Exhibit
4.2


 




	
  

  	
   

  	
  CLIFFORD CHANCE LLP

  






 


 






 


DIAGEO 2010 SHARESAVE PLAN


 






 


Approved by shareholders of
the Company on 14 October 2010


 


Adopted by the board of the
Company on 14 August 2010


 


HMRC Reference: SRS105709


 


The Plan is a discretionary benefit offered by
the Diageo group for the benefit of its employees.  Its main purpose is to increase the interest
of the employees in the Company’s long-term business goals and performance
through share ownership.  The Plan is an
incentive for the employees’ future performance and commitment to the goals of
the Diageo group.


 


Shares purchased under the Plan and any gains
made by exercising options granted under the Plan are not part of salary for
any purpose (except to any extent required by statute).


 


The Plan is being offered for the first time in
2010 and the Board shall have the right to decide, in its sole discretion,
whether or not further options will be offered in the future and to which
employees the Plan will be extended.


 


Participating in the Plan is an investment
opportunity distinct from any employment contract.  Participation in the Plan entails the risk
associated with an investment.  An
individual who participates in the Plan is treated as being aware of such risks
and accepts such risks of his own free will.


 


The detailed rules for the Plan are set
out in this document.


 

















 


CONTENTS


 


	
  Rule

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Definitions
  And Interpretation

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Eligibility

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Invitations

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Applications

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Scaling
  Back

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Option
  Price

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Grant Of
  Options

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Limits

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Exercise
  Of Options

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Leavers
  And Deceased Participants

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Takeovers
  And Other Corporate Events

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Adjustment
  Of Options

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Alterations

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Miscellaneous

  	
   

  	
  17

  



 


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1.                                 DEFINITIONS
AND INTERPRETATION


 


1.1                           In this Plan, unless the context otherwise requires:


 


“Associated
Company” means an associated company of the Company as described in
paragraph 47 of Schedule 3 except for the purpose of Rule 10.7 (Meaning of ceasing employment) when that
expression shall have the meaning described in paragraph 35 of Schedule 3;


 


“Board”
means the board of directors of the Company or a duly authorised committee of
the Board or a duly authorised person;


 


“Bonus Date”
means the date on which a bonus is payable under the relevant Savings Contract
and from which date an Option is normally exercisable;


 


“Company”
means Diageo plc (registered in England and Wales with registered number
23307);


 


“Contribution”
means a contribution under a Savings Contract;


 


“Control”
means control within the meaning of section 719 of ITEPA;


 


“dealing day”
means a dealing day of either the London Stock Exchange or any other securities
exchange on which Shares are quoted and from which the Option Price is
determined;


 


“Eligible
Employee” means a person who satisfies the conditions described in Rule 2.1
(General rule on eligibility);


 


“Grant Date”
means the date on which an Option is granted;


 


“HMRC”
means HM Revenue and Customs;


 


“Invitation”
means an invitation to apply for an Option as described in Rule 3 (Invitations);


 


“ITEPA”
means the Income Tax (Earnings and Pensions) Act 2003;


 


“Listing
Rules” means the Listing Rules published by the UKLA;


 


“London Stock
Exchange” means London Stock Exchange plc;


 


“Option”
means a right to acquire Shares granted under the Plan;


 


“Option Price”
means the price at which Shares may be acquired on the exercise of an Option as
determined under Rule 6 (Option Price);


 


“Participant”
means a person who holds an Option including his personal representatives;


 


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“Participating
Company” means:


 


(a)                                      the Company; and


 


(b)                                     any Subsidiary designated by the Board;


 


“Plan” means the Diageo 2010 Sharesave Plan  as amended from time to time;


 


“Rule”
means a rule of the Plan;


 


“Savings
Contract” means an agreement under a certified SAYE savings
arrangement, within the meaning of paragraph 48(1) of Schedule 3, which
has been approved by HMRC for the purposes of Schedule 3;


 


“Schedule 3”
means Schedule 3 to ITEPA;


 


“Shares”
means fully paid ordinary shares in the capital of the Company which satisfy
the requirements of paragraphs 18 to 22 of Schedule 3, unless Rule 9.11 (Shares ceasing to satisfy Schedule 3 requirements)
applies;


 


“Specified
Age” means 60 years old;


 


“Subsidiary”
means a body corporate which is a subsidiary (within the meaning of section
1159 of the Companies Act 2006) of the Company and of which the Company has
Control;


 


“UKLA”
means the United Kingdom Listing Authority;


 


and expressions not defined in this Plan have
the same meanings as they have in Schedule 3.


