Document:

Exhibit 4.3

 

	
  

  	
   

  	
  LIMITED LIABILITY
  PARTNERSHIP

  

 

 

 

THE DIAGEO 2001 SHARE INCENTIVE PLAN

 

 

Ref:  RTT/G1535/00417

Inland Revenue:  A1347

 

Adopted:  5 September 2001

Approved:  3 October 2001

Amended:  17 April 2002

Amended: 20
October 2004

Amended:  7 February 2007

Amended by the shareholders of the Company: 14 October 2010

 

 

CONTENTS

 

	
  Rule

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Purpose Of The Plan

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Eligibility Of Individuals

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Participation On Same Terms

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Limits

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Alterations And Additions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Miscellaneous

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Free Shares

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Partnership Shares

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Matching Shares

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Dividend Shares

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Company Reconstructions

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Rights Issues

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Appendix
  A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Free
  Share Agreement

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Appendix B

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Partnership
  Share Agreement

  	
   

  	
  24

  

 

 

THE DIAGEO 2001 SHARE
INCENTIVE PLAN

 

1.                                 DEFINITIONS

 

1.1                           In this Plan, unless the context otherwise requires:

 

“Accumulation Period”
means in relation to Partnership Shares, a period specified by the Board not
exceeding twelve months during which the Trustees accumulate a Qualifying
Employee’s Partnership Share Money before purchasing Partnership Shares or
repaying it to the employee;

 

“Acquisition Date”
means:

 

(a)                                      in relation to Partnership Shares, where there is no Accumulation
Period, the date set by the Trustees in relation to the Award, being a date
within 30 days after the last date on which the Partnership Share Money to be
applied in purchasing the Partnership Shares was deducted;

 

(b)                                     in relation to Partnership Shares, where there is an Accumulation
Period, the date set by the Trustees in relation to the Award, being a date
within 30 days after the end of the Accumulation Period which applies in
relation to the Award; and

 

(c)                                      in relation to Dividend Shares, the date set by the Trustees in relation
to the acquisition of such Shares, being a date within 30 days after the
dividend is received by them;

 

“Associated Company”
has the same meaning as in section 416 of the Taxes Act 1988;

 

“Award Date”
means in relation to Free Shares or Matching Shares, the date on which such
Shares are awarded;

 

“Award” means:

 

(a)                                      in relation to Free Shares and Matching Shares, the appropriation of
Free Shares and Matching Shares in accordance with the Plan; and

 

(b)                                     in relation to Partnership Shares, the purchase of Partnership Shares on
behalf of Qualifying Employees in accordance with the Plan.

 

“the Board”
means the board of directors of the Company or a committee appointed by them;

 

“Capital Receipt”
has the same meaning as in paragraph 79 of the Schedule;

 

“Close Company”
has the same meaning as in section 414 of the Taxes Act 1988;

 

“the Company”
means Diageo plc;

 

“Control” has
the same meaning as in Section 840 of the Taxes Act 1988;

 

“Dealing Day”
means a day on which the Stock Exchange is open for business;

 

1

 

“the Deed” means
the trust instrument intended to be made following the adoption of the Plan by
the Company in connection with the Plan;

 

“Dividend Shares”
means Shares purchased on behalf of a Participant from reinvestment of
dividends under Part D of the Plan and which are subject to the Plan;

 

“Forfeiture Period”
means the period of three years beginning with the Award Date;

 

“Free Share Agreement”
means an agreement in the terms set out in Appendix A;

 

“Free Shares”
means Shares awarded under Part A of the Plan which are subject to the
Plan;

 

“Group Plan”
means the Plan as established by the Company and extending to its Subsidiaries
which are Participating Companies;

 

“Holding Period”
means:

 

(a)                                      in relation to Free Shares, the period specified by the Board as
mentioned in Rule 8.13;

 

(b)                                     in relation to Matching Shares, the period specified by the Board as
mentioned in Rule 10.5; and

 

(c)                                      in relation to Dividend Shares, the period of three years from the
Acquisition Date;

