Exhibit 4.2


 


THE DIAGEO PLC
2008 PERFORMANCE SHARE PLAN


 


Approved by shareholders of the Company on 15 October 2008


 


Adopted by the Remuneration Committee of the Company
on 15 October 2008


 


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 Diageo
plc’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 or received under the Plan, any cash
received under the Plan and any gains obtained 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 2008
in selected countries and the remuneration committee of Diageo plc shall have
the right to decide, in its sole discretion, whether or not further awards will
be granted in the future and to which employees those awards will be granted.


 


The detailed rules of the Plan are set out
overleaf.


 

















 


CONTENTS


 


	
  Rule

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions And Interpretation

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Eligibility

  	
  3

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Grant Of Awards

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Limits

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Vesting Of Awards

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Consequences Of Vesting

  	
  10

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Exercise Of Options

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Cash Alternative

  	
  12

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Lapse Of Awards

  	
  14

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Leavers And Deceased Participants

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Takeovers And Other Corporate Events

  	
  16

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Adjustment Of Awards

  	
  18

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Alterations

  	
  19

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Miscellaneous

  	
  20

  
	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
  :
  GRANT OF A FORFEITABLE SHARES AWARD

  	
  23

  
	
   

  	
   

  	
   

  
	
  Schedule
  2

  	
  :
  CASH CONDITIONAL AWARDS

  	
  24

  
	
   

  	
   

  	
   

  
	
  Schedule
  3

  	
  :
  PERFORMANCE CONDITION

  	
  25

  
					



 

















 


1.                                 DEFINITIONS AND INTERPRETATION


 


1.1                           In the Plan, unless the context otherwise requires:


 


“ADS” means an American Depositary Share
being an authorised depositary security representing for the time being 4
Shares in the Company and being evidenced by an authorised depositary receipt
issued by the Bank and quoted on the New York Stock Exchange;


 


“Award” means
a Conditional Award, a Forfeitable Shares Award or an Option;


 


“Bank”
means The Bank of New York or such other bank as the Company may from time to
time appoint to issue authorised depositary receipts;


 


“Committee” means the remuneration committee of the board of
directors of the Company (or, on and after the occurrence of a corporate event
described in Rule 11 (Takeovers and
other corporate events), the remuneration committee of the board of
directors of the Company as constituted immediately before such event occurs)
and any duly appointed individual or committee appointed by the remuneration
committee;


 


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


 


“Conditional Award” means a conditional right to acquire Shares
granted under the Plan;


 


“Control” means control within the meaning of section 995 of
the Income Tax Act 2007;


 


“Dividend Equivalent” means a benefit
calculated by reference to dividends paid on Shares as described in Rule 3.5;


 


“Early Vesting Date” means either:


 


(a)                                      the date of cessation of employment of a Participant in the
circumstances referred to in Rules 10.1 (Deceased
Participants) and 10.2 (Retirement,
ill-health, injury, disability, redundancy and transfer out of the Group);
or


 


(b)                                     a date of notification referred to in Rule 11.1 (General offers), the date of the relevant
event referred to in Rule 11.2 (Schemes
of arrangement and winding up) or the date of Vesting referred to in
Rule 11.3 (Demergers and similar events);


 


“Exercise Period” means the period referred to in Rule 6.2
during which an Option may be exercised;


 


“Forfeitable Shares” means Shares comprised
in a Forfeitable Shares Award which are subject to certain restrictions and
forfeiture under the Plan;


 


“Forfeitable Shares Award” means the
transfer of the beneficial interest in Forfeitable Shares to a Participant and
the subsequent holding of that interest in accordance with the Plan;


 


1

















 


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


 


“Group Member” means:


 


(a)                                      a Participating Company or a body corporate which is the Company’s
holding company (within the meaning of section 1159 of the Companies Act 2006)
or a Subsidiary of the Company’s holding company;


 


(b)                                     a body corporate which is a subsidiary undertaking (within the
meaning of section 1162 of that Act) of a body corporate within paragraph (a) above
and has been designated by the Committee for this purpose; and


 


(c)                                      any other body corporate in relation to which a body corporate
within paragraph (a) or (b) above is able (whether directly or
indirectly) to exercise 15% or more of its equity voting rights and has been
designated by the Committee for this purpose;


 


“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 or any successor to that company;


 


“New York Stock Exchange”
means The New York Stock Exchange, Inc.;


 


“Normal Vesting
Date”
means the date on which an Award vests under Rule 5.1 (Timing of Vesting: 
Normal Vesting Date);


 


“Option” means a right to acquire Shares
granted under the Plan which is designated as an option by the Committee under Rule 3.2
(Type of Award);


 


“Option Price” means the amount, if any, payable on the
exercise of an Option;


 


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


 


“Participating Company” means the Company or
any Subsidiary;


 


“Performance Condition” means a condition
related to performance which is specified by the Committee under Rule 3.1
(Terms of grant);


 


“Plan” means the Diageo 2008 Performance
Share Plan as amended from time to time;


 


“Rule” means a rule of the Plan;


 


“Shares” means fully paid ordinary shares in
the capital of the Company;


 


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


 


“Tax Liability” means any amount of tax or
social security contributions for which a Participant would or may be liable
and for which any Group Member or former Group 


 


2

















 


Member would
or may be obliged to (or would or may suffer a disadvantage if it were not to)
account to any relevant authority;


 


“UKLA” means the United Kingdom Listing
Authority;


 


“US Participant”
means a Participant who is resident in the United States of America on the
Grant Date;


 


“Vest” means:


 


(a)                                      in relation to a Conditional Award, a Participant becoming entitled
to have Shares or ADSs transferred to him (or his nominee) subject to the
Rules;


 


(b)                                     in relation to an Option, it becoming exercisable;


 


(c)                                      in relation to a Forfeitable Shares Award, the restrictions imposed
on the Forfeitable Shares under the Plan ceasing to apply


 


and Vesting
shall be construed accordingly;


 


“Vested Shares” means those Shares in
respect of which an Award Vests.


