**EXHIBIT      4.1**

 

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   **DATED2 February 2005** 

 **(1)**      **BT  GROUP plc**

**(2)    ****HANIF LALANI**

**_____________________________________________**

**DIRECTOR’S SERVICE CONTRACT**

**_____________________________________________**

 

 

 

Group Legal Services  BT Group plc  81 Newgate Street  LondonEC1A 7AJ

Tel : 020 7356 5238 

Ref: 129313/JWF

 

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|     |   | **CONTENTS**                  |   |     |   |
|----------|--------|-------------------------------|--------|----------|--------|
|     |   |                          |   | **Page** |   |
|     |   |                          |   |     |   |
| 1.       |        | Interpretation                |        | 1        |   |
| 2.       |        | Period                        |        | 1        |   |
| 3.       |        | Duties                        |        | 1        |   |
| 4.       |        | Conflicts                     |        | 2        |   |
| 5.       |        | Salary                        |        | 2        |   |
| 6.       |        | Pension                       |        | 2        |   |
| 7.       |        | Holiday                       |        | 2        |   |
| 8.       |        | Car                           |        | 3        |   |
| 9.       |        | Telecommunications Facilities |        | 3        |   |
| 10.      |        | Health Cover                  |        | 3        |   |
| 11.      |        | Medical Examination           |        | 3        |   |
| 12.      |        | Expenses                      |        | 3        |   |
| 13.      |        | Professional Subscriptions    |        |  3  |   |
| 14.      |        | Grievance Procedure           |        | 3        |   |
| 15.      |        | Obligation to Provide Work    |        | 4        |   |
| 16.      |        | Termination                   |        | 4        |   |
| 17.      |        | Confidentiality               |        | 5        |   |
| 18.      |        | Copyright                     |        | 5        |   |
| 19.      |        | Restrictions                  |        | 5        |   |
| 20.      |        | Continuation                  |        | 5        |   |
| 21.      |        | Variation                     |        | 5        |   |
| 22.      |        | Notices                       |        | 6        |   |
| Schedule |        |                               |        | 6        |   |

 

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**DATED 2 February 2005**

**PARTIES**

| 1) | **BT GROUP plc**(registered number 4190816) whose registeredoffice is at 81 Newgate Street, London EC1 A 7AJ (“BT”) |
|----|---------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                            |
|--------|-------------------------------------------------------------------------------------------------|
| 2)     | **HANIF LALANI**whose address is 81 Newgate Street, LondonEC1A 7AJ (the “Director”) |

|   |               |
|--------|--------------------|
| **1.** | **Interpretation** |

|   |                                                       |
|--------|------------------------------------------------------------|
| 1.1    | In    this Agreement the following expressions shall mean: |

|   |                   |                                                                                                                                                                           |
|--------|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **Associated Company** | any company or venture in which BT or a subsidiary has a shareholding or equity participation;                                                                                 |
|   |                   |                                                                                                                                                                           |
|   | **Board**              | the board of directors    of BT, or a committee of the board;                                                                                                                  |
|   |                   |                                                                                                                                                                           |
|   | **BT Group**           | BT and all its subsidiaries    from time to time;                                                                                                                              |
|   |                   |                                                                                                                                                                           |
|   | **Chairman**           | the chairman of BT or his    designated nominee;                                                                                                                               |
|   |                   |                                                                                                                                                                           |
|   | **Chief Executive**    | the Chief Executive of BT    or his designated nominee;                                                                                                                        |
|   |                   |                                                                                                                                                                           |
|   | **Commencement Date**  | 7 February 2005;                                                                                                                                                               |
|   |                   |                                                                                                                                                                           |
|   | **Salary**             | £400,000 a        year or such higher salary as may be determinedby the Board;                                                                                           |
|   |                   |                                                                                                                                                                           |
|   | **Subsidiary**         | any subsidiary which for      the time being is a subsidiary company (as defined in Section      736 of the Companies Act 1985 as amended by the Companies Act 1989) of    BT. |

|   |                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.2    | A reference to something being determined, specified or required by BT includes a determination, specification or requirement from time to time. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.3    | This Agreement supersedes any previous agreement between BT and the Director.                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **2.** | **Period**                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Subject to Paragraph 16,      this Agreement will last for an initial period of one year from and including      the Commencement Date. It will continue until either BT has given to the      Director previous written notice of not less than twelve months or the      Director has given to BT previous written notice of not less than six months,    ending in either case at any time after the initial period. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **3.** | **Duties**                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.1    | BT shall employ    the Director as a full-time executive director.                                                                                                                                                                                                                                                                                                                                                      |