 

“Initial Market Value”
means the Market Value of a Share on an Award Date and, where the Share is
subject to a restriction or risk of forfeiture, the Market Value shall be
determined without reference to that restriction or risk;

 

“Market Value”
means on any day:

 

(a)                                      if the Shares have been admitted to the Daily Official List of the Stock
Exchange, the average of the middle market quotations of a Share as derived
from the Daily Official List of the Stock Exchange for the three immediately
preceding Dealing Days;

 

(b)                                     if the Shares have not been admitted to the Daily Official List of the
Stock Exchange, the Market Value of a Share determined in accordance with the
provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and
agreed for the purposes of the Plan with the Inland Revenue Shares Valuation
Division on or before that day; or

 

(c)                                      in relation to Shares purchased with Partnership Share Money other than
by way of subscription, the actual purchase cost of the Shares provided that
all the Shares are acquired on the same date as they are awarded as Partnership
Shares;

 

(d)                                     In relation to Matching Shares which relate to Partnership Shares which
have been purchased in accordance with paragraph (c) above, the Market
Value of

 

2

 

each Matching Share shall be the same as the Market Value of each
Partnership Share acquired on that date(1);

 

“Matching Shares”
means Shares awarded under Part C of the Plan and which are subject to the
Plan;

 

“Material Interest”
has the same meaning as in paragraph 15 of the Schedule;

 

“NICs” means
National Insurance contributions;

 

“Participant”
means an individual who has received under the Plan an Award of Free Shares,
Matching Shares or Partnership Shares, or on whose behalf Dividend Shares have
been acquired;

 

“Participating Company”
means the Company and such of its Subsidiaries as have executed deeds of
adherence to the Plan under clause 14 of the Deed;

 

“Partnership Shares”
means Shares awarded under Part B of the Plan and which are subject to the
Plan;

 

“Partnership Share
Agreement” means an agreement in the terms set out in Appendix B;

 

“Partnership Share Money”
means money deducted from a Qualifying Employee’s Salary pursuant to a
Partnership Share Agreement and held by the Trustees to purchase Partnership
Shares or to be returned to such a person;

 

“PAYE” means the
requirements of Pay As You Earn as prescribed by sections 203 to 203L of the
Taxes Act 1988 or regulations under section 203 of that Act;

 

“Performance Allowances”
means the criteria for an Award of Free Shares where:

 

(a)                                      whether Shares are awarded; or

 

(b)                                     the number or value of Shares awarded

 

is conditional on
performance targets being met;

 

“the Plan” means
the Diageo 2001 Share Incentive Plan;

 

“Plan Shares”
means:

 

(a)                                      Free Shares, Matching Shares or Partnership Shares awarded to
Participants;

 

(b)                                     Dividend Shares acquired on behalf of Participants; and

 

(c)                                      shares in relation to which paragraph 115(5) (company
reconstructions: new shares) of the Schedule applies, in each case
that remain subject to the Plan;

 

“Plan Termination Notice”
means a notice issued under paragraph 120 of the Schedule;

 

(1)  Paragraph (d) of definition of
Market Value added with effect from 17 April 2002.

 

3

 

“Profit Sharing Scheme”
means a profit-sharing scheme approved by the Board of Inland Revenue under
Schedule 9 of the Taxes Act 1988;

 

“Qualifying Company”
means:

 

(a)                                      a company that is a Participating Company at the end of the Qualifying
Period; or

 

(b)                                     a company that when the individual was employed by it was a
Participating Company; or

 

(c)                                      a company that when the individual was employed by it was an Associated
Company of

 

(i)                        a
company qualifying under paragraph (a) or (b); or

 

(ii)                     another
company qualifying under paragraph 14 of the Schedule;

 

“Qualifying Corporate Bond”
has the same meaning as in section 117 of the Taxation of Chargeable Gains Act
1992;

 

“Qualifying Employee”
means an employee who must be invited to participate in an award in accordance
with Rule 3.6 and any employee who the Company has invited in accordance with
Rule 3.7;