 


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


 


2.                                 ELIGIBILITY


 


An individual
is eligible to be granted an Award only if he is an employee (including an
executive director) of a Participating Company. 
The Committee may, in its discretion, determine that the individual
shall have a qualifying period of continuous service with the Company or any
Subsidiary to be eligible to be granted an Award, such period not to exceed 5
years before the Grant Date


 


3.                                 GRANT OF AWARDS


 


3.1                           Terms of grant


 


Subject to Rule 3.7
(Timing of
grant), Rule 3.9
(Approvals and consents) and Rule 4
(Limits), the Committee may resolve to
grant an Award on:


 


(a)                                      the terms set out in the Plan; and


 


(b)                                     such additional terms (whether a Performance Condition and/or any
other terms) as the Committee may specify


 


to any person
who is eligible to be granted an Award under Rule 2 (Eligibility).


 


3

















 


3.2                           Type of Award


 


On or before
the Grant Date, the Committee shall determine whether an Award shall be a
Conditional Award, an Option or a Forfeitable Shares Award.  If the Committee does not specify the type of
an Award on or before the Grant Date then an Award shall be a Conditional
Award.


 


3.3                           Grant of Award to US Participant


 


Where an Award is granted under Rule 3.1 (Terms of Grant) to a US Participant, it
shall take the form of a Conditional Award and shall be to acquire ADSs and not
Shares.


 


3.4                           Method of grant


 


An Award shall
be granted as follows:


 


(a)                                      a Conditional Award or an Option shall be granted by deed executed
by the Company;


 


(b)                                     if an Award is an Option, the Committee shall determine the Option
Price (if any) on or before the Grant Date provided that the Committee may
reduce or waive such Option Price on or prior to the exercise of the Option;


 


(c)                                      a Forfeitable Shares Award shall be granted by the procedure set out
in Schedule 1 to the Plan.


 


3.5                           Treatment of Dividends


 


The Committee may:


 


(a)                                      decide at any time that a Participant (or his nominee) shall be
entitled to receive a benefit determined by reference to the value of all or
any of the dividends (including the dividend tax credit unless the Committee
decides otherwise) that would have been paid on the Vested Shares or ADSs in
respect of dividend record dates occurring during the period between the Grant
Date and the date of Vesting and may further decide that such benefit shall be
provided in cash and/or shares and/or ADSs. The Committee may decide to exclude
the value of all or part of any special dividend from the amount of the
Dividend Equivalent; or


 


(b)                                       grant an Award on terms whereby the number of Shares or ADSs
comprised in the Award shall increase by deeming dividends (excluding special dividends,
unless the Committee decides otherwise) paid on the Shares or ADSs from the
Grant Date to Vesting to have been reinvested in additional Shares or ADSs on
such terms (as to the inclusion or exclusion of any dividend tax credit, the
price at which any additional Shares or ADSs shall be deemed to have been
purchased or otherwise) as the Committee shall decide.


 


This Rule shall not apply in the case of a
Forfeitable Shares Award under which a Participant is entitled to receive
dividends.


 


4

















 


3.6                           Method of satisfying Awards


 


Unless
specified to the contrary by the Committee on the Grant Date, an Award may be
satisfied:


 


(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); or


 


(d)                                     in the case of an Award granted to a US Participant, by the issue or
transfer of ADSs.


 


The Committee
may decide to change the way in which it is intended that an Award granted as a
Conditional Award or an Option may be satisfied after it has been granted,
having regard to the provisions of Rule 4 (Limits).


 


3.7                           Timing of grant


 


Subject to Rule 3.9
(Approvals and consents), an Award may
only be granted:


 


(a)                                      within the period of 6 weeks beginning with:


 


(i)                        the day on which the Plan is approved by shareholders of the
Company; or


 


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


 


(b)                                     at any other time when the Committee considers that circumstances
are sufficiently exceptional to justify its grant


 


but an Award
may not be granted after [14 October 2018] (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).


 


3.8                           Non-transferability and bankruptcy


 


An
Award 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.


 


3.9                           Approvals and consents


 


The grant of
any Award 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, the listing rules of the New York Stock
Exchange, or any other UK or overseas regulation or enactment.


 


5

















 


3.10                     Shareholding Condition


 


The Committee may decide that it shall be a condition
of the grant of an Award that an individual eligible to be granted an Award
shall have held beneficially a number of Shares determined by the Committee for
such period as the Committee decides.  If
the Committee decides to set such a shareholding condition, it must notify the
individual of the condition no later than 3 calendar months before the
beginning of the financial year in which it is intended to grant the Award.


 


4.                                 LIMITS


 


4.1                           5% in 10 years limit


 


An Award 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 4.3) in
the period of 10 calendar years ending with that calendar year under the Plan
and under any other executive share plan adopted by the Company to exceed such
number as represents 5% of the ordinary share capital of the Company in issue
at that time.


 


4.2                           10% in 10 years limit


 


An Award 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 4.3) in
the period of 10 calendar years ending with that calendar year under the Plan
and under any other employee share plan adopted by the Company to exceed such
number as represents 10% of the ordinary share capital of the Company in issue
at that time.


 


4.3                           Meaning of “allocated”


 


For the
purposes of Rules 4.1 and 4.2:


 


(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;


 


(b)                                     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 count as “allocated” unless they are already treated as
allocated under this Rule; and


 


(c)                                      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”.


 


6

















 


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


 


For the
purposes of Rule 4.3:


 


(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
Committee determines that:


 


(aa)      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


 


(bb)    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 Committee shall reasonably
determine from time to time.


 


4.5                           Changes to investor guidelines


 


Treasury
shares shall cease to count as “allocated” Shares for the purposes of Rule 4.3
if institutional investor guidelines cease to require such Shares to be so
counted.


 


4.6                           Individual limit


 


(a)                                      The maximum total market value of Shares or ADSs (calculated as set
out in this Rule) over which Awards may be granted to any employee during any
financial year of the Company is 375% of his salary (as defined in this Rule),
unless Rule 4.6(b) applies.


 


(b)                                     If the Committee decides that exceptional circumstances exist in
relation to the recruitment or retention of an eligible employee then the
maximum total market value of Shares or ADSs (calculated as set out in this
Rule) over which Awards may be granted to that employee during a financial year
of the Company is such higher percentage of his salary (as defined in this
Rule) as the Committee may determine.


