ONLINE ANNUAL REPORT 2010

NOTICE OF AMENDMENTS TO THE MASSMART HOLDINGS LIMITED EMPLOYEE SHARE SCHEME
(the “TRUST” or the “SCHEME”)


1.

INTRODUCTION AND RATIONALE

  On 15 October 2008, the JSE Limited (“JSE”) replaced Schedule 14 of the Listings Requirements (“JSE Listings Requirements”) in its entirety which requires all existing employee share trusts to be rendered conformant with the revised Schedule 14 by not later than 1 January 2011. The amendments to the Trust, as authorised by Ordinary Resolution Number 12, are primarily designed to render the Trust conformant with the revised Schedule 14.

For convenience, the Company is proposing to substitute in their entirety the existing terms of the Trust, first adopted by the Company at the general meeting on 12 June 2000, with the amended and restated terms. The amended and restated terms are the same terms that were adopted on 12 June 2000, save for the key proposed amendments set out below.
   

2.

SUMMARY OF THE PROPOSED AMENDMENTS TO THE TRUST

  Below is a summary of the key proposed amendments to the Trust:
 
 

Key amendments

 
  • the back-dating of options is prohibited;
  • the “rolling over” of the scheme allocation is prohibited;
  • to the extent that any director may be the recipient of an award, such director shall recuse himself from the decision-making process in this regard;
  • a fixed maximum Scheme allocation and fixed cumulative maximum individual limit has been set. The maximum number of shares that may be allocated to the Trust shall be 39,500,000 (thirty-nine million, five hundred thousand) ordinary shares. The cumulative maximum number of shares that may be allocated in respect of any one offeree (as defined in the Trust) shall be 4,000,000 (four million) shares. It is recorded that as at the date hereof, 10,141,910 ordinary shares have already been allocated and are to be taken into account as part of the approved allocation. For clarity, in addition to whatever shares have been allocated prior to 24 November 2010, new allocations shall be permitted and limited to a cumulative maximum of 4,000,000 (four million) shares per offeree;
  • no executive director of the Company shall be capable of accepting an appointment as a trustee of the Trust;
  • trustees may not participate under the Scheme;
  • the Trust has been specifically empowered to acquire shares on the open market, if authorised by the directors, or otherwise for the purposes of the Scheme. Shares purchased through the open market for the purpose of the Scheme shall not be taken into account when calculating the number of shares authorised to be utilised by the Trust for offerees;
  • shares may only be offered to the trustees or options granted to the trustees for the purpose of this Scheme once participants or groups of participants to whom the shares will be allocated have been formally identified;
  • a new clause 16 has been introduced clarifying that the Trust acts as agent for the employer when it extends offers or grants options;
  • the time period within which to exercise options granted or to sell shares before they lapse has been extended from 6 (six) years to 10 (ten) years. The amendment extends the period in respect of all options and shares granted, and makes no distinction between options or shares granted on or before
    24 November 2010. This period has been extended to increase the retention aspect of the Scheme;
  • the Trust provides, in the event of a sub-division or consolidation, for an adjustment to the number of shares that may be utilised and the amount payable. Such adjustment must give a participant entitlement to the same proportion of the equity capital as that to which he/she was previously entitled. The Company’s auditors or other independent advisors must confirm to the JSE in writing that such adjustments are made in accordance with the provisions of the Trust. In addition, to the extent that there is a capitalisation issue, a special dividend, a rights issue or reduction of capital, the individual limits and the amounts payable should be adjusted to give a participant entitlement to the same proportion of equity capital as that to which he/she was previously entitled;
  • the disclosure required to be given by the Company in its annual financial statements have been enhanced in accordance with the revised Schedule 14; and
  • allocated shares which are not subsequently issued to identified beneficiaries for any reason, will revert back to the Scheme.
  Save as is set out above, which amendments are required to render the Trust conformant with the revised Schedule 14, the Trust remains unchanged from that which was adopted by the Company on 12 June 2000, as amended.
   

3.

REVISED SUMMARY OF PRINCIPAL TERMS

  Below is a revised updated summary of the principal terms of the Trust prepared on the assumption that the amendments proposed by Ordinary Resolution Number 12 are adopted:
   
 

Establishment of the Trust

  The Trust, which was first adopted by the Company at the general meeting on 12 June 2000, is intended to incentivise employees (as defined in the Trust) to promote the continued successful growth of the Company by giving them an opportunity to acquire shares therein.
   
 

Appointment of trustees

  There shall at all times be a minimum of 2 (two) and a maximum of 4 (four) trustees of the Trust. No person who is a trustee of the Trust shall be a beneficiary under the Trust. No person who is an executive director of the Company shall be a trustee. The current trustees are Stephen Anthony Lewis, David Mark Franklin and Ian Nigel Matthews.
   
 

Powers of trustees

  In terms of the trust deed, the trustees will be conferred with the powers necessary to implement and administer the Trust.
   
 

Duties of trustees

  Along with the other duties imposed by the trust deed, the trustees shall make offers and grant options to offerees (as defined in the Trust) as directed by the directors from time to time and shall ensure that the Trust is effected in accordance with its terms.
   
 

Funding

  The Company shall, with the prior approval of the directors, lend and advance monies to the trustees for the purpose of carrying out their duties under the Trust to the extent that the Trust’s own resources, if any, are insufficient. The Trust may also borrow money from third parties, if authorised by the Board.
   
