -- 127,289(7)
Vice President,
Specialty Chemicals 1998 188,245 97,644 -- -- 233,146
1997 139,730 31,109 -- -- 88,949
H Alan Hanslip........... 1999 185,300 78,654 54,947 -- 104,331(8)
Vice President, Human
Resources 1998 160,324 82,414 1,242 -- 190,865
1997 96,580 31,733 -- 32,470
</TABLE>
- --------
Notes:
(1) All the above Executives are paid in pounds sterling. Their salaries were
based upon the United Kingdom salary parameters set before the spin-off by
the Compensation Committee of Great Lakes Chemical Corporation. With the
help of external consultants these salaries were re-confirmed by the
Compensation Committee of Octel Corp. No salary increases were awarded
from the date of the spin-off to the end of fiscal 1999. For the purposes
of the Compensation table an exchange rate of (Pounds)1--$1.62 is used.
(2) The President and Chief Executive Officer received an additional bonus of
$169,303 in recognition of his contribution following the spin-off from
Great Lakes Chemical Corporation (the "Distribution"). In fiscal 1999 he
also received a pension benefit valued at $200,879 plus other benefits
mainly consisting of a leased company car valued at $22,676.
(3) Alan Jarvis became an employee of the Corporation effective October 13,
1997.
(4) In recognition of his contribution following the Distribution Alan Jarvis
received an additional bonus of $71,873. In fiscal 1999, he also received
a pension benefit valued at $66,329 plus other benefits mainly consisting
of a leased company car valued at $14,745.
(5) In recognition of his contribution following the Distribution Steven
Williams received an additional bonus of $71,873. In fiscal 1999, he also
received a pension benefit valued at $57,232 plus other benefits mainly
consisting of a leased company car valued at $13,123.
(6) Dr Geoffrey Hignett became an employee of the Corporation effective
February 1, 1997.
(7) In recognition of his contribution following the Distribution Dr Geoffrey
Hignett received an additional bonus of $60,787. In fiscal 1999, he also
received a pension benefit valued at $48,751 plus other benefits mainly
consisting of a leased company car valued at $13,618.
(8) In recognition of his contribution following the Distribution Alan
Hanslip received an additional bonus of $48,875. In fiscal 1999, he also
received a pension benefit valued at $37,734 plus other benefits mainly
consisting of a leased company car valued at $14,259.
Stock Option Plans
The Corporation has six stock option plans, the first four of which provide
for grants of options to key employees and Non-employee Directors. Two other
plans provide stock on an equal basis to all employees. The Current Plans,
which are administered by the Compensation Committee of the Board of Octel
Corp., were approved prior to the Distribution.
15
<PAGE>
The six plans in existence are:
i) The Octel Corp. Company Share Option Plan;
ii) The Octel Corp. Performance Related Stock Option Plan;
iii) The Octel Corp. Time Restricted Stock Option Plan;
iv) The Octel Corp. Non-Employee Directors' Stock Option Plan;
v) The Octel Corp. Savings Related Share Option Scheme; and
vi) The Octel Corp. Profit Sharing Share Scheme.
Options, and the conditions relating thereto, granted under the above plans
are determined by the Compensation Committee and all the plans were approved
prior to the Distribution. The limit set by Great Lakes Chemical Corporation
for the number of shares of Common Stock which can be issued or awarded under
the Current Plans is 1,175,000 in the aggregate. The Stock Plans, which the
Board approved in February 2000 and which are submitted to the stockholders
for approval at the Annual Meeting, increases this aggregate amount to
2,075,000 shares of Common Stock in the aggregate. See "Proposal Three: The
approval of the first amendment and restatement of the Octel Corp. Performance
Related Stock Option Plan, the Octel Corp. Company Share Option Plan, the
Octel Corp. Non- Employee Directors' Stock Option Plan, and the Octel Corp.
Savings-Related Share Option Scheme."
The options granted to the Named Executives during fiscal 1999 pursuant to
the Current Plans described above are set out in the following table.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------ --------------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in price Vesting Expiration 0% 5% 10%
Name Granted (1) 1999 ($/Sh) Date Date $ (2) ($) (2) ($) (2)
---- ------------ ------------ -------- -------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis J Kerrison:
TRSOP.................. 45,158 5.26 0 12/31/99 12/31/2007 609,633 928,245 1,361,882
PRSOP (3).............. 31,451 3.66 0 1/1/01 01/01/2008 424,589 646,491 948,504
PRSOP (3).............. 35,959 4.19 0 1/1/02 12/31/2008 436,003 692,842 1,060,989
CSOP................... 96,028 11.18 13.275 1/1/03 08/08/2009 0 719,661 1,901,063
Total................ 208,596
Alan G Jarvis:
TRSOP.................. 19,171 2.23 0 12/31/99 12/31/2007 258,809 394,070 578,162
PRSOP (3).............. 11,868 1.38 0 1/1/01 01/01/2008 160,218 243,953 357,917
PRSOP (3).............. 13,569 1.58 0 1/1/02 12/31/2008 164,524 261,441 400,360
CSOP................... 36,237 4.22 13.275 1/1/03 08/08/2009 0 271,570 717,383
Total................ 80,845
Steven W Williams:
TRSOP.................. 19,171 2.23 0 12/31/99 12/31/2007 258,809 394,070 578,162
PRSOP (3).............. 11,868 1.38 0 1/1/01 01/01/2008 160,218 243,953 357,917
PRSOP (3).............. 13,569 1.58 0 1/1/02 12/31/2008 164,524 261,441 400,360
CSOP................... 36,237 4.22 13.275 1/1/03 08/08/2009 0 271,570 717,383
Total................ 80,845
Dr Geoffrey J Hignett:
TRSOP.................. 16,231 1.89 0 12/31/99 12/31/2007 219,119 333,636 489,497
PRSOP (3).............. 10,049 1.17 0 1/1/01 01/01/2008 135,662 206,562 303,059
PRSOP (3).............. 11,489 1.34 0 1/1/02 12/31/2008 139,304 221,365 338,989
CSOP................... 30,681 3.57 13.275 1/1/03 08/08/2009 0 229,932 607,391
Total................ 68,450
H Alan Hanslip:
TRSOP.................. 13,036 1.52 0 12/31/99 12/31/2007 175,986 267,962 393,142
PRSOP (3).............. 8,070 0.94 0 1/1/01 01/01/2008 108, 945 165,883 243,376
PRSOP (3).............. 9,227 1.07 0 1/1/02 12/31/2008 111,877 177,782 272,247
CSOP .................. 24,641 2.87 13.275 1/1/03 08/08/2009 0 184,667 487,817
Total................ 54,974
</TABLE>
16
<PAGE>
- --------
Notes:
(1) In the event of a change of control of the Corporation, all options become
fully vested and exercisable. In order to prevent dilution or enlargement
of rights under the options, in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, distribution of assets or other change in the
corporate structure of shares of the Corporation, the type and number of
shares available upon exercise and the exercise price will be adjusted
accordingly. The Compensation Committee may, subject to specified
limitations, advance the date on which an option shall become exercisable.
(2) Amounts reflect assumed rate of appreciation from the fair market value on
the date of grant as set forth in the Securities and Exchange Commission's
executive compensation disclosure rules. Actual gains, if any, on stock
option exercises depend on future performance of the Common Stock and
overall stock market conditions. No assurance can be made that the amounts
reflected in these columns will be achieved.
(3) The exercise of these options is dependent on the Corporation achieving
specific cash generation targets over a 3 year period.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at December 31, at December 31, 1999
Shares Acquired Value Realized 1999 Exercisable/ (2) Exercisable/
Name On Exercise ($(1) Unexercisable Unexercisable
---- --------------- -------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
Dennis J Kerrison....... -- -- 45,158/ $468,514/
164,680 $ 699,379
Alan G Jarvis........... -- -- 19,171/ $198,899/
61,674 $263,909
Steven W Williams....... -- -- 19,171/ $198,899/
62,916 $263,909/
Dr Geoffrey J Hignett... -- -- 16,231/ $168,397/
52,219 $223,457
H Alan Hanslip.......... -- -- 13,036 $135,248/
43,180 $179,456
</TABLE>
- --------
Notes:
(1) As of the end of the fiscal year, none of the options held by the named
executive officers had been exercised.
(2) The value of the in-the-money options is based on Octel Corp.'s NYSE
closing Common Stock price on December 31, 1999 of $10.375.
Pension Plan
The Corporation operates three separate pension plans for executives which,
together, are designed to provide the equivalent of 1/40 of final salary (or
the average of the last 3 years of service if higher) for each year of service
( 1/30 for the CEO) with Octel Corp. The three plans are:
i) The Octel Pension Plan;
ii) The Octel Senior Management Plan; and
iii) The Octel Funded Unapproved Pension Plan.
The reason for having three plans is to make maximum use of UK Inland
Revenue approved pension arrangements to optimize both the Executive's and the
Corporation's tax position.
Normal retirement age is the end of the month following the Executive's 65th
birthday.
Pension Plan Table
<TABLE>
<CAPTION>
5 Years 10 Years 15 Years 20 Years 25 Years
Final ------------- --------------- --------------- --------------- ---------------
Earnings @1/30 @1/40 @1/30 @1/40 @1/30 @1/40 @1/30 @1/40 @1/30 @1/40
$ $ $ $ $ $ $ $ $ $ $
- -------- ------ ------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
150,000 18,750 37,500 56,250 75,000 93,750
250,000 31,250 62,500 93,750 125,000 156,250
350,000 43,750 87,500 131,250 175,000 218,750
450,000 75,000 56,250 150,000 112,500 225,000 168,750 300,000 225,000 375,000 281,250
550,000 91,666 68,750 183,233 137,500 275,000 206,250 366,666 275,000 458,333 343,750
</TABLE>
17
<PAGE>
As of December 31, 1999, the final base salary of the Named Executives and
eligible credited years under the pension plans were as follows:
<TABLE>
<CAPTION>
Base Eligible
Name Salary Years
---- -------- --------
<S> <C> <C>
Dennis Kerrison............................................ $429,300 3
Alan Jarvis................................................ $243,000 2
Steven Williams............................................ $243,000 4
Dr Geoffrey Hignett........................................ $205,740 2
Alan Hanslip............................................... $165,240 3
</TABLE>
Change in Control and Severance Agreements
The Corporation recognizes that establishing and maintaining a strong
management team is essential in protecting and enhancing the interests of the
Corporation and its stockholders. In order to ensure management stability and
the continuity of key management personnel, the Corporation has entered into
Change-in-Control agreements with each of the Named Executives. The agreements
provide that in the event of a take-over or fundamental restructuring of the
business, which results in the loss of the Executive's position, such
Executive is entitled to compensation of three years' pay plus benefits and
further that all stock options and grants to such Executives shall vest
immediately.
Employment Agreements
Each Executive also has an employment agreement which complies with UK
employment law and which provides for, amongst other things, 30 days of annual
vacation, the provision of a Corporation car, private health insurance,
pension provision, life insurance, permanent health insurance and a rolling
one year term of employment (2 years for the CEO) which can be terminated by
the Corporation upon twelve months notice (twenty four months for the CEO) and
six months (twelve months for the CEO) from the Executive.
Life Insurance Cover
Named Executives are covered by two basic plans. The Corporation's
accidental death plan provides up to six times annual salary in the event of
accidental death for whatever reason. Also, as a component of the Pension
plans, up to four times annual salary is payable for death whilst in service
with the Corporation.
Non-employee Directors have accidental cover while on Corporation business
up to a maximum of $500,000 in the case of death or injury. Cover ceases upon
termination of employment with the Corporation and there are no cash surrender
values.
18
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee reviews and makes recommendations to the Board
regarding salaries, compensation and benefits of executive officers and key
employees of the Corporation with the assistance of external advisors and
develops and administers programs providing stock-based incentives. After
consideration of the Compensation Committee's recommendations, the full Board
approves the salaries and bonuses and the stock and benefit programs for the
Corporation's executive officers.
Compensation Philosophy
The compensation philosophy of the Corporation is to link executive
compensation to continuous improvements in corporate performance and increases
in stockholder value. The goals of the Corporation's executive compensation
programs are as follows:-
. To establish pay levels that are necessary to attract and retain highly
qualified executives in light of the overall competitiveness of the
market for high quality executive talent and the Corporation's unique
business profile.
. To recognize superior individual performance, new responsibilities and
new positions within the Corporation.
. To balance short-term and long-term compensation to complement the
Corporation's annual and long-term business objectives and strategy and
to encourage executive performance in the fulfillment of those
objectives.
. To provide variable compensation opportunities based on the Corporation's
performance.
. To encourage stock ownership by executives.
. To align executive remuneration with the interests of stockholders.
Stock Ownership
The Compensation Committee believes that it can align the interests of
stockholders and executives by providing those persons who have substantial
responsibility over the management and growth of the Corporation with an
opportunity to establish a meaningful ownership position in the Corporation.
Compensation Components
Corporate and individual performances are recognized through both short and
long term incentive compensation plans designed to align the interests of
executives and stockholders. The total compensation program consists of three
components; base salary, which reflects the executive's level of
responsibility and individual performance; annual incentive compensation
awards in the form of cash bonuses, which reflect both corporate and
individual performance; and long term incentive compensation in the form of
stock options. The latter two components provide at risk compensation which is
linked directly to financial results. The Committee considers all elements of
compensation when determining an individual's total compensation.
Short-Term Incentive Compensation
Each year the Committee reviews the base salary of the President and Chief
Executive Officer and, in conjunction with the President and Chief Executive
Officer, reviews the base salaries of other corporate officers; however, the
Committee makes the final compensation decisions concerning such Officers. The
median level of the executive market as assessed by external surveys is used
as the main criterion in determining base salary. The levels and scope of
responsibility, experience, and corporate and business unit performances, as
well as individual performance, are also key criteria in base salary
determination.
19
<PAGE>
A Management Incentive Compensation Plan ("MICP") provides incentive
compensation in the form of cash bonuses to executive officers, managers and
other selected key employees who have a broad impact on the Corporation's
performance. The philosophy for incentive compensation is to provide awards
when financial objectives are achieved and provide no or reduced awards when
the objectives are not achieved. The awards granted in 1999 were based on pre-
established targets for corporate net income and cash generation in addition
to individual achievement against personal targets.
Long-Term Incentive Compensation
Long-term incentive compensation is comprised of annual grants of stock
options which are designed to encourage key employees to remain with the
Corporation by providing them with a long-term interest in the Corporation's
overall performance and to motivate them to maximize long-term stockholder
value. The Corporation's stock option grant guidelines were designed with the
assistance of external compensation consultants. The Committee administers the
stock compensation plans. Performance related stock options with ten year
vesting will generally be granted annually and cannot be exercised for at
least three years from the date of grant.
Chief Executive's Compensation
Dennis Kerrison's compensation includes base salary, incentive compensation
and stock options. Consistent with all other executive officers, the President
and Chief Executive Officer's compensation was determined by the Compensation
Committee in accordance with the salary policy, bonus programs and stock
option guidelines, namely the Corporation and the President and Chief
Executive's overall performance and motivation to maximize long-term
stockholder value. Stock options, which cannot be exercised for at least 3
years from the date of grant, with a maximum of ten year exercise from grant,
will generally be granted annually. The Committee has available information as
to the level of past awards and individual stock ownership of the President
and Chief Executive Officer.
The Committee determined that in order to better align Mr Kerrison's
compensation with stockholder interests, a greater portion of his compensation
would be at-risk and directly linked to financial results.
Mr Kerrison's base salary effective as of January 1999 was $429,300. A bonus
of $335,283 was granted to Mr Kerrison in consideration of the Corporation's
cash generation and overall financial performance and Mr Kerrison's leadership
of the Corporation during the fiscal year. He also received an additional
bonus of $169,303 in recognition of his contribution following the spin-off
from Great Lakes Chemical Corporation.