 

“Qualifying Period”
means:

 

(a)                                        in the case of Free Shares, 18 months before the Award
is made or such other period not exceeding that period as the Board may
determine in relation to the Award;

 

(b)                                       in the case of Partnership Shares and Matching Shares
where there is an Accumulation Period, 6 months before the start of the
Accumulation Period or such other period not exceeding that period as the Board
may determine in relation to the Award; and

 

(c)                                        in the case of Partnership Shares and Matching Shares
where there is no Accumulation Period, 18 months before the deduction of
Partnership Share Money relating to the Award or such other period not
exceeding that period as the Board may determine in relation to the Award;

 

“Redundancy” has
the same meaning as in the Employment Rights Act 1996;

 

“Relevant Employment”
means employment by the Company or any Associated Company;

 

“Retirement Age”
means age 50;

 

“Salary” has the
same meaning as in paragraph 48 of the Schedule;

 

“the Schedule”
means Schedule 8 to the Finance Act 2000;

 

4

 

“Shares” means
ordinary shares in the capital of the Company which comply with the conditions
set out in paragraph 59 of the Schedule;

 

“the Stock Exchange”
means the London Stock Exchange plc;

 

“Subsidiary”
means a body corporate which is a subsidiary of the Company (within the meaning
of section 736 of the Companies Act 1985) and of which the Company has Control;

 

“Tax Year” means
a year beginning on 6 April and ending on the following 5 April;

 

“Taxes Act”
means the Income and Corporation Taxes Act 1988;

 

“the Trustees”
means the trustees or trustee for the time being of the Deed;

 

“the Trust Fund”
means all assets transferred to the Trustees to be held on the terms of the Deed
and the assets from time to time representing such assets, including any
accumulations of income;

 

“the Trust Period”
means the period of 80 years beginning with the date of the Deed.

 

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

 

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

 

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

 

2.                                 PURPOSE
OF THE PLAN

 

The purpose of the Plan is to enable employees
of Participating Companies to acquire Shares in the Company which give them a
continuing stake in the Company.

 

3.                                 ELIGIBILITY
OF INDIVIDUALS

 

3.1                           Subject to Rule 3.4, individuals may participate in an Award only
if:

 

3.1.1                            they are employees of a Participating Company;

 

3.1.2                            they have been employees of a Qualifying Company at
all times during any Qualifying Period;

 

3.1.3                            they are eligible on the relevant date(s) as set
out in Rule 3.5; and

 

3.1.4                            they do not fail to be eligible under either or both
of Rules 3.2 or 3.3.

 

3.2                           Individuals are not eligible to participate in an Award of Shares if
they have, or within the preceding twelve months have had, a Material Interest
in:

 

3.2.1                            a Close Company whose Shares may be appropriated or
acquired under the Plan; or

 

5

 

3.2.2         a company which has Control of such a company or is a member of a
consortium which owns such a company.

 

3.3                           Individuals are not eligible to participate in an Award of Free Shares
in any Tax Year if in that Tax Year:

 

3.3.1         they have been awarded shares under a Profit-Sharing Scheme established
by the Company or a Connected Company, or are to be awarded such shares at the
same time; or

 

3.3.2         they have participated in (or are at the same time to participate in)
another plan established by the Company or a Connected Company and approved
under the Schedule, or if they would have participated in such a plan but for
their failure to meet the relevant Performance Allowances.

 

3.4         Individuals are not eligible to participate in an
Award of Partnership Shares or Matching Shares in any Tax Year if in that Tax
Year they have participated in (or are at the same time to participate in)
another plan established by the Company or a Connected Company and approved
under the Schedule, or if they would have participated in such a plan but for
their failure to meet the relevant Performance Allowances.

 

3.5                           The relevant dates mentioned in Rule 3.1.3 are:

 

3.5.1         in the case of Free Shares, the date on which the Award of such shares
is made;

 

3.5.2         in the case of Partnership Shares or Matching Shares where there is no
Accumulation Period, the date on which the Partnership Share Money relating to
the Award is deducted; and

 

3.5.3         in the case of Partnership Shares or Matching Shares where there is an
Accumulation Period, the date on which the Partnership Share Money relating to
the Award is first deducted.