 

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|   |                                                                                                                                                                                        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    | The Director will perform such    duties for the BT Group and Associated Companies, at such locations    in the United Kingdom oroverseas, as the Board or the Chief Executive may specify. |
|   |                                                                                                                                                                                        |
| 3.3    | The Director      will be bound by the BT share dealing rules, any other rules specified    by the Board and BT’s Articles of Association as altered from time to time.               |
|   |                                                                                                                                                                                        |
| **4.** | **Conflicts**                                                                                                                                                                               |
|   |                                                                                                                                                                                        |

| 4.1 | The Director will promote, and not do any thing which is harmful or conflicts with, the interests and reputation of the BT Group. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                         |
|--------|------------------------------------------------------------------------------|
| 4.2    | The Director will not without obtaining the written consent of the Chairman: |

|   |   |
|--------|--------|

|   | 4.2.1  | work for any other person,    business, organisation or company; or                                                          |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                         |
|   | 4.2.2  | hold any shares or interests      in any business or company that is likely to compete with the business    of the BT Group. |

|   |                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------|
| 4.3    | The Director will pay to BT any fees received from any directorship of another company, unless BT otherwise agrees. |

|   |       |
|--------|------------|
| **5.** | **Salary** |

|   |                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------|
| 5.1    | The Director will be paid the Salary in twelve equal monthly instalments, payable on the last business day of each month. |
|   |                                                                                                                      |
| 5.2    | The Director may be paid    a bonus at the discretion of the Board.                                                       |

|   |                                                                                                                                                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.3    | The Director may, at the discretion of the Board, participate in any scheme established for BT employees to acquire shares in BT subject to the applicable rules of the scheme, but participation under such schemes will not form part of this Agreement. |

|         |        |
|--------------|-------------|
| **6.**  | **Pension** |

|   |                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------|
| 6.1    | The Director will continue to be eligible to participate in theBT Pension Scheme (“BTPS”). |

|   |                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.2    | BT will supplement the Director’s pension benefits as a BTPS member with a pension of 1/45th of Final Pensionable Pay (as defined in the BTPS) for every year of service between the Commencement Date and the age of 60 so as to provide a maximum pension of 66.6% of Final Pensionable Pay instead of the benefits that the Director would otherwise receive from the BTPS at age 60. |

|   |                                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.3    | All other benefits will remain as set out in Section B of the BTPS Rules as enhanced under Paragraph 6.2.                                                                                                                   |
|   |                                                                                                                                                                                                                        |
| **7.** | **Holiday**                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                        |
|   | The Director will be entitled      to paid statutory holidays and to 32.5 days’ paid holiday in each year      which accrues rateably each month in arrears, to be taken at times agreed    with the Chief Executive. |

 

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|   |    |
|--------|---------|
| **8.** | **Car** |

|   |                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The Director will be provided with a car as determined by BT and BT will meet the cost of maintenance, insurance, motor vehicle tax and petrol. |

|   |                              |
|--------|-----------------------------------|
| **9.** | **Telecommunications Facilities** |
|   |                              |

|   | BT will provide telecommunications facilities and home security at the Director’s main residence and a free call allowance all as determined by BT. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |                          |
|---------|-------------------------------|
| **10.** | **Sick Pay and Health Cover** |

|   |                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1   | The Director will be entitled to receive sick pay (inclusive of any statutory sick pay and any benefits payable under any permanent health insurance effected by BT) of: |

|   |   |
|--------|--------|

|  | • | one-twelfth of the Salary for each month    in the first six months, and |
|--|--------|--------------------------------------------------------------------------|
|  |   |                                                                     |
|  | • | one twenty-fourth of the Salary for each month in the next six months,   |

|   |                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | in total in any period of two years, subject to production of medical certificates and to such other requirements as BT may reasonably request. |