On February 5, 1999 Mr Kerrison received zero-cost options in respect of
45,158 shares of the Corporation's common stock which vested on December 31,
1999 and which must be exercised by December 31, 2007 in accordance with the
Corporation's time restricted bonus arrangements for certain senior
executives. These options were valued at two times the President's and Chief
Executive's salary and assumed a stock price of $19.60. In addition, Mr
Kerrison was granted up to 31,451 zero-cost options on February 5, 1999 and
which will vest on January 1, 2001 subject to the achievement of certain
performance criteria specified by the Compensation Committee. These
performance related stock options must be exercised by January 1, 2008. On
April 1, 1999 Mr Kerrison was granted 35,959 zero cost options which will vest
on January 1, 2002 subject to the achievement of certain performance criteria
specified by the Compensation Committee. These performance related stock
options must be exercised by December 31, 2008. In addition on August 9, 1999
Mr Kerrison was granted 96,028 options at an exercise price of $13.275 which
will vest on January 1, 2003 and must be exercised by August 8, 2009. The
stock options granted to Mr Kerrison were in line with the stock option
arrangements approved prior to the Distribution. In line with normal UK
practice, Mr Kerrison also receives a fully expensed company car and pension
benefits valued at $223,555.
20
<PAGE>
Summary
With a significant portion of the Corporation's executive compensation
linked directly to individual and corporate performance and paid in stock, the
Committee believes that these compensation practices will help ensure
alignment with the interests of the Corporation's stockholders. While
recognizing that fluctuations of the business cycles may negatively impact
financial performance from time to time, the Committee believes that the
strong leadership provided by the Corporation's senior executives and the
infrastructure that they have put in place have positioned the Corporation to
capitalize on the opportunities that lie ahead.
Compensation Committee Interlocks and Insider Participation
This report is submitted by the members of the Compensation Committee listed
below, none of whom is or has been a full-time employee of the Corporation.
They have all served as members of the Committee since the Distribution and
the Committee met four times during fiscal 1999.
COMPENSATION COMMITTEE
Martin M Hale (Chairman) Dr Benito Fiore
21
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return to stockholders on the
common stock of the Corporation since the date of the spin-off from Great
Lakes Chemical Corporation and S&P Specialty Chemical Indices over the same
period.
[GRAPH HERE]
Value of $100 Investment made May 28, 1998*
<TABLE>
<CAPTION>
5/26/98 12/31/98 06/30/99 12/31/99
------- -------- -------- --------
<S> <C> <C> <C> <C>
S&P 500 Composite Index................ $100.00 112.36 125.47 134.30
S&P Chemicals (Specialty) Index........ $100.00 82.65 120.04 100.79
Octel Corp. (OTL)...................... $100.00 60.99 54.95 45.60
</TABLE>
*excludes purchase commissions
22
<PAGE>
INFORMATION RESPECTING THE CORPORATION'S
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants of the Corporation, selected by the Board
for 1999, are PricewaterhouseCoopers, 1 London Bridge, London, SE1 9QL,
England. A representative of PricewaterhouseCoopers is expected to be present
at the Annual Meeting and will have the opportunity to make a statement if
such representative desires to do so. The representative is also expected to
be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, management is not aware of any
matters to be presented at the meeting other than the matters specifically
stated in the Notice of Meeting and discussed in the Proxy Statement. If any
other matter or matters are properly brought before the meeting, the persons
named in the enclosed proxy have discretionary authority to vote the proxy on
each such matter in accordance with their judgement.
SOLICITATION AND EXPENSES OF SOLICITATION
The solicitation of proxies will be made initially by mail. The
Corporation's directors, officers and employees may also solicit proxies in
person or by telephone without additional compensation. In addition, proxies
may be solicited by certain banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Corporation's Common
Stock. All expenses of solicitation of proxies will be paid by the
Corporation.
ANNUAL REPORT AND FORM 10-K
Copies of the Corporation's Annual Report to Stockholders, which includes
portions of the Corporation's Annual Report on Form 10-K for the Fiscal Year
ended December 31, 1999 are being mailed with this Proxy Statement to each
stockholder entitled to vote at the Annual Meeting. Stockholders not receiving
a copy of the Annual Report may obtain one by writing or calling Ms Heather
Ashworth, Investor Relations Director, Octel Corp., European Headquarters,
Global House, Bailey Lane, Manchester M90 4AA, England, telephone 011 44 161
498 8889.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
The Corporation anticipates holding its 2001 Annual Meeting of Stockholders
on Tuesday, May 8, 2001.
Under the regulations of the Securities and Exchange Commission, any
stockholder desiring to make a proposal to be acted upon at the 2001 Annual
Meeting of Stockholders must present such proposals to the Secretary of the
Corporation at its principal office at 200 Executive Drive, Newark, DE19702,
U.S.A., not later than December 5, 2000, in order for the proposal to be
considered for inclusion in the Corporation's Proxy Statement.
23
<PAGE>
Stockholder proposals or director nominations not included in a Proxy
Statement for an Annual Meeting must comply with the advance notice procedures
and information requirements set forth in the Bylaws of the Corporation in
order to be properly brought before that Annual meeting of Stockholders.
By order of the Board of Directors
John P Tayler
Corporate Secretary
March 27, 2000
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
24
<PAGE>
PROXY
- --------------------------------------------------------------------------------
PROXY PROXY
OCTEL CORP.
2000 2000
This Proxy is Solicited on behalf of the Board of Directors
The undersigned hereby appoints DENNIS J. KERRISON, ALAN G. JARVIS AND JOHN
P. TAYLER, and each of them with full power of substitution, as the proxies of
the undersigned, to attend the Annual Meeting of Stockholders to be held on
Tuesday, May 9, 2000, at 10:00 a.m. and any adjournment or postponement thereof,
and to vote the stock the undersigned would be entitled to vote, if present, on
the items listed on the reverse side of this proxy card.
THIS PROXY WILL BE VOTED AS SPECIFIED; OR IF NO CHOICE IS SPECIFIED, IT WILL BE
VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES, THE ELECTION OF
PRICEWATERHOUSECOOPERS AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 2000 AND THE
APPROVAL OF THE FIRST AMENDMENT AND RESTATEMENT OF THE STOCK PLANS.
ELIMINATE DUPLICATE MAILINGS
SEC rules require the Corporation to mail an annual report to every
stockholder even if there are multiple stockholders in the same household. If
you are a stockholder of record and have the same address as other stockholders
of record, you may authorize the Corporation to discontinue mailings of multiple
annual reports. To do so, mark the box (see over) on each proxy card for which
you do not wish to receive an annual report.
Applicable law requires the Corporation to send separate proxy statements
and proxy cards for all of your accounts.
_________________________________
New Address
-----------
_________________________________ SEE REVERSE
SIDE
_________________________________ -----------
(Please sign on the reverse side)
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your 3177
votes as in this
example.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" items 1, 2 and 3.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of FOR WITHHELD 2. Election of FOR AGAINST ABSTAIN
Directors [_] [_] Nominees: PricewaterhouseCoopers
James M.C. Puckridge as independent public
and Benito Fiore accountants for fiscal 2000. [_] [_] [_]
For, except vote withheld from the following nominee(s): 3. Approval of the first
amendment and restatement
_______________________________________________________ of the Stock Plans. [_] [_] [_]
4. In their discretion, the Proxies are authorized to
vote upon any other matter which may properly come
before the meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
Please check here to discontinue the annual [_]
report mailing for this account
Address change [_]
Please sign exactly as name appears hereon. Joint owners
should each sign personally. Where applicable, indicate
your official position or representation capacity.
________________________________________________________
________________________________________________________
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
. FOLD AND DETACH HERE .
<PAGE>
Exhibit 99.1
Document B
OCTEL CORP.
________________________________________________________________________________
RULES
of the
OCTEL CORP. NON EMPLOYEE DIRECTORS' STOCK OPTION PLAN
________________________________________________________________________________
PRICEWATERHOUSECOOPERS
9 Bond Court
Leeds
LS1 2SN
<PAGE>
CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS............................................................ 4
2. GRANT OF OPTIONS....................................................... 6
2.1 Procedure for Grant of Options....................................... 6
2.2 Requirement to Issue Option Certificate.............................. 6
2.3 Right to Disclaim Option............................................. 6
2.4 Options may not be transferred....................................... 6
2.5 Modified Terms and Conditions........................................ 7
2.6 Additional Requirements.............................................. 7
3. RIGHTS OF EXERCISE..................................................... 7
3.1 Earliest Date of Exercise............................................ 7
3.2 Requirement to remain in Office...................................... 7
3.3 Death of Option Holder............................................... 8
3.4 Right to Exercise Prematurely........................................ 8
3.5 Lapse of Options..................................................... 8
4. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION............. 8
4.1 Take-over pursuant to Tender......................................... 8
4.2 Voluntary Winding Up of the Company.................................. 9
4.3 Rollover of Options.................................................. 9
4.4 Meaning of "appropriate period"...................................... 9
5. MANNER OF EXERCISE..................................................... 9
5.1 Actions Required of the Option Holder................................ 9
5.2 Actions Required of the Company...................................... 10
5.3 Partial Exercise..................................................... 10
6. ISSUE OF SHARES........................................................ 10
6.1 Ranking of Shares.................................................... 10
6.2 Admission to the New York Stock Exchange............................. 11
7. ADJUSTMENTS............................................................ 11
7.1 General Power of Adjustment.......................................... 11
7.2 Requirement to Capitalise Reserves................................... 11
7.3 Notification of Option Holders....................................... 11
8. ADMINISTRATION......................................................... 12
8.1 Delivery of Notices or Documents..................................... 12
8.2 Copies of Shareholder Communications................................. 12
8.3 Maintenance of Unissued Share Capital................................ 12
8.4 Committee's Power to Administer Plan................................. 12
8.5 Committee's Decisions are Final and Conclusive....................... 12
8.6 Costs of Administering Plan.......................................... 12
9. ALTERATIONS............................................................ 13
9.1 Power to alter Rules................................................. 13
9.2 Alteration which affects subsisting rights of Option Holders......... 13
9.3 Notification to Option Holders....................................... 13
10. GENERAL............................................................... 13
10.1 Termination of the Plan............................................. 13
10.2 No Compensation for loss of Option Rights........................... 13
10.3 Governing Law....................................................... 13
11. DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION....................... 14
12. EMPLOYMENT AND SOCIAL TAXES........................................... 14
</TABLE>
<PAGE>
1. DEFINITIONS
In this Plan, the following words and expressions shall, where the context so
permits, have the meanings set forth below:
"Acquiring Company" the person mentioned in Rule 4.1, being a
company within the meaning of Section 832 of
the Act;
"Acquisition Price" in relation to an Option, the total amount
payable on any exercise being an amount equal
to the relevant Share Price multiplied by the
number of Shares in respect of which the
Option is exercised;
"the Code" the United States Internal Revenue Code of
1986 (as amended);
"the Company" save as provided in Rule 4.3, Octel Corp. a
Delaware corporation;
"Date of Grant" the date on which the Committee resolves to
grant an Option under the Plan pursuant to
Rule 2;
"Dealing Day" a day on which the New York Stock Exchange is
open for business;
"the Committee" the Octel Corp. Compensation Committee;
"Participant" any person who is a non employee director at
the Date of Grant;
"Grant Period" a period of 180 days beginning on the Dealing
Day following any of:
(1) a day on which the Company makes an
announcement of its results for any
year, quarter year or other period or
issues any prospectus, listing
particulars or other document containing
equivalent information relating to
Shares; or
(2) a day on which the Committee resolves to
grant an Option under the Plan pursuant
to Rule 2;
"Office" office of appointment as non employee
director of
<PAGE>
the Company;
"Option" a right to acquire Shares pursuant to the
Plan;
"Option Certificate" a certificate issued under Rule 2.2;
"Option Holder" a person to whom an Option has been granted
(or, as the context requires, his personal
representatives);
"Parent" any company which is a parent corporation of
the Company within the meaning of Section
424(e) of the Code;
"the Plan" the Octel Corp. Non Employee Directors' Stock
Option Plan in its present form, or as from
time to time altered in accordance with the
Rules;
"Rules" the Rules of the Plan and "Rule" shall be
construed accordingly;
"Securities Act" the United States Securities Act of 1933 as
amended
"Share" save as provided in Rule 4.3, a share in the
Company;
"Share Price" the price per Share, as determined by the
Committee, at which a Participant may acquire
Shares in respect of which an Option has been
granted to him if the Shares are to be
subscribed, being not less than the nominal
value of a Share, subject to any adjustment
pursuant to Rule 7.1;
"Subsidiary" any company which is a subsidiary corporation
within the meaning of Section 424(f) of the
Code;
"U.S. Person" has the meaning attributed by Rule 902(0)
promulgated under the Securities Act;
<PAGE>
References to any statutory provision are to that provision as amended or re-
enacted from time to time, and, unless the context otherwise requires, words in
the singular shall include the plural (and vice versa) and words importing the
masculine the feminine (and vice versa).
2. GRANT OF OPTIONS
2.1 Procedure for Grant of Options
a Within a Grant Period, the Committee may, at its absolute discretion,
grant Options under the Plan to Participants.
b The Committee may adopt such procedure as it thinks fit for granting
Options, whether by invitation to Participants to apply for Options or
by granting Options without issuing invitations.
2.2 Requirement to Issue Option Certificate
The Company shall issue to each Option Holder an Option Certificate which
shall be in such form as the Committee shall from time to time determine.
The Option Certificate shall include details of:
a the Date of Grant of the Option;
b the Share Price; and
c the number of Shares subject to the Option; and
d any date or dates determined by the Committee, upon which the Option
is first exercisable in whole and/or part and, where on any date only
part is first exercisable, the number of Shares over which such
partial exercise may be made.
2.3 Right to Disclaim Option
Each Participant to whom an Option is granted may by notice in writing
within 30 days of the Date of Grant disclaim in whole or in part his rights
under the Option in which case the Option shall for all purposes be deemed
never to have been granted.
2.4 Options may not be transferred
Subject to the rights of an Option Holder's personal representatives to
exercise an Option as provided in Rule 3.3, every Option shall be personal
to the Participant to
<PAGE>
whom it is granted and shall not be capable of being transferred, assigned
or charged. Each Option Certificate shall carry a statement to this effect.
2.5 Modified Terms and Conditions
The Committee may determine that any Option granted under the Rules shall
be subject to additional and/or modified terms and conditions relating to
the grant and terms of exercise as may be necessary to comply with or take
account of any securities, exchange control or taxation laws, regulations
or practice of any territory which may have application to the relevant
Participant, or Option Holder.
2.6 Additional Requirements
In exercising its discretion under Rule 2.5, the Committee may:
a require an Option Holder to make such declarations or take such other
action (if any) as may be required for the purpose of any securities,
taxes or other laws of any territory which may be applicable to him at
the Date of Grant or on exercise; and
b adopt any supplemental rules or procedures governing the grant or
exercise of Options as may be required for the purpose of any
securities, tax or other laws of any territory which may be applicable
to an Participant or Option Holder.
3. RIGHTS OF EXERCISE
3.1 Earliest Date of Exercise
Save as provided in Rules 3.3, 3.4 and 4, an Option may not be exercised
before whichever is the later of:
a 1.1.2001; and
b any date or dates which may have been specified in accordance with
Rule 2.2 in the relevant Option Certificate;
but in any event may not be exercised later than the tenth anniversary
of the Date of Grant.
3.2 Requirement to remain in Office
Save as provided in Rules 3.3, 3.4 and 4, an Option may only be exercised
by an Option Holder while he is a non employee director of the Company.
<PAGE>
3.3 Death of Option Holder
An Option may be exercised by the personal representatives of a deceased
Option Holder during the period of one year following the date of death.
3.4 Right to Exercise Prematurely
Where an Option Holder ceases to hold Office with the Company Options will
be exercisable at the absolute discretion of the Committee in which
circumstances Options will be exercisable by the Option Holder within a
period of one year following the date of termination of Office with the
Company.
