Document:

Chief Executive's (Dr Reynolds) Employment Agreement

 Exhibit 4.1 

 

					
	 Telecom Corporation of New Zealand Limited
 Telecom Place
 167 Victoria Street West
 Auckland 1142
  
 Email:
wayne@teawatea.net.nz
	  	  
 T +64 9 385 6018

F +64 9 357 0798
  
 www.telecom.co.nz
	  	 

	  	  
	  	  
	  	  
	  	  
	  	  

 26 August 2011 
 Paul Reynolds 
 Chief Executive Officer 
 Telecom Corporation of New Zealand Limited 
 Level 2 

Telecom Place 
 167 Victoria Street West

 Auckland 1142 
 NEW ZEALAND

 Dear Paul 
 VARIATION TO TERMS
AND CONDITIONS 
 I am writing to formally confirm the following changes to your terms and conditions as set out in your individual
employment agreement with Telecom dated 28th June 2007 (as subsequently amended). 
 As you know, the proposed demerger of Telecom into
“New Telecom” and “New Chorus” (Demerger) will affect how your performance criteria are measured, and how performance incentive entitlements will be calculated, during the period in which Demerger occurs. As a result, this letter
sets out the changes applicable to your Annual Performance Incentive and your Long Term Incentive. 
 Incentive Levels 

Your Total Base Remuneration and Annual Performance Incentive will be maintained as per Schedule A of your employment agreement. Your Long Term Incentive
annual target value will be maintained at $2,100,000 per annum. 
 Long Term Incentive Scheme Alterations 

These changes apply in relation to the application of the Long Term Incentive component of your remuneration, and in particular, to your entitlements
under the following schemes: 
  

	 	•	 	 Performance Entitlements Scheme; 

  

	 	•	 	 Performance Rights Scheme; 

  

	 	•	 	 The FY10 CEO Long Term Incentive scheme. 

  
 1 

 Performance Entitlements Scheme 
 As a result of Demerger the number of entitlements to which you are eligible under grants previously made under the Performance Entitlements Scheme will increase, to reflect the expected loss in value of
those entitlements pursuant to the Demerger. The number of additional entitlements you will receive will be an amount equal to “N”, which shall be calculated in accordance with the following formula and rounded to the nearest whole number:

  

					
			
	N =	  	 (X × R) × Y
 Z
	  	
			
	where:	  		  	
			
	X =	  	the number of entitlements held by you on the Demerger record date	  	
			
	R =	  	0.2 (being the number of New Chorus shares that each Telecom share as at the Demerger record date entitles the holder to receive pursuant to the Demerger)	  	
			
	Y =	  	the VWAP of New Chorus shares during the first 20 business days commencing on the business day after the Demerger date	  	
			
	Z =	  	the VWAP of Telecom shares during the first 20 business days commencing on the business day after the Demerger date	  	
			
	VWAP =	  	the unweighted average of the daily volume weighted average sale price per share sold on NZSX on each business day during the relevant period specified	  	

 The Performance Hurdles relating to your entitlements under the Performance Entitlement Scheme will continue to apply.
However, since Demerger is expected to result in a reduction to the Telecom share price, and specifically Telecom’s Total Shareholder Return (TSR), the TSR calculation set out in the Performance Hurdles document will be adjusted so as to
reflect the loss in value in the share price of a Telecom share as a result of Demerger. Standard & Poor’s has confirmed the ability to continue to accurately calculate TSR performance post-demerger by adjusting for the value of New
Chorus at demerger. 
 Performance Rights Scheme 
 As a result of Demerger, the number of Options to which you are eligible under grants made under the Performance Rights Scheme will increase, to reflect the expected loss in value of those Options
pursuant to the Demerger. The increase will be calculated in accordance with the formula set out above (taking N as the number of additional Options of a class to be issued to you, and X as the number of Options of that class held by you on the
Demerger record date). 
 As for the Performance Entitlements Scheme, the Performance Hurdles relating to your Options will continue to apply
but the TSR calculation set out in the Performance Hurdles document will be adjusted so as to reflect the loss in value in the share price of a Telecom share as a result of Demerger. 
 Please note that the Performance Rights Scheme Rules will be amended to reflect the treatment of the Performance Rights Scheme in the Demerger. The amended Performance Rights Scheme Rules will be made
available to you prior to Demerger. 
 2010 CEO Long Term Incentive Grant 
 The 2010 CEO Long Term Incentive cash grant will continue to be of effect, after Demerger, with payment to be made in accordance with the Scheme Rules by Telecom. 