 


For the
purpose of this Rule 4.6:


 


(i)                                         an employee’s salary
shall be taken to be his base salary (excluding benefits in kind), expressed as
an annual rate payable by the Participating Companies to him on the Grant Date
(or on such other date as the Committee shall reasonably determine).  Where a payment of salary is made in a
currency other than sterling, the payment shall be treated as equal to the
equivalent amount of 


 


7

















 


sterling
determined by using any rate of exchange which the Committee may reasonably
select; and


 


(ii)                                       the market value of the
Shares or ADSs over which an Award is granted shall be taken to be an amount
equal to the middle-market quotation of Shares (as derived from the London
Stock Exchange Daily Official List) on the Grant Date or, if the Committee so
determines, the average of the middle market quotations of a Share for the 3
dealing days before the Grant Date or the average of the middle market
quotations of a Share during a period before the Grant Date determined by the
Committee not exceeding the period of 12 months ending on the last day of the
financial year of the Company before the Grant Date.


 


4.7                           Effect of limits


 


Any Award
shall be limited and take effect so that the limits in this Rule 4 are
complied with.


 


4.8                           Restriction on use of unissued Shares and treasury
shares


 


No Shares may be issued or treasury shares transferred
to satisfy the Vesting of any Conditional Award or the exercise of any Option
to the extent that such issue or transfer would cause the number of Shares
allocated (as defined in Rule 4.3 and adjusted under Rule 4.4) to
exceed the limits in Rules 4.1 (5% in
10 years limit) and 4.2 (10% 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.


 


5.                                 VESTING OF AWARDS


 


5.1                           Timing of Vesting: 
Normal Vesting Date


 


Subject to Rule 5.3
(Restrictions on Vesting: regulatory and tax
issues), an Award shall Vest on the later of:


 


(a)                                      the date on
which the Committee determines whether or not any Performance Condition and any
other condition imposed on the Vesting of the Award has been satisfied (in
whole or part); and


 


(b)                                     the third
anniversary of the Grant Date (or such earlier date as the Committee shall
determine at the Grant Date as the date of Vesting)


 


except where
earlier Vesting occurs on an Early Vesting Date under Rule 10 (Leavers) or Rule 11 (Takeovers and other corporate events).


 


5.2                           Extent of Vesting


 


An Award shall
only Vest to the extent:


 


(a)                                      that any Performance Condition is satisfied on the Normal Vesting Date
or, if appropriate, the Early Vesting Date;


 


(b)                                     as permitted by any other term imposed on the Vesting of the Award;
and


 


8
















 


(c)                                      in relation to Vesting before the Normal Vesting Date, as permitted
by Rules 10.1 (Deceased Participants),
10.2 (Retirement, ill-health, injury,
disability, redundancy and transfer out of the Group), 10.3 (Cessation of employment in other circumstances)
and 11.5 (Reduction in number of Vested
Shares).


 


5.3                           Restrictions on Vesting: regulatory and tax
issues


 


An Award shall
not Vest unless and until the following conditions are satisfied:


 


(a)                                      the Vesting of the Award, and the issue or transfer of Shares or
ADSs after such Vesting would be lawful in all relevant jurisdictions and in
compliance with the Listing Rules, any relevant share dealing code of the
Company, the City Code on Takeovers and Mergers and any other relevant UK or
overseas regulation or enactment;


 


(b)                                     if, on the Vesting of the Award, a Tax Liability would arise by
virtue of such Vesting, then the Participant authorises the Company to sell or
procure the sale of sufficient Shares or ADSs on his behalf to ensure that any
relevant Group Member receives the amount required to discharge the Tax
Liability except to the extent that he agrees with the Committee to fund all or
part of the Tax Liability in a different manner;


 


(c)                                      the Participant has entered into such arrangements as the Committee
requires (and where permitted in the relevant jurisdiction) to satisfy a Group
Member’s liability to social security contributions in respect of the Vesting
of the Award; and


 


(d)                                     where the Committee requires, the Participant has entered into, or
agreed to enter into, a valid election under Part 7 of ITEPA (Employment income: 
elections to disapply tax charge on restricted securities) or
any similar arrangement in any overseas jurisdiction.


 


For the
purposes of this Rule 5.3, references to Group Member include any former
Group Member.


 


5.4                           Tax liability before Vesting


 


If a
Participant will, or is likely to, incur any Tax Liability before the Vesting
of an Award then that Participant must enter into arrangements acceptable to
any relevant Group Member to ensure that it receives the amount of such Tax
Liability.  If no such arrangement is
made then the Participant shall be deemed to have authorised the Company to
sell or procure the sale of sufficient of the Shares or ADSs subject to his
Award on his behalf to ensure that the relevant Group Member receives the
amount required to discharge the Tax Liability and the number of Shares or ADSs
subject to his Award shall be reduced accordingly.


 


For the
purposes of this Rule 5.4, references to Group Member include any former
Group Member.


 


9

















 


5.5                           Change of jurisdiction


 


If a Participant relocates to another jurisdiction
before his Award Vests and, as a result of the relocation, the Participant or
any Group Member would be subject to additional tax or social security on the
Vesting of the Award or the Vesting of the Award in that other jurisdiction
would be subject to any regulatory restriction, approval or consent, the
Committee may determine that the Award may:


 


(a)                                      Vest on such terms and during such period preceding the date on
which the Participant relocates as the Committee may determine; or


 


(b)                                     be released by the Participant for a Cash Conditional Award granted
under Schedule 2.


 


6.                                 CONSEQUENCES OF VESTING


 


6.1                           Conditional Awards


 


On or as soon
as reasonably practicable after the Vesting of a Conditional Award and, in any
event, within 30 days of Vesting, the Committee shall, subject to Rule 5(3)(b) (Payment of Tax Liability) and any
arrangement made under Rule 5.3(c) (Restrictions
on Vesting: regulatory and tax issues), transfer or procure the
transfer of the Vested Shares or ADSs to the Participant (or a nominee for
him).


 


6.2                           Options


 


An Option
shall, subject to Rule 7.1 (Restrictions
on the exercise of an Option: regulatory and tax issues), be
exercisable in respect of Vested Shares or ADSs for a period of 12 months beginning with the date on which the
Option Vests and, if unexercised at the end of that period, the Option shall
then lapse unless it lapses earlier under Rule 10.3 (Cessation of employment in other circumstances),
Rule 11.1 (General offers),
Rule 11.2 (Schemes of arrangement and
winding up) or Rule 11.3 (Demergers
and similar events).