 

Employees who must be
invited to participate in Awards

 

3.6                           Individuals shall be invited to participate in the Plan if they meet the
requirements in Rule 3.1 and are chargeable to tax under Case I of
Schedule E in respect of their employment.

 

Employees who may be
invited to participate in Awards

 

3.7                           The Board may also invite any employee who meets the requirements in Rule 3.1
to participate in the Plan.

 

6

 

4.                                 PARTICIPATION
ON SAME TERMS

 

4.1         Subject to Rule 8.11, every Qualifying Employee
who is invited to participate in this Plan shall be invited to participate on
the same terms and those who do participate shall do so on the same terms.

 

4.2         The Company may make an Award of Free Shares to
Qualifying Employees by reference to their remuneration, length of service or
hours worked.

 

4.3         The Company may make an Award of Free Shares to
Qualifying Employees by reference to their performance as set out in Rule 8.5.

 

5.                                 LIMITS

 

5.1         No Shares shall be issued to the Trustees under the
Plan in any calendar year which would, at the time they are issued, cause the
aggregate of:

 

5.1.1                            the number of Shares issued under the Plan in the
period of 10 calendar years ending with that year; and

 

5.1.2         the number of Shares which shall have been or may be issued in pursuance
of options granted in that period, or shall have been granted in that period
otherwise than in pursuance of options, under any employees’ share scheme
adopted by the Company,

 

to exceed such number as represents 10% of the
ordinary share capital of the Company in issue at that time.

 

5.2         Any treasury shares held by the Company which are
transferred to the Trustees under the Plan shall be treated as issued for the
purposes of the limit in Rule 5.1 above.

 

5.3                           No Awards shall be made after 13 October 2020.

 

6.                                 ALTERATIONS
AND ADDITIONS

 

6.1                           Subject to Rule 6.2, the Board may, with the Trustees’ written
consent, at any time alter this Plan in any respect provided that, if such an
alteration is made at a time when this Plan is approved by the Inland Revenue
under the Schedule, any alteration to a “key feature” (as defined in paragraph
118(3)(a) of the Schedule) shall not have effect unless and until the
written approval of the Inland Revenue has been obtained in accordance with
paragraph 4 of the Schedule.

 

6.2                           No alteration to the advantage of the persons who may participate in the
Plan shall be made under Rule 6.1 to the provisions concerning
eligibility, the individual limits on participation, the overall limits on the
issue of shares under the Plan, the basis of determining how many shares
employees receive and the adjustments that may be made following a rights issue
or any other variation of capital without the prior approval by ordinary
resolution of the members of the Company in general meeting.

 

6.3                           Rule 6.2 shall not apply to any minor alteration to benefit the
administration of the Plan, to take account of a change in legislation or to
obtain or maintain favourable tax,

 

7

 

exchange control or regulatory treatment for Participants, the Company,
the trustees or any subsidiary.

 

7.                                 MISCELLANEOUS

 

7.1         The rights and obligations of any individual under the
terms of his employment with the Company or a Subsidiary shall not be affected
by his participation in this Plan or any right which he may have to participate
in it, and an individual who participates in it shall waive all and any rights
to compensation or damages in consequence of the termination of his employment
for any reason whatsoever insofar as those rights arise or may arise from his
ceasing to have rights under this Plan as a result of such termination.

 

7.2         Except where required by law, no money or money’s
worth received by any individual under this Plan shall form part of his
remuneration for any purpose whatsoever.

 

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

 

7.4         Any notice or other communication under or in
connection with this Plan may be given in such manner as the Board consider to
be appropriate which may include communication by email or intranet or by
personal delivery or by sending the same 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 an employee of the Company or a Subsidiary, 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 employment.