The performance criteria and targets applicable to your grant will remain as per the initial grant. 

  
 2 

 2011 CEO Long Term Incentive Grant 
 A new grant will be made to you on or around 15 September 2011 under the Equity Link Scheme. A copy of the Equity Link Scheme Rules, and further details, will be provided with the grant
letter. 
 An entitlement under the Telecom Equity Link Scheme is not a security issued by Telecom, but rather a cash payment subject to and
upon the terms and conditions set out in the Telecom Equity Link Scheme. It is agreed that any grant of an entitlement is a discretionary benefit and is not to be included in calculations of your gross earnings for the purposes of calculating
holiday pay under the Holidays Act 2003. 
 Annual Performance Incentive Scheme Alterations 

Performance Incentive Scheme 
 You will
continue to hold your Telecom shares with restrictive conditions in accordance with the terms of the original grant under the Performance Incentive Scheme. Such Telecom shares will entitle you to receive New Chorus shares under the Demerger in the
same manner as other eligible Telecom shareholders. The New Chorus shares you receive in respect of such Telecom shares will not be subject to the restrictive conditions contained in the Performance Incentive Scheme. Demerger will not affect the
divestment restriction on the Telecom shares held pursuant to the grant. 
 All other terms and conditions as set out in your employment
agreement and subsequently varied remain unchanged and in force and effect. 
 Yours sincerely 

/s/ Wayne Boyd 
 Wayne Boyd 

Chairman 
 I, Paul Reynolds, understand and
accept the conditions of employment set out in this variation to my agreement and I confirm my acceptance of these terms and conditions. 
 /s/
Paul Reynolds 
 Date: 

  
 3Chief Executive Officer Performance Rights Scheme 2007

Table of Contents

 Exhibit 4.3 

 
  
  

 
  
  

PERFORMANCE RIGHTS SCHEME 
  

 
 (amended August 2011)

Table of Contents

 PERFORMANCE RIGHTS SCHEME 
 TABLE OF CONTENTS 
  

							
		  	PART I - PRELIMINARY AND INTERPRETATION 	  	 	1	  
			
	1	  	Preliminary	  	 	1	  
			
	2	  	Interpretation	  	 	1	  
			
		  	PART II - OPERATION OF THE SCHEME	  	 	3	  
			
	3	  	Grants	  	 	3	  
			
	4	  	Rejection Of Grant	  	 	3	  
			
	5	  	Exercise of Options	  	 	3	  
			
	6	  	Procedure for Exercise and Lapse	  	 	3	  
			
	7	  	Rights on Exercise	  	 	5	  
			
		  	PART III - TERMINATION OF EMPLOYMENT	  	 	6	  
			
	8	  	Termination of Employment	  	 	6	  
			
		  	PART IV - CORPORATE EVENTS	  	 	7	  
			
	9	  	Capital Changes	  	 	7	  
			
	10	  	Other Adjustment	  	 	7	  
			
		  	PART V - GENERAL	  	 	8	  
			
	11	  	No Divestment	  	 	8	  
			
	12	  	Administration of Scheme	  	 	8	  
			
	13	  	Amendment	  	 	8	  
			
	14	  	Miscellaneous	  	 	8	  

Table of Contents

 PERFORMANCE RIGHTS SCHEME 

 

Date:            2007 (as amended in August 2011) 

PART I - PRELIMINARY AND INTERPRETATION 
  

	1	Preliminary 

  

	1.1	This is the Chief Executive Officer’s Performance Rights Scheme 2007. 

 

	2	Interpretation 

  

	2.1	In this document unless the context otherwise requires: 

 Board means the board of directors of Telecom from time to time 

Bonus Issue means: 
  

	 	(a)	any distribution or allocation of securities or other benefits (other than cash) to Shareholders for which Shareholders are not to provide consideration, including by
way of dividend, capital return, capital reduction, otherwise or any combination thereof; or 