 


1.2                           Any reference in the Plan to any enactment includes a reference to that
enactment as from time to time modified, extended or re-enacted.


 


1.3                           Words of the feminine gender shall include the masculine and vice versa
and words in the singular shall include the plural and vice versa unless, in
either case, the context otherwise requires or it is otherwise stated.


 


1.4                           Expressions in italics and headings are for guidance only and do not
form part of the Plan.


 


2.                                 ELIGIBILITY


 


2.1                           General rule on eligibility


 


An individual is eligible to be invited to
apply for an Option only if:


 


(a)                                      he is either an employee (but not a director) of a Participating Company
or a director of a Participating Company who is required to work for the
company for at least 25 hours a week (excluding meal breaks);


 


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(b)                                     he either satisfies the conditions in Rule 2.2 (Individuals eligible) or is nominated by
the Board for this purpose; and


 


(c)                                      he is not excluded from being granted an Option because of paragraph 11
of Schedule 3 (Material interest in a close
company).


 


2.2                           Individuals eligible


 


The conditions referred to in Rule 2.1(b) are
that:


 


(a)                                      the individual shall have a qualifying period of continuous service (if
any) with the Company or any Subsidiary from time to time as the Board may
decide, such period not to exceed five years before the Grant Date; and


 


(b)                                     the individual’s earnings from the office or employment referred to in Rule 2.1(a) meet
(or would meet if there were any) the requirements set out in paragraphs 6(2)(c) and
(6)(2)(ca) of Schedule 3.


 


3.                                 INVITATIONS


 


3.1                           Issuing Invitations


 


The Board shall decide if and when Invitations
will be issued.  If the Board decides to
issue Invitations then it must issue an Invitation to each Eligible Employee.


 


3.2                           Timing of Invitations


 


Invitations may be issued at any time but
before the Board decides when to issue Invitations it must have regard both to
when the Option Price may be determined under Rule 6.1 (Option Price — timing of determination)
and any regulatory restrictions on both the issuing of such Invitations and any
subsequent grant of Options.


 


3.3                           Content of Invitations


 


Each Invitation will specify:


 


(a)                                      the date by which an application for an Option must be received (being
not less than 14 days after the date of the Invitation unless otherwise agreed
in advance with HMRC);


 


(b)                                     the Option Price (or how the Option Price will be determined);


 


(c)                                      any choice as to the term of the Option in terms of the number of
monthly contributions payable;


 


(d)                                     the minimum monthly Contribution which must not be less than £5 (or as
otherwise stated in the relevant Savings Contract) nor more than £10;


 


(e)                                      the maximum monthly Contribution, which must be not more than £250 or as
otherwise specified in paragraph 25 of Schedule 3; and


 


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(f)                                        if the bonus payable under a Savings Contract shall not be taken into
account in determining the number of Shares made subject to an Option, then
that fact.


 


4.                                 APPLICATIONS


 


4.1                           Form of application


 


An application for an Option shall be
accompanied by an application for a Savings Contract in which the Eligible
Employee must state:


 


(a)                                      the Contribution he proposes to make;


 


(b)                                     that his proposed Contribution, when added to any other Contribution he
makes under any other Savings Contract, will not exceed the maximum permitted
under Schedule 3;


 


(c)                                      if he has a choice of Savings Contract, the Savings Contract chosen; and


 


(d)                                     if he has a choice of repayment date, the repayment date chosen.


 


4.2                           Number of Shares under Option


 


An application for an Option shall be for an
Option to acquire the largest whole number of Shares which could be acquired at
the Option Price with an amount equal to the expected Contributions plus the
bonus payable under the relevant Savings Contract on the Bonus Date unless it
was specified in the Invitation that the bonus would not be included for this
purpose.


 


4.3                           Effect of limits


 


If there are applications for Options over more
Shares than permitted under Rule 8 (Limits),
then each application for an Option and a related Savings Contract shall be
deemed to have been amended or withdrawn under Rule 5 (Scaling back).


 


If an Eligible Employee specifies in his
application for a Savings Contract a proposed Contribution which:


 


(a)                                      when added to any other Contribution he makes under any other Savings
Contract; and


 


(b)                                     if the Board, acting fairly and reasonably, decides, when added to any
other Contribution he made under any other Savings Contract which he has
cancelled without exercising the option to which such Savings Contract related


 


would exceed the maximum
permitted in the related Invitation then the Board is authorised to reduce the
proposed Contribution to the maximum amount permitted.