3.5 Lapse of Options
An Option shall lapse on the occurrence of the earliest of the following:
a the tenth anniversary of the Date of Grant; or
b subject to Rule 4.3, the expiry of any of the applicable periods
specified in Rules 3.3, 3.4, 4.1, and 4.2, but where an Option Holder
dies while time is running under Rule 3.4, the Option shall not lapse
until the expiry of the period in Rule 3.3; or
c the date on which an Option Holder ceases to be a non employee
director of the Company for any reason other than his death or those
specified in Rule 3.4; or
d the date on which a resolution is passed, or an order is made by the
Court, for the compulsory winding-up of the Company; or
e the date on which the Option Holder becomes bankrupt or does or
attempts or omits to do anything as a result of which he is deprived
of the legal or beneficial ownership of the Option.
4. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION
4.1 Take-over pursuant to Tender
If any company ("the Acquiring Company") becomes a Parent of the Company as
a result of making either a tender offer to acquire the whole of the
Company's issued share capital (other than any shares already owned by the
Acquiring
<PAGE>
Company or any Subsidiary of the Acquiring Company) and which is made on a
condition that if it is satisfied the Acquiring Company will become the
Parent, or a tender offer to acquire all the Shares in the Company which
are of the same class as the Shares then an Option may be exercised within
the period of six months of the date on which and any condition subject to
which the offer is made is satisfied.
4.2 Voluntary Winding Up of the Company
If a resolution is passed for the voluntary winding-up of the Company, an
Option may be exercised during the period of six months starting on the
commencement of such winding-up provided that any issue of shares pursuant
to such exercise is authorised by the liquidator or the Court (if
appropriate) upon the application of and at the sole cost and expense of
the Option Holder.
4.3 Rollover of Options
Notwithstanding anything to the contrary in these Rules, where Rule 4.1,
applies an Option Holder may, by agreement with the Acquiring Company and
within the appropriate period release his Option under the Plan ("the Old
Option") in consideration of the grant to him of a new Option ("the New
Option") which, is equivalent to the Old Option but relates to shares in a
different company (whether the Acquiring Company or some other company).
With effect from the date of release references in Rules 3, 4, 5, 6, 7, 8,
9, and 10, (and, in relation to expressions used in those Rules, in Rule 0)
to "the Company" and "Shares" shall, in relation to the New Option, be
construed as references to the Acquiring Company and Shares in the
Acquiring Company or that other company as the case may be.
4.4 Meaning of "appropriate period"
For the purpose of Rule 4.3, the "appropriate period" is the period
mentioned in Rule 4.1.
5. MANNER OF EXERCISE
5.1 Actions Required of the Option Holder
An Option may be exercised, in whole or in part, by giving 30 days notice,
by the delivery to the secretary of the Company, or his duly appointed
agent, of an Option Certificate covering not less than all the Shares over
which the Option is then to be exercised, with the notice of exercise in
the prescribed form duly completed and signed by the Option Holder together
with a remittance for the Acquisition Price payable in respect of the
Shares over which the Option is to be exercised.
<PAGE>
5.2 Actions Required of the Company
The relevant Shares shall be allotted or transferred (as the case may be)
within 28 days following such delivery and, accordingly in cases where
Shares are to be transferred, the Company shall use its best endeavours to
ensure due transfer thereof. At the request of the Option Holder, the
Shares may be allotted or transferred (as the case may be) to a nominee
provided the Option Holder has beneficial ownership of the Shares at the
time of such allotment or transfer.
5.3 Partial Exercise
Where an Option is exercised in part the minimum number of shares which may
be exercised is 100 Shares and the Company shall issue a balancing Option
Certificate to the Option Holder.
6. ISSUE OF SHARES
6.1 Ranking of Shares
All Shares issued pursuant to the exercise of Options under the Plan shall
as to voting, dividend, transfer and other rights (including those arising
on a liquidation) rank pari passu in all respects with the Shares then in
issue, except that they shall not rank for any dividend or other rights
declared by reference to a record date preceding the date of such exercise.
<PAGE>
6.2 Admission to the New York Stock Exchange
If and so long as the Shares are listed on the New York Stock Exchange the
Company shall use its best endeavours to procure that as soon as
practicable after the allotment of any Shares pursuant to the Plan
application shall be made to the New York Stock Exchange for permission to
deal in those Shares unless such application has already been made.
7. ADJUSTMENTS
7.1 General Power of Adjustment
The number of Shares over which an Option is granted and the Share Price
thereof may be adjusted in such manner as the Committee shall determine
following any capitalisation issue, subdivision, consolidation or reduction
of share capital and in respect of any discount element in any rights issue
or other variation of share capital to the intent that (as nearly as may be
possible without involving fractions of a Share or a Share Price calculated
to more than two places of decimals) the Acquisition Price payable in
respect of an Option shall remain unchanged PROVIDED that, save as provided
in Rule 7.2, no adjustment made pursuant to this Rule 7.1 shall have the
effect of reducing the Share Price below the par value of a Share.
7.2 Requirement to Capitalise Reserves
Any adjustment made to the Share Price of unissued Shares which would have
the effect of reducing the Share Price to less than the par value of the
Share shall only be made if and to the extent that the Committee is
authorised to capitalise from the reserves of the Company a sum equal to
the amount by which the par value of the Shares in respect of which the
Option is exercisable exceeds the adjusted Share Price. The Committee may
apply such sum in paying up such amount on such Shares so that on the
exercise of any Option in respect of which such a reduction shall have been
made, the Committee shall capitalise such sum (if any) and apply the same
in paying up such amount as aforesaid.
7.3 Notification of Option Holders
The Committee may take such steps as it may consider necessary to notify
Option Holders of any adjustments made under Rule 7.1 and to call in,
cancel, endorse, issue or re-issue any Option Certificate consequent upon
such adjustment.
<PAGE>
8. ADMINISTRATION
8.1 Delivery of Notices or Documents
Notices or documents required to be given to an Participant or to an Option
Holder shall either be delivered to him by hand or sent to him by post at
his last known home or business address according to the information
provided by him. Notices sent by post shall be deemed to have been given on
the day following the date of posting.
8.2 Copies of Shareholder Communications
The Company may distribute to Option Holders copies of any notice or
document sent by the Company to its shareholders generally.
8.3 Maintenance of Unissued Share Capital
The Company shall at all times either keep available sufficient unissued
Shares to satisfy the exercise of all Options which have neither lapsed nor
been exercised (taking account of any other obligations of the Company to
allot unissued Shares) or shall ensure that sufficient issued Shares will
be available to satisfy the exercise of such Options.
8.4 Committee's Power to Administer Plan
The Committee may make such regulations for the administration of the Plan
as it deems fit, provided that no regulation shall be valid to the extent
it is inconsistent with the Rules.
8.5 Committee's Decisions are Final and Conclusive
The decision of the Committee in any dispute relating to an Option, or the
due exercise thereof, or any other matter in respect of the Plan, shall be
final and conclusive.
8.6 Costs of Administering Plan
The costs of introducing and administering the Plan shall be borne by the
Company.
<PAGE>
9. ALTERATIONS
9.1 Power to alter Rules
Subject to Rule 9.2, the Committee may in its discretion alter the Rules.
9.2 Alteration which affects subsisting rights of Option Holders
No alteration may be made which would abrogate or adversely affect the
subsisting rights of Option Holders.
9.3 Notification to Option Holders
Written notice of any amendment made in accordance with this Rule 9 shall
be given to all Option Holders.
10. GENERAL
10.1 Termination of the Plan
The Plan shall terminate on the tenth anniversary of the date on which it
is approved by the Company in general meeting or at any earlier time by the
passing of a resolution by the Committee. Termination of the Plan shall be
without prejudice to the subsisting rights of Option Holders.
10.2 No Compensation for loss of Option Rights
If an Option Holder shall cease for any reason to be in the employment of a
Member of the Group, he shall not be entitled, by way of compensation for
loss of office or otherwise howsoever, to any sum or any benefit to
compensate him for the loss of any right or benefit accrued or in prospect
under the Plan.
10.3 Governing Law
This Plan and all Options shall be governed by and construed in accordance
with English law.
<PAGE>
11. DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION
If an Option Holder exercises an Option the Committee may in lieu of allotting
or procuring the transfer of Shares in accordance with Rule 5.2 pay to such
Option Holder a cash sum equal to the amount by which the value of the Shares in
respect of which the notice of exercise was given (calculated as the average of
the middle market quotations on the New York Stock Exchange for the three
Dealing Days prior to the date of exercise) exceeds the Acquisition Price of
those Shares.
If payment is made pursuant to this Rule to an Option Holder, he shall have no
further rights in respect of the Shares for which the notice of exercise was
given. The Company may make any deductions in respect of such payment which it
is required to make under the laws of any territory which laws are applicable to
the Option Holder and the Company.
12. EMPLOYMENT AND SOCIAL TAXES
The Option Holder shall indemnify the Company against any tax arising in respect
of the exercise of the Option which is a liability of the Option Holder but for
which the Company is required to account under the laws of any relevant
territory. The Company may recover the tax from the Option Holder in such manner
as the Committee thinks fit including (but without prejudice to the generality
of the foregoing):-
a withholding shares when the Option is exercised and selling the same;
b deducting the necessary amount from the Option Holder's fees; or
c requiring the Option Holder to account directly to such company for such
tax.
<PAGE>
Exhibit 99.2
OCTEL CORP.
________________________________________________________________________________
RULES
of the
OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
PRICEWATERHOUSECOOPERS
Benson House
33 Wellington Street
Leeds
LS1 4JP
<PAGE>
THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS................................................................. 1
2. INVITATION OF APPLICATIONS.................................................. 6
2.1 When Invitations may be issued.......................................... 6
2.2 Wording of Invitations.................................................. 6
2.3 Documents accompanying Invitations...................................... 6
2.4 Wording of Application Form............................................. 6
2.5 Provision for Scaling Down.............................................. 7
2.6 Number of Shares applied for............................................ 7
3. SCALING DOWN................................................................ 7
4. GRANT OF OPTIONS............................................................ 8
4.1 Maximum period between determination of Share Price and Grant of Option. 8
4.2 Options may only be granted to Eligible Employees....................... 8
4.3 Requirement to Issue Option Certificate................................. 8
4.4 Options may not be transferred.......................................... 8
5. RIGHTS OF EXERCISE.......................................................... 9
5.1 Earliest Date of Exercise............................................... 9
5.2 Requirement to remain in Employment..................................... 9
5.3 Option Holder with Material Interest.................................... 9
5.4 Death of Option Holder.................................................. 9
5.5 Right to Exercise Prematurely........................................... 9
5.6 Right to Exercise on Attaining Age 65................................... 10
5.7 Right to Exercise More than Three Years after Date of Grant............. 10
5.8 Employee Transferred to other member of the Group....................... 10
5.9 Transfer of Employment within Group..................................... 10
5.10 Lapse of Options....................................................... 11
6. TAKEOVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION................... 12
6.1 Take-over pursuant to General Offer..................................... 12
6.2 Take-over pursuant to Scheme of Arrangement............................. 12
6.3 Scheme of Arrangement without Change of Control......................... 12
6.4 Compulsory Acquisition of Shares........................................ 12
6.5 Voluntary Winding Up of the Company..................................... 13
6.6 Meaning of Obtaining Control............................................ 13
6.7 Rollover of Options..................................................... 13
6.8 Meaning of "appropriate period"......................................... 13
7. MANNER OF EXERCISE.......................................................... 14
7.1 Funds which can be used to exercise Option.............................. 14
7.2 Actions Required of the Option Holder................................... 14
7.3 Actions Required of the Company......................................... 14
8. ISSUE OF SHARES............................................................. 14
8.1 Ranking of Shares....................................................... 14
8.2 Admission to the New York Stock Exchange................................ 15
9. ADJUSTMENTS................................................................. 15
9.1 General Power of Adjustment............................................. 15
9.2 Adjustment which reduces Share Price to less than nominal value......... 15
</TABLE>
<PAGE>
THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
<TABLE>
<S> <C>
9.3 Requirement to Capitalise Reserves....................................... 15
9.4 Notification of Option Holders........................................... 16
10. ADMINISTRATION............................................................... 16
10.1 Delivery of Notices or Documents........................................ 16
10.2 Copies of Shareholder Communications.................................... 16
10.3 Maintenance of Unissued Share Capital................................... 16
10.4 Directors' Power to Administer Scheme................................... 16
10.5 Directors' Decisions are Final and Conclusive........................... 16
10.6 Costs of Administering Scheme........................................... 17
11. ALTERATIONS.................................................................. 17
11.1 Power to alter Rules prior to Inland Revenue approval................... 17
11.2 Power to alter Rules following Inland Revenue approval.................. 17
11.3 Alteration which affects subsisting rights of Option Holders............ 17
11.4 Notification to Option Holders.......................................... 17
12. GENERAL...................................................................... 17
12.1 Termination of the Scheme............................................... 17
12.2 No Compensation for loss of Option Rights............................... 17
12.3 Governing Law........................................................... 18
</TABLE>
<PAGE>
THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
APPROVED BY THE INLAND REVENUE UNDER THE INCOME AND CORPORATION
TAXES ACT 1988 ON [ ] UNDER REFERENCE [ ]
1. DEFINITIONS
In this Scheme, the following words and expressions shall, where the context so
permits, have the meanings set forth below:
"Acquiring Company" the person mentioned in Rule 6.1 being a
company within the meaning of Section
832 of the Act;
"Acquisition Price" in relation to an Option, the total
amount payable on any exercise being an
amount equal to the relevant Share
Price, multiplied by the number of
Shares in respect of which the Option is
exercised;
"the Act" the Income and Corporation Taxes Act
1988;
"Associated Company" the meaning ascribed by Section 416 of
the Act;
"Bonus" any sum payable by way of terminal bonus
under a Savings Contract being the
additional payment made by the nominated
Savings Authority when repaying
contributions under a Savings Contract;
"Bonus Date" under a three year Savings Contract, the
earliest date on which the Standard
Bonus is payable under the Savings
Contract following 36 monthly payments;
"the Company" save as provided in Rule 6.7, Octel
Corp., a Delaware Corporation;
"Continuous Employment" the meaning ascribed by Section 211 of
the Employment Rights Act 1996;
"Control" the meaning ascribed by Section 840 of
the Act;
"Date of Grant" the date on which an Option is granted
under the Scheme pursuant to Rule 4;
1
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"Dealing Day" a day on which the New York Stock
Exchange is open for business;
"the Directors" the board of directors of the Company,
or a duly authorised committee thereof;
"Eligible Employee" (1) any person who is a Full Time
Director or employee of a
Participating Company and:
(a) is chargeable to tax in
respect of his office or
employment under Case 1 of
Schedule E of the Taxes Act;
and
(b) on the immediately preceding
Qualifying Date, had such
minimum period of Continuous
Employment with any one or
more Participating Companies
(taken consecutively) as the
Directors may determine, being
a period not exceeding five
years in total ending on the
date the relevant Option is
granted; and
(2) any other director or employee of a
Participating Company whom the
Directors may in their sole
discretion approve, provided that
any person who is ineligible to
participate by virtue of paragraph
8 of Schedule 9 to the Act shall
not be treated as an Eligible
Employee;
"Employees' Share Scheme" the meaning ascribed by Section 743 of
the Companies Act 1985;
"Full Time Director" a Director who is contracted to work not
less than 25 hours a week (exclusive of
meal breaks) (or such lower number of
hours per week as the Directors may
determine from time to time in their
absolute discretion) for any one or more
of the Participating Companies; or
2
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
"Grant Period" a period of 30 days (or 42 days in the
event that applications are scaled down
under Rule 3) beginning on the Dealing
Day following any of:
(1) a day on which the Scheme is
approved by the Inland Revenue
under the Act; or
(2) a day on which the Company makes an
announcement of its results for any
year, quarter year or other period
or issues any prospectus, listing
particulars or other document
containing equivalent information
relating to Shares; or
(3) a day on which any announcement is
made of modifications to be made to
the Act or a day on which any such
modifications come into force; or
(4) a day on which an announcement is
made by the Savings Authority of a
new savings-related share option
prospectus; or
(5) a day on which the Directors
resolve to grant Options.