 

8

 

PART A

 

8.           FREE SHARES

 

8.1         Every Qualifying Employee shall enter into an
agreement with the Company (a “Free Share Agreement”) in the terms of the draft
in Appendix A.

 

8.2         The Trustees, acting with the prior consent of the
Board, may from time to time award Free Shares.

 

8.3         The number of Free Shares to be awarded by the
Trustees to each Qualifying Employee on an Award Date shall be determined by
the Board in accordance with this Rule 8.

 

Maximum annual Award

 

8.4         The Initial Market Value of the Shares awarded to a
Qualifying Employee in any Tax Year shall not exceed £3,000 or such other limit
as may be permitted by the Schedule from time to time.

 

Allocation of Free Shares
by reference to performance

 

8.5         The Board may stipulate that the number of Free Shares
(if any) to be awarded to each Qualifying Employee on a given Award Date shall
be determined by reference to Performance Allowances.

 

8.6         If Performance Allowances are used, they shall apply
to all Qualifying Employees.

 

8.7         Where Performance Allowances are used:

 

8.7.1                            they shall be determined by reference to such fair and
objective criteria (performance targets) relating to business results or such
other objective criteria as the Board shall determine over such period as the
Board shall specify; and

 

8.7.2                            performance targets shall be set for performance units
of one or more employees (provided that an employee shall not be a member of
more than one performance unit).

 

8.8         Where the Board decides to use Performance Allowances
it shall, as soon as reasonably practicable:

 

8.8.1                            notify each employee participating in the Award of the
performance targets and measures which, under the Plan, shall be used to
determine the number or value of Free Shares awarded to him; and

 

8.8.2                            notify all Qualifying Employees of any Participating
Company, in general terms, of the performance targets and measures to be used
to determine the number or value of Free Shares to be awarded to each
Participant in the Award

 

9

 

provided that the Board may exclude from such
notice any information the disclosure of which the Board reasonably considers
would prejudice commercial confidentiality.

 

8.9         The Board shall determine the number of Free Shares
(if any) to be awarded to each Qualifying Employee by reference to performance
using Method 1 (Rules 8.10 and 8.11) or Method 2 (Rule 8.12).  The same method shall be used for all
Qualifying Employees for each Award.

 

Performance Allowances:
method 1

 

8.10       Subject to Rule 8.11, by this method:

 

8.10.1       at least 20% of Free Shares awarded in any performance period shall be
awarded without reference to performance;

 

8.10.2       the remaining Free Shares shall be awarded by reference to performance;
and

 

8.10.3       the highest Award made to an individual by reference to performance in
any period shall be no more than four times the highest Award to an individual
without reference to performance.

 

8.11       If this method is used:

 

8.11.1       the Free Shares awarded without reference to performance (Rule 8.10.1)
shall be awarded on the same terms as mentioned in Rule 4; and

 

8.11.2       the Free Shares awarded by reference to performance (Rule 8.10.2)
need not be allocated on the same terms as mentioned in Rule 4.

 

Performance Allowances:
method 2

 

8.12       By this method:

 

8.12.1       some or all Free Shares shall be awarded by reference to performance;

 

8.12.2       the Award of Free Shares to Qualifying Employees who are members of the
same performance unit shall be made on the same terms as mentioned in Rule 4;
and

 

8.12.3       Free Shares awarded for each performance unit shall be treated as
separate Awards.

 

Holding Period for Free
Shares

 

8.13       The Board shall, in relation to each Award Date,
specify a Holding Period throughout which a Participant shall be bound by the
terms of the Free Share Agreement.

 

8.14       The Holding Period shall, in relation to each Award,
be a specified period of not less than three years nor more than five years (or
such other periods required by paragraph 31 of the Schedule from time to time),
beginning with the Award Date and shall be the

 

10

 

same for all Participants who receive an Award at the same time.  The Holding Period shall not be increased in
respect of Free Shares already awarded under the Plan.