  

	 	(b)	any cash dividend, capital return, capital reduction, other distribution or allocation or any combination thereof, to the extent that it is mandatory that the cash
entitlement arising as a result be applied to the purchase of securities or other benefits (other than cash) from Telecom 

 Breach means a breach of Telecom’s constitution, the listing and/or other rules governing the Exchange or any other stock exchange on which Shares are quoted, and/or any statute,
regulation or Telecom’s internal procedures for insiders 
 Business Day means a day on which the Exchange is
open for trading 
 Capital Change means a Rights Offer, Bonus Issue, Capital Return, or any other reconstruction
of, or adjustment to, the capital or capital structure of Telecom of any nature 
 Capital Return means any payment
of cash to Shareholders which is, or is to be, accompanied by a reduction in the number of Shares, or the proportion of economic interest in Telecom, held by Shareholders to which the Capital Return applies, but does not include a payment of cash
which is covered by paragraph (b) of the definition of Bonus Issue 
 Cash Amount has the meaning given in
clause 6.4(ii) 
 Chief Executive Officer means Dr Paul Reynolds, the chief executive officer of Telecom

 Employment means employment by Telecom and Employed has a corresponding meaning 

Event has the meaning in clause 10 
 Exchange means New Zealand Exchange Limited’s NZSX 

Exercisable Option means an Option that the Board has determined may be exercised pursuant to clause 6.1 

Exercise Date means the first Business Day after the expiration of the period, specified in a Grant, after which Options may
be exercised 
 Exercise Notice means notice of the exercise of an Option 

Exercise Price means nil 
 Fundamental Change has the meaning given to that term in the Chief Executive Officer’s employment agreement 
 Grant means the grant of an Option 
 Group means
Telecom and its subsidiaries 
 Initial Test Date means a date within 20 Business Days of the Exercise Date,
determined by the Board 
 Notification Date means the date the Board delivers a notice pursuant to clause 6.1 or
the date deemed pursuant to the Scheme 
 Option means an option to acquire a Share pursuant to the Scheme

 Option Lapse Date means the first Business Day after the expiration of the period, specified in a Grant, after
which Options are to lapse 
  

  
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 PERFORMANCE RIGHTS SCHEME 

 
 Performance Hurdle means the performance hurdle
(if any) specified in a Grant 
 Re-Test Date means a date within 20 Business Days of the Specified Date,
determined by the Board 
 Rights Offer means any offer of securities or benefits to Shareholders for which
Shareholders are to provide consideration, but not including any offer of securities or benefits to Shareholders that is covered by paragraph (b) of the definition of Bonus Issue 

Scheme means this Performance Rights Scheme 
 Share means an ordinary share in Telecom 
 Shareholder
means a holder of a Share 
 Specified Date means the first Business Day after the expiration of the
period, specified in a Grant, after which the Board will re-test achievement of a Performance Hurdle 
 Telecom
means Telecom Corporation of New Zealand Limited. 
  

	2.2	In this document: 

  

	 	(a)	the singular includes the plural and vice versa, and words importing any gender include the other genders; 

 

	 	(b)	a reference to a person includes any individual, partnership, committee and incorporated or unincorporated body (whether or not having a separate legal personality);

  

	 	(c)	a reference to amend includes modify, delete, add and vary; 

  

	 	(d)	a reference to apply includes apply under assignment or set off; 

  

	 	(e)	where a word or expression is defined, other parts of speech and grammatical forms of that word or expression have a corresponding meaning; 

 

	 	(f)	a reference to the Scheme means the Scheme as amended from time to time; 

  

	 	(g)	a reference to a person includes its successors and permitted assigns; and 

 

	 	(h)	headings are inserted for convenience only and shall be ignored in interpretation. 

  
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 PERFORMANCE RIGHTS SCHEME 

 
 PART II - OPERATION OF THE SCHEME

  

	3	Grants 

  

	3.1	The Board may make a Grant to the Chief Executive Officer. Each Grant will: 

 

	 	(a)	specify the number of Options granted to the Chief Executive Officer; 

  

	 	(b)	enclose a copy of the Scheme; 

  

	 	(c)	specify the Commencement Date, the Performance Hurdle (if any), the Exercise Price and the periods of years after which the Exercise Date, the Specified Date and the
Option Lapse Date fall; 

  

	 	(d)	enclose an Options certificate; and 

  

	 	(e)	specify the period during which the Chief Executive Officer may reject the Grant. 