|   |                                                                                                                                                                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2   | BT will arrange private health cover for the Director, the Director’s spouse and children under the age of 18 (or 21 if in full-time education) who are living in the United Kingdom and dental cover for the Director and the Director’s spouse, as determined by BT. |

|    |                    |
|---------|-------------------------|
| **11.** | **Medical Examination** |

|    |                                                                                                        |
|---------|-------------------------------------------------------------------------------------------------------------|
|    | BT may, at its expense, require the Director to be examined by a medical practitioner of BT’s choice. |
|    |                                                                                                        |
| **12.** | **Expenses**                                                                                                |

|          |                                                                                                                                                 |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|          | BT will reimburse authorised expenses properly incurred in the course of the Director’s duties against receipts or other proof of expenditure. |
|          |                                                                                                                                                 |
| **13.**  | **Professional    Subscriptions and Advice**                                                                                                         |

|   |                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------|
| 13.1   | The Director will be reimbursed subscriptions to professional bodies where the Chairman considers it to be in the interests of BT. |

|   |                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------|
| 13.2   | BT will pay the cost of personal tax and financial planning adviceup to a maximum of £5,000 (excluding VAT) a year. |

|          |                                                                                                                                                            |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **14.**  | **Grievance    Procedure**                                                                                                                                      |
|          |                                                                                                                                                            |
|          | If    the Director has any grievance he may apply in writing to the Chairman who    personally will either propose a solution or refer the matter to the Board. |

 

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|          |                                  |
|---------------|---------------------------------------|
| **15.**  | **Obligation to Provide        Work** |

|       |                                                                    |
|------------|-------------------------------------------------------------------------|
| 15.1  | BT    is under no obligation to provide the Director with work and may: |

|   |   |
|--------|--------|
|   | 15.1.1 | suspend the Director, if the    Board considers this appropriate, for up to three months; or |

|   |          |
|--------|---------------|
|   | 15.1.2   | if notice to terminate this    Agreement has been given, vary the Director’s duties or require the Director    to cease performing all duties during all or part of the notice period, |

|   |                                                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | in which case BT may exclude the Director from the premises of the BT Group but will continue to pay the Salary in accordance with Paragraph 5.1 and provide the benefits under this Agreement until this Agreement terminates. |

|   |                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 15.2   | Where Paragraph 15.1.2 applies, the Director will at BT’s request promptly resign in writing as a director of BT (and as a member of any committee of the Board) and of any company of which BT is a shareholder (if necessary, in accordance with Paragraph 16.6) but this Agreement will not terminate on the Director resigning under this sub-paragraph. |

|          |            |
|---------------|-----------------|
| **16.**  | **Termination** |

|       |                                                                |
|------------|---------------------------------------------------------------------|
| 16.1  | This Agreement will terminate    immediately, without compensation: |

|   |   |                                                                        |
|--------|--------|-----------------------------------------------------------------------------|
|   | 16.1.1 | onthe last day of the month in which the Director reaches the age of 60; or |

|   |   |                                                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 16.1.2 | subject to Paragraphs 15.2    and 16.3, if the Director ceases to be a Director under the provisions of    BT’s Articles of Association as altered from time to time; or |

|   |   |                                                                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
|   | 16.1.3 | if the Director fails in the    reasonable opinion of the Board satisfactorily to perform his duties after    receiving a written warning. |

|   |                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------|
| 16.2   | BT may terminate this Agreement without notice, and without compensation,if the Board believes that the Director: |

|   |         |                                                                                                                                                                       |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 16.2.1       | is    incapacitated for any reason from performing the Director’s duties for a    period of one year or periods totalling 365 days in any period of two years;    or |
|   |         |                                                                                                                                                                       |
|   | 16.2.2  | is guilty of any dishonesty    or disreputable conduct; or                                                                                                                 |
|   |         |                                                                                                                                                                       |

|   | 16.2.3 | is guilty of any misconduct    or neglect of duty after receiving a warning; or |
|--------|--------|---------------------------------------------------------------------------------|
|   |   |                                                                            |
|   | 16.2.4 | is repeatedly failing to    follow BT’s policies and procedures.          |

|   |                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| 16.3   | If the Director ceases to be a director of BT because he is not re-elected or deemed to be re-elected at a general meeting, BT may either: |

|   |          |                                                                             |
|--------|---------------|----------------------------------------------------------------------------------|
|   | 16.3.1   | terminate this Agreement subject    to paying compensation in lieu of notice; or |

|   |          |                                                                                                                                          |
|--------|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   | 16.3.2   | require the Director to perform    such duties for the BT Group (other than as a director of BT) as the Board    or the Chairman may specify. |