 

Eligibility

  Employees shall be eligible to and shall participate in the Scheme to the extent that offers are made to and accepted by them, options are granted, accepted and, to the extent specified in the Trust, exercised by them. The trustees may not participate under the Scheme. To the extent that any director may be the recipient of an award, such director shall recuse himself from the decision-making process in this regard.

Beneficiaries are entitled to hold their shares in a trust established primarily for the benefit of the relevant beneficiary or his/her immediate relations or in any private company or close corporation, all of the shares of which or the entire interest in which is and continues to be held or beneficially owned by the relevant beneficiary and/or his/her immediate relations, subject to certain conditions.

Continued employment is a condition of exercising the options subject to certain limited exceptions in respect of, inter alia, retirement and death.
   
 

Purchase price

  The purchase price for any shares awarded in terms of an offer or option is the weighted average traded price per ordinary share determined over a period of

5 (five) trading days on the JSE (as evidenced by a certificate issued by the Company’s then sponsor) immediately preceding the offer or option date, as the case may be, or the par value of such share, whichever is the greater. The repricing of options is prohibited.

   
 

Limitation

  The maximum number of shares that may be allocated to the Trust shall be 39,500,000 (thirty-nine million, five hundred thousand) ordinary shares. The cumulative maximum number of shares that may be allocated in respect of any one employee shall be 4,000,000 (four million) shares. It is recorded that as at the date hereof, 10,141,910 ordinary shares have already been allocated and are to be taken into account as part of the approved allocation. For clarity, in addition to whatever shares have been allocated prior to 24 November 2010, new allocations shall be permitted and limited to a cumulative maximum of 4,000,000 (four million) shares per employee.

Upon any beneficiary paying the outstanding purchase price in respect of his/her reserved shares in full, whether pursuant to the exercise of an option or pursuant to the acceptance of an offer:
 
  1. such shares and any rights issue and capitalisation shares and dividend capitalisation shares linked thereto shall cease to be reserved shares and any burden attaching to such shares in terms of the Trust shall cease to operate; and
     
  2. save as may be expressly provided for to the contrary and subject to certain other relaxation of restrictions, the Company Secretary from time to time and the trustees shall upon payment of the share tax, if any, payable thereon, release such shares together with any capitalisation, dividend capitalisation and rights issue shares financed by the Trust. The trustees shall, subject to the attainment of the relevant performance criteria, if any, and subject to discharge of the share debt (as defined in the Trust), if applicable, release the shares only as to:
     
 
  • 25% (twenty-five percent) of the initial offer or allocation on or after the 2nd (second) anniversary as from the offer date or the option date;
  • 50% (fifty percent) of the initial offer or allocation on or after the 3rd (third) anniversary as from the offer date or the option date;
  • 75% (seventy-five percent) of the initial offer or allocation on or after the 4th (fourth) anniversary as from the offer date or the option date; and
  • 100% (one hundred per cent) of the initial offer or allocation on or after the 5th (fifth) anniversary as from the offer date or the option date,
   

as the case may be, to the beneficiary, on a cumulative basis and, provided further, the directors of the Company shall be entitled to determine shorter or longer periods than those provided for above ab initio or at any time thereafter, and whether pursuant to the failure to meet performance criteria or not.


Voting

In terms of Schedule 14 of the JSE Listings Requirements, the shares held by a share scheme or trust will not have their votes at general/annual general meetings taken into account for purposes of determining approval of resolutions in terms of the JSE Listings Requirements. Such shares will also not be allowed to be taken into account for purposes of determining categorisations as detailed in Section 9 of the JSE Listings Requirements.

Corporate events and other adjustments

Where a merger, take-over or other corporate event occurs (other than acquisitions, issue of shares for cash and the issue of shares or vendor consideration placings which will not be regarded as circumstances requiring adjustment), the Company in its discretion will adjust the number of options and/or grant price in an attempt to put the employee in the same economic position in which he/she was prior to the corporate event. The Trust provides, in the event of sub-division or consolidation of shares, for an adjustment to the number and/or grant price of options so as to give the employee entitlement to the same proportion of equity capital to which he/she was previously entitled.

Where an offer is made to shareholders which would see control of the company pass to the offeror then, unless there is provision in the offer for a substitution of the existing offers and options which places the beneficiaries in no worse a position than that in which they are currently under, the beneficiaries are able to accept existing offers and exercise all existing options granted to them, whether vested or not, such that they may participate in any such proposed offer.

Reporting and reversion of unissued shares

Additional reporting obligations have been imposed on the Company in accordance with the revised Schedule 14, in particular the Company must summarise in its annual financial statements the number of shares that may be utilised for the purpose of the Trust at the beginning of the financial year, changes in such number during the accounting period and the balance of shares available for utilisation for purposes of the Trust at the end of the financial year. In addition, any adjustments made to the Trust limits in the event of sub-division or consolidation, capitalisation issues, special dividends, rights issues or reductions of capital must be reported in the annual financial statements in the year during which the adjustment is made. The Company’s auditors or other independent advisors acceptable to the JSE must confirm to the JSE in writing that any adjustments made are in accordance with the provisions of the Trust at the time that any such adjustment is finalised.

To the extent that any allocated shares are not subsequently issued to identified participants, same must revert back to the Trust.

Termination of the Trust

The Trust shall terminate as soon as all the following events have taken place:

  • the Trust ceases to hold any Scheme shares and the directors resolve that the Trust shall terminate;
  • as soon as it has received payment in full of all amounts owed to it by the beneficiaries, which are recoverable; and
  • as soon as the trustees have discharged all of their obligations to the beneficiaries.

back to top