 

	4	Rejection Of Grant 

  

	4.1	Opportunity 

 The Chief
Executive Officer may reject a Grant by giving the Board notice, and returning to the Board the Options certificate, within 40 Business Days after the Grant. If the Chief Executive Officer rejects a Grant, the Options the subject of that Grant will
lapse immediately. 
  

	4.2	Acknowledgement 

 In
retaining a Grant (and electing not to reject the Grant pursuant to clause 4.1), the Chief Executive Officer acknowledges that: 
  

	 	(a)	the terms of the Scheme are binding; and 

  

	 	(b)	participation in the Scheme does not affect the terms of his Employment. In no event will Telecom be deemed, by making a Grant or otherwise, to have represented that
the Chief Executive Officer’s Employment will continue until and/or beyond the Exercise Date. 

  

	5	Exercise of Options 

  

	5.1	Options may be exercised on the Notification Date or any Business Day after the Notification Date, unless: 

 

	 	(a)	the Board considers that the exercise would give rise to a Breach; or 

  

	 	(b)	the Option has lapsed. 

  

	6	Procedure for Exercise and Lapse 

  

	6.1	Board Determination 

 On
the Initial Test Date and again on the Re-Test Date, the Board will: 
  

	 	(a)	determine whether an Option may be exercised by measuring performance against the Performance Hurdle, provided that if no Options were determined to be exercisable on
the Initial Test Date, the maximum total number of Options the Board may determine to be exercisable on the Re-Test Date is equal to 50% of the Options in the relevant Grant; and 

 

	 	(b)	within two Business Days, notify the Chief Executive Officer in writing of the determination. 

 

	6.2	Exercise 

 After each
Notification Date, the Chief Executive Officer may, as he sees fit from time to time (subject to clause 5), exercise part or all of his Exercisable Options (subject to any minimum number or multiple of a number of Options prescribed by the Board
from time to time), by giving the Board an Exercise Notice. 
  

	6.3	Exercise Notice 

 Any
Exercise Notice must specify the number of Options being exercised and be accompanied by: 
  

	 	(a)	the Options certificate; and 

  
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 PERFORMANCE RIGHTS SCHEME 

 
  

	 	(b)	(if applicable) a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders. 

 

	6.4	Issue or Payment 

 Within
five Business Days after the date on which the Board receives: 
  

	 	(a)	an Exercise Notice; 

  

	 	(b)	an Options certificate; and 

  

	 	(c)	(if applicable) a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders, 

in accordance with this clause 6, Telecom will, at the Board’s discretion: 

 

	 	(i)	issue to the Chief Executive Officer a Share for each Option being exercised, unless clause 5(a) or (b) precludes the exercise of Options (if so, the Board will
give notice to the Chief Executive Officer accordingly and return the Options certificate); or 

  

	 	(ii)	pay a gross cash amount equal to the closing price of Shares reported on the Exchange on the immediately preceding Business Day for each Option being exercised less the
amount of any contribution to Kiwisaver by Telecom (“Cash Amount”), unless clause 5(b) precludes the exercise of Options (if so, the Board will give notice to the Chief Executive Officer accordingly and return the Options
certificate). For the avoidance of doubt, the Cash Amount will be paid to the Chief Executive Officer less tax at the highest marginal tax rate applying to the Chief Executive Officer and less the amount of any contribution to Kiwisaver by the Chief
Executive Officer. 

  

	6.5	Board Notice 

 The Board
will give a further notice to the Chief Executive Officer if he has been precluded (pursuant to clause 5.1(a)) from exercising an Option, as soon as it considers that the exercise would no longer give rise to a Breach. 

 

	6.6	Effective Exercise 

Subject to clause 6.7, the Exercise Notice, where the Chief Executive Officer is precluded (pursuant to clause 5.1(a)) from exercising an
Option, will take effect 10 Business Days after the date on which the Board gives its notice pursuant to clause 6.5, if the Chief Executive Officer: 
  

	 	(a)	surrenders the Options certificate; and 

  

	 	(b)	(if applicable) delivers a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders, 

during that period. If the Chief Executive Officer fails to do so, the Exercise Notice will be deemed to have been revoked. 