 

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|   |                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 16.4   | Instead          of giving the Director the twelve months’ notice referred to in Paragraph          2, BT may (but shall not    be obliged to) terminate this Agreement immediately by: |
|        |                                                                                                                                                                                          |   |
|        | 16.4.1                                                                                                                                                                                        | paying the Director the Salary in accordance with Paragraph 5.1, and |
|        |                                                                                                                                                                                          |   |
|        | 16.4.2                                                                                                                                                                                        | continuing or          paying the value of the benefits referred to in Paragraph 16.4.3    as provided under this Agreement, |
|        |                                                                                                                                                                                          |   |
|        | until the earlier of twelve months    from the date of termination or the Director obtaining full-time employment;                                                                            |
|        |                                                                                                                                                                                          |   |
|        | 16.4.3                                                                                                                                                                                        | the benefits are the pension benefits        (including life cover), health cover, dental cover, the car currently        provided on termination together with the cost of maintenance, insurance    and motor vehicle tax (but not petrol). |

|   |       |
|--------|--------------------------------|

| 16.5   | Upon termination of this Agreement the Director will at BT’srequest promptly resign in writing as a Director of BT (and  as a member ofany committee of the Board) and of any company of which BT is a shareholder,and will promptly return to BT any property of the BT Group. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                  |

| 16.6          | The Company Secretary of BT is irrevocably authorised to signa letter of resignation on behalf of the Director if he fails to do so.                                                    |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                    |
| **17.**  | **Confidentiality**                                                                                                                                                                     |
|          |                                                                                                                                                                                    |
| 17.1     | The Director        will not disclose any confidential information relating to the BT        Group or    any third party which may have been obtained in the course of this employment. |
|          |                                                                                                                                                                                    |

| 17.2          | This prohibition does not apply to confidential information thatcomes into the public domain through no act or neglect of the Director. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                    |
| **18.**  | **Copyright**                                                                                                                           |
|          |                                                                                                                                    |
|          | The copyright in any material arising    from this employment is assigned to BT.                                                        |
|          |                                                                                                                                    |
| **19.**       | **Restrictions**                                                                                                                        |
|          |                                                                                                                                    |
| 19.1          | The Director will be bound    by the provisions of the Schedule to this Agreement.                                                      |
|          |                                                                                                                                    |

| 19.2   | The    12 month periods referred to in the Schedule will be reduced    by any time during which the Director has been suspended or excluded from    the premises of the BT Group under Paragraph 15.1. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                   |

| **20.**       | **Continuation**                                                                                                               |
|---------------|--------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                           |
|               | Paragraphs 16.5, 16.6          and 17 to 19 inclusive will continue in force after the termination          of this Agreement. |
|               |                                                                                                                           |
| **21.**  | **Variation**                                                                                                                  |
|               |                                                                                                                           |
|               | BT may vary Paragraphs          7 to 10 inclusive, 13 and 14 but only after first consulting the Director.                     |

 

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|    |        |
|---------|-------------|
| **22.** | **Notices** |

|   | Any notice or document may    be served on the Director personally or by posting it to his last known address,    or on BT addressed to the Secretary at its registered office, and if sent    by first class post will be deemed to have been received within 24 hours    of posting. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                   |
|   | Signed by the parties on    the date written on the first page of this Agreement                                                                                                                                                                                                       |

