Exhibit
4.2


 


RULES


 


OF


 


THE
FEDEX CORPORATION INCENTIVE STOCK PLAN


 


2005
INLAND REVENUE APPROVED SUB-PLAN FOR THE


 


UNITED
KINGDOM


 


 


Adopted
by the Company on: December 4, 2005


 


Approved
by the Inland Revenue on: December 7, 2005


 


Inland
Revenue reference no: X23020/WPR


 





















 


SCHEDULE


 


RULES OF THE FEDEX CORPORATION INCENTIVE
STOCK PLAN


2005 INLAND REVENUE APPROVED SUB-PLAN FOR THE


UNITED KINGDOM


 


1              General


 


This schedule
to the FedEx Corporation Incentive Stock Plan, as amended (“the Plan”), sets
out the rules of the FedEx Corporation Incentive Stock Plan 2005 Inland Revenue
Approved Sub-Plan for the United Kingdom (“the Sub-Plan”).


 


2              Establishment of Sub-Plan


 


FedEx
Corporation (“the Company”) has established the Sub-Plan under Section 18 of
the Plan (Foreign Jurisdictions), which authorises the Company to establish
sub-plans to the Plan.


 


3              Purpose
of Sub-Plan


 


The purpose of
the Sub-Plan is to aid the Company and its subsidiaries in securing and
retaining key employees and directors of outstanding ability in the United
Kingdom and to motivate them to exert their best efforts to achieve the
long-term goals of the Company and its subsidiaries. The Company believes that
the ownership or increased ownership of Shares by employees and directors will
further align their interests with those of the Company’s other shareholders
and will promote the long-term success of the Company and its subsidiaries.


 


In particular,
the Sub-Plan seeks to enable the grant to, and subsequent exercise by,
employees and directors in the United Kingdom, on a tax favoured basis, of rights
to acquire Shares under the Plan.


 


4              Inland Revenue approval of Sub-Plan


 


The
Sub-Plan is intended to be approved by the Inland Revenue under Schedule 4.


 


5              Rules of Sub-Plan


 


The
rules of the Plan, in their present form and as amended from time to time,
shall, with the modifications set out in this schedule, form the rules of the
Sub-Plan. In the event of any conflict between the rules of the Plan and this
schedule, the schedule shall prevail.


 


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6              Relationship of Sub-Plan to Plan


 


The Sub-Plan
shall form part of the Plan and not a separate and independent plan.


 


7              Interpretation


 


In the
Sub-Plan, unless the context otherwise requires, the following words and
expressions have the following meanings:


 


	
  Approval Date

  	
   

  	
  the later of
  the date on which the Inland Revenue notifies the Company or its advisers
  that the Sub-Plan is in a format capable of approval under Schedule 4 and the
  date on which the Sub-Plan is adopted by the Company provided that in either
  case no amendment to a rule of the Sub-Plan is made after the relevant date
  and prior to the date on which the Sub-Plan is approved by the Inland Revenue
  under Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Associated Company

  	
   

  	
  the meaning
  given to that expression by paragraph 35 of Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Close Company

  	
   

  	
  the meaning
  given to that expression by section 414(1) of ICTA 1988, and paragraph 9(4)
  of Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Consortium

  	
   

  	
  the meaning
  given to that word by paragraph 36(2) of Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Control

  	
   

  	
  the meaning
  given to that word by section 840 of ICTA 1988 and “Controlled” shall be
  construed accordingly;

  
	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

  	
  the date on
  which an Option is granted to an Eligible Employee in accordance with Section
  7(b) of the Plan;

  
	
   

  	
   

  	
   

  
	
  Eligible Employee

  	
   

  	
  an
  individual who falls within Section 7(a) of the Plan (Eligible Recipients)
  and who is:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)   an employee (other than a
  director) of the Company or a company participating in the Sub-Plan; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)   a director of the Company or
  a company participating in the Sub-Plan who is contracted to work at least 25
  hours per week for the Company and its subsidiaries or any of them (exclusive
  of meal breaks)

  



 


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  and who, in
  either case, is not eligible solely by reason that he is a non-executive
  director of a company participating in the Sub-Plan and does not have at the
  Date of Grant of an Option, and has not had during the preceding twelve
  months, a Material Interest in a Close Company which is the Company or a
  company which has Control of the Company or a member of a Consortium which
  owns the Company;

  
	
   

  	
   

  	
   

  
	
  ICTA 1988

  	
   

  	
  the Income
  and Corporation Taxes Act 1988;