"Holding Company" in relation to the Acquiring Company, a
company falling within the definition in
Section 736 of the Companies Act 1985;
"the Invitation Date" the date of the relevant invitation made
under Rule 2
"Market Value" in relation to a Share on any day:
(1) if and so long as the Shares are
listed on the New York Stock
Exchange, the average of its middle
market quotation for the three
Dealing Days immediately preceding
the Invitation Date and falling
within the Grant Period; or
(2) save as mentioned in (1) above, its
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
market value on the Invitation Date
as determined in accordance with
Part VIII of the Taxation of
Chargeable Gains Act 1992 and
agreed in advance with the Shares
Valuation Division of the Inland
Revenue;
"Maximum Bonus" the Bonus payable two years after the
Standard Bonus is payable;
"Maximum Contribution" under all Savings Contracts the lesser
of
(1) (Pounds)250 per month; and
(2) the maximum amount specified in
paragraph 24(2)(a) of Schedule 9 to
the Act; and
(3) such maximum contribution as may be
determined from time to time by the
Directors;
"Monthly Contributions" monthly contributions agreed to be paid
by an Option Holder under his Savings
Contract;
"Option" a right to acquire Shares pursuant to
the Scheme;
"Option Certificate" a certificate issued under Rule 4.3;
"Option Holder" a person to whom an Option has been
granted (or, as the context requires,
his personal representatives);
"Participating Company" the Company and any other company for
the time being designated by the
Directors as a Participating Company
being a company which is under the
Control of the Company;
"Permitted Minimum Monthly such amount as the Directors shall
Contribution" specify, being not less than (Pounds)5
or more than (Pounds)10;
"Qualifying Date" such date as the Directors may from time
to time determine (or, in the absence of
any such determination, the last day of
the Company's accounting period) in the
period of one year
4
<PAGE>
THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
immediately preceding
the relevant Date of Grant;
"Rules" the Rules of the Scheme and "Rule" shall
be construed accordingly;
"Savings Authority" the building society or bank recognised
by the Directors from time to time for
the purpose of receiving Monthly
Contributions under Savings Contracts;
"Savings Contract" a contract under a certified contractual
savings scheme (within the meaning of
Section 326 of the Act) approved by the
Board of Inland Revenue for the purpose
of Schedule 9 to the Act:
"the Scheme" the Octel Corp. Savings Related Share
Option Scheme in its present form, or as
from time to time altered in accordance
with the Rules;
"Share" save as provided in Rule 6.7, a share in
the Company satisfying paragraphs 10 to
14 inclusive of Schedule 9 to the Act;
"Share Price" the price per Share in US Dollars, as
determined by the Directors, at which an
Eligible Employee may acquire Shares in
respect of which an Option has been
granted to him, being not less than:
(1) 80% of the Market Value of a Share;
or
(2) if greater and Shares are to be
subscribed, the nominal value of a
Share,
which is converted into Sterling using
the Exchange Rate in force on the Date
of Grant, subject to any adjustment
pursuant to Rule 9.1;
"Standard Bonus" the Bonus payable on the earliest date
on which a Bonus is payable under a
Savings Contract;
"Subsidiary" has the meaning ascribed by Section 736
of the Companies Act 1985;
5
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
References to any statutory provision are to that provision as amended or re-
enacted from time to time, and, unless the context otherwise requires, words in
the singular shall include the plural (and vice versa) and words importing the
masculine the feminine (and vice versa).
2. INVITATION OF APPLICATIONS
2.1 When Invitations may be issued
Applications for the grant of Options under the Scheme shall be invited only if
the Directors so determine in their absolute discretion. Invitations to apply
for Options on any occasion shall be made in accordance with the Rules and on
similar terms to all Eligible Employees.
2.2 Wording of Invitations
Invitations shall be made in writing and shall include details of the following
matters which shall be determined by the Directors:
a the Share Price;
b the latest date during the Grant Period by which applications must be
received, being neither earlier than 14 days nor later than 28 days after
the date of the invitation;
c the Maximum Contribution;
2.3 Documents accompanying Invitations
Each invitation shall be accompanied by:
a a proposal form for a Savings Contract; and
b an application form.
2.4 Wording of Application Form
An application form shall be in such form as the Directors may from time to time
prescribe save that it shall provide for the applicant to state:
6
<PAGE>
THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
a the Monthly Contributions (being a multiple of (Pounds)1 and not less than
the Permitted Minimum Monthly Contribution) which he wishes to make under
the related Savings Contract; and
b that his proposed Monthly Contributions (when taken together with any
Monthly Contributions he makes under any other Savings Contract) will not
exceed the Maximum Contribution;
2.5 Provision for Scaling Down
Each application shall provide that, in the event of scaling down in accordance
with Rule 3, the Directors are authorised by the applicant either to alter his
application by reducing the amount of his Monthly Contributions or to withdraw
his application, as the case may be, to the extent of such scaling down.
2.6 Number of Shares applied for
Each application shall be deemed to be for an Option over such number of Shares
as can be acquired at the Share Price with the expected repayment under the
related Savings Contract at the appropriate Bonus Date.
3. SCALING DOWN
To the extent that valid applications are received in excess of any maximum
number of Shares which may be determined by the Directors, then the Directors
shall scale down applications to the extent necessary in one of the following
ways as may be determined by them:
a (where relevant) by treating any elections for the Maximum Bonus as
elections for the Standard Bonus and then, so far as necessary, reducing
the proposed Monthly Contributions in excess of (Pounds)5 pro rata and
then, so far as necessary, selecting by lot; or
b by treating each election for a Bonus as an election for no Bonus and then,
so far as necessary, reducing the proposed Monthly Contributions in excess
of (Pounds)5 pro rata and then, so far as necessary, selecting by lot; or
c by reducing the proposed Monthly Contributions in excess of (Pounds)5 pro
rata and then, so far as necessary, selecting by lot.
7
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
4. GRANT OF OPTIONS
4.1 Maximum period between determination of Share Price and Grant of Option
No Option shall be granted more than 29 days (or 41 days in the event that
applications are scaled down under Rule 3) after the first day by reference to
which the Share Price in relation to that Option was fixed.
4.2 Options may only be granted to Eligible Employees
No Option shall be granted to a person unless at the Date of Grant he is an
Eligible Employee.
4.3 Requirement to Issue Option Certificate
The Company shall issue an Option Certificate to each Eligible Employee to whom
such an Option has been granted which shall be in such form as the Directors
shall from time to time determine (subject to the approval of the Inland
Revenue). The Option Certificate shall include details of:
a the Date of Grant of the Option;
b the Share Price; and
c the number of Shares subject to the Option.
4.4 Options may not be transferred
Subject to the rights of an Option Holder's personal representatives to exercise
an Option as provided in Rule 5.4, every Option shall be personal to the
Eligible Employee to whom it is granted and shall not be capable of being
transferred, assigned or charged. Each Option Certificate shall carry a
statement to this effect.
8
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
5. RIGHTS OF EXERCISE
5.1 Earliest Date of Exercise
a Save as provided in Rules 5.4, 5.5, 5.6, 5.7 and 6, an Option may be
exercised only during the period commencing with the Bonus Date under the
relevant Savings Contract; and
b save as provided in Rule 5.4, an Option may not be exercised after the
expiry of the period of six months after the relevant Bonus Date.
5.2 Requirement to remain in Employment
Save as provided in Rules 5.4, 5.5, 5.7, 5.8 and 6, an Option may only be
exercised by an Option Holder while he is a director or employee of a
Participating Company.
5.3 Option Holder with Material Interest
An Option may not be exercised by an Option Holder at any time when he is
prohibited from such exercise by virtue of the provisions of paragraph 8 of
Schedule 9 to the Act (material interest in a close company).
5.4 Death of Option Holder
An Option may be exercised by the personal representatives of a deceased Option
Holder
a during the period of one year following the date of the Option Holder's
death if such death occurs before the Bonus Date; or
b during the period of one year following the Bonus Date if the Option
Holder's death occurs on or within the period of six months after the Bonus
Date.
5.5 Right to Exercise Prematurely
An Option may be exercised by an Option Holder within the period of six months
following the date on which he ceases to hold any office or employment with a
Participating Company on account of:
a injury or disability; or
9
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
________________________________________________________________________________
b redundancy (within the meaning of the Employment Rights Act 1996); or
c retirement on reaching age 65
d the transfer of the undertaking or part-undertaking in which the Option
Holder is employed to a person other than a Participating Company or an
Associated Company of a Participating Company; or
e the Company by which the Option Holder is employed ceasing to be under the
Control of the Company.
5.6 Right to Exercise on Attaining Age 65
An Option may be exercised by an Option Holder within the period of six months
following the date on which he reaches age 65 if he continues to hold any office
or employment with a Participating Company after that date.
5.7 Right to Exercise More than Three Years after Date of Grant
Provided more than three years have elapsed since the Date of Grant of an
Option, such Option may be exercised by an Option Holder within the period of
six months following the date on which he ceases to hold any office or
employment with a Participating Company on account of:
a early retirement by agreement with his employer; or
b pregnancy and, for the purposes of the Scheme, a woman who leaves
employment due to pregnancy or confinement will be regarded as having left
such employment on the earlier of the date she notifies the relevant
Participating Company of her intention not to return and the last day of
the 29-week period of confinement.
5.8 Employee Transferred to other member of the Group
An Option Holder who is employed on the Bonus Date by an Associated Company of a
Participating Company or by a company of which the Company has Control may
exercise his Option within the period of six months commencing with the Bonus
Date.
5.9 Transfer of Employment within Group
An Option Holder shall not be treated for the purposes of Rule 5 as ceasing to
hold an office or employment with a Participating Company until such time as he
is no longer a director or employee of any Participating Company or an
Associated Company of a
10
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
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Participating Company and an Option Holder (being a woman) who ceases to be such
a director or employee by reason of pregnancy or confinement and who exercises
her right to return to work under section 79 of the Employment Rights Act 1996
before exercising an Option shall be treated for those purposes as not having
ceased to hold such an office or employment.
5.10 Lapse of Options
An Option shall lapse on the occurrence of the earliest of the following:
a subject to Rule 5.10b below, the expiry of the period of six months after
the Bonus Date; or
b where the Option Holder has died, the expiry of the relevant period during
which the Option may be exercised in accordance with Rule 5.4; or
c subject to Rule 6.7, the expiry of any of the applicable periods specified
in Rules 5.4, 5.5, 5.7, 6.1, but where an Option Holder dies while time is
running under Rules 5.5 or 5.7, the Option shall not lapse until the expiry
of the period in Rule 5.4; or
d the date on which an Option Holder ceases to be a director or employee of
any Participating Company for any reason other than his death or those
specified in Rules 5.5 and 5.7; or
e the date on which a resolution is passed, or an order is made by the Court,
for the compulsory winding-up of the Company; or
f the date on which the Option Holder becomes bankrupt or does or attempts or
omits to do anything as a result of which he is deprived of the legal or
beneficial ownership of the Option.
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6. TAKEOVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION
6.1 Take-over pursuant to General Offer
If any person obtains Control of the Company as a result of making either a
general offer to acquire the whole of the Company's issued share capital (other
than any shares already owned by the Holding Company or any Subsidiary of the
Holding Company) and which is made on a condition that if it is satisfied the
offeror will have such Control, or a general offer to acquire all the Shares in
the Company which are of the same class as the Shares then an Option may be
exercised within the period of six months of the date on which Control is so
obtained and any condition subject to which the offer is made is satisfied.
6.2 Take-over pursuant to Scheme of Arrangement
If any person obtains Control of the Company in pursuance of legislation which
the Inland Revenue has agreed is equivalent to Section 425 of the Companies Act
1985 then an Option may be exercised during the period which starts on the date
such scheme of arrangement is sanctioned and ends six months later or, if
earlier, on the day immediately preceding the date upon which the scheme shall
become effective.
6.3 Scheme of Arrangement without Change of Control
If, without any person obtaining Control of the Company, a scheme of arrangement
takes effect under legislation which the Inland Revenue has agreed is equivalent
to Section 425 of the Companies Act 1985 then an Option may be exercised during
the period which starts on the date such scheme of arrangement is sanctioned and
ends six months later or, if earlier, on the day immediately preceding the date
upon which the scheme shall become effective.
6.4 Compulsory Acquisition of Shares
If any person becomes bound or entitled to acquire Shares in the Company under
legislation which the Inland Revenue has agreed is equivalent to Section 428 to
430 of the Companies Act 1985 then an Option may be exercised during any period
such person remains so bound or entitled
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
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6.5 Voluntary Winding Up of the Company
If a resolution is passed for the voluntary winding-up of the Company, an Option
may be exercised during the period of six months starting on the commencement of
such winding-up provided that any issue of shares pursuant to such exercise is
authorised by the liquidator or the Court (if appropriate) upon the application
of and at the sole cost and expense of the Option Holder.
6.6 Meaning of Obtaining Control
For the purpose of this Rule 6, a person shall be deemed to have obtained
Control of the Company if he and others acting in concert with him have together
obtained Control.
6.7 Rollover of Options
Notwithstanding anything to the contrary in these Rules, where any person
mentioned in Rule 6.1 is a company an Option Holder may, by agreement with the
Acquiring Company and within the appropriate period release his Option under the
Scheme ("the Old Option") in consideration of the grant to him of a new Option
("the New Option") which, within the meaning ascribed by paragraph 15(3) of
Schedule 9 to the Act, is equivalent to the Old Option but relates to shares in
a different company (whether the Acquiring Company or some other company falling
within sub-paragraph (b) or (c) of paragraph 10 of Schedule 9 to the Act). With
effect from the date of release references in Rules 5, 6, 7, 8, 9, 10, 11, and
12, (and, in relation to expressions used in those Rules, in Rule 1) to "the
Company" and "Shares" shall, in relation to the New Option, be construed as
references to the Acquiring Company and Shares in the Acquiring Company or that
other company as the case may be, but references to Participating Company shall
continue to be construed as if references to the Company were references to
Octel Corp..
6.8 Meaning of "appropriate period"
For the purpose of Rule 6.4, the "appropriate period" is:
a) where Rules 6.1 or 6.4 apply, the periods mentioned in those Rules
respectively; or
b) where Rule 6.2 applies, the period of six months beginning with the time
when the Court sanctions the scheme of arrangement.
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
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7. MANNER OF EXERCISE
7.1 Funds which can be used to exercise Option
An Option may only be exercised during the periods specified in Rules 5 and 6
and only with moneys not exceeding the amount of repayment (including any Bonus
or interest) made under the related Savings Contract. For this purpose,
repayment under the Savings Contract shall exclude the repayment of any Monthly
Contributions the due date for payment of which falls more than one month after
the date on which repayment is made.
7.2 Actions Required of the Option Holder
An Option may be exercised, in whole or in part, by the delivery to the
secretary of the Company, or his duly appointed agent, of an Option Certificate
covering not less than all the Shares over which the Option is then to be
exercised, with the notice of exercise in the prescribed form duly completed and
signed by the Option Holder, together with a remittance for the Acquisition
Price payable in respect of the Shares over which the Option is to be exercised.
7.3 Actions Required of the Company
The relevant Shares shall be allotted or transferred (as the case may be) within
28 days following such delivery and, accordingly in cases where Shares are to be
transferred, the Company shall use its best endeavours to ensure due transfer
thereof. At the request of the Option Holder, the Shares may be allotted or
transferred (as the case may be) to a nominee provided the Option Holder has
beneficial ownership of the Shares at the time of such allotment or transfer.
8. ISSUE OF SHARES
8.1 Ranking of Shares
All Shares issued pursuant to the exercise of Options under the Scheme shall as
to voting, dividend, transfer and other rights (including those arising on a
liquidation) rank pari passu in all respects with the Shares then in issue,
except that they shall not rank for any dividend or other rights declared by
reference to a record date preceding the date of such exercise.
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
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8.2 Admission to the New York Stock Exchange
If and so long as the Shares are listed on the New York Stock Exchange the
Company shall use its best endeavours to procure that as soon as practicable
after the allotment of any Shares pursuant to the Scheme application shall be
made to the New York Stock Exchange for permission to deal in those shares
unless such application has already been made.