 


5.                                 SCALING
BACK


 


If valid applications for Options are received
for a total number of Shares which exceeds any maximum number permitted by the
Board or permitted by the limit in Rule


 


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8 (Limits),
then the Board shall scale back the applications using one or more of the following
methods:


 


(a)                                      by reducing the proposed Contributions by the same proportion provided
that the reduced amount shall not be less than the minimum amount permitted
under the relevant Savings Contract;


 


(b)                                     where relevant, by treating any application for a longer Option term
under a Savings Contract as an application for a shorter Option term under that
Savings Contract;


 


(c)                                      by treating the expected repayment under a Savings Contract as not
including a bonus; or


 


(d)                                     by deeming each choice of a Savings Contract of a five year term as one
of a three year term.


 


If scaling back under the preceding provisions
of this Rule does not make available sufficient Shares to allow all
Eligible Employees who have made valid applications to be granted Options, the
Board may either select applications by lot or decide not to accept any
applications on that occasion.


 


6.                                 OPTION
PRICE


 


6.1                           Option Price — timing of
determination


 


The Option Price may only be determined by
reference to dealing days falling:


 


(a)                                      within the period of 6 weeks starting on:


 


(i)                        the
day on which the Plan is formally approved by HMRC under Schedule 3;


 


(ii)                     the
dealing day after the day on which the Company announces its results for any
period; or


 


(iii)                  any
day on which a new Savings Contract prospectus is announced or comes into
force; or


 


(b)                                     at any other time when the circumstances are considered by the Board to
be sufficiently exceptional to justify the issuing of Invitations.


 


6.2                           Option Price — method of
determination


 


The Board will determine the Option Price which
must be:


 


(a)                                      not manifestly less than 80 per cent (or such other percentage as may be
specified in paragraph 28(1) of Schedule 3) of the Market Value (as
defined below) of a Share on either:


 


(i)                        a
day immediately preceding the date on which Invitations are sent to Eligible
Employees; or


 


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(ii)                     the
date specified in the Invitation; and


 


(b)                                     in the case of an Option to acquire Shares only by subscription, not
less than the nominal value of those Shares.


 


For the purpose of this Rule, “Market Value” on any day means:


 


(aa)                                if Shares are quoted in the London Stock Exchange Daily Official List:


 


(i)        the middle-market quotation of Shares (as derived from
that list) for that day;


 


(ii)       if the Board decides, the average of the middle-market
quotations of Shares (as derived from that list) over the period of 3 dealing
days ending on that day; or


 


(iii)      the middle-market quotation of the Shares (as derived
from that list) on such other dealing day or days as may be agreed in advance
with HMRC;


 


(bb)                              if paragraph (aa) above does not apply, the market value (within the
meaning of Part VIII of the Taxation of Chargeable Gains Act 1992) of a
Share as agreed in advance for the purposes of the Plan with HMRC Shares and
Assets Valuation.


 


7.                                 GRANT
OF OPTIONS


 


7.1                           Grant procedure


 


Subject to Rule 5 (Scaling back) and Rule 7.5 (Approvals and consents), the Board may
grant an Option to every individual who:


 


(a)                                      has submitted a valid application for an Option; and


 


(b)                                     is an Eligible Employee on the Grant Date.


 


7.2                           Restrictions on timing of grant of
Options


 


Options must be granted within 30 days (or 42
days if applications are scaled back) after the first day by reference to which
the Option Price is set under Rule 6.1 but:


 


(a)                                      not before the date on which HMRC approves the Plan for the purposes of
Schedule 3; nor


 


(b)                                     later than 13 October 2020 (that is, the expiry of the period of 10
years beginning with the date on which the Plan is approved by shareholders of
the Company).


 


7.3                           Method of satisfying options


 


Unless specified to the contrary by the Board
at the time of grant of an Option, an Option may be satisfied:


 


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(a)                                      by the issue of new Shares; and/or


 


(b)                                     by the transfer of treasury Shares; and/or


 


(c)                                      by the transfer of Shares other than the transfer of treasury Shares.


 


The Board may decide to change the way in which
it is intended that an Option may be satisfied after it has been granted, having
regard to the provisions of Rule 8 (Limits).


 


7.4                           Non-transferability and bankruptcy


 


An Option granted to any person:


 


(a)                                      shall not be transferred, assigned, charged or otherwise disposed of
(except on his death to his personal representatives) and shall lapse
immediately on any attempt to do so; and


 


(b)                                     shall lapse immediately if he is declared bankrupt.