  
	
   

  	
   

  	
   

  
	
  Inland Revenue

  	
   

  	
  the UK Board
  of Inland Revenue;

  
	
   

  	
   

  	
   

  
	
  Jointly Owned Company

  	
   

  	
  a company
  eligible to participate in the Sub-Plan under the provisions of paragraph 34
  of Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Key Feature

  	
   

  	
  a provision
  of the Sub-Plan which is necessary in order to meet the requirements of
  Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Market Value

  	
   

  	
  notwithstanding
  Section 9(c)(1) of the Plan (Option Price),

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)   in the case of an Option
  granted under the Sub-Plan:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)    if at the relevant time the
  Shares are listed on the New York Stock Exchange, the average of the high and
  low sales prices of the Shares as reported on the New York Stock Exchange
  composite tape on the Date of Grant;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   if paragraph (i) above does
  not apply, the market value of a Share as determined in accordance with Part
  VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with
  Inland Revenue Shares Valuation;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)   in the case of an option
  granted under any other share option scheme, the market value of an ordinary
  share in the capital of the Company determined under the rules of

  



 


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  such scheme for the purpose of the grant of the option;

  
	
   

  	
   

  	
   

  
	
  Material Interest

  	
   

  	
  the meaning
  given to that expression by paragraphs 9 to 14 of Schedule 4;

  
	
   

  	
   

  	
   

  
	
  Option

  	
   

  	
  a subsisting
  right to acquire Shares granted under the Sub-Plan;

  
	
   

  	
   

  	
   

  
	
  Option Holder

  	
   

  	
  an
  individual who holds an Option or, where the context permits, his legal
  personal representatives;

  
	
   

  	
   

  	
   

  
	
  Ordinary Share Capital

  	
   

  	
  the meaning
  given to that expression by Section 832(1) of ICTA 1988;

  
	
   

  	
   

  	
   

  
	
  Plan Administrator

  	
   

  	
  the “Committee”,
  as that term is defined in Section 4(a) of the Plan (Administration of the
  Plan);

  
	
   

  	
   

  	
   

  
	
  Relevant Employment

  	
   

  	
  employment
  with any of the Company, and
  any company Controlled by the
  Company and any Jointly Owned Company;

  
	
   

  	
   

  	
   

  
	
  Schedule 4

  	
   

  	
  Schedule 4
  to the Income Tax (Earnings and Pensions) Act 2003;

  
	
   

  	
   

  	
   

  
	
  Shares

  	
   

  	
  shares of
  “Common Stock”, as that term is defined in Section 2 of the Plan
  (Definitions);

  
	
   

  	
   

  	
   

  
	
  Share Certificate

  	
   

  	
  the
  certificate issued in respect of the Shares acquired on the exercise of an Option
  under rule 23 (Issue or transfer of Shares on Exercise of Options); and

  
	
   

  	
   

  	
   

  
	
  Share Option Agreement

  	
   

  	
  a written
  agreement between the Company and an Eligible Employee setting forth the
  terms, conditions, limitations and other provisions applicable to the Option.

  



 


In this
schedule, unless the context otherwise requires:


 


7.1           words and expressions not
defined above have the same meanings as are given to them in the Plan;


 


7.2           the rule headings are inserted
for ease of reference only and do not affect their interpretation;


 


7.3           a reference to a rule is a
reference to a rule in this schedule, and a reference to a section is a
reference to a section in the Plan;


 


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7.4           the singular includes the
plural and vice-versa and the masculine includes the feminine;


 


7.5           a reference to a statutory
provision is a reference to a United Kingdom statutory provision and includes
any statutory modification, amendment or re-enactment thereof; and


 


7.6           the Interpretation Act 1978
applies to the Sub-Plan in the same way as it applies to an enactment.


 


8              Companies
participating in Sub-Plan


 


The
companies participating in the Sub-Plan shall be the Company and any company
Controlled by the Company and any Jointly Owned Company which has been
nominated by the Company to participate in the Sub-Plan.


 


9              Shares
used in Sub-Plan


 


The
Shares shall form part of the Ordinary Share Capital of the Company and shall
at all times comply with the requirements of paragraphs 16 to 20 of Schedule 4.


 


10           Grant of Options


 


An Option
shall be granted under and subject to the rules of the Plan as modified by this
schedule.


 


11           Identification
of Options


 


A Share
Option Agreement issued in respect of an Option shall expressly state that it
is issued in respect of an Option. An option which is not so identified shall
not constitute an Option.