9. ADJUSTMENTS
9.1 General Power of Adjustment
The number of Shares over which an Option is granted and the Share Price thereof
may, subject to the prior approval of the Inland Revenue, be adjusted in such
manner as the Directors shall determine following any capitalisation issue,
subdivision, consolidation or reduction of share capital and in respect of any
discount element in any rights issue or other variation of share capital to the
intent that (as nearly as may be possible without involving fractions of a Share
or a Share Price calculated to more than two places of decimals) the Acquisition
Price payable in respect of an Option shall remain unchanged PROVIDED that, save
as provided in Rules 9.2 and 9.3, no adjustment made pursuant to this Rule 9.1
shall have the effect of reducing the Share Price below the nominal value of a
Share.
9.2 Adjustment which reduces Share Price to less than nominal value
Where an Option subsists over both issued and unissued Shares or over issued
Shares only, an adjustment may be made under Rule 9.1 which would have the
effect of reducing the Share Price to less than the nominal value of the Share
provided that the Acquisition Price of such Option remains constant.
9.3 Requirement to Capitalise Reserves
Any adjustment made to the Share Price of unissued Shares which would have the
effect of reducing the Share Price to less than the nominal value of the Share
shall only be made if and to the extent that the Directors are authorised to
capitalise from the reserves of the Company a sum equal to the amount by which
the nominal value of the Shares in respect of which the Option is exercisable
exceeds the adjusted Share Price. The Directors may apply such sum in paying up
such amount on such Shares so that on the exercise of any Option in respect of
which such a reduction shall have been made, the Directors shall capitalise such
sum (if any) and apply the same in paying up such amount as aforesaid.
15
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THE RULES OF THE OCTEL CORP. SAVINGS-RELATED SHARE OPTION SCHEME
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9.4 Notification of Option Holders
The Directors may take such steps as they may consider necessary to notify
Option Holders of any adjustments made under Rule 9.1 and to call in, cancel,
endorse, issue or re-issue any Option Certificate consequent upon such
adjustment.
10. ADMINISTRATION
10.1 Delivery of Notices or Documents
Notices or documents required to be given to an Eligible Employee or to an
Option Holder shall either be delivered to him by hand or sent to him by first
class post at his last known home or business address according to the
information provided by him. Notices sent by first class post shall be deemed to
have been given on the day following the date of posting.
10.2 Copies of Shareholder Communications
The Company shall distribute to Option Holders copies of any notice or document
sent by the Company to its shareholders generally.
10.3 Maintenance of Unissued Share Capital
The Company shall at all times either keep available sufficient unissued Shares
to satisfy the exercise of all Options which have neither lapsed nor been
exercised (taking account of any other obligations of the Company to allot
unissued Shares) or shall ensure that sufficient issued Shares will be available
to satisfy the exercise of such Options.
10.4 Directors' Power to Administer Scheme
The Directors may make such regulations for the administration of the Scheme as
they deem fit, provided that no regulation shall be valid to the extent it is
inconsistent with the Rules.
10.5 Directors' Decisions are Final and Conclusive
The decision of the Directors in any dispute relating to an Option, or the due
exercise thereof, or any other matter in respect of the Scheme, shall be final
and conclusive.
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10.6 Costs of Administering Scheme
The costs of introducing and administering the Scheme shall be borne by the
Company.
11. ALTERATIONS
11.1 Power to alter Rules prior to Inland Revenue approval
The Directors may, prior to approval of the Scheme under the Act by the Inland
Revenue, alter the Rules of the Scheme as may be necessary in order to obtain
such approval.
11.2 Power to alter Rules following Inland Revenue approval
Subject to Rule 11.3, after the date on which the Scheme is approved by the
Inland Revenue under the Act, the Directors may in their discretion alter the
Rules provided that no such alteration shall be effective until it has been
approved by the Inland Revenue.
11.3 Alteration which affects subsisting rights of Option Holders
No alteration may be made which would abrogate or adversely affect the
subsisting rights of Option Holders.
11.4 Notification to Option Holders
Written notice of any amendment made in accordance with this Rule 11 shall be
given to all Option Holders.
12. GENERAL
12.1 Termination of the Scheme
The Scheme shall terminate on the tenth anniversary of the date on which it is
approved by the Board of the Inland Revenue or at any earlier time by the
passing of a resolution by the Directors. Termination of the Scheme shall be
without prejudice to the subsisting rights of Option Holders.
12.2 No Compensation for loss of Option Rights
17
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If an Option Holder shall cease for any reason to be in the employment of a
Participating Company or an Associated Company of a Participating Company, he
shall not be entitled, by way of compensation for loss of office or otherwise
howsoever, to any sum or any benefit to compensate him for the loss of any right
or benefit accrued or in prospect under the Scheme.
12.3 Governing Law
This Scheme and all Options shall be governed by and construed in accordance
with English law.
18
<PAGE>
Exhibit 99.3
OCTEL CORP.
________________________________________________________________________________
RULES
of the
OCTEL CORP. COMPANY SHARE OPTION PLAN
________________________________________________________________________________
PRICEWATERHOUSECOOPERS
Benson House
33 Wellington Street
Leeds
LS1 4JP
<PAGE>
The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS FOR THE PURPOSE OF PART A............................ 1
2. GRANT OF OPTIONS................................................. 5
2.1 Procedure for Grant of Options................................. 5
2.2 Requirement to Issue Option Certificate........................ 5
2.3 Right to Disclaim Option....................................... 6
2.4 Options may not be transferred................................. 6
3. CONDITIONS RELATING TO THE GRANT OF OPTIONS...................... 6
3.1 Statutory Limit................................................ 6
3.2 Interpretation of Individual Limits............................ 7
3.3 Calendar Year Limitation....................................... 7
3.4 Maximum Aggregate Number Of Shares............................. 7
3.5 United States Securities Act Of 1933........................... 7
3.6 Additional Conditions..........................................
4. RIGHTS OF EXERCISE............................................... 8
4.1 Earliest Date of Exercise...................................... 8
4.2 Requirement to remain in Employment............................ 8
4.3 Death of Option Holder......................................... 9
4.4 Right to Exercise Prematurely.................................. 9
4.5 Extended Exercise Period....................................... 9
4.6 Transfer of Employment within Group............................ 10
4.7 Transfer of Employment Overseas................................ 10
4.8 Lapse of Options............................................... 11
4.9 Compliance with the United States Securities Laws.............. 11
4.10 Shares to be held for Investment Purposes..................... 12
4.11 Shareholder Approval.......................................... 12
4.12 Option Holder with Material Interest.......................... 12
5. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION....... 12
5.1 Take-over pursuant to Tender Offer............................. 12
5.2 Take-over pursuant to Scheme of Arrangement.................... 13
5.3 Scheme of Arrangement without Change of Control................ 13
5.4 Compulsory Acquisition of Shares............................... 13
5.5 Voluntary Winding Up of the Company............................ 13
5.6 Meaning of Obtaining Control................................... 13
5.7 Rollover of Options............................................ 14
5.8 Meaning of "appropriate period"................................ 14
6. MANNER OF EXERCISE............................................... 14
6.1 Actions Required of the Option Holder.......................... 14
6.2 Actions Required of the Company................................ 15
6.3 Partial Exercise............................................... 15
7. ISSUE OF SHARES.................................................. 15
7.1 Ranking of Shares.............................................. 15
7.2 Admission to the New York Stock Exchange....................... 15
8. ADJUSTMENTS...................................................... 15
8.1 General Power of Adjustment.................................... 15
</TABLE>
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The Rules Of The Octel Corp. Company Share Option Plan
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<TABLE>
<S> <C>
8.2 Requirement to Capitalise Reserves............................. 16
8.3 Notification of Option Holders................................. 16
9. ADMINISTRATION................................................... 16
9.1 Delivery of Notices or Documents............................... 16
9.2 Copies of Shareholder Communications........................... 16
9.3 Maintenance of Unissued Share Capital.......................... 17
9.4 Directors' Power to Administer Plan............................ 17
9.5 Directors' Decisions are Final and Conclusive.................. 17
9.6 Costs of Administering Plan.................................... 17
10. ALTERATIONS..................................................... 17
10.1 Power to alter Rules prior to Inland Revenue approval......... 17
10.2 Power to alter Rules following Inland Revenue approval........ 17
10.3 Alteration which affects subsisting rights of Option Holders.. 18
10.4 Notification to Option Holders................................ 18
11. GENERAL......................................................... 18
11.1 Termination of the Plan....................................... 18
11.2 No Compensation for loss of Option Rights..................... 18
11.3 Governing Law................................................. 18
12. DEFINITIONS FOR PURPOSES OF PART B.............................. 18
12.1 Part B not Approved by Inland Revenue......................... 18
12.2 Terms of Part A apply except as amended....................... 19
13. GRANT OF UNAPPROVED OPTIONS..................................... 19
13.1 Specification of Unapproved Option............................ 19
13.2 Modified Terms and Conditions................................. 19
13.3 Additional Requirements....................................... 19
14. CONDITIONS RELATING TO THE GRANT OF UNAPPROVED OPTIONS.......... 20
15. EXERCISE OF UNAPPROVED OPTIONS.................................. 20
16. DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION................. 20
17. EMPLOYMENT AND SOCIAL TAXES..................................... 20
</TABLE>
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The Rules Of The Octel Corp. Company Share Option Plan
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PART A APPROVED BY THE INLAND REVENUE UNDER THE INCOME AND CORPORATION TAXES
ACT 1988 ON [ ] UNDER REFERENCE [ ]
1. DEFINITIONS FOR THE PURPOSE OF PART A
In this Plan, the following words and expressions shall, where the context so
permits, have the meanings set forth below:
"Acquiring Company" the person mentioned in Rule 5.1, being a
company within the meaning of Section 832 of
the Act;
"Acquisition Price" in relation to an Option, the total amount
payable on any exercise being an amount equal
to the relevant Share Price multiplied by the
number of Shares in respect of which the
Option is exercised;
"the Act" the Income and Corporation Taxes Act 1988;
"Associated Company" the meaning ascribed by Section 416 of the
Act;
"the Auditors" the auditors for the time being of the
Company acting as experts and not as
arbitrators;
"the Code" the United States Federal Internal Revenue
Code of 1986 (as amended);
"the Company" save as provided in Rule 5.7, Octel Corp., a
Delaware corporation;
"Control" the meaning ascribed by Section 840 of the
Act;
"Date of Grant" the date on which the Directors resolve to
grant an Option under the Plan pursuant to
Rule 2;
"Dealing Day" a day on which the New York Stock Exchange is
open for business;
"the Directors" the board of directors of the Company, or a
duly authorised committee thereof;
"Eligible Employee" any person who
(1) (a) is a director of a Participating
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The Rules Of The Octel Corp. Company Share Option Plan
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Company required to work for not
less than 25 hours a week
(exclusive of meal breaks); or
(b) if not a director, is employed by a
Participating Company on terms
which require him to work for not
less than 20 hours a week
(exclusive of meal breaks); and
(2) is not ineligible to participate in the
Plan by virtue of paragraph 8 of
Schedule 9 to the Act (material interest
in a close company); and does not own
within the meaning of Section 422(b)(6)
of the Code to own Shares possessing
more than ten per cent of the total
combined voting power of all classes of
share of the Company (or it its Parent
or any of its subsidiaries);
"Grant Period" a period of 20 days commencing on the Dealing
Day following any of:
(1) a day on which the Plan is approved by
the Inland Revenue under the Act; or
(2) a day on which the Company makes an
announcement of its results for any
year, half year or other period or
issues any prospectus, listing
particulars or other document containing
equivalent information relating to
Shares; or
(3) a day on which the Directors resolve
that exceptional circumstances have
arisen which justify the grant of
Options; or
(4) a day on which any announcement is made
of modifications to be made to the Act
or a day on which any such modifications
come into force;
"Group" the Company and its Subsidiaries;
2
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The Rules Of The Octel Corp. Company Share Option Plan
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"Holding Company" in relation to the Acquiring Company, a
company falling within the definition in
Section 736 of the Companies Act 1985;
"Incentive Stock Option" an option which qualifies for relief under
Section 422 of the Code;
"Listing" the meaning ascribed in Article 4.4.1(b)(ii)
of the Articles of Association of the
Company;
"Market Value" in relation to a Share on any day:
(1) if and so long as the Shares are listed
on the New York Stock Exchange, the
reported closing price of Octel Corp.
common stock on the New York Stock
Exchange for that day, or the last
Dealing Day prior to that day if that
day is not a Dealing Day.
(2) save as mentioned in (1) above, its
market value as determined in accordance
with Part VIII of the Taxation of
Chargeable Gains Act 1992 and agreed in
advance with the Shares Valuation
Division of the Inland Revenue;
"Option" a right to acquire Shares pursuant to the
Plan;
"Option Certificate" a certificate issued under Rule 2.2;
"Option Holder" a person to whom an Option has been granted
(or, as the context requires, his personal
representatives);
"Parent" any company which is a parent corporation of
the Company within the meaning of Section
424(e) of the Code;
"Participating Company" the Company and any other company for the
time being designated by the Directors as a
Participating Company being a company which
is both a Subsidiary of the Company and under
the Control of the Company;
3
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The Rules Of The Octel Corp. Company Share Option Plan
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"the Plan" the Octel Corp. Company Share Option Plan in
its present form, or as from time to time
altered in accordance with the Rules;
"Relevant Share Option Scheme" any other share option scheme (except a
Savings Related Share Option Scheme)
established by the Company or any Associated
Company;
"Rules" the Rules of the Plan and "Rule" shall be
construed accordingly;
"Savings Related Share Option a savings related share option scheme
Scheme" approved by the Inland Revenue under the Act;
"Securities Act" the United States Securities Act of 1933 as
amended;
"Share" save as provided in Rule 5.7, a share in the
Company satisfying paragraphs 10 to 14
inclusive of Schedule 9 to the Act;
"Share Price" the price per Share, as determined by the
Directors, at which an Eligible Employee may
acquire Shares in respect of which an Option
has been granted to him, being not less than:
(1) the Market Value of a Share on the Date
of Grant (or where in accordance with
Rule 2.1, the Directors issue
invitations to apply for Options the
Dealing Day by reference to which the
Market Value is calculated); or
(2) if greater and Shares are to be
subscribed, the nominal value of a
Share,
subject to any adjustment pursuant to Rule
8.1;
"Statutory Limit" (Pounds)30,000 or any other limit from time
to time specified under paragraph 28 of
Schedule 9 to the Act;
"Subsidiary" any company which is both a subsidiary within
the meaning ascribed by Section 736 of the
4
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The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
Companies Act 1985 and a subsidiary
corporation within the meaning of Section
424(f) of the Code;
References to any statutory provision are to that provision as amended or re-
enacted from time to time, and, unless the context otherwise requires, words in
the singular shall include the plural (and vice versa) and words importing the
masculine the feminine (and vice versa).
2. GRANT OF OPTIONS
2.1 Procedure for Grant of Options
a Within a Grant Period, the Directors may, at their absolute
discretion, grant Options under the Plan to Eligible Employees.
b The Directors may adopt such procedure as they think fit for granting
Options, whether by invitation to Eligible Employees to apply for
Options or by granting Options without issuing invitations, PROVIDED
THAT any documentation used in such procedure is approved in advance
by the Inland Revenue in accordance with Rule 10.2
c Where an Option is to be granted pursuant to an invitation and the
Share Price is determined at the date of the invitation, the Option
must be granted no later than the twenty-ninth day in the period
commencing with the Dealing Day by reference to which the Share Price
was calculated.
2.2 Requirement to Issue Option Certificate
The Company shall issue to each Option Holder an Option Certificate which
shall be executed in such manner as shall take effect as a binding
contractual obligation of the Company and which shall be in such a form as
the Directors from time to time determine (subject to the approval of the
Inland Revenue). The Option Certificate shall include details of:
a the Date of Grant of the Option;
b the Share Price; and
c the number of Shares subject to the Option; and
5
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The Rules Of The Octel Corp. Company Share Option Plan
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d any date or dates determined by the Directors in accordance with Rule
3.6 upon which the Option is first exercisable in whole and/or part
and, where on any date only part is first exercisable, the number of
Shares over which such partial exercise may be made; [and
e the performance targets or conditions to be satisfied as a condition
of the exercise of the Option in accordance with Rule 3.6.]