 


If an Option
is not exercised during the last 30 days of the Exercise Period because of any
regulatory restrictions referred to in Rule 7.1(a), the Committee may
extend the period during which the Option may be exercised so as to permit the
Option to be exercised as soon as those restrictions cease to apply.


 


6.3                           Forfeitable Shares Award


 


On the Vesting
of a Forfeitable Shares Award, the Vested Shares or ADSs shall cease to be
subject to the restrictions imposed on the Forfeitable Shares under the Plan
and the Committee shall, subject to Rule 5.3(b) (Payment of Tax Liability) and any
arrangement made under Rule 5.3(c) (Restrictions
on Vesting: regulatory and tax issues), transfer or procure the
transfer of:


 


(a)                                      the legal title to the Vested Shares or ADSs; and/or


 


(b)                                     any documents of title relating to the Vested Shares or ADSs


 


to the
Participant (or a nominee for him) on or as soon as reasonably practicable
after Vesting.


 


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6.4                           Dividend equivalent


 


If the
Committee decided at any time under Rule 3.4(a) (Treatment of Dividends) that a Participant
would be entitled to the Dividend Equivalent in relation to Shares or ADSs
under their Award, then the provision of the Dividend Equivalent to the
Participant shall be made as soon as practicable after Vesting and:


 


(a)                                      in the case of a cash payment, shall be subject to such deductions
(on account of tax or similar liabilities) as may be required by law or as the
Committee may reasonably consider to be necessary or desirable;


 


(b)                                     in the case of a provision of Shares or ADSs, Rule 5.3 (Restrictions on Vesting: regulatory and tax issues)
shall apply as if such provision was the Vesting of an Award.


 


7.                                 EXERCISE OF OPTIONS


 


7.1                           Restrictions on the exercise of an Option: regulatory
and tax issues


 


An Option
which has Vested may not be exercised unless the following conditions are
satisfied:


 


(a)                                      the exercise of the Option and the issue or transfer of Shares or
ADSs after such exercise would be lawful in all relevant jurisdictions and in
compliance with the Listing Rules, any relevant share dealing code of the
Company, the City  Code on Takeovers and
Mergers and any other relevant UK or overseas regulation or enactment;


 


(b)                                     if, on the exercise of the Option, a Tax Liability would arise by
virtue of such exercise, then the Participant authorises the Company to sell or
procure the sale of sufficient Shares or ADSs on his behalf to ensure that any
relevant Group Member receives the amount required to discharge the Tax
Liability except to the extent that the Participant agrees with the Committee
to fund all or part of the Tax Liability in a different manner;


 


(c)                                      the Participant has entered into such arrangements as the Committee
requires (and where permitted in the relevant jurisdiction) to satisfy a Group
Member’s liability to social security contributions in respect of the exercise
of the Option; and


 


(d)                                     where the Committee requires, the Participant has entered into, or
agreed to enter into, a valid election under Part 7 of ITEPA (Employment income: 
elections to disapply tax charge on restricted securities) or
any similar arrangement in any overseas jurisdiction.


 


For the
purposes of this Rule 7.1, references to Group Member include any former
Group Member.


 


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7.2                           Exercise in whole or part


 


An Option may
be exercised to the maximum extent possible at the time of exercise or over
such fewer number of Shares or ADSs as the Participant decides.


 


7.3                           Method of exercise


 


The exercise
of any Option shall be effected in the form and manner prescribed by the
Committee.  Unless the Committee, acting
fairly and reasonably determines otherwise, any notice of exercise shall,
subject to Rule 7.1 (Restrictions on
the exercise of an Option: regulatory and tax issues), take effect
only when the Company receives it, together with payment of any relevant Option
Price (or, if the Committee so permits, an undertaking to pay that amount) and,
if a Participant decides to satisfy the Tax Liability other than by selling
Shares or ADSs pursuant to the authority in Rule 7.1(b), an agreement
relating to the payment of the Tax Liability having been entered into.


 


7.4                           Transfer or allotment timetable


 


As soon as
reasonably practicable after an Option has been exercised and, in any event,
within 30 days of exercise, the Company shall, subject to Rule 7.1(b) (Payment of Tax Liability) and any
arrangement made under Rule 7.1(c) (Restrictions
on exercise: regulatory and tax issues), transfer or procure the
transfer to him (or a nominee for him) or, if appropriate, allot to him (or a
nominee for him) the number of Shares or ADSs in respect of which the Option
has been exercised.


 


8.                                 CASH ALTERNATIVE


 


8.1                           Committee determination


 


Where a
Conditional Award Vests or where an Option has been exercised and Vested Shares
or ADSs  have not yet been allotted or
transferred to the Participant (or his nominee), the Committee may determine
that, in substitution for his right to acquire such number of Vested Shares or
ADSs as the Committee may decide (but in full and final satisfaction of his right
to acquire those Shares or ADSs), he shall be paid by way of additional
employment income a sum equal to the cash equivalent (as defined in Rule 8.2)
of that number of Shares or ADSs in accordance with the following provisions of
this Rule 8.


 


8.2                           Limitation on the application of Rule 8.1


 


Rule 8.1
shall not apply in relation to an Award made to a Participant in any
jurisdiction where the presence of Rule 8.1 would cause:


 


(a)                                      the grant of the Award to be unlawful or for it to fall outside any
applicable securities law exclusion or exemption; or


 


(b)                                     adverse tax or social security contributions consequences for the
Participant or any Group Member as determined by the Committee


 


provided
that this Rule 8.2 shall apply only if its application would prevent the
occurrence of a consequence referred to in (a) or (b) above.


 


12

















 


8.3                           Cash equivalent


 


For the
purpose of this Rule 8, the cash equivalent of a Share or ADS is:


 


(a)                                      in the case of a Conditional Award, the market value of a Share or
ADS on the day when the Award Vests;


 


(b)                                     in the case of an Option, the market value of a Share or ADS on the
day when the Option is exercised reduced by the Option Price in respect of that
Share or ADS.