 


12           Contents of Share Option
Agreement


 


A Share Option
Agreement issued in respect of an Option shall state:


 


12.1         that it
is issued in respect of an Option;


 


12.2         the Date
of Grant of the Option;


 


12.3         the
number of Shares subject to the Option;


 


12.4         the
exercise price per Share under the Option;


 


12.5         any
condition imposed on the exercise of the Option;


 


12.6         the
date(s) on which the Option will ordinarily become exercisable, whether in
whole or in part; and


 


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12.7         the
period during which an Option shall remain exercisable (if at all) following
termination of employment, if different than as set forth in the Plan.


 


13           Earliest
date for grant of Options


 


An
Option may not be granted earlier than the Approval Date.


 


14           Persons
to whom Options may be granted


 


An
Option may not be granted to an individual who is not an Eligible Employee at
the Date of Grant.


 


15           Options non transferable


 


An
Option shall be personal to the Eligible Employee to whom it is granted and
shall not be capable of being transferred, charged or otherwise alienated
(other than by will or by the laws of descent and distribution).


 


16           Limit on number of Shares placed under Option under
Sub-Plan


 


For the
avoidance of doubt, Shares placed under Option under the Sub-Plan shall be
taken into account for the purpose of Section 6 of the Plan (Stock Subject of
the Plan).


 


17           Inland
Revenue limit (£30,000)


 


An Option
may not be granted to an Eligible Employee if the result of granting the Option
would be that the aggregate Market Value of the Shares subject to all
outstanding options granted to him under the Sub-Plan or any other share option
scheme established by the Company or an Associated Company and approved by the
Inland Revenue under Schedule 4 to ITEPA 2003 would exceed sterling £30,000 or
such other limit as may from time to time be specified in paragraph 6 of
Schedule 4 to ITEPA 2003.  For this
purpose, the United Kingdom sterling equivalent of the Market Value of a Share
on any day shall be determined by taking the spot sterling/US dollar exchange
rate for that day as shown in the Financial Times.


 


18           Exercise
price under Options


 


Notwithstanding
Section 9(c)(1) of the Plan (Option Price), the amount payable per Share on the
exercise of an Option shall not be less than the Market Value of a Share on the
Date of Grant and shall be stated on the Date of Grant.


 


19           Exercise of Options


 


Subject
to rule 20, each Option shall be exercisable for a period commencing no earlier
than the third anniversary of the Date of Grant and ending on the tenth
anniversary of the Date of Grant.


 


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20           Early Exercise or Lapse of Options


 


Options maybe
exercised or lapse in accordance with Section 9(c)(4) of the Plan (Rights After
Termination of Employment). Notwithstanding Section 9(c)(4) of the Plan, the Plan
Administrator shall determine the period during which the Option shall remain
exercisable following such termination and this shall be stated in the Share
Option Agreement if different from that stated in Section 9(c)(4) of the Plan, and
it may not thereafter be altered.


 


21           Material
Interest


 


An
Option may not be exercised if the Option Holder then has, or has had within
the preceding twelve months, a Material Interest in a Close Company which is
the Company or which is a company which has Control of the Company or which is
a member of a Consortium which owns the Company.


 


22           Manner of
payment for Shares on exercise of Options


 


The
amount due on the exercise of an Option, including the exercise price and any
amounts due in accordance with rule 27 (Tax and social security withholding),
shall be paid in cash or by cheque or banker’s draft and may be paid out of
funds provided to the Option Holder on loan by a bank, broker or other person.


 


The
amount may be paid via a cashless exercise procedure, provided the Inland
Revenue has agreed to this in advance. The date of exercise of an Option shall
be the date on which the stock plan administrator processes the exercise notice.


 


23           Issue or
transfer of Shares on exercise of Options


 


The
Company shall, as soon as reasonably practicable and in any event not later
than thirty days after the date of exercise of an Option, issue or transfer to
the Option Holder, or procure the issue or transfer to the Option Holder of,
the number of Shares specified in the notice of exercise and shall deliver to
the Option Holder, or procure the delivery to the Option Holder of, a Share
Certificate (or equivalent evidence) in respect of such Shares, subject only to
compliance by the Option Holder with the rules of the Sub-Plan and in
particular compliance with rule 27 (Tax and social security withholding) and to
any delay necessary to complete or obtain:


 


23.1         the
listing of the Shares on any stock exchange on which Shares are then listed; or


 


23.2         such
registration or other qualification of the Shares under any applicable law,
rule or regulation as the Company determines is necessary or desirable.