 

8.15       A Participant may during the Holding Period direct the
Trustees:

 

8.15.1       to accept an offer for any of his Free Shares if the acceptance or
agreement shall result in a new holding being equated with those shares for the
purposes of capital gains tax; or

 

8.15.2       to accept an offer of a Qualifying Corporate Bond (whether alone or with
other assets or cash or both) for his Free Shares if the offer forms part of
such a general offer as is mentioned in Rule 8.15.3; or

 

8.15.3       to accept an offer of cash, with or without other assets, for his Free
Shares if the offer forms part of a general offer which is made to holders of
shares of the same class as his shares, or to holders of shares in the same
company and which is made in the first instance on a condition such that if it
is satisfied the person making the offer shall have control of that company,
within the meaning of section 416 of the Taxes Act 1988; or

 

8.15.4       to agree to a transaction affecting his Free Shares or such of them as
are of a particular class, if the transaction would be entered into pursuant to
a compromise, arrangement or scheme applicable to or affecting:

 

(a)                     all
of the ordinary share capital of the Company or, as the case may be, all the
shares of the class in question; or

 

(b)                    all
the shares, or all the shares of the class in question, which are held by a
class of shareholders identified otherwise than by reference to their
employment or their participation in a plan approved under the Schedule.

 

11

 

PART B

 

9.           PARTNERSHIP SHARES

 

9.1         The Board may at any time invite every Qualifying
Employee to enter into an agreement with the Company (a “Partnership Share
Agreement”) in the terms of the draft in Appendix B.

 

9.2         Partnership Shares shall not be subject to any
provision under which they may be forfeit.

 

Maximum amount of
deductions

 

9.3         The amount of Partnership Share Money deducted from an
employee’s Salary shall not exceed £125 in any month (or such other maximum
amount as may for the time being be permitted by paragraph 36(1)(a) of the
Schedule).  If the Salary is not paid
monthly, such limit shall be calculated proportionately.

 

9.4         The amount of Partnership Share Money deducted from a
Participant’s Salary over an Accumulation Period shall not exceed 10% (or such
other maximum amount as may for the time being be permitted by paragraph 36(1)(a) of
the Schedule) of the total of the payments of Salary made to the Participant
over that Accumulation Period or if there is no Accumulation Period, 10% (or
such other maximum amount as may for the time being be permitted by paragraph
36(1)(a) of the Schedule) of the Salary payment from which the deduction
is made.

 

9.5         Any amount deducted in excess of that allowed by Rule 9.3
or 9.4 shall be paid over to the relevant employee, subject to both deduction
of income tax under PAYE and NICs, as soon as practicable.

 

Minimum amount of
deductions

 

9.6         The minimum amount to be deducted under the
Partnership Share Agreement in any month shall be the same in relation to all
Partnership Share Agreements entered into in response to invitations issued on
the same occasion.  It shall not be
greater than £10 (or such other minimum amount as may for the time being be
permitted by paragraph 37(2) of the Schedule).

 

Notice of possible effect
of deductions on benefit entitlement

 

9.7         Every Partnership Share Agreement shall contain a
notice under paragraph 38 of the Schedule.

 

Restriction imposed on
number of Shares awarded

 

9.8         The Board may specify the maximum number of Shares to
be included in an Award of Partnership Shares.

 

12

 

9.9         The Partnership Share Agreement shall contain an
undertaking by the Company to notify each Qualifying Employee of any
restriction on the number of Shares to be included in an Award.

 

9.10       The notification in Rule 9.9 shall be given:

 

9.10.1       if there is no Accumulation Period, before the deduction of the
Partnership Share Money relating to the Award; and

 

9.10.2       if there is an Accumulation Period, before the beginning of the
Accumulation Period relating to the Award.

 

Plan with no Accumulation
Period

 

9.11       If there is no Accumulation Period, the Trustees shall
apply Partnership Share Money to purchase Shares on behalf of the Qualifying
Employee on the Acquisition Date.  The
number of Shares awarded to each Participant shall be determined in accordance
with the Market Value of the Shares on that date.