 


7.5                           Approvals and consents


 


The grant of any Option shall be subject to
obtaining any approval or consent required under the Listing Rules, any relevant
share dealing code of the Company, the City Code on Takeovers and Mergers, or
any other relevant UK or overseas regulation or enactment.


 


8.                                 LIMITS


 


8.1                           10 per cent. in 10 years limit


 


An Option shall not be granted in any calendar
year if, at the time of its proposed Grant Date, it would cause the number of
Shares allocated (as defined in Rule 8.2) in the period of 10 calendar
years ending with that year under the Plan and under any other employee share
plan adopted by the Company to exceed such number as represents 10 per cent. of
the ordinary share capital of the Company in issue at that time.


 


8.2                           Meaning of “allocated”


 


For the purpose of Rule 8.1:


 


(a)                                      Shares are allocated:


 


(i)                        when
an option, award or other contractual right to acquire unissued Shares or
treasury Shares is granted;


 


(ii)                     where
Shares are issued or treasury Shares are transferred otherwise than pursuant to
an option, award or other contractual right to acquire Shares, when those
Shares are issued or treasury Shares transferred;


 


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(b)                                     the number of Shares allocated in respect of an option, award or other
contractual right shall be such number as the Board shall reasonably determine;


 


(c)                                      any Shares which have been issued or which may be issued (or any Shares
transferred out of treasury or which may be transferred out of treasury) to any
trustees to satisfy the exercise of any option, award or other contractual
right shall be treated as “allocated” unless they are already treated as allocated
under this Rule; and


 


(d)                                     for the avoidance of doubt, existing Shares other than treasury Shares
that are transferred or over which options, awards or other contractual rights
are granted shall not count as “allocated”.


 


8.3                           Post-grant events affecting numbers
of “allocated” Shares


 


For the purposes of Rule 8.2:


 


(a)                                      where


 


(i)                        any
option, award or other contractual right to acquire unissued Shares or treasury
Shares is released or lapses (whether in whole or in part); or


 


(ii)                     after
the grant of an option, award or other contractual right the Board determines
that:


 


(a)                                           where an amount is normally payable on its exercise it
shall be satisfied without such payment but instead by the payment of cash
equal to the gain made on its exercise; or


 


(b)                                          it shall be satisfied by the transfer of existing Shares (other than
Shares transferred out of treasury),


 


the unissued Shares or treasury Shares which
consequently cease to be subject to the option, award or other contractual
right shall not count as “allocated”; and


 


(b)                                     the number of Shares allocated in respect of an option, award or other
contractual right shall be such number as the Board shall reasonably determine
from time to time.


 


8.4                           Changes to investor guidelines


 


Treasury Shares shall cease to count as “allocated”
for the purpose of Rule 8.1 if institutional investor guidelines cease to
require such Shares to be so counted.


 


8.5                           Board Limit


 


The Board may impose a limit on the number of
Shares over which Options may be granted on any particular occasion.


 


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9.           EXERCISE OF OPTIONS


 


9.1         Normal period for exercise


 


An Option may only be exercised during the
period beginning with the Bonus Date and ending 6 months after the Bonus Date
except where Rule 10 (Leavers and
deceased participants) or Rule 11 (Takeovers and other corporate events) applies.


 


9.2         Restriction on exercise: material
interest in a close company


 


Regardless of any other Rule, a Participant
shall not exercise an Option when he is ineligible to participate in the Plan
because of paragraph 11 of Schedule 3 (Material
interest in a close company).


 


9.3         Long stop date for exercise


 


Unless Rule 10.1 (Deceased Participants) applies, an Option
shall not be capable of exercise later than 6 months after the Bonus Date and,
if not exercised, it shall lapse at the end of that period.


 


9.4         No exercise on early cessation of
savings


 


Regardless of any other rule of this Plan,
where, before an Option has become capable of exercise, the Participant:


 


(a)                                      gives notice that he intends to stop paying Contributions under the
related Savings Contract;


 


(b)                                     is deemed under the terms of the Savings Contract to have given such
notice (for example, for missing more than 6
monthly Contributions); or


 


(c)                                      makes an application for repayment of the Contributions paid under it,


 


the Option shall not become exercisable and
shall immediately lapse.