 

	6.7	Continued Breach 

 If the
exercise of Options pursuant to clause 6.6 would give rise to a Breach, the Board will proceed as if an Exercise Notice had been given pursuant to clause 6.2. 
  

	6.8	Breach 

 If, after the
period of six months from the date on which it first gives notice pursuant to clause 6.4 or by the date the Option lapses (whichever occurs earlier), the Board considers that it is still unable to give notice in respect of an Option pursuant to
clause 6.5 and/or the exercise of Options pursuant to clause 6.6 would give rise to a Breach, then Telecom is in default under the Scheme. Where Telecom is in default under this clause, the Chief Executive Officer and Telecom acknowledge and agree
the following: 
  

	 	(a)	Telecom must pay the Chief Executive Officer liquidated damages in the sum equal to the volume weighted average market price of Shares on the Exchange for the Business
Days in the month immediately preceding the date of the Exercise Notice given by the Chief Executive Officer pursuant to clause 6.2, within ten Business Days; and 

 

	 	(b)	that the amount payable under clause 6.8(a) is a genuine pre-estimate of the damages the Chief Executive Officer is likely to suffer as a result of the default;

  

  
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 PERFORMANCE RIGHTS SCHEME 

 

	 	(c)	that on payment of the amount under clause 6.8(a), all rights the Chief Executive Officer has to specific performance, compensation for breach, loss or damages, or any
other remedy are waived and/or extinguished and the Chief Executive Officer’s Options will lapse immediately, if not already lapsed. 

  

	6.9	Option Lapse Date 

Subject to clause 8, each Option lapses, and ceases to be exercisable, on the earlier of the: 

 

	 	(a)	the last possible Notification Date of that Option, provided that the Board has determined that the Option may not be exercised; 

 

	 	(b)	Option Lapse Date of that Option; and 

  

	 	(c)	the date on which the Chief Executive Officer ceases to be Employed. 

  

	7	Rights on Exercise 

  

	7.1	Shares issued to the Chief Executive Officer will be credited as fully paid and will rank pari passu in all respects with all Shares at the date of issue, except for
any dividend or other benefit in respect of Shares where the record date occurs prior to issue. 

  
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 PERFORMANCE RIGHTS SCHEME 

 
 PART III - TERMINATION OF EMPLOYMENT

  

	8	Termination of Employment 

Exercisable Options 
  

	8.1	If the Chief Executive Officer ceases to be Employed for any reason, his Exercisable Options will lapse three months after the date on which he ceased to be Employed.

 Options between Exercise Date or Specified Date and Notification Date 

 

	8.2	If the Chief Executive Officer ceases to be Employed for any of the reasons specified in clauses 8.3(a) or 8.4(a) or 8.4(b): 

 

	 	(a)	after the Exercise Date but before the next occurring Notification Date; or 

 

	 	(b)	after the Specified Date but before the next occurring Notification Date, 

 of an Option, that Option shall lapse three months after the date on which the Chief Executive Officer ceases to be Employed unless the Board determines in accordance with clause 6.1 that the Option may
not be exercised, in which case the Option will lapse on the relevant Notification Date. 
 Termination by the Chief Executive
Officer for Fundamental Change or by Telecom on Notice 
  

	8.3	If the Chief Executive Officer ceases to be Employed: 

  

	 	(a)	due to: 

  

	 	(i)	termination of his employment agreement by the Chief Executive Officer for Fundamental Change (in accordance with clause 21 of that employment agreement); or

  

	 	(ii)	termination of his employment agreement by Telecom on notice (in accordance with clause 23 of that employment agreement); and 

 

	 	(b)	on or after the date half way through the period from the grant date of a Grant of Options (“Specified Grant”) to the Exercise Date of the Specified
Grant, 

 the Board will permit the Chief Executive Officer to exercise a number of Options in the Specified Grant
calculated in accordance with the following formula (“Permitted Options”): 
  

					
	 number of Permitted Options = A
	 	×	 	N
		 		 	T

 Where: 
  

			
	A	  	total number of Options in the Specified Grant
	N	  	is the number of days from the grant date of the Specified Grant to the date the Chief Executive Officer ceases Employment
	T	  	is the number of days from the grant date of the Specified Grant to the Exercise Date of the Specified Grant.