2.3 Right to Disclaim Option
Each Eligible Employee to whom an Option is granted may by notice in
writing within 30 days of the Date of Grant disclaim in whole or in part
his rights under the Option in which case the Option shall for all purposes
be deemed never to have been granted.
2.4 Options may not be transferred
Subject to the rights of an Option Holder's personal representatives to
exercise an Option as provided in Rule 4.3, every Option shall be personal
to the Eligible Employee to whom it is granted and shall not be capable of
being transferred, assigned or charged. Each Option Certificate shall carry
a statement to this effect.
3. CONDITIONS RELATING TO THE GRANT OF OPTIONS
3.1 Statutory Limit
Any Option granted to an Eligible Employee shall be limited and take effect
so that immediately following such grant, the aggregate Market Value of all
the Shares which he may acquire on the exercise of all options which he
then holds and which are or may become capable of being exercised and which
were granted under:
a Part A of the Plan; and
b any Relevant Share Option Scheme approved by the Inland Revenue under
the Act
shall not exceed the Statutory Limit.
6
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3.2 Interpretation of Individual Limits
a For the purposes of Rule 3.1, the Market Value of an Option shall be
taken as at its Date of Grant and in relation to options granted under
any Relevant Share Option Scheme the Market Value of an option shall
be taken as being the fair market value of the Shares subject to that
option at its date of grant determined in accordance with the Rules of
such other scheme.
b For the purposes of determining the application of the statutory Limit
in Rule 3.1, the rate of exchange for US dollar into sterling shall be
the noon fixed rate for US dollars in the Wall Street Journal on the
Date of Grant of the Option.
3.3 Calendar Year Limitation
The aggregate Market Value (determined at the Date of Grant) of Shares with
respect to which Incentive Stock Options first become exercisable by any
individual Option Holder in any calendar year shall not exceed $100,000.
3.4 Maximum Aggregate Number Of Shares
The present maximum aggregate number of Shares which may be issued under
the Plan is [ ] subject to any future increase in this limit which
may be substituted at the discretion of the Directors.
3.5 United States Securities Act Of 1933
The grant of any Option under the Plan to any person subject to United
States securities laws shall be subject to fulfilling the requirements
(including obtaining any required approval or consent) of the provisions of
the Securities Act or of any applicable regulation or enactment. The
Options have not been, and will not be, registered under the Securities
Act, or under any other securities laws in any other jurisdiction in the
United States. Shares issued pursuant to the exercise of an Option will be
registered on Form S-8. Until so registered, any transfer of such Shares
may be restricted.
3.6 Additional Conditions
The Directors when granting any Option may in their absolute
discretion impose any conditions and limitations (additional to any
conditions and
7
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The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
limitations contained in any other of these Rules) upon the exercise
of any Option provided that such additional conditions and limitations
shall: -
i be objective, specified at the Date of Grant and set out in full, or
details given with, the Option Certificate: and
ii be such that the right to exercise any Option after the fulfilment or
attainment of the conditions and limitations so specified shall not be
dependent upon the further discretion of any person; and
iii not be capable of amendment, variation or waiver unless an event
occurs which causes the Directors to consider that a waived, varied or
amended condition would be a fairer measure of performance and would
be no more difficult to satisfy. When such conditions or limitations
have been imposed and have ceased to be capable of being satisfied or
being satisfied in full [except as a result of an event to which
Rules: 4.7, 4.8 or 5 apply] that Option shall lapse in whole or in
part as the case may be.
4. RIGHTS OF EXERCISE
4.1 Earliest Date of Exercise
Save as provided in Rules 4.3, 4.4 and 5 an Option may not be exercised
before whichever is the latest of:
a Listing; and
b the third anniversary of the Date of Grant; and
c any date or dates which may have been specified in accordance with
Rule 2.2 in the relevant Option Certificate; and
any additional conditions and limitations imposed on the Option (and which
have not be waived) in accordance with Rule 3.6 have been fulfilled.
but in any event may not be exercised later than the day preceding the
tenth anniversary of the Date of Grant.
4.2 Requirement to remain in Employment
Save as provided in Rules 4.3, 4.4, 4.5 and 5, an Option may only be
exercised by an Option Holder while he is a director or employee of a
Participating Company or an Associated Company of a Participating Company.
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The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
4.3 Death of Option Holder
An Option may be exercised by the personal representatives of a deceased
Option Holder during the period of one year following the date of death.
4.4 Right to Exercise Prematurely irrespective of Additional Conditions
An Option may be exercised by an Option Holder within the period of one
year following the date on which he ceases to hold any office or employment
with a Participating Company or an Associated Company of a Participating
Company on account of:
a injury, ill-health or disability; or
b redundancy (within the meaning of the Employment Rights Act 1996); or
c the transfer of the undertaking or part-undertaking in which the
Option Holder is employed to a person other than a Participating
Company or an Associated Company of a Participating Company; or
d the Company by which the Option Holder is employed ceasing to be under
the Control of the Company.
4.5 Right to Exercise Prematurely if Additional Conditions Achieved
If any additional conditions and limitations imposed on the Option (and
which have not been waived) in accordance with Rule 3.6 have been fulfilled
an Option may be exercised by an Option Holder within the period of one
year following the date on which he ceases to hold any office or employment
with a Participating Company or an Associated Company of a Participating
Company on account of:
a retirement at contractual retirement age including late retirement; or
b early retirement by agreement with his employer; or
c any other reason in the absolute discretion of the Directors.
4.6 Extended Exercise Period
Where an Option Holder ceases employment on account of any of the reasons
set out in Rules 4.4 or 4.5 prior to the date which is three years and six
months after the relevant Date of Grant, or the date on which he last
exercised an option under a
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The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
Relevant Share Option Scheme (whichever is later), he may in addition (at
the discretion of the Directors) exercise the Option at any time within
whichever of the following periods is applicable:
a in relation to Rule 4.4, the period which starts on the date his
employment ceases and ends six months after the earliest date on which
he could exercise the Option without incurring any liability to income
tax in consequence thereof; or
b in relation to Rule 4.5, the period which begins on the first date by
reference to which it may be established (if relevant) that the
condition specified in Rule 3.6 has been satisfied and ends six months
after the earliest date on which he could exercise the Option without
incurring any liability to income tax in consequence thereof;
but in no case may an Option be exercised more than 42 months after the
date the Option Holder's employment ceased.
4.7 Transfer of Employment within Group
An Option Holder shall not be treated for the purposes of Rules 4.4, 4.5,
and 4.8 as ceasing to hold an office or employment with a Participating
Company until such time as he is no longer a director or employee of any
Participating Company or an Associated Company of a Participating Company
and an Option Holder (being a woman) who ceases to be such a director or
employee by reason of pregnancy or confinement and who exercises her right
to return to work under section 79 of the Employment Rights Act 1996 before
exercising an Option shall be treated for those purposes as not having
ceased to hold such an office or employment.
4.8 Transfer of Employment Overseas
Subject to the satisfaction of any additional conditions and limitations
imposed pursuant to Rule 3.6 if an Option Holder, whilst remaining a
director or employee of a Participating Company or an Associated Company of
a Participating Company, is transferred to work in another country and as a
result of that transfer will either
a become subject to tax on his remuneration in the country to which he
is transferred and the Directors are satisfied that as a result he
will suffer a tax disadvantage upon exercising an Option; or
b become subject to restrictions on his ability to exercise his Option
or to hold or deal in the shares or the proceeds of the sale of the
shares he may acquire on exercise of that Option by reason of or in
consequence of the securities laws or exchange control laws of the
country to which he is transferred
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The Rules Of The Octel Corp. Company Share Option Plan
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the Option Holder may exercise that Option in the period commencing three
months before and ending three months after the transfer takes place. If he
chooses not to exercise his Option at that time, it will not thereby lapse.
4.9 Lapse of Options
An Option shall lapse on the occurrence of the earliest of the following:
a the tenth anniversary of the Date of Grant; or
b the expiry of the period (if any) allowed for the satisfaction of any
condition of exercise specified in the Option Certificate pursuant to
Rule 3.3 without such condition having been satisfied or the date on
which it becomes apparent that any such condition has become incapable
of being satisfied; or
c subject to Rule 5.7, the expiry of any of the applicable periods
specified in Rules 43, 4.5, 4.6, 5.1, 5.2, 5.3, 5.4, and 5.5, but
where an Option Holder dies while time is running under Rules 4.5 or
4.6, the Option shall not lapse until the expiry of the period in Rule
4.3; or
d the date on which an Option Holder ceases to be a director or employee
of any Participating Company or any Associated Company of a
Participating Company for any reason other than his death or those
specified in Rules 4.5 and 4.6; or
e the date on which a resolution is passed, or an order is made by the
Court, for the compulsory winding-up of the Company; or
f the date on which the Option Holder becomes bankrupt or does or
attempts or omits to do anything as a result of which he is deprived
of the legal or beneficial ownership of the Option.
4.10 Compliance with the United States Securities Laws
Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions
of law, including, without limitation, the Securities Act, the United
States Securities Exchange Act of 1934, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject
to the approval of Counsel for the Company with respect to such
compliance.
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4.11 Shares to be held for Investment Purposes
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the
time of any such exercise that the shares are being purchased only
for investment and without any present intention to sell or
distribute such shares if, in the opinion of Counsel for the Company,
such a representation is required in order to comply with any of the
aforementioned relevant provisions of law.
4.12 Shareholder Approval
If any amendment requiring the approval of the Company's Shareholders
is made subsequent to the first registration of any class of equity
security by the Company under Section 12 of the Securities Exchange
Act of 1934, such shareholder approval shall be:
(a) solicited substantially in accordance with Section 14(a) of that Act
and the rules and regulations promulgated thereunder; or
(b) solicited after the Company has furnished in writing to the holders
entitled to vote substantially the same information concerning the
Plan as that which would be required by the rules and regulations in
effect under Section 14(a) of that Act at the time such information
is furnished.
4.13 Option Holder with Material Interest
An Option may not be exercised by an Option holder at any time when
he is prohibited from such exercise by virtue of the provisions of
paragraph 8 of Schedule 9 to the Act (material interest in a close
company).
5. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION
5.1 Take-over pursuant to Tender Offer
If any person obtains Control of the Company as a result of making either a
tender offer to acquire the whole of the Company's issued share capital
(other than any shares already owned by the Holding Company or any
Subsidiary of the Holding Company) and which is made on a condition that if
it is satisfied the offer or will have such Control, or a tender offer to
acquire all the Shares in the Company which are of the same class as the
Shares then an Option may be exercised within the period of six months of
the date on which Control is so obtained and any condition
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The Rules Of The Octel Corp. Company Share Option Plan
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subject to which the offer is made is satisfied (or until the expiry of the
period mentioned in Rule 5.4, if earlier).
5.2 Take-over pursuant to Scheme of Arrangement
If any person obtains Control of the Company in pursuance of a compromise
or scheme of arrangement sanctioned by the Court under legislation which
the Inland Revenue has agreed is equivalent to Section 425 of the Companies
Act 1985 then an Option may be exercised during the period which starts on
the date the Court sanctions such scheme of arrangement and ends six months
later or, if earlier, on the day immediately preceding the date upon which
the scheme shall become effective.
5.3 Scheme of Arrangement without Change of Control
If, without any person obtaining Control of the Company, the Court
sanctions a scheme of arrangement affecting the Shares under legislation
which the Inland Revenue has agreed is equivalent to Section 425 of the
Companies Act 1985 then an Option may be exercised during the period which
starts on the date the Court sanctions such scheme of arrangement and ends
six months later or, if earlier, on the day immediately preceding the date
upon which the scheme shall become effective.
5.4 Compulsory Acquisition of Shares
If any person becomes bound or entitled to acquire Shares in the Company
under legislation which the Inland Revenue has agreed is equivalent to
Sections 428 to 430 of the Companies Act 1985 then an Option may be
exercised during any period such person remains so bound or entitled.
5.5 Voluntary Winding Up of the Company
If a resolution is passed for the voluntary winding-up of the Company, an
Option may be exercised during the period of six months starting on the
commencement of such winding-up provided that any issue of shares pursuant
to such exercise is authorised by the liquidator or the Court (if
appropriate) upon the application of and at the sole cost and expense of
the Option Holder.
5.6 Meaning of Obtaining Control
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For the purpose of this Rule 5, a person shall be deemed to have obtained
Control of the Company if he and others acting in concert with him have
together obtained Control.
5.7 Rollover of Options
Notwithstanding anything to the contrary in these Rules, where any person
mentioned in Rule 5.1 is a company an Option Holder may, by agreement with
the Acquiring Company and within the appropriate period release his Option
under the Plan ("the Old Option") in consideration of the grant to him of a
new Option ("the New Option") which, within the meaning ascribed by
paragraph 15(3) of Schedule 9 to the Act, is equivalent to the Old Option
but relates to shares in a different company (whether the Acquiring Company
or some other company falling within sub-paragraph (b) or (c) of paragraph
10 of Schedule 9 to the Act. With effect from the date of release
references in Rules 4, 5, 6, 7, 8, 9, 10 and 11 (and, in relation to
expressions used in those Rules, in Rule 1) to "the Company" and "Shares"
shall, in relation to the New Option, be construed as references to the
Acquiring Company and Shares in the Acquiring Company or that other company
as the case may be, but references to Participating Company shall continue
to be construed as if references to the Company were references to Octel
Corp..
5.8 Meaning of "appropriate period"
For the purpose of Rule 5.7, the "appropriate period" is:
a where Rules 5.1 or 5.4 apply, the periods mentioned in those Rules
respectively; or
b where Rule 5.2 applies, the period of six months beginning with the
time when the Court sanctions the scheme of arrangement.
6. MANNER OF EXERCISE
6.1 Actions Required of the Option Holder
An Option may be exercised, in whole or in part, by the delivery to the
secretary of the Company, or his duly appointed agent, of an Option
Certificate covering not less than all the Shares over which the Option is
then to be exercised, with the notice of exercise in the prescribed form
duly completed and signed by the Option Holder together with a remittance
for the Acquisition Price payable in respect of the Shares over which the
Option is to be exercised.
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6.2 Actions Required of the Company
The relevant Shares shall be allotted or transferred (as the case may be)
within 28 days following such delivery and, accordingly in cases where
Shares are to be transferred, the Company shall use its best endeavours to
ensure due transfer thereof. At the request of the Option Holder, the
Shares may be allotted or transferred (as the case may be) to a nominee
provided the Option Holder has beneficial ownership of the Shares at the
time of such allotment or transfer.
6.3 Partial Exercise
Where an Option is exercised in part the minimum number of Shares which may
be exercised is 100 Shares and the Company shall issue a balancing Option
Certificate to the Option Holder.
7. ISSUE OF SHARES
7.1 Ranking of Shares
All Shares issued pursuant to the exercise of Options under the Plan shall
as to voting, dividend, transfer and other rights (including those arising
on a liquidation) rank pari passu in all respects with the Shares then in
issue, except that they shall not rank for any dividend or other rights
declared by reference to a record date preceding the date of such exercise.
7.2 Admission to the New York Stock Exchange
If and so long as the Shares are listed on the New York Stock Exchange the
Company shall use its best endeavours to procure that as soon as
practicable after the allotment of any Shares pursuant to the Plan
application shall be made to the New York Stock Exchange for permission to
deal in those shares unless such application has already been made.
8. ADJUSTMENTS
8.1 General Power of Adjustment
The number of Shares over which an Option is granted and the Share Price
thereof may, subject to the prior approval of the Inland Revenue, be
adjusted in such manner as the Directors shall determine following any
capitalisation issue,
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The Rules Of The Octel Corp. Company Share Option Plan
________________________________________________________________________________
subdivision, consolidation or reduction of share capital and in respect of
any discount element in any rights issue or other variation of share
capital to the intent that (as nearly as may be possible without involving
fractions of a Share or a Share Price calculated to more than two places of
decimals) the Acquisition Price payable in respect of an Option shall
remain unchanged PROVIDED that, save as provided in Rules and 7.2, no
adjustment made pursuant to this Rule 7.1 shall have the effect of reducing
the Share Price below the par value of a Share.