 


9.5         Limitation on exercise


 


The amount paid for Shares on the exercise of
an Option shall not exceed the amount of the Contributions made under the
related Savings Contract before the date of exercise together with any interest
or bonus paid under that Savings Contract.


 


9.6         Option only exercisable once


 


An Option shall not be capable of being
exercised more than once.


 


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9.7         Method of exercise


 


The exercise of any Option shall be effected in
the form and manner prescribed by the Board and subject to the prior approval
of HMRC. Unless the Board, acting fairly and reasonably, determines otherwise,
any notice of exercise shall take effect only when the Company receives it,
together with payment of the relevant aggregate Option Price.


 


9.8         Restriction on use of unissued Shares
or treasury Shares


 


No Shares may be issued or treasury Shares
transferred to satisfy the exercise of any Option to the extent that such issue
or transfer would cause the number of Shares allocated (as defined in Rule 8.2
(Meaning of “allocated”) and
adjusted under Rule 8.3 (Post-grant
events affecting numbers of “allocated” Shares)) to exceed the limit
in Rule 8.1 (10 per cent. in 10 years
limit) except where there is a variation of share capital of the
Company which results in the number of Shares so allocated exceeding such
limits solely by virtue of that variation.


 


9.9         Allotment and transfer timetable


 


Within 30 days after an Option has been
exercised by a Participant, the Board shall allot to him (or a nominee for him)
or, if appropriate, procure the transfer to him (or a nominee for him) of the
number of Shares in respect of which the Option has been exercised, provided
that the Board considers that the issue or transfer of those Shares would be
lawful in all relevant jurisdictions.


 


9.10       Share rights


 


All Shares allotted under the Plan shall rank
equally in all respects with Shares then in issue except for any rights
attaching to such Shares by reference to a record date before the date of the
allotment.


 


Where Shares are transferred under the Plan,
Participants will be entitled to any rights attaching to such Shares by
reference to a record date on or after the date of such transfer.


 


9.11       Shares ceasing to satisfy Schedule 3
requirements


 


If at any time the Shares cease to satisfy the
requirements of paragraphs 18 to 22 of Schedule 3 (Fully paid up, unrestricted, ordinary share capital):


 


(a)                                      an Option may be exercised regardless of that fact (but subject to the
other provisions of the Plan); and


 


(b)                                     the Company shall notify HMRC as soon as practicable (which may withdraw
its approval of the Plan under Schedule 3).


 


9.12       Restriction on exercise period:
participants who are subject to taxation in the USA


 


Regardless of any other Rule, in the case of an
Option granted to a Participant who is subject to taxation in the United States
of America, such Option shall be exercised (if at


 


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all) by no later than 15 March in the year
following the calendar year in which it first becomes exercisable in accordance
with the provisions of the Plan.


 


10.         LEAVERS AND DECEASED PARTICIPANTS


 


10.1       Deceased Participants


 


If a Participant dies:


 


(a)                                      before the Bonus Date then his Option may be exercised by his personal
representatives during the period of 12 months after his death and, if not
exercised, it shall lapse at the end of that period; or


 


(b)                                     on or within 6 months after the Bonus Date then his Option may be
exercised by his personal representatives during the period of 12 months after
the Bonus Date and, if not exercised, it shall lapse at the end of that period.


 


10.2       Injury, disability, redundancy,
retirement and transfer out of the group


 


If a Participant ceases to be a director or
employee of a Participating Company by reason of:


 


(a)                                      injury, disability or redundancy (within the meaning of the Employment
Rights Act 1996); or


 


(b)                                     retirement on reaching the Specified Age or any other age at which he is
bound to retire under his contract of employment;


 


(c)                                      his office or employment being with a company of which the Company
ceases to have Control; or


 


(d)                                     the business or part of a business in which he works being transferred
to a person who is not an Associated Company nor a company of which the Company
has Control,


 


he may, subject to Rule 9.3
(Long stop date for exercise),
exercise his Option during the period of 6 months after such cessation and, if
not exercised it shall, subject to Rule 10.1 (Deceased Participants), lapse at the end of that period.


 


10.3       Cessation of employment in other
circumstances on or before third anniversary


 


If a Participant ceases to be a director or
employee of a Participating Company on or before the third anniversary of the
Grant Date for a reason other than one of those specified in Rule 10.1 (Deceased Participants) or Rule 10.2 (Injury, disability, redundancy, retirement and
transfer out of the group) then his Option shall lapse on such
cessation.