 


Market
value on any day shall be determined as follows:


 


(i)                                         if on the day of Vesting or exercise, Shares are quoted in the
London Stock Exchange Daily Official List, the middle-market quotation of a
Share, as derived from that List, on that day; or


 


(ii)                                      in the case of an Award granted to a US Participant, if on the day
of Vesting or exercise, ADSs are quoted on the New York Stock Exchange, the
closing price of an ADS on the dealing day before that date; or


 


(iii)                                   if Shares or ADSs are not so quoted, such value of a Share or ADS as
the Committee reasonably determines.


 


8.4                           Payment of cash equivalent


 


Subject to Rule 8.4
(Share alternative), as soon as
reasonably practicable after the Committee has determined under Rule 8.1
that a Participant shall be paid a sum in substitution for his right to acquire
any number of Vested Shares or ADSs:


 


(a)                                      the Company shall pay to him or procure the payment to him of that
sum in cash; and


 


(b)                                     if he has already paid the Company for those Shares or ADSs, the
Company shall return to him the amount so paid by him.


 


8.5                           Share alternative


 


If the
Committee so decides, the whole or any part of the sum payable under Rule 8.3
shall, instead of being paid to the Participant in cash, be applied on his
behalf:


 


(a)                                      in subscribing for Shares or issuing ADSs at a price equal to the
market value by reference to which the cash equivalent is calculated; or


 


(b)                                     in purchasing such Shares or ADSs; or


 


(c)                                      partly in one way and partly in the other


 


and the
Company shall allot or transfer to him (or his nominee) or procure the transfer
to him (or his nominee) of the Shares so subscribed for, ADS so issued or
Shares or ADSs purchased.


 


13

















 


8.6                           Deductions


 


There shall be
deducted from any payment under this Rule 8 such amounts (on account of
tax or similar liabilities) as may be required by law or as the Committee may
reasonably consider to be necessary or desirable.


 


9.                                 LAPSE OF AWARDS


 


An
Award shall lapse:


 


(a)                                      in accordance with the Rules; or


 


(b)                                     to the extent it does not Vest under these Rules.


 


On the lapse
of all or any part of a Forfeitable Shares Award, the beneficial interest (and,
if appropriate, the legal interest) of the Forfeitable Shares in respect of
which such Award has lapsed shall be transferred for no (or nominal)
consideration to any person specified by the Committee.


 


10.                           LEAVERS AND DECEASED PARTICIPANTS


 


10.1                     Deceased Participants


 


If a
Participant dies at a time when he is a director or employee of a Group Member
before the Normal Vesting Date then, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues)
and the remainder of this Rule, his Award shall Vest on the date of cessation.


 


For the
purposes of this Rule, the Committee shall determine the number of Shares or
ADSs which Vest by:


 


(i)                                         applying the Performance Condition and any condition imposed on the
Vesting of Awards; and


 


(ii)                                      reducing the number of Shares or ADSs pro rata to reflect any
unexpired part of the period of 3 years after the Grant Date (or such shorter
period set by the Committee under Rule 5.1(b)) as at the time that the
Participant ceases to be a director or employee unless the Committee, acting
fairly and reasonably, decides that the pro rata reduction in the number of
Shares or ADSs is inappropriate in any particular case when it shall increase
the number of Shares or ADSs to such higher number as it decides (provided that
the number does not exceed the number of Shares or ADSs determined under
paragraph (i) above).


 


10.2                     Retirement, ill-health, injury, disability, redundancy
and transfer out of the Group


 


If a
Participant ceases to be a director or employee of a Group Member before the
Normal Vesting Date by reason of:


 


(a)                                      retirement with the agreement of his employer;


 


(b)                                     ill-health, injury or disability (evidenced to the satisfaction of
his employer);


 


(c)                                      redundancy (within the meaning of the Employment Rights Act 1996) or
any overseas equivalent; or


 


14

















 


(d)                                     his office or employment being with either a company which ceases to
be a Group Member or relating to a business or part of a business which is
transferred to a person who is not a Group Member


 


subject
to Rule 5.3 (Restrictions on Vesting:
regulatory and tax issues), Rule 11 (Takeovers and other corporate events) and the remainder of
this Rule, his Award shall Vest on the Normal Vesting Date (unless the
Committee decides that his Award shall Vest on the date of cessation).


 


For the purposes of this Rule, the Committee shall
determine the number of Shares  or ADSs
which Vest by:


 


(i)                                         applying the Performance Condition, any condition imposed on the
Vesting of Awards and any other factors considered by the Committee to be
relevant to reduce the number of Shares or ADSs which Vest; and


 


(ii)                                      reducing the number of Shares or ADSs pro rata to reflect any
unexpired part of the period of 3 years after the Grant Date (or such shorter
period set by the Committee under Rule 5.1(b)) as at the time that the
Participant ceases to be a director or employee unless the Committee, acting
fairly and reasonably, decides that the pro rata reduction in the number of
Shares or ADSs is inappropriate in any particular case when it shall increase
the number of Shares or ADSs to such higher number as it decides (provided that
the number does not exceed the number of Shares or ADSs determined under
paragraph (i) above).


 


10.3                     Cessation of employment in other circumstances


 


If a
Participant ceases to be a director or employee of a Group Member for any
reason other than those specified in Rule 10.1 (Deceased Participants) and Rule 10.2 (Retirement, ill-health, injury, disability,
redundancy and transfer out of the Group) then any Award held by him
shall lapse immediately on such cessation unless the Committee, acting fairly
and reasonably, decides that his Award shall Vest.  If the Committee permits an Award to Vest,
Vesting shall, subject to Rule 5.3 (Restrictions
on Vesting: regulatory and tax issues), Rule 11 (Takeovers and other corporate events) and
the remainder of this Rule, occur on the Normal Vesting Date (unless the
Committee decides that the Award shall Vest on the date of cessation).


 


For the purposes of this Rule, the Committee shall
determine the number of Shares or ADSs which Vest by:


 


(i)                                         applying the Performance Condition, any condition imposed on the
Vesting of Awards and any other factors considered by the Committee to be
relevant to reduce the number of Shares or ADSs which Vest; and


 


(ii)                                      reducing the number of Shares or ADSs pro rata to reflect any
unexpired part of the period of 3 years after the Grant Date (or such shorter
period set by the Committee under Rule 5.1(b)) as at the time that the
Participant ceases to be a director or employee unless the Committee, acting
fairly and reasonably, decides that the pro rata reduction in the number of
Shares or ADSs is inappropriate in any particular case when it shall increase
the number of Shares 


 


15

















 


or ADSs to such higher number as it decides
(provided that the number does not exceed the number of Shares or ADSs
determined under paragraph (i) above).