 


24           Rights
attaching to Shares issued on exercise of Options


 


All
Shares issued in respect of the exercise of an Option shall, as to any voting,
dividend, transfer and other rights, including those arising on a


 


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liquidation
of the Company, rank equally in all respects and as one class with the shares
of the same class in issue at the date of such issue save as regards any rights
attaching to such shares by reference to a record date prior to the date of
such issue.


 


25           Amendment
of Sub-Plan


 


Notwithstanding
Section 16 of the Plan (Amendments), no amendment to a Key Feature of the
Sub-Plan, whether taking the form of an amendment of the Plan or this schedule,
shall take effect until it has been approved by the Inland Revenue.


 


26           Adjustment
of Options


 


Notwithstanding
Section 14 of the Plan (Changes in Capitalization), any adjustment of an
Option:


 


26.1         shall not be made unless the
adjustment is permitted pursuant to paragraph 22(3) of Schedule 4; and


 


26.2         shall not take effect until it
has been approved by the Inland Revenue.


 


27           Tax and
social security withholding


 


27.1         Where, in relation to an
Option granted under the Sub-Plan the
Company or, if different, the Option Holder’s employing company, is
liable, or is in accordance with current practice believed to be liable, to
account to any revenue or other authority for any sum in respect of any tax or
social security liability of the Option Holder, the Option Holder shall be required
to reimburse the Company or the Option Holder’s employing company an amount
sufficient to discharge the liability. Alternatively, the Option Holder may, by
agreement with the Company,
enter into some other arrangement to ensure that such amount is available to it
(whether by authorising the sale of some or all of the Shares subject to his
Option and the payment to the Company
or such employing company of the requisite amount out of the proceeds of sale
or otherwise).


 


27.2         The Company may require an Option Holder
to execute a copy of the Share Option Agreement or some other document (which in
either case may be in electronic form) in order to bind himself contractually
to any such arrangement as is referred to in rule 27.1 and return the executed document
to the Company by a specified
date.


 


28           Exercise
of discretion by Plan Administrator


 


In
exercising any discretion which it may have under the Sub-Plan, the Plan
Administrator shall act fairly and reasonably.


 


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29           Relationship of Sub-Plan to contract
of employment


 


29.1         the Sub-Plan shall not form
part of any contract of employment between the Company or any company Controlled by the Company or any Jointly Owned Company and an Eligible
Employee;


 


29.2         unless so expressly provided
in his contract of employment, an Eligible Employee has no right to be granted
an Option;


 


29.3         the benefit to an Eligible
Employee of participation in the Sub-Plan (including, in particular but not by
way of limitation, any Options held by him) shall not form any part of his
remuneration or count as his remuneration for any purpose and shall not be
pensionable; and


 


29.4         if an
Eligible Employee ceases to be in Relevant Employment, he shall not be entitled
to compensation for the loss of any right or benefit under the Sub-Plan
(including in particular but not by way of limitation, any Options held by him
which lapse by reason of his ceasing to be in Relevant Employment) whether by
way of damages for unfair dismissal, wrongful dismissal, breach of contract or
otherwise.


 


30           Disapplication
of certain provisions of Plan


 


The
provisions of the Plan dealing with:


 


the
amendment, modification, cancellation or suspension of awards in Section
4(b)(1)(iv);


 


restricted
stock awards pursuant to Section 8 of the Plan;


 


incentive
stock options pursuant to Section 9(e) of the Plan;


 


tax
withholding pursuant to Section 12 of the Plan;


 


restricted
shares pursuant to Section 15(b)(1) of the Plan; and


 


cancellation
of outstanding options pursuant to Section 17 of the Plan;


 


shall
not form part of, and no such rights may be granted under, the Sub-Plan.


 


The
words “unless otherwise determined by the Committee” in Sections 9(c)(4)(i),
9(c)(4)(ii), 9(c)(4)(iii), 9(c)(4)(iv) and 9(f) shall not apply in this
Sub-Plan.


 


The
words dealing with the amendment, modification, cancellation or suspension of
awards in Section 16 shall not apply in this Sub-Plan.


 


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31           Term of
the Plan


 


The
Sub-Plan shall be effective from the Approval Date. Unless the Plan is earlier
terminated, no Option shall be granted under the Sub-Plan after 31 May 2013,
but outstanding Options may extend beyond such date.


 


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