 


10.4       Cessation of employment after third
anniversary


 


If a Participant ceases to be a director or
employee of a Participating Company after the third anniversary of the Grant
Date for any reason (other than dismissal for


 


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misconduct) he may, subject to Rule 9.3 (Long stop date for exercise), exercise his
Option during the period of 6 months following such cessation and if not
exercised it shall, subject to Rule 10.1 (Deceased
Participants), lapse at the end of that period.


 


10.5       Employment by Associated Company


 


If, on the Bonus Date, a Participant holds an
office or employment with a company which is not a Participating Company but
which is an Associated Company or a company of which the Company has Control,
he may exercise his Option on and within 6 months after the Bonus Date and if
not exercised it shall, subject to Rule 10.1 (Deceased Participants), lapse at the end of that period.


 


10.6       Participant reaching Specified Age


 


If a Participant continues to be a director or
employee of a Participating Company after the date on which he reaches the
Specified Age, he may, subject to Rule 9.3 (Long stop date for exercise), exercise his Option within 6
months after reaching that age.


 


10.7       Meaning of ceasing employment


 


A Participant shall not be treated for the
purposes of Rule 10 (Leavers and
deceased Participants) as ceasing to be a director or employee of a
Participating Company until he ceases to be a director or employee of the
Company, any Associated Company and any company under the Control of the
Company.


 


11.         TAKEOVERS AND OTHER CORPORATE
EVENTS


 


11.1       General offers


 


If any person (or any group of persons acting
in concert) obtains Control of the Company as a result of making a general
offer to acquire:


 


(a)                                      the whole of the issued ordinary share capital of the Company (other
than that which is already owned by it) which is made on a condition such that
if it is satisfied the acquiring Company will have Control of the Company; or


 


(b)                                     all the Shares (other than those already owned by it),


 


the Board shall within 7 days after becoming
aware of that event notify every Participant of it and, subject to Rule 9.3
(Long stop date for exercise), Rule 10
(Leavers and deceased Participants)
and Rule 11.7 (Internal reorganisations),
any Option may be exercised within one month after such notification or such
longer period as the Board may permit, provided such period is not later than 6
months after such person has obtained Control of the Company.


 


11.2       Compulsory acquisition


 


In the event that any person becomes bound or
entitled to acquire shares in the Company under sections 979 to 982 of the
Companies Act 2006 the Board shall, as soon as practicable, notify every
Participant of that event and, subject to Rule 9.3 


 


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(Long stop
date for exercise), Rule 10 (Leavers
and deceased Participants) and Rule 11.7 (Internal reorganisations), any Option may
be exercised at any time when that person remains so bound or entitled, but to
the extent that it is not exercised within that period an Option shall
(regardless of any other provision of the Plan) lapse at the end of that
period.


 


11.3       Scheme of arrangement


 


In the event that under section 899 of the
Companies Act 2006 (or other local procedure which HMRC agrees is equivalent) a
court sanctions a compromise or arrangement proposed for the purposes of or in
connection with a scheme for the reconstruction or amalgamation of the Company
an Option may, subject to Rule 9.3 (Long
stop date for exercise), Rule 10 (Leavers and deceased Participants) and Rule 11.7 (Internal reorganisations), be exercised
within six months after such event, but to the extent that the Option is not
exercised within that period it shall (regardless of any other provision of the
Plan) lapse at the end of that period.


 


11.4       Voluntary winding up


 


In the event that the Company passes a
resolution for voluntary winding up the Board shall, as soon as practicable,
notify every Participant of that event and, subject to Rule 9.3 (Long stop date for exercise), Rule 10
(Leavers and deceased Participants)
and Rule 11.7 (Internal reorganisations),
any Option may be exercised within six months after the passing of the
resolution for the winding up, but to the extent that it is not exercised
within that period an Option shall (regardless of any other provision of the
Plan) lapse at the end of that period.


 


11.5       Option rollover: general provisions


 


If any company (“the acquiring company”):


 


(a)                                      obtains Control of the Company as a result of making a general offer to
acquire:


 


(i)                        the
whole of the issued ordinary share capital of the Company (other than that
which is already owned by it) which is made on a condition such that if it is
satisfied the acquiring company will have Control of the Company; or


 


(ii)                     all
the Shares (other than those already owned by it); or


 


(b)                                     obtains Control of the Company under a compromise or arrangement
sanctioned by the court under section 899 of the Companies Act 2006 (or other
local procedure which HMRC agrees is equivalent); or


 


(c)                                      becomes bound or entitled to acquire shares in the Company under
sections 979 to 982 of the Companies Act 2006,


 


any Participant may, at any time within the
relevant period specified under paragraph 38(3) of Schedule 3, by
agreement with the acquiring company, release any Option


 


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(“the Old
Option”) in consideration of the grant to him of an Option (“the New Option”) which, for the purposes of
paragraph 39 of Schedule 3, is equivalent to the Old Option but relates to
shares in a different company (whether the acquiring company itself or some
other company falling within paragraph 18(b) or (c) of Schedule 3).