 


10.4                     Meaning of ceasing employment


 


A Participant
shall not be treated for the purposes of this Rule 10 as ceasing to be a
director or employee of a Group Member until such time as he is no longer a
director or employee of any Group Member. 
Any Participant who ceases to be such a director or employee before the
Vesting of his Award in circumstances where he retains a statutory right to
return to work then he shall be treated as not having ceased to be such a
director or employee until such time (if at all) as he ceases to have such a
right to return to work while not acting as an employee or director.


 


10.5                     Death following cessation of employment


 


If a
Participant dies following cessation of employment in circumstances where his
Award did not lapse but it has not Vested by the time of his death, it shall
Vest immediately on his death to the extent determined by reference to the time
of cessation in accordance with Rule 10.1 or 10.2.


 


11.                           TAKEOVERS AND OTHER CORPORATE EVENTS


 


11.1                     General offers


 


If any person
(or group of persons acting in concert):


 


(a)                                      obtains Control of the Company as a result of making a general offer
to acquire shares in the Company; or


 


(b)                                     having obtained Control of the Company makes such an offer and such
offer becomes unconditional in all respects


 


the Committee
shall within 7 days of becoming aware of that event notify every Participant of
it and, subject to Rule 11.4 (Internal reorganisations),
the following provisions shall apply:


 


(i)                                         subject to Rule 5.3 (Restrictions
on Vesting: regulatory and tax issues), all Awards shall Vest on the
date of such notification if they have not then Vested, provided that or to the
extent that the Performance Condition is satisfied on the occurrence of such an
event, and Rule 11.5 (Reduction in
number of Vested Shares) shall apply; and


 


(ii)                                      any Option may, subject to Rule 7.1 (Restrictions on exercise) be exercised within 1 month of the
date of such notification, but to the extent that an Option is not exercised
within that period, that Option shall (regardless of any other provision of the
Plan) lapse at the end of that period.


 


11.2                     Schemes of arrangement and winding up


 


In the event
that:


 


16

















 


(a)                                      a compromise or arrangement is sanctioned by the Court under section
899 of the Companies Act 2006 in connection with or for the purposes of a
change in Control of the Company; or


 


(b)                                     the Company passes a resolution for a voluntary winding up of the
Company; or


 


(c)                                      an order is made for the compulsory winding up of the Company


 


all Awards shall, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues),
and Rule 11.4 (Internal reorganisations)
Vest on the date of such event if they have not then Vested, provided that or
to the extent that the Performance Condition is satisfied on the occurrence of
such an event and Rule 11.5 (Reduction
in number of Vested Shares) shall apply.


 


If an event described in this Rule occurs then an
Option may, subject to Rule 7.1 (Restrictions
on exercise) and Rule 11.4 (Internal
reorganisations), be exercised within 1 month of 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.


 


11.3                     Demerger and similar events


 


If a demerger,
special dividend or other similar event (the “Relevant Event”) is proposed
which, in the opinion of the Committee, would affect the market price of Shares
to a material extent, then the Committee may, at its discretion, decide that
the following provisions will apply:


 


(a)                                      the Committee shall, as soon as reasonably practicable after
deciding to apply these provisions, notify a Participant that, subject to
earlier lapse under Rule 10 (Leavers),
his Award Vests provided that or to the extent that the Performance Condition
is satisfied on the occurrence of such a Relevant Event and, if relevant, his
Option may be exercised on such terms as the Committee may determine and during
such period preceding the Relevant Event or on the Relevant Event as the
Committee may determine;


 


(b)                                     if an Award Vests, or an Option is exercised, conditional upon the
Relevant Event and such event does not occur then the conditional Vesting or
exercise shall not be effective and the Award shall continue to subsist; and


 


(c)                                      if the Committee decides that an Award Vests under this Rule 11.3
then the date of that Vesting shall be the Early Vesting Date and the
provisions of Rule 11.5 (Reduction in
number of Vested Shares) shall apply.


 


11.4                     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 11.2(a) (Schemes of arrangement and winding up)) is
proposed which is expected to result in the Company becoming controlled by a
new company (the “New Company”); and


 


17

















 


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


 


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


 


then an Award
shall not Vest under Rule 11.1 or Rule 11.2 but shall be
automatically surrendered in consideration for the grant of a new award which
the Committee determines is equivalent to the Award it replaces except that it
will be over shares in the New Company or some other company.


 


The Rules will
apply to any new award granted under this Rule 11.4 as if references to
Shares or ADSs were references to shares over which the new award is granted
and references to the Company were references to the company whose shares are
subject to the new award.


 


11.5                     Corporate events: reduction in number of Vested Shares
or ADSs


 


If an
Award Vests under any of Rules 11.1 to 11.3 (Corporate Events), the Committee shall determine the number
of Vested Shares or ADSs of that Award by:


 


(a)                                      applying the Performance Condition and any other condition imposed
on the Vesting of Awards; and


 


(b)                                     if the Committee, acting fairly and reasonably, decides the number
of Shares or ADSs shall be reduced pro rota to reflect any unexpired part of
the period of 3 years after the Grant Date (or such shorter period set by the
Committee under Rule 5.1 (b)).


 


If an Award
Vests under any of Rules 11.1 to 11.3 when the holder of that Award has
ceased to be a director or employee of a Group Member, then the number of
Shares or ADSs which Vest shall be determined under Rule 10.1, 10.2 or
10.3 (whichever is relevant) in precedence over this Rule.


 


12.                           ADJUSTMENT OF AWARDS


 


12.1                     General rule


 


In the event
of:


 


(a)                                      any variation of the share capital of the Company; or


 


(b)                                     a demerger, special dividend or other similar event which affects
the market price of Shares or ADSs to a material extent


 


the Committee
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 or ADSs comprised in an Award;


 


18
















 


(b)                                     subject to Rule 12.3 (Adjustment
below nominal value), the Option Price; and


 


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


 


12.3                     Adjustment below nominal value


 


An adjustment
under Rule 12.2 (Method of adjustment)
may reduce the price at which Shares may be subscribed for on the exercise of
an Option to less than their nominal value, but only if and to the extent that
the Committee 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 and which are to be allotted after such exercise exceeds the price
at which the Shares may be subscribed for; and


 


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


 


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


 


13.                           ALTERATIONS


 


13.1                     General rule on alterations


 


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


 


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 Award has been or may be granted shall be made under Rule 13.1
(General rule on alternations)
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;


 


(d)                                     the basis for determining a Participant’s entitlement to, and the
terms of, Shares or ADSs or cash 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.