**S C H E D U L E**

| 1.   | In    this Schedule:- |
|----------------|-----------------------|
|           |                  |

|   | a) | “Expiry Date” means    the date of termination or expiry of this Agreement for any reason. |
|--------|----|--------------------------------------------------------------------------------------------------------|

|   |                             |                                                                                                                                      |
|--------|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   | b)      | “in any capacity” means    on the Director’s own behalf or jointly with or on behalf of any person,    firm or company. |

|   |                             |                                                                                                                                                                                                                                                      |
|--------|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | c)      | “Confidential Information” means    confidential information of the BT Group which would be of value to a competitor    or could reasonably enable a competitor to obtain an unfair advantage in    trading in competition with the BT Group. |

|   |   |                                                                                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | d)     | “Business” means the communications business of theBT Group in the United Kingdom or any other country of the European Union inwhich the BT Group conducts business. |

|      |                                                                                                                                                                                                                                                                                                                                                   |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.   | Since the Director is likely    to obtain in the course of his employment with the BT Group, trade secrets    and Confidential Information and, personal knowledge of customers and employees    of the BT Group, the Director agrees with BT that he will be bound by the    following covenants for 12 months immediately following the Expiry Date: |

|   |   |                                                                                                                                                                                                                                                                                                                   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (i)    | The Director will not in any capacity solicit or endeavour to entice away or offer engagement or employment to, or engage or employ or procure any Designated Person, who was an employee of BT at the Expiry Date, to be engaged or employed in any business which competes or is about to compete with the Business. |

|   |   |                                                                                                                                                                                                                                                                                                                  |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | A Designated Person is an employee    of BT with whom the Director has had personal dealings in the 12 months immediately    preceding the Expiry Date and who had at the Expiry Date knowledge of trade    secrets or Confidential Information or knowledge of and connections or influence    with customers of BT. |

|   |   |                                                                                                                                                                                                                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (ii)   | The Director will not in any capacity for the purposes of any business which competes or is about to compete with the Business, canvass, solicit, deal with or accept business or custom from any person, firm or company: |

 

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|   |   |
|--------|--------|

|   |   | (a)   | that was a customer of    BT during the 12 months immediately preceding the Expiry Date (“the    12 month period”);    and |
|--------|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |   |       |                                                                                                                                   |

|   |   | (b)   | with whom or with which the    Director personally had had dealings during the 12 month period in the course    of his employment. |
|--------|--------|------------|------------------------------------------------------------------------------------------------------------------------------------|

|   |                                       |                                                                                                                                                                                                                                                                        |
|--------|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (iii)        | The    Director will not in any capacity carry on, be engaged or employed or be    concerned or interested in any business, or take steps to set up, promote    or facilitate the establishment of any business which competes or is about    to compete with the Business. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | For the purposes of this Clause 2, any reference to “engagement or, employment” means engagement or employment whether under a contract or otherwise and if under a contract includes a contract of employment, or a contract for services or any other form of contract and the terms “engage” and “employ” and    their derivatives shall be construed in accordance with this definition. |

|   |   |
|--------|--------|

| 3. | Clause 2 shall apply mutatis mutandis in relation toSubsidiaries as if the provisions in sub-clauses (i) - (iii) inclusive andthe definitions were repeated with the substitution of the words “any ofthe Company’s Subsidiaries” forBT, and the Company contracts with the Director in this sub-clause on its ownbehalf and on behalf of each of its Subsidiaries. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                                                                                                                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.     | For the avoidance of doubt it is expressly agreed that each ofthe sub-clauses (i) - (iii) in Clause 2 is intended to contain separateand severable restraints and if any one or more of such sub-clauses are for anyreason unenforceable in whole or in part, then the other sub-clauses shall nonethelessbe and remain effective. |

|   |                                                                                                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.     | The Director acknowledges that the restraints contained in thisSchedule and each of them are necessary to protect the legitimate interests ofthe BT Group, are no wider than reasonably necessary for that purpose, and arereasonable as between the parties to this Agreement. |

|   |                                                                                                                                                                                                                                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.     | If any of the restrictions contained in this Schedule shall beadjudged to be void or ineffective or unenforceable for whatever reason but wouldbe adjudgedto be valid and effective if part of the wording were deleted or the periodsreduced or the area reduced in scope, they shall apply with such modificationsas may be necessary to make them valid and effective. |

|                   |   |
|------------------------|--------|
| SIGNED BY              |   |
|                   | )      |
| LARRY STONE            | )      |
|                   |   |
| for and on behalf of   | )      |
| BT GROUP plc           | )      |
|                   |   |
| SIGNED BY HANIF LALANI | )      |
|                   | )      |

 

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