 


11.6       Option rollover: interpretation of
Rules


 


Where a New Option is granted under Rule 11.5
(Option rollover: general provisions)
the following terms of the Plan shall, in relation to the New Option, be
construed as if:


 


(a)                                      except for the purposes of the definitions of “Participating Company”
and “Subsidiary” in Rules 1.1 (Definitions),
the expression “the Company” were defined as “a company whose shares may be
acquired by the exercise of options granted under the Plan”;


 


(b)                                     the Savings Contract made in connection with the Old Option had been
made in connection with the New Option;


 


(c)                                      the Bonus Date in relation to the New Option were the same as that in
relation to the Old Option; and


 


(d)                                     Rule 13.2 (Shareholder approval)
were omitted.


 


11.7       Internal reorganisations


 


In the event that:


 


(a)                                      an offer (as referred to in Rule 11.1 (General offers)) is made or a compromise or arrangement (as
referred to in Rule 11.3 (Scheme of
arrangement)) is proposed which is expected to result in the Company
becoming controlled by a new company (the “New
Company”);


 


(b)                                     at least 75% of the shares in the New Company are expected to be held by
substantially the same persons who immediately before the offer or proposal was
made were shareholders in the Company; and


 


(c)                                      the Board and the New Company agree that this Rule should apply,


 


then an Option shall not become exercisable
under Rule 11.1 (General offers)
or Rule 11.3 (Schemes of arrangement)
but may nonetheless be released in consideration for the grant of a New Option
under Rule 11.5 (Option rollover:
general provisions) and, if not so released, shall then
automatically lapse at the end of the relevant period specified in paragraph 38(3) of
Schedule 3.


 


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12.         ADJUSTMENT OF OPTIONS


 


12.1       General rule


 


Subject to Rule 12.3 (HMRC approval), in the event of any
variation of the share capital of the Company, the Board may make such
adjustments as it considers appropriate under Rule 12.2 (Method of adjustment).


 


12.2       Method of adjustment


 


An adjustment made under this Rule shall
be to one or more of the following:


 


(a)                                      the number of Shares in respect of which any Option may be exercised;


 


(b)                                     subject to Rule 12.4 (Adjustment
below nominal value), the Option Price; and


 


(c)                                      where an Option has been exercised but no Shares have been allotted or
transferred after such exercise, the number of Shares which may be so allotted
or transferred and the price at which they may be acquired.


 


12.3       HMRC approval


 


At a time when the Plan is approved by HMRC
under Schedule 3, no adjustment under Rule 12.2 (Method of adjustment) shall be made
without the prior approval of HMRC.


 


12.4       Adjustment below nominal value


 


An adjustment under Rule 12.2 (Method of adjustment) may reduce the
Option Price of those Options to be satisfied by the subscription of Shares to
less than their nominal value, but only if and to the extent that the Board is
authorised:


 


(a)                                      to capitalise from the reserves of the Company a sum equal to the amount
by which the nominal value of the Shares in respect of which the Option is
exercised exceeds the Option Price; and


 


(b)                                     to apply that sum in paying up that amount on such Shares,


 


so that on the exercise of any Option in
respect of which such a reduction shall have been made the Board shall
capitalise that sum (if any) and apply it in paying up that amount.


 


13.         ALTERATIONS


 


13.1       General rule


 


Except as described in Rule 13.2 (Shareholder approval) and Rule 13.4 (Alterations to disadvantage of Participants),
the Board may at any time alter the Plan or the terms of any Option.


 


If an alteration is made to a key feature (as
defined in paragraph 42(2B) of Schedule 3) of the Plan at a time when the Plan
is approved by HMRC under Schedule 3, the alteration will not have effect
unless and until either HMRC has approved the alteration


 


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or the Board resolves that the alteration shall
take effect even if this causes the Plan to cease to be approved under Schedule
3 (in which circumstances, the Board shall notify HMRC as soon as practicable
after resolving that the alteration shall take effect).