 


19

















 


13.3                     Exceptions to shareholder approval


 


Rule 13.2
(Shareholder approval) shall not
apply to:


 


(a)                                      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 or any Group
Member; or


 


(b)                                     any alteration relating to the Performance Condition made under Rule 13.5.


 


13.4                     Alterations to disadvantage of Participants


 


No alteration
to the material disadvantage of any Participant (other than to any Performance
Condition) shall be made under Rule 13.1 unless:


 


(a)                                      the Committee 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.


 


13.5                     Alterations to a Performance Condition


 


The Committee
may amend any Performance Condition without prior shareholder approval if:


 


(a)                                      any circumstance has arisen which causes the Committee reasonably to
consider that it would be appropriate to amend the Performance Condition;


 


(b)                                     the altered Performance Condition will, in the reasonable opinion of
the Committee, be not materially less difficult to satisfy than the unaltered
Performance Condition would have been but for the circumstance in question; and


 


(c)                                      the Committee shall act fairly and reasonably in making the
alteration.


 


14.                           MISCELLANEOUS


 


14.1                     Employment


 


The rights and
obligations of any individual under the terms of his office or employment with
any Group Member 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 him ceasing to have rights under an Award 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 grant of any
Award does not imply that any further Award will be granted nor that a
Participant has any right to receive any further Award.


 


20

















 


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 relating to the Plan, the decision of the
Committee shall be final and binding upon all persons.


 


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


 


14.3                     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 Vested
Shares are transferred to Participants (or their nominee) or, in the case of
Forfeitable Shares, released from their restrictions under the Plan,
Participants will be entitled to all rights attaching to such Shares by
reference to a record date on or after the date of such transfer or release of
such restrictions.


 


14.4                     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 Group Member, 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 Committee determines.


 


14.5                     Third parties


 


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


 


14.6                     Benefits not pensionable


 


Benefits
provided under the Plan shall not be pensionable.


 


14.7                     Data protection


 


Each Participant consents to the collection,
processing and transfer of his personal data for any purpose relating to the
operation of the Plan.  This includes:


 


(a)                                      providing personal data to any Group Member and any third party such
as trustees of any employee benefit trust, administrators of the Plan,
registrars, brokers and any of their respective agents;


 


21

















 


(b)                                     processing of personal data by any such Group Member or third party;


 


(c)                                      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


 


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


 


14.8                     Governing law


 


The
Plan and all Awards 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.


 


22

















 


SCHEDULE 1 : GRANT OF A FORFEITABLE SHARES
AWARD


 


On or
before the grant of a Forfeitable Shares Award, each employee selected for such
an Award must enter into an agreement with the Company under the terms of which
the employee agrees both in respect of the Shares or ADSs comprised in the
Award at the Grant Date and any additional Shares or ADSs that may become
subject to the Award under Rule 3.4 (Treatment
of Dividends):


 


(a)                            to have full beneficial ownership of the Shares or ADSs;


 


(b)                           unless the Committee decides otherwise to waive his right to all
cash and scrip dividends on his Forfeitable Shares until Vesting;


 


(c)                            that he will not assign, transfer, charge or otherwise dispose of
any Forfeitable Shares or any interest in such Forfeitable Shares until Vesting
save as otherwise required by the Rules;


 


(d)                           if required by the Committee, to enter into any elections under Part 7
of ITEPA and any election to transfer, or any agreement to pay, secondary Class 1
National Insurance contributions in relation to his Forfeitable Shares; and


 


(e)                            to sign any documentation to give effect to the terms of the
Forfeitable Shares Award.


 


The
date of such agreement shall be the Grant Date of the Forfeitable Shares Award.


 


On the
Grant Date (or as soon as practicable after the payment date of the relevant
dividend in the case of additional Shares or ADSs that are to become subject to
the Forfeitable Shares Award under Rule 3.4 (Treatment of Dividends)) either the legal ownership of the
Forfeitable Shares shall be held on the Participant’s behalf by a nominee as
chosen from time to time by the Committee or the Participant shall deposit the
share certificate (or any other document of title) relating to the Forfeitable
Shares together with a signed but otherwise uncompleted instrument of transfer
with such person as the Committee may from time to time decide.


 


23

















 


SCHEDULE 2 : CASH CONDITIONAL AWARDS


 


The Rules of
the Plan shall apply to a right (a “Cash
Conditional Award”) to receive a cash sum granted or to be granted
under this Schedule as if it was a Conditional Award, except as set out in this
Schedule.  Where there is any conflict
between the Rules and this Schedule, the terms of this Schedule shall
prevail.


 


1.                                 The Committee may grant or procure the grant of a Cash Conditional
Award.


 


2.                                 Each Cash Conditional Award shall relate to a given number of
notional Shares or ADSs.


 


3.                                 On the Vesting of the Cash Conditional Award, the holder of that
Award shall be entitled to a cash sum which shall be equal to the “Cash Value” of the notional Vested Shares
or ADSs, where the Cash Value of a notional Share or ADS is the market value of
a Share or ADS on the date of Vesting of the Cash Conditional Award.  For the purposes of this Schedule, the market
value of a Share or ADS on any day shall be determined in accordance with Rule 8.3
(Cash equivalent).


 


4.                                 The cash sum payable under paragraph 3 above shall be paid by the
employer of the Participant as soon as practicable after the Vesting of the
Cash Conditional Award, net of any deductions (on account of tax or similar
liabilities) as may be required by law.


 


5.                                 For the avoidance of doubt, a Cash Conditional Award shall not
confer any right on the holder of such an Award to receive Shares or ADSs or
any interest in Shares or ADSs.


 


24

















 


SCHEDULE 3 : PERFORMANCE CONDITION


 


The first Awards granted under
the Plan after it is approved by shareholders will be subject to the
Performance Condition set out below.  The
Committee may set a different Performance Condition for subsequent Awards.