 

Plan with Accumulation
Period

 

9.12       If there is an Accumulation Period, the Trustees shall
apply the Partnership Share Money to acquire Shares on behalf of the Qualifying
Employee on the Acquisition Date.

 

9.13       The number of Shares acquired on behalf of each
Participant shall be determined by reference to the lower of:

 

9.13.1       the Market Value of the Shares at the beginning of the Accumulation
Period; and

 

9.13.2       the Market Value of the Shares on the Acquisition Date.

 

9.14       If a transaction occurs during an Accumulation Period
which results in a new holding of shares being equated for the purposes of
capital gains tax with any of the Shares to be acquired under the Partnership
Share Agreement, the Participant may agree that the Partnership Share Agreement
shall have effect after the time of that transaction as if it were an agreement
for the purchase of shares comprised in the new holding.

 

Surplus Partnership Share
Money

 

9.15       Any surplus Partnership Share Money remaining after
the purchase of Shares by the Trustees:

 

9.15.1       may, with the agreement of the Participant, be carried forward to the
next deduction (where there is no Accumulation Period) or to the next
Accumulation Period (where there is an Accumulation Period); and

 

9.15.2       in any other case, shall be paid over to the Participant, subject to
both deduction of income tax under PAYE and NICs, as soon as practicable.

 

13

 

Scaling down

 

9.16       If the Company receives applications for Partnership
Shares exceeding the Award maximum determined in accordance with Rule 9.8
then the following steps shall be taken in sequence until the excess is
eliminated.

 

Step 1.                  the excess of the monthly deduction chosen by each
applicant over the amount specified in accordance with Rule 9.6 shall be
reduced pro rata;

 

Step 2.                all monthly deductions shall be reduced to the amount
specified in accordance with Rule 9.6;

 

Step 3.                applications shall be selected by lot, each based on a
monthly deduction of the amount specified in accordance with Rule 9.6.

 

Each application shall be deemed to have been
modified or withdrawn in accordance with the foregoing provisions, and each
employee who has applied for Partnership Shares shall be notified of the
change.

 

Withdrawal from Partnership
Share Agreement

 

9.17       An employee may withdraw from a Partnership Share
Agreement at any time by notice in writing to the Company.  Unless a later date is specified in the
notice, such a notice shall take effect 30 days after the Company receives
it.  Any Partnership Share Money then held
on behalf of an employee shall be paid over to that employee as soon as practicable.  This payment shall be subject to income tax
under PAYE and NICs.

 

Repayment of Partnership
Share Money on withdrawal of approval or Termination

 

9.18       If approval to the Plan is withdrawn or a Plan
Termination Notice is issued in respect of the Plan, any Partnership Share
Money held on behalf of employees shall be repaid to them as soon as
practicable, subject to deduction of income tax under PAYE, and NICs.

 

14

 

PART C

 

10.         MATCHING SHARES

 

10.1       The Partnership Share Agreement sets out the basis on
which a Participant is entitled to Matching Shares in accordance with this Part C
of the Plan.

 

General requirements for
Matching Shares

 

10.2       Matching Shares shall:

 

10.2.1                      be Shares of the same class and carrying the same
rights as the Partnership Shares to which they relate;

 

10.2.2       subject to Rule 10.4, be awarded on the same day as the Partnership
Shares to which they relate are acquired on behalf of the Participant; and

 

10.2.3                      be awarded to all Participants on exactly the same
basis.

 

Ratio of Matching Shares to
Partnership Shares

 

10.3       The Partnership Share Agreement shall specify the
ratio of Matching Shares to Partnership Shares for the time being offered by
the Company and that ratio shall not exceed 2:1.  The Board may vary the ratio before
Partnership Shares are acquired. 
Employees shall be notified of the terms of any such variation before
the Partnership Shares are awarded under the Partnership Share Agreement.

 

10.4       If the Partnership Shares on the day on which they are
awarded under the Partnership Share Agreement are not sufficient to produce a
Matching Share, the match shall be made when sufficient Partnership Shares have
been acquired to allow at least one Matching Share to be appropriated.