8.2 Requirement to Capitalise Reserves
Any adjustment made to the Share Price of unissued Shares which would have
the effect of reducing the Share Price to less than the par value of the
Share shall only be made if and to the extent that the Directors are
authorised to capitalise from the reserves of the Company a sum equal to
the amount by which the par value of the Shares in respect of which the
Option is exercisable exceeds the adjusted Share Price. The Directors may
apply such sum in paying up such amount on such Shares so that on the
exercise of any Option in respect of which such a reduction shall have been
made, the Directors shall capitalise such sum (if any) and apply the same
in paying up such amount as aforesaid.
8.3 Notification of Option Holders
The Directors may take such steps as they may consider necessary to notify
Option Holders of any adjustments made under Rule 8.1 and to call in,
cancel, endorse, issue or re-issue any Option Certificate consequent upon
such adjustment.
9. ADMINISTRATION
9.1 Delivery of Notices or Documents
Notices or documents required to be given to an Eligible Employee or to an
Option Holder shall either be delivered to him by hand or sent to him by
post at his last known home or business address according to the
information provided by him. Notices sent by post shall be deemed to have
been given on the day following the date of posting.
9.2 Copies of Shareholder Communications
The Company may distribute to Option Holders copies of any notice or
document sent by the Company to its shareholders generally.
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9.3 Maintenance of Unissued Share Capital
The Company shall at all times either keep available sufficient unissued
Shares to satisfy the exercise of all Options which have neither lapsed nor
been exercised (taking account of any other obligations of the Company to
allot unissued Shares) or shall ensure that sufficient issued Shares will
be available to satisfy the exercise of such Options.
9.4 Directors' Power to Administer Plan
The Directors may make such regulations for the administration of the Plan
as they deem fit, provided that no regulation shall be valid to the extent
it is inconsistent with the Rules.
9.5 Directors' Decisions are Final and Conclusive
The decision of the Directors in any dispute relating to an Option, or the
due exercise thereof, or any other matter in respect of the Plan, shall be
final and conclusive.
9.6 Costs of Administering Plan
The costs of introducing and administering the Plan shall be borne by the
Company.
10. ALTERATIONS
10.1 Power to alter Rules prior to Inland Revenue approval
The Directors may, prior to approval of Part A of the Plan under the Act by
the Inland Revenue, alter the Rules of the Plan as may be necessary in
order to obtain such approval.
10.2 Power to alter Rules following Inland Revenue approval
Subject to Rule 10.3, after the date on which Part A of the Plan is
approved by the Inland Revenue under the Act, the Directors may in their
discretion alter the Rules provided that no such alteration to Part A shall
be effective until it has been approved by the Inland Revenue.
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10.3 Alteration which affects subsisting rights of Option Holders
No alteration may be made which would abrogate or adversely affect the
subsisting rights of Option Holders.
10.4 Notification to Option Holders
Written notice of any amendment made in accordance with this Rule 10 shall
be given to all Option Holders.
11. GENERAL
11.1 Termination of the Plan
The Plan shall terminate on the tenth anniversary of the date on which it
is approved by the Company in general meeting or at any earlier time by the
passing of a resolution by the Directors. Termination of the Plan shall be
without prejudice to the subsisting rights of Option Holders.
11.2 No Compensation for loss of Option Rights
If an Option Holder shall cease for any reason to be in the employment of a
Participating Company or an Associated Company of a Participating Company,
he shall not be entitled, by way of compensation for loss of office or
otherwise howsoever, to any sum or any benefit to compensate him for the
loss of any right or benefit accrued or in prospect under the Plan.
11.3 Governing Law
This Plan and all Options shall be governed by and construed in accordance
with English law.
PART B
12. DEFINITIONS FOR PURPOSES OF PART B
12.1 Part B not Approved by Inland Revenue
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The Rules Of The Octel Corp. Company Share Option Plan
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This Part B of the Rules of the Plan is not approved by the Inland Revenue
under the provisions of the Act.
12.2 Terms of Part A apply except as amended
The Rules as contained in Part A of the Plan shall apply to Options granted
under this Part B unless amended in accordance with the provisions hereof.
13. GRANT OF UNAPPROVED OPTIONS
13.1 Specification of Unapproved Option
The Directors shall specify when an Option is granted under this Part B of
the Rules of the Plan and the relevant Option Certificate shall be written
accordingly.
13.2 Modified Terms and Conditions
The Directors may determine that any Option granted under this Part B of
the Rules shall be subject to additional and/or modified terms and
conditions relating to the grant and terms of exercise as may be necessary
to comply with or take account of any securities, exchange control or
taxation laws, regulations or practice of any territory which may have
application to the relevant Eligible Employee, Option Holder or
Participating Company.
13.3 Additional Requirements
In exercising their discretion under Rule 13.2, the Directors may:
a require an Option Holder to make such declarations or take such other
action (if any) as may be required for the purpose of any securities,
taxes or other laws of any territory which may be applicable to him
at the Date of Grant or on exercise; and
b adopt any supplemental rules or procedures governing the grant or
exercise of Options as may be required for the purpose of any
securities, tax or other laws of any territory which may be
applicable to an Eligible Employee or Option Holder.
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14. CONDITIONS RELATING TO THE GRANT OF UNAPPROVED OPTIONS
Rule 3.1 of Part A shall not apply to this Part B of the Plan.
15. EXERCISE OF UNAPPROVED OPTIONS
Rule 4.12 of Part A shall not apply to Part B of the Plan.
16. DISCRETION TO PAY CASH ON EXERCISE OF AN OPTION
If an Option Holder exercises an Option the Directors may in lieu of allotting
or procuring the transfer of Shares in accordance with Rule 6.2 of Part A pay to
such Option Holder a cash sum equal to the amount by which the value of the
Shares in respect of which the notice of exercise was given (calculated as the
average of the middle market quotations on the New York Stock Exchange for the
three Dealing Days prior to the date of exercise) exceeds the Acquisition Price
of those Shares.
If payment is made pursuant to this Rule to an Option Holder, he shall have no
further rights in respect of the Shares for which the notice of exercise was
given. The Company may make any deductions in respect of such payment which it
is required to make under the laws of any territory which laws are applicable to
the Option Holder and/or his employing Participating Company.
No Option granted under Part B of the Plan will be paralleled with an Option
granted under Part A of the Plan.
17. EMPLOYMENT AND SOCIAL TAXES
The Option Holder shall indemnify the company (and, where relevant, any
Participating Company) against any tax arising in respect of the exercise of the
Option which is a liability of the Option Holder but for which such company is
required to account under the laws of any relevant territory. Such company may
recover the tax from the Option Holder in such manner as the Directors think fit
including (but without prejudice to the generality of the foregoing):-
a withholding shares when the Option is exercised and selling the same;
b deducting the necessary amount from the Option Holder's remuneration; or
c requiring the Option Holder to account directly to such company for such
tax.
20
<PAGE>
Exhibit 99.4
OCTEL CORP.
________________________________________________________________________________
RULES
of the
OCTEL CORP. PERFORMANCE RELATED STOCK OPTION PLAN
________________________________________________________________________________
PRICEWATERHOUSECOOPERS
9 Bond Court
Leeds
LS1 2SN
<PAGE>
CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS................................................................ 1
2. GRANT OF OPTIONS........................................................... 3
2.1 Procedure for Grant of Options........................................ 3
2.2 Requirement to Issue Option Certificate............................... 3
2.3 Right to Disclaim Option.............................................. 4
2.4 Options may not be transferred........................................ 4
3. CONDITIONS RELATING TO THE GRANT OF OPTIONS................................ 4
3.1 Performance Conditions................................................ 4
3.2 Variation of Performance Conditions................................... 4
3.3 Modified Terms and Conditions......................................... 4
3.4 Additional Requirements............................................... 5
4. RIGHTS OF EXERCISE......................................................... 5
4.1 Earliest Date of Exercise............................................. 5
4.2 Requirement to remain in Employment................................... 5
4.3 Death of Option Holder................................................ 6
4.4 Right to Exercise Prematurely irrespective of Performance Conditions.. 6
4.5 Right to Exercise Prematurely if Performance Conditions Achieved...... 6
4.6 Transfer of Employment within Group................................... 7
4.7 Transfer of Employment Overseas....................................... 7
4.8 Lapse of Options...................................................... 7
5. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION................. 8
5.1 Take-over pursuant to General Offer................................... 8
5.2 Voluntary Winding Up of the Company................................... 8
5.3 Meaning of Obtaining Control.......................................... 8
5.4 Rollover of Options................................................... 9
5.5 Meaning of "appropriate period"....................................... 9
6. MANNER OF EXERCISE......................................................... 9
6.1 Actions Required of the Option Holder................................. 9
6.2 Actions Required of the Company....................................... 9
6.3 Partial Exercise...................................................... 9
6.4 Indemnity against Taxation of the Option Holder....................... 10
7. ISSUE OF SHARES............................................................ 10
7.1 Ranking of Shares..................................................... 10
7.2 Admission to Official List of the New York Stock Exchange............. 10
8. ADJUSTMENTS................................................................ 11
8.1 General Power of Adjustment........................................... 11
8.2 Notification of Option Holders........................................ 11
9. ADMINISTRATION............................................................. 11
9.1 Delivery of Notices or Documents...................................... 11
9.2 Copies of Shareholder Communications.................................. 11
9.3 Maintenance of Unissued Share Capital................................. 11
9.4 The Committee's Power to Administer Plan.............................. 12
9.5 The Committee's Decision is Final and Conclusive...................... 12
9.6 Costs of Administering Plan........................................... 12
10. ALTERATIONS............................................................... 12
10.1 Power to alter Rules.................................................. 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.2 Alteration which affects subsisting rights of Option Holders.......... 12
10.3 Notification to Option Holders........................................ 12
11. GENERAL................................................................... 13
11.1 Termination of the Plan............................................... 13
11.2 No Compensation for loss of Option Rights............................. 13
11.3 Governing Law......................................................... 13
</TABLE>
<PAGE>
THE RULES OF THE OCTEL CORP. PERFORMANCE RELATED STOCK OPTION PLAN
________________________________________________________________________________
1. DEFINITIONS
In this Plan, the following words and expressions shall, where the context so
permits, have the meanings set forth below:
"Acquiring Company" the person mentioned in Rule 5.1;
"the Code" the United States Internal Revenue Code
of 1986 (as amended);
"the Committee" the Octel Corp. Compensation Committee;
"Date of Grant" the date on which the Committee resolves
to grant an Option under the Plan
pursuant to Rule 2;
"the Company" save as provided in Rule 5.4, Octel
Corp. a Delaware Corporation, registered
in the United States;
"Eligible Employee" any person who is listed in Schedule One
of the Rules (or added to the list in
Schedule One of the Rules at the
discretion of the Committee) and who is
a director or employee of a Member of
the Group at the date of Grant;
"Fair Market Value" in relation to a Share on any day:
(1) if and so long as the Shares are
listed on the New York Stock
Exchange, the reported closing
price of Octel Corp. common stock
on the New York Stock Exchange for
the Dealing Day;
(2) save as mentioned in (1) above, its
market value as determined in
accordance with Part VIII of the
Taxation of Chargeable Gains Act
1992 and agreed in advance with the
Shares Valuation Division of the
Inland Revenue;
"Grant Period" a period of 180 days commencing on the
Dealing Day following any of:
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THE RULES OF THE OCTEL CORP. PERFORMANCE RELATED STOCK OPTION PLAN
________________________________________________________________________________
(1) the date of the spin of the Company
from Great Lakes Chemicals
Corporation; or
(2) any anniversary of the date of the
spin of the Company from Great
Lakes Chemicals Corporation or any
date that the Committee shall
determine;
"Group" the Company and its Subsidiaries and
"Member of the Group" shall be construed
accordingly;
"Option" a right to acquire Shares for no payment
pursuant to the Plan;
"Option Certificate" a certificate issued under Rule 2.2;
"Option Holder" a person to whom an Option has been
granted (or, as the context requires,
his personal representatives);
"the Parent" a parent corporation within the meaning
of Section 424(e) of the Code;
"the Plan" the Octel Corp. Performance Related
Stock Option Plan in its present form,
or as from time to time altered in
accordance with the Rules;
"Rules" the Rules of the Plan and "Rule" shall
be construed accordingly;
"Salary" the annual salary of an Eligible
Employee (excluding benefits in kind),
for a year in which Options are granted
to an Eligible Employee;
"Share" save as provided in Rule 5.4, a share in
the Company;
"Subsidiary" a subsidiary corporation within the
meaning of Section 424(f) of the Code.
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________________________________________________________________________________
"Vested Options" any Options remaining after the
cancellation of part of an initial
Option originally granted;
References to any statutory provision are to that provision as amended or re-
enacted from time to time, and, unless the context otherwise requires, words in
the singular shall include the plural (and vice versa) and words importing the
masculine the feminine (and vice versa).
2. GRANT OF OPTIONS
2.1 Procedure for Grant of Options
a Within a Grant Period, the Committee may, at its absolute discretion, grant
Options under the Plan to Eligible Employees. The Committee has decided
that initially, the level of Options granted to Eligible Employees will be
linked to Salary.
b The Committee may adopt such procedure as it thinks fit for granting
Options, whether by invitation to Eligible Employees to apply for Options
or by granting Options without issuing invitations.
2.2 Requirement to Issue Option Certificate
The Company shall issue to each Option Holder an Option Certificate which shall
be in such form as the Committee shall from time to time determine. The Option
Certificate shall include details of:
a the Date of Grant of the Option;
b the maximum number of Shares subject to the Option; and
c any date or dates determined by the Committee in accordance with Rule 3.1
upon which the Option is first exercisable in whole and/or part and, where
on any date only part is first exercisable, the number of Shares over which
such partial exercise may be made; and
d the performance targets or conditions to be satisfied as a condition of the
exercise of the Option in accordance with Rule 3.1.
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2.3 Right to Disclaim Option
Each Eligible Employee to whom an Option is granted may by notice in writing
within 30 days of the Date of Grant disclaim in whole or in part his rights
under the Option in which case the Option shall for all purposes be deemed never
to have been granted.
2.4 Options may not be transferred
Subject to the rights of an Option Holder's personal representatives to exercise
an Option as provided in Rule 4.3, every Option shall be personal to the
Eligible Employee to whom it is granted and shall not be capable of being
transferred, assigned or charged. Each Option Certificate shall carry a
statement to this effect.
3. CONDITIONS RELATING TO THE GRANT OF OPTIONS
3.1 Performance Conditions
Every Option shall be granted subject to the condition that (save as provided in
Rules 4.3, 4.4 and 5) it shall only be exercisable in whole or in part following
the attainment of the performance conditions as advised at the Date of Grant of
the Option. Performance criteria will set at the absolute discretion of the
Committee. Initially Options granted under the Plan will be "Cliff Edge"
Options. "Cliff Edge" Options will be granted in three tranches and are only
exercisable subject to the Company achieving performance targets measured
against the Company's cumulative cash flow before debt repayments, share
buybacks and dividends. For the first tranche of "Cliff Edge" Options, the
performance conditions are as set out in Schedule One of these Rules.
3.2 Variation of Performance Conditions
In the application of Rule 3.1, when events have happened which cause the
Committee to consider that the existing constraints and/or conditions (as the
case may be) have become unfair or impractical, it may, in its discretion
(provided such discretion is exercised fairly and reasonably), amend, relax,
waive or substitute such constraints or conditions so that such constraints or
conditions so amended, relaxed, waived or substituted would, in the reasonable
opinion of the Committee, be no more or less difficult to abide by or satisfy
than when they were originally imposed or last amended or relaxed (as the case
may be). After any such amendment, relaxation, waiver or substitution the
Committee shall issue to the Option Holder a replacement Option Certificate or
other notice including the details specified in Rule 2.2.
3.3 Modified Terms and Conditions
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The Committee may determine that any Option shall be subject to additional
and/or modified terms and conditions relating to the grant and terms of exercise
as may be necessary to comply with or take account of any securities, exchange
control or taxation laws, regulations or practice of any territory which may
have application to the relevant Eligible Employee, Option Holder or Member of
the Group.