 


All words and expressions defined in the Rules of
the Plan shall have the same meanings when used in this Performance Condition.  Where there is any conflict
between the Rules and this Performance Condition, the terms of this
Performance Condition shall prevail.


 


1.                                 Definitions


 


“Net Return Index”
means the index that reflects movements in share price over a   period and dividends reinvested on a net
basis (without any associated tax credit) in shares on the payment date;


 


“Peer Group Companies” means other companies
of relevant size and international spread to the Company chosen by the
Committee before the Grant Date listed in the Appendix to this Performance
Condition;


 


“TSR” means total shareholder return
calculated for the Company and each of the Peer Group Companies as calculated
by Bloomberg (or any other financial information provider as selected by the Committee)
over the Performance Period calculated as:


 


TSR2 minus TSR1


TSR1


 


TSR1 is its average share price over each
weekday (excluding Saturdays and Sundays) during the 12-month period ending on
the weekday immediately before the beginning of the Financial Year in which the
Grant Date falls; and


 


TSR2 is its average Net Return Index over
each weekday (excluding Saturdays and Sundays) during the 12-month period
ending on the final weekday of the Performance Period;


 


“Financial Year” means a financial year of
the Company within the meaning of section 390 of the Companies Act 2006;


 


“Performance Period” means the three
consecutive Financial Years of which the first is the Financial Year in which
the Grant Date falls.


 


2.                                 Underlying performance condition and vesting


 


Awards
will only Vest if the Committee is satisfied that there has been an underlying
improvement in the financial performance of the Company over the Performance
Period.  The Committee shall, in it
absolute discretion, determine the method by which the financial performance of
the Company shall be measured.


 


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3.                                 TSR Condition and vesting


 


(a)                                      The TSR over the Performance Period will be calculated for the
Company and all other Peer Group Companies. 
The Company and each Peer Group Company will be ranked in descending
order of performance.


 


(b)                                     Subject to paragraph 2 above, Awards shall only be capable of
Vesting if the Company’s TSR for the Performance Period results in a ranking
that is at or above the median compared with the TSR for the Performance Period
of the Peer Group Companies.  The percentage of an Award that is
capable of Vesting upon the satisfaction of the Performance Condition is as
follows:


 




	
  TSR Ranking 

  	
   

  	
  % of Award capable of
  Vesting

  
	
  1st or 2nd

  	
   

  	
  100%

  
	
  3rd

  	
   

  	
  95%

  
	
  4th

  	
   

  	
  75%

  
	
  5th

  	
   

  	
  65%

  
	
  6th

  	
   

  	
  55%

  
	
  7th

  	
   

  	
  50%

  
	
  8th

  	
   

  	
  40%

  
	
  9th

  	
   

  	
  25%

  
	
  10th or below

  	
   

  	
  0%

  






 


4.                                 Adjustments


 


The
Committee may make such adjustments to the method of calculating TSR, the Peer
Group Companies or any other feature of the terms of this Schedule as it
considers appropriate to ensure that the TSR Condition in paragraph 3 above
achieves its original purpose.


 


5.                                 Leavers and Deceased
Participants


 


If the
Participant ceases to be a director or employee of a Group Member as described
in Rules 10.1 to 10.3 in circumstances where his Award Vests before the
end of the Performance Period:


 


(a)                                      the Performance Period shall end on the last weekday of the month
before the month of cessation; and


 


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(b)                                     TSR2 shall be the
average Net Return Index over each weekday
(excluding Saturdays and Sundays):


 


(i)                        for the period beginning with the first weekday of the Financial
Year and ending on the last weekday of the month before the month of cessation
if the date of cessation occurs during the first Financial Year of the
Performance Period;


 


(ii)                     the period of 12 months ending on the last weekday of the month
before the month of cessation if the date of cessation occurs after the end of
the first Financial Year of the Performance Period.


 


6.                                 Takeovers and other corporate events


 


If an
event as described in Rule 11 occurs:


 


(a)                                      the Performance Period shall end on the date of that event; and


 


(b)                                     TSR2 shall be the Net Return
Index on the date of that event provided that the Net Return Index for the
Company shall be based on the price paid for a Share in the Company under the
relevant event and, if the offer is a share offer or there are a number of
alternatives under the offer, the value of the shares or the highest value of
those alternatives at such date as the Committee may determine.


 


7.                                 Peer Group Company
events


 


Subject
to the Committee’s discretion under paragraph 4 above, the Committee shall take
the following steps in respect of the events described below:


 


(a)                                      in the event of a demerger involving a Peer Group Company:


 


(i)                        TSR should be measured, following the demerger, for the entity (the “Surviving Entity”) which retains the London
Stock Exchange (or overseas equivalent) serial number which applied to the
original Peer Group Company during the Performance Period; and


 


(ii)                     TSR for the original company up to the date of the demerger should
be recalculated so that it reflects TSR for the proportion of the original Peer
Group Company equal to the value of the Surviving Entity at the time of the
demerger;


 


(b)                                     in the event of an acquisition of a Peer Group Company by another
Peer Group Company, TSR should be measured for the acquiring company following
the acquisition and the Peer Group Company that has been acquired shall be
removed from the Peer Group Companies and the Vesting schedule set out in
paragraph 3 above shall be adjusted accordingly;


 


(c)                                      if any Peer Group Company ceases to
exist, its shares cease to be listed in the Official List of the London Stock
Exchange (or overseas equivalent), or otherwise is so changed as to make it, in
the opinion of the Committee, 


unsuitable as a Peer
Group Company, the Committee may, in its absolute discretion, exclude that
company (in which case, the Vesting schedule set out in paragraph 3 above shall
be adjusted accordingly) or include a substitute for that company.


 


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8.                                 Disputes


 


The calculations of the Committee shall not be open to
question and, in the absence of fraud, the Committee shall be under no
liability to any person by reason of those calculations or of anything done or
omitted by them for the purposes of or in connection with those calculations.


 


APPENDIX


 


The initial Peer Group Companies of the Company will
be:


 


Anheuser-Busch, Brown-Forman, Cadbury,
Carlsberg, Coca-Cola, Colgate Palmolive, Groupe Danone, Heineken, Heinz, InBev,
Nestle, PepsiCo, Pernod Ricard, Procter & Gamble, SABMiller, Unilever.


 


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