 The Notification Date for the Permitted Options will be deemed to be the Business Day immediately after
the date the Chief Executive Officer ceases to be Employed. The Permitted Options shall lapse three months after the Notification Date. 
 Termination by the Chief Executive Officer On Notice or by Telecom for Disability 
  

	8.4	If the Chief Executive Officer ceases to be Employed due to termination of his employment agreement: 

 

	 	(a)	by the Chief Executive Officer on Notice (in accordance with clause 20 of that employment agreement); or 

 

	 	(b)	by Telecom for disability (in accordance with clause 22 of that employment agreement), 

the Board may in its discretion permit the Chief Executive Officer to exercise part or all of his Options. If the Board elects to permit
the Chief Executive Officer to exercise Options pursuant to this clause, it may deem the Notification Date for those Options to be such date after the Chief Executive Officer ceases to be Employed as the Board decides. Those Options will lapse three
months after the Notification Date. 
 Termination by Telecom Without Notice 

 

	8.5	If the Chief Executive Officer ceases to be Employed due to termination of his employment agreement by Telecom without notice (in accordance with clause 24 of his
employment agreement) all of his Options, other than his Exercisable Options, will immediately lapse. 

  
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 PERFORMANCE RIGHTS SCHEME 

 
 PART IV - CORPORATE EVENTS 

 

	9	Capital Changes 

  

	9.1	If before the exercise of Options: 

  

	 	(a)	     

  

	 	(i)	a Rights Offer occurs; and 

  

	 	(ii)	Shareholders are able to sell their rights under that Rights Offer for consideration, 

Telecom shall pay to the Chief Executive Officer an amount (less any deductions or withholdings required by law) equal to the amount
which he would have received (after any expenses of sale) if the Chief Executive Officer had exercised all of his Options before the record date for the Rights Offer, and had sold all of the rights under the Rights Offer relating to the Shares
arising from the exercise of those Options on the first day on which it was possible to do so; 
  

	 	(b)	a Bonus Issue occurs, then: 

  

	 	(i)	in the case of a Bonus Issue of Shares, then upon exercise of Options (but not otherwise) Telecom shall issue to the Chief Executive Officer the Shares to which he
would have been entitled if on the record date for the Bonus Issue the Chief Executive Officer had been the holder of a number of Shares equal to the number which he would have held if he had exercised those Options immediately before the record
date for the Bonus Issue; or 

  

	 	(ii)	in the case of a Bonus Issue of securities or benefits other than Shares, within a reasonable time after the Bonus Issue occurs, the Board shall make a Grant to the
Chief Executive Officer under clause 3.1 where, in the reasonable opinion of the Board, the terms of the Grant appropriately compensate the Chief Executive Officer for the reduction in value of the existing Options of the Chief Executive Officer as
a result of the Bonus Issue; 

  

	 	(c)	a Capital Return occurs, and that Capital Return is on the basis that it applies to all holders of Shares, without any election by holders of Shares;

  

	 	(i)	the Chief Executive Officer’s Options shall be reduced in the same ratio as holdings of Shares are reduced on the Capital Return; and 

 

	 	(ii)	Telecom shall pay to the Chief Executive Officer the amount (less any deductions or withholdings required by law) which he would have received if the Chief Executive
Officer had exercised all of his Options, and the Shares resulting from that exercise had participated in the Capital Return; 

  

	 	(d)	any other Capital Change occurs, that Capital Change shall be dealt with in accordance with clause 10. 

 

	10	Other Adjustment 

  

	10.1	If: 

  

	 	(a)	there occurs any offer for or acquisition of securities of Telecom, reconstruction or amalgamation affecting Telecom, Capital Change, disposal of businesses or assets
of the Group, or other event of any nature which in the opinion of the Board affects or will affect the position or rights of, or benefits to, the Chief Executive Officer or Telecom in respect of the Scheme (collectively an
“Event”); and 

  

	 	(b)	either that Event is not provided for under Scheme, or in the opinion of the Board the manner in which the Scheme applies on the occurrence of that Event produces a
result which is inappropriate or unfair to the Chief Executive Officer or to Telecom or to both, 

 the Board may
make such alterations to the rights, obligations, or benefits of the Chief Executive Officer or Telecom and/or take or cause Telecom to take such steps, as in the opinion of the Board are appropriate or desirable as a result of the occurrence of
that Event. 