 


13.2       Shareholder approval


 


Except as described in Rule 13.3 (Exceptions to shareholder approval), no
alteration to the advantage of an individual to whom an Option has been or may
be granted shall be made under Rule 13.1 (General
rule) to the provisions concerning:


 


(a)                                      eligibility;


 


(b)                                     the individual limits on participation;


 


(c)                                      the overall limits on the issue of Shares or the transfer of treasury
Shares under the Plan;


 


(d)                                     the basis for determining a Participant’s entitlement to, and the terms
of, Shares provided under the Plan;


 


(e)                                      the adjustments that may be made in the event of any variation of
capital; and


 


(f)                                        the terms of this Rule 13.2


 


without the prior approval by ordinary
resolution of the members of the Company in general meeting.


 


13.3       Exceptions to shareholder approval


 


Rule 13.2 (Shareholder approval) shall not apply to any minor
alteration to benefit the administration of the Plan, to take account of a
change in legislation or to obtain or maintain favourable tax, exchange control
or regulatory treatment for Participants, the Company, any company of which the
Company has Control or any Associated Company.


 


13.4       Alterations to disadvantage of
Participants


 


No alteration to the material disadvantage of
any Participant shall be made under Rule 13.1 (General rule) unless:


 


(a)                                      the Board shall have invited every relevant Participant to indicate
whether or not he approves the alteration; and


 


(b)                                     the alteration is approved by a majority of those Participants who have
given such an indication.


 


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14.         MISCELLANEOUS


 


14.1       Employment


 


The rights and obligations of any individual
under the terms of his office or employment with the Company, any Associated Company
or any company of which the Company has Control shall not be affected by his
participation in the Plan or any right which he may have to participate in
it.  An individual who participates in
the Plan waives any and all rights to compensation or damages in consequence of
the termination of his office or employment for any reason whatsoever (and
regardless of whether such termination is lawful or unlawful) insofar as those
rights arise or may arise from his ceasing to have rights under or be entitled to
exercise any option under the Plan as a result of such termination.  Participation in the Plan shall not confer a
right to continued employment upon any individual who participates in it.  The issuing of an Invitation and the grant of
an Option does not imply that any further Invitations or grants of Options will
be made nor that a Participant has any right to receive such an Invitation or
be granted any further Options.


 


14.2       Disputes


 


In the event of any dispute or disagreement as
to the interpretation of the Plan, or as to any question or right arising from
or related to the Plan, the decision of the Board shall be final and binding
upon all persons.


 


The exercise of any power or discretion by the
Board shall not be open to question by any person and a Participant or former
Participant shall have no rights in relation to the exercise or omission to
exercise any such power or discretion.


 


14.3       Notices


 


Any notice or other communication under or in
connection with the Plan may be given:


 


(a)                                      by personal delivery or by post, in the case of a company to its
registered office, and in the case of an individual to his last known address,
or, where he is a director or employee of a Participating Company or an
Associated Company, either to his last known address or to the address of the
place of business at which he performs the whole or substantially the whole of
the duties of his office or employment; or


 


(b)                                     in an electronic communication to their usual business address or such
other address for the time being notified for that purpose to the person giving
the notice; or


 


(c)                                      by such other method as the Board determines.


 


Where any such notice or
other communication is given by an Eligible Employee or a Participant to the
Company, it shall be effective only on receipt by the Company.


 


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14.4       Third Parties


 


No third party has any right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan.


 


14.5       Benefits not pensionable


 


Benefits provided under the Plan shall not be
pensionable.


 


14.6       Data Protection


 


Each Participant acknowledges that there will
be collection, processing and transfer of his personal data for any purpose
relating to the operation of the Plan. 
This includes:


 


14.6.1                      providing personal data to any Participating Company,
any Associated Company or any company of which the Company has Control and any
third party such as trustees of any employee benefit trust, administrators of
the Plan, registrars, brokers and any of their respective agents;


 


14.6.2                      processing of personal data by any such Participating
Company, any Associated Company or any company of which the Company has Control
or third party;


 


14.6.3                      transferring personal data to a country outside the
European Economic Area (including a country which does not have data protection
laws equivalent to those prevailing in the European Economic Area); and


 


14.6.4                      providing personal data to potential purchasers of the
Company, the Participant’s employer or the business in which the Participant
works.


 


14.7       Governing law


 


The Plan and all Options shall be governed by
and construed in accordance with the law of England and Wales and the Courts of
England and Wales have exclusive jurisdiction to hear any dispute.


 


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