3.4 Additional Requirements
In exercising their discretion under Rule 3.3, the Committee may:
a require an Option Holder to make such declarations or take such other
action (if any) as may be required for the purpose of any securities, taxes
or other laws of any territory which may be applicable to him at the Date
of Grant or on exercise; and
b adopt any supplemental rules or procedures governing the grant or exercise
of Options as may be required for the purpose of any securities, tax or
other laws of any territory which may be applicable to an Eligible Employee
or Option Holder.
4. RIGHTS OF EXERCISE
4.1 Earliest Date of Exercise
Save as provided in Rules 4.3, 4.4 and 5, a Vested Option that Vests in
accordance with Schedule One may not be exercised before whichever is the latest
of:
a 1.1.2001; and
b any date or dates which may have been specified in accordance with Rule 2.2
in the relevant Option Certificate; and
c the date on which the conditions specified in accordance with Rule 3.1 have
been satisfied whether as originally provided or as subsequently amended,
relaxed, waived or substituted pursuant to Rule 3.2
but in any event may not be exercised later than the tenth anniversary of the
Date of Grant.
4.2 Requirement to remain in Employment
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Save as provided in Rules 4.3, 4.4, 4.5 and 5, a Vested Option may only be
exercised by an Option Holder while he is a director or employee of a Member of
the Group.
4.3 Death of Option Holder
An Option may be exercised by the personal representatives of a deceased Option
Holder during the period of one year following the date of death.
4.4 Right to Exercise Prematurely irrespective of Performance Conditions
Where an Option Holder ceases to hold any office or employment with a Member of
the Group on account of:
a injury, ill-health or disability; or
b redundancy (within the meaning of the Employment Rights Act 1996); or
c the transfer of the undertaking or part-undertaking in which the Option
Holder is employed to a person other than a Member of the Group; or
d the Company by which the Option Holder is employed ceasing to be under the
Control of the Company
Options will lapse and will only be exercisable at the absolute discretion of
the Committee, in which circumstances Options will be exercisable by the Option
Holder within a period of one year following the date of termination of any
office or employment with a Member of the Group.
4.5 Right to Exercise Prematurely if Performance Conditions Achieved
If the condition required by Rule 3.1 has been achieved, a Vested Option may be
exercised by an Option Holder within the period of one year following the date
on which he ceases to hold any office or employment with a Member of the Group
on account of:
a retirement at contractual retirement age including late retirement; or
b early retirement by agreement with his employer; or
c any other reason in the absolute discretion of the Committee.
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4.6 Transfer of Employment within Group
An Option Holder shall not be treated for the purposes of Rules 4.4, 4.5, and
4.8 as ceasing to hold an office or employment with a Member of the Group until
such time as he is no longer a director or employee of any Member of the Group
and an Option Holder (being a woman) who ceases to be such a director or
employee by reason of pregnancy or confinement and who exercises her right to
return to work before exercising an Option shall be treated for those purposes
as not having ceased to hold such an office or employment.
4.7 Transfer of Employment Overseas
Subject to the satisfaction of the condition imposed pursuant to Rule 3.1 if an
Option Holder, whilst remaining a director or employee of a Member of the Group,
is transferred to work in another country and as a result of that transfer will
either
a become subject to tax on his remuneration in the country to which he is
transferred and the Committee is satisfied that as a result he will suffer
a tax disadvantage upon exercising an Option; or
b become subject to restrictions on his ability to exercise his Option or to
hold or deal in the shares or the proceeds of the sale of the shares he may
acquire on exercise of that Option by reason of or in consequence of the
securities laws or exchange control laws of the country to which he is
transferred
the Option Holder may exercise that Option in the period commencing three months
before and ending three months after the transfer takes place. If he chooses not
to exercise his Option at that time, it will not thereby lapse.
4.8 Lapse of Options
An Option or vested Option shall lapse on the occurrence of the earliest of the
following:
a the tenth anniversary of the Date of Grant; or
b the expiry of the period (if any) allowed for the satisfaction of any
condition of exercise specified in the Option Certificate pursuant to Rule
3.1 without such condition having been satisfied or the date on which it
becomes apparent that any such condition has become incapable of being
satisfied; or
c subject to Rule 5.4, the expiry of any of the applicable periods specified
in Rules 4.3, 4.4, 4.5, 5.1 and 5.2, but where an Option Holder dies while
time is running
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under Rules 4.4 or 4.5, the Option shall not lapse until the expiry of the
period in Rule 4.3; or
d the date on which an Option Holder ceases to be a director or employee of
any Member of the Group for any reason other than his death or those
specified in Rules 4.4 and or 4.5; or
e the date on which a resolution is passed, or an order is made by the Court,
for the compulsory winding-up of the Company; or
f the date on which the Option Holder becomes bankrupt or does or attempts or
omits to do anything as a result of which he is deprived of the legal or
beneficial ownership of the Option.
5. TAKE-OVER, RECONSTRUCTION AND AMALGAMATION AND LIQUIDATION
5.1 Take-over pursuant to General Offer
If any company ("the Acquiring Company") becomes a Parent of the Company as a
result of making either a general offer to acquire the whole of the Company's
issued share capital (other than any shares already owned by the Acquiring
Company or any Subsidiary of the Acquiring Company) and which is made on a
condition that if it is satisfied the Acquiring Company will become the Parent,
or a general offer to acquire all the Shares in the Company which are of the
same class as the Shares then an Option may be exercised and within the period
of six months of the date on which the Acquiring Company becomes the Parent, any
condition subject to which the offer is made is satisfied.
5.2 Voluntary Winding Up of the Company
If a resolution is passed for the voluntary winding-up of the Company, an Option
may be exercised during the period of six months starting on the commencement of
such winding-up provided that any issue of shares pursuant to such exercise is
authorised by the liquidator or the Court (if appropriate) upon the application
of and at the sole cost and expense of the Option Holder.
5.3 Meaning of Obtaining Control
For the purpose of this Rule 5, a person shall be deemed to have obtained
Control of the Company if he and others acting in concert with him have together
obtained Control.
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5.4 Rollover of Options
Notwithstanding anything to the contrary in these Rules, where Rule 5.1 applies,
an Option Holder may, by agreement with the Acquiring Company and within the
appropriate period release his Option under the Plan ("the Old Option") in
consideration of the grant to him of a new Option ("the New Option") which is
equivalent to the Old Option but relates to shares in a different company
(whether the Acquiring Company or some other company). With effect from the date
of release references in Rules 4, 5, 6, 7, 8, 9, 10, and 11, (and, in relation
to expressions used in those Rules, in Rule 1) to "the Company" and "Shares"
shall, in relation to the New Option, be construed as references to the
Acquiring Company and Shares in the Acquiring Company or that other company as
the case may be.
5.5 Meaning of "appropriate period"
For the purpose of Rule 5.4, the "appropriate period" is the period mentioned in
Rule 5.1 or Rule 5.2 as the case may be.
6. MANNER OF EXERCISE
6.1 Actions Required of the Option Holder
An Option may be exercised, in whole or in part, on giving 30 days notice, by
the delivery to the secretary of the Company, or his duly appointed agent, of an
Option Certificate covering not less than all the Shares over which the Option
is then to be exercised, with the notice of exercise in the prescribed form duly
completed and signed by the Option Holder.
6.2 Actions Required of the Company
The relevant Shares shall be allotted or transferred (as the case may be) within
28 days following such delivery and, accordingly in cases where Shares are to be
transferred, the Company shall use its best endeavours to ensure due transfer
thereof. At the request of the Option Holder, the Shares may be allotted or
transferred (as the case may be) to a nominee provided the Option Holder has
beneficial ownership of the Shares at the time of such allotment or transfer.
6.3 Partial Exercise
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Where an Option is exercised in part the minimum number of shares which may be
exercised is 100 Shares and the Company shall issue a balancing Option
Certificate to the Option Holder.
6.4 Indemnity against Taxation of the Option Holder
The Option Holder shall indemnify the Company (and, where relevant, any Member
of the Group) against any tax arising in respect of the exercise of the Option
which is a liability of the Option Holder but for which such company is required
to account under the laws of any relevant territory. Such company may recover
the tax from the Option Holder in such manner as the Committee thinks fit
including (but without prejudice to the generality of the foregoing):-
a withholding shares when the Option is exercised and selling the same;
b deducting the necessary amount from the Option Holder's remuneration; or
c requiring the Option Holder to account directly to such company for such
tax.
7. ISSUE OF SHARES
7.1 Ranking of Shares
All Shares issued pursuant to the exercise of Options under the Plan shall as to
voting, dividend, transfer and other rights (including those arising on a
liquidation) rank pari passu in all respects with the Shares then in issue,
except that they shall not rank for any dividend or other rights declared by
reference to a record date preceding the date of such exercise.
7.2 Admission to Official List of the New York Stock Exchange
If and so long as the Shares are listed on the New York Stock Exchange the
Company shall use its best endeavours to procure that as soon as practicable
after the allotment of any Shares pursuant to the Plan application shall be made
to the New York Stock Exchange for permission to deal in these Shares unless
such application has already been made.
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8. ADJUSTMENTS
8.1 General Power of Adjustment
The number of Shares over which an Option is granted may be adjusted in such
manner as the Committee shall determine following any capitalisation issue,
subdivision, consolidation or reduction of share capital and in respect of any
discount element in any rights issue or other variation of share capital.
8.2 Notification of Option Holders
The Committee may take such steps as it may consider necessary to notify Option
Holders of any adjustments made under Rule 8.1 and to call in, cancel, endorse,
issue or re-issue any Option Certificate consequent upon such adjustment.
9. ADMINISTRATION
9.1 Delivery of Notices or Documents
Notices or documents required to be given to an Eligible Employee or to an
Option Holder shall either be delivered to him by hand or sent to him by post at
his last known home or business address according to the information provided by
him. Notices sent by post shall be deemed to have been given on the day
following the date of posting.
9.2 Copies of Shareholder Communications
The Company may distribute to Option Holders copies of any notice or document
sent by the Company to its shareholders generally.
9.3 Maintenance of Unissued Share Capital
The Company shall at all times either keep available sufficient unissued Shares
to satisfy the exercise of all Options which have neither lapsed nor been
exercised (taking account of any other obligations of the Company to allot
unissued Shares) or shall ensure that sufficient issued Shares will be available
to satisfy the exercise of such Options.
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9.4 The Committee's Power to Administer Plan
The Committee may make such regulations for the administration of the Plan as it
deems fit, provided that no regulation shall be valid to the extent it is
inconsistent with the Rules.
9.5 The Committee's Decision is Final and Conclusive
The decision of the Committee in any dispute relating to an Option, or the due
exercise thereof, or any other matter in respect of the Plan, shall be final and
conclusive subject to the determination of the Auditors when so required by Rule
8.1.
9.6 Costs of Administering Plan
The costs of introducing and administering the Plan shall be borne by the
Company.
10. ALTERATIONS
10.1 Power to alter Rules
Subject to Rule 10.2, the Committee may in its discretion alter the Rules in any
way it thinks fit.
10.2 Alteration which affects subsisting rights of Option Holders
No alteration may be made which would abrogate or adversely affect the
subsisting rights of Option Holders.
10.3 Notification to Option Holders
Written notice of any amendment made in accordance with this Rule 10 shall be
given to all Option Holders.
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11. GENERAL
11.1 Termination of the Plan
The Plan shall terminate on the tenth anniversary of the date on which it is
approved by the Company in general meeting or at any earlier time by the passing
of a resolution by the Committee. Termination of the Plan shall be without
prejudice to the subsisting rights of Option Holders.
11.2 No Compensation for loss of Option Rights
If an Option Holder shall cease for any reason to be in the employment of a
Member of the Group, he shall not be entitled, by way of compensation for loss
of office or otherwise howsoever, to any sum or any benefit to compensate him
for the loss of any right or benefit accrued or in prospect under the Plan.
11.3 Governing Law
This Plan and all Options shall be governed by and construed in accordance with
English law.
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SCHEDULE ONE
Entitlement to Share Options
- ----------------------------
The grant of Options to an Eligible Employee is at the absolute discretion of
the Committee. The number of Options to be granted under the Plan to Eligible
Employees will be linked to Salary. "Cliff Edge" Options will be granted based
on the " Value of Options Awarded" as set out in the table below. Three tranches
of "Cliff Edge" Options will be granted.
The final number of Options that vest under the Plan and are therefore
exercisable by an Option Holder will be dependent upon performance criteria. Any
Options that do not vest are cancelled. The proportion of Options granted that
ultimately vest (together with an example) is set out below.
"Cliff Edge" Options Granted
- ----------------------------
The number of Shares over which Options will be granted for the first two
tranches of "Cliff Edge" Options (1998 - 2000 and 1999 - 2000) will be equal to:
Value of Options Awarded
- ------------------------
Final average buyback price of a Share in the Company in 1998 ($15.83).
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Example for a Grant of "Cliff Edge" (1998 - 2000) Options
=========================================================
<TABLE>
<CAPTION>
Eligible Annual Converted Percentage Initial Maximum Maximum
- -------- ------ --------- ---------- ------- ------- -------
employees Salary for at 1.67 Applied to Award Value of Number of
- --------- ---------- ------- ---------- ----- -------- ---------
Year of Salary Value Annual shares
------- ------ ----- ------ ------
Grant Option
----- ------
Award
-----
(effective
from May (A) (B) ((C) x 1.5) ($15.83)
--- ((A) x (B) =
1998) (C))
(Pounds) $ $ $ $
- - - -
<S> <C> <C> <C> <C> <C> <C>
DJ Kerrison 265,000 442,550 75% 331,912 497,869 31,451
SW Williams 150,000 250,500 50% 125,250 187,875 11,868
AG Jarvis 150,000 250,500 50% 125,250 187,875 11,868
RA Lee 133,000 222,111 50% 111,055 166,583 10,523
GJ Hignett 127,000 121,090 50% 106,045 159,068 10,049
HA Hanslip 102,000 170,340 50% 85,170 127,755 8,070
GM Leathes 102,000 170,340 50% 85,170 127,755 8,070
RT Shone 85,000 141,950 50% 70,975 106,462 6,725
WE Martin 80,000 133,600 30% 40,080 60,120 3,798
MH Pimbley 70,000 116,900 30% 35,070 52,605 3,323
WO Clarke 75,000 125,250 30% 37,575 56,363 3,561
TP Revington 85,000 141,950 30% 42,585 63,878 4,035
DP Turner 72,000 120,950 30% 36,072 54,108 3,418
</TABLE>
Performance measures and vesting of Options
- -------------------------------------------
Performance will be measured against the Company's cumulative cash flow before
debt repayments, share buyback and dividends for the period commencing on the
date of the spin and ending on 31 December 2002 (" Adjusted Cumulative Cash
Flow").
For Cliff Edge Options (1998 - 2000), the Adjusted Cumulative Cash Flow target
will be for the year ended 31 December 2000, and is $344,500,000. If this target
is reached 66.67 % of the Options granted in 1998 will vest. This equates to
the Option Holders' Initial Award Value shown above. Should performance exceed
or under achieve this target the number of Options that vest are calculated pro-
rota as follows:
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<TABLE>
<CAPTION>
Performance Adjusted Cumulative Cash Flow Percentage of Options That Vest
- ----------------------------------------- -------------------------------
<S> <C>
Less than $310,050,000 Nil
$310,050,001 - $344,500,000 53.33% - 66.67%
$344,500,001 - $378,950,000 66.68% - 80.00%
$378,950,001 - $400,000,000 80.01% - 99.99%
Over $400,000,000 100%
</TABLE>
By way of example, if the target of $344,500,000 is reached, Mr HA Hanslip will
have vest 66.67% of his Options. This equates to 66.67% of his Annual Option
Award ($122,400) i.e. $81,600, equates to his Initial Award Value of $81,600
shown in the table above. If the target was exceeded to the maximum possible,
Mr Hanslip would have all his Options vest, which equates to the maximum Award
of $122,400.
Similar performance criteria will be set by the Committee for Cliff Edge Options
1999 - 2001 and 2000 - 2002, relating Performance to the years ended 31 December
2001 and 31 December 2002.
16