  
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 PERFORMANCE RIGHTS SCHEME 

 
 PART V - GENERAL 

 

	11	No Divestment 

  

	11.1	The Chief Executive Officer may not (including by operation of law) transfer, assign, or otherwise dispose of or create any interest (including any security, or legal
or equitable interest) in an Option. 

  

	12	Administration of Scheme 

  

	12.1	The Board will administer all aspects of the Scheme, including the offering of Shares. Any matter to be determined by Telecom will be determined as the Board sees fit
in its sole discretion. The decision of the Board as to: 

  

	 	(a)	the exercise of any discretion conferred on the Board or Telecom by the Scheme; 

 

	 	(b)	the interpretation of this document; 

  

	 	(c)	any other matter touching upon the Scheme, 

 shall be conclusive and binding on the Chief Executive Officer and Telecom and shall not be capable of being challenged or appealed. 

 

	12.2	The Board may delegate (to the extent permitted by law) to any person (and revoke any delegation of) any or all of its powers, discretions, rights and obligations under
the Scheme from time to time as it sees fit, and references to Telecom and the Board will be construed accordingly. 

  

	13	Amendment 

  

	13.1	Telecom may from time to time, subject to clause 13.2: 

  

	 	(a)	vary any term of the Chief Executive Officer’s participation in the Scheme, with the agreement of the Chief Executive Officer; or 

 

	 	(b)	amend the Scheme, if it considers that: 

  

	 	(i)	the interests of the Chief Executive Officer are not materially prejudiced; or 

 

	 	(ii)	the amendment is fair and appropriate having regard to the proper interests of the Chief Executive Officer, Telecom, and/or shareholders of Telecom;

  

	 	(c)	terminate the Scheme. 

  

	13.2	Telecom: 

  

	 	(a)	may not amend the Scheme (or vary any term of the Chief Executive Officer’s participation in the Scheme) if this would give rise to a Breach; but

  

	 	(b)	may amend or terminate the Scheme if Telecom considers that this would avoid giving rise to a Breach. 

 

	13.3	Telecom will give notice of any amendment to or termination of the Scheme to the Chief Executive Officer. 

 

	14	Miscellaneous 

  

	14.1	All actions (including directions) and consequences deemed to occur under the Scheme will occur irrevocably and unconditionally (subject to clause 13).

  

	14.2	If a calculation under the Scheme produces a fraction of a cent or Share, the product will be rounded to the nearest whole number favourable to the Chief Executive
Officer. 

  

	14.3	The Scheme represents all of the terms on which Options are issued and exercised under the Scheme, except those which Telecom implies to give effect to the Scheme.

  

	14.4	No failure, delay or indulgence by Telecom in exercising any power or right conferred on it under the Scheme will operate as a waiver of that power or right; nor will a
single exercise of a power or right preclude further exercises, or the exercise of any other power or right under the Scheme. 

  

	14.5	Any dispute which arises under the Scheme will be determined by Telecom. Telecom’s decision will be final. 

 

  
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	14.6	All notices and other communications under the Scheme will be in writing and addressed to the recipient at the address or facsimile number from time to time designated
by the recipient. Unless any other designations are given: 

  

	 	(a)	the addresses and facsimile numbers of Telecom and the Chief Executive Officer are those set out in the Grant; and 

 

	 	(b)	notices or communications to Telecom will be addressed and marked to the attention of Telecom’s Company Secretary. 

Any notice or communication will be deemed to have been received: 

 

	 	(c)	at the time of delivery, if delivered by hand; 

  

	 	(d)	on the second Business Day after the date of mailing, if sent by post or airmail with postage prepaid; or 

 

	 	(e)	on the day on which confirmation of proper transmission is received (on transmission), if sent by facsimile. 

 

	14.7	The Scheme will be governed by and construed in accordance with New Zealand law. 

  
 9

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