 

Holding Period for Matching
Shares

 

10.5       The Board shall, in relation to each Award Date,
specify a Holding Period throughout which a Participant shall be bound by the
terms of the Partnership Share Agreement.

 

10.6       The Holding Period shall, in relation to each Award,
be a specified period of not less than three years nor more than five years (or
such other periods required by paragraph 31 of the Schedule from time to time),
beginning with the Award Date and shall be the same for all Participants who receive
an Award at the same time.  The Holding
Period shall not be increased in respect of Matching Shares awarded under the
Plan.

 

10.7       A Participant may during the Holding Period direct the
Trustees:

 

10.7.1       to accept an offer for any of his Matching Shares if the acceptance or
agreement shall result in a new holding being equated with those original
Shares for the purposes of capital gains tax; or

 

15

 

10.7.2       to accept an offer of a Qualifying Corporate Bond (whether alone or with
other assets or cash or both) for his Matching Shares if the offer forms part
of such a general offer as is mentioned in paragraph 10.7.3; or

 

10.7.3       to accept an offer of cash, with or without other assets, for his
Matching Shares if the offer forms part of a general offer which is made to
holders of shares of the same class as his Shares or to the holders of shares
in the same company, and which is made in the first instance on a condition
such that if it is satisfied the person making the offer shall have control of
that company, within the meaning of section 416 of the Taxes Act 1988; or

 

10.7.4       to agree to a transaction affecting his Matching Shares or such of them
as are of a particular class, if the transaction would be entered into pursuant
to a compromise, arrangement or scheme applicable to or affecting;

 

(a)                     all
of the ordinary share capital of the Company or, as the case may be, all the
shares of the class in question; or

 

(b)       all the shares, or all the shares of the class in
question, which are held by a class of shareholders identified otherwise than
by reference to their employment or their participation in a plan approved
under the Schedule.

 

10.8       Matching Shares shall be forfeited by a Participant
and shall thereupon be held by the Trustees subject to the Plan available for
future awards of Free Shares or Matching Shares for other eligible individuals
if:

 

(i)                                         the Participant withdraws the Partnership Shares in respect of which the
Matching Shares were awarded from the Plan in the Forfeiture Period; or

 

(ii)                                      the Participant ceases to be in Relevant Employment at any time in the
Forfeiture Period other than

 

(a)                     because
of injury or disability;

 

(b)                    on
being dismissed by reason of redundancy;

 

(c)       by reason of a transfer to which the Transfer of
Undertaking (Prohibition of Employment) Regulations 1981 apply;

 

(d)       by reason of a change in control or other
circumstances ending the Associated Company status of the company by which he
is employed;

 

(e)                     by
reason of retirement on or after he reaches Retirement Age; or

 

(f)                       on
his death.

 

16

 

PART D

 

11.         DIVIDEND SHARES

 

Reinvestment of cash
dividends

 

11.1       The Free Share Agreement or Partnership Share
Agreement, as appropriate, shall set out the rights and obligations of
Participants receiving Dividend Shares under the Plan.

 

11.2       The Board may direct that any cash dividend in respect
of Plan Shares held on behalf of Participants may be applied in acquiring
further Plan Shares on their behalf.

 

11.3       Dividend Shares shall be Shares:

 

11.3.1                      of the same class and carrying the same rights as the
Shares in respect of which the dividend is paid; and

 

11.3.2                      which are not subject to any provision for forfeiture.

 

11.4       The Board may decide to:

 

11.4.1                      apply all Participants’ dividends, up to the limit
specified in Rule 11.6, to acquire Dividend Shares;

 

11.4.2                      to pay all dividends in cash to all Participants; or

 

11.4.3                      to offer Participants the choice of either 11.4.1 or
11.4.2.

 

11.5       The Board may revoke any direction for reinvestment of
cash dividends.

 

11.6       The amount applied by the Trustees in acquiring
Dividend Shares shall not exceed £1,500 in each Tax Year (or such other limit
specified from time to time in paragraph 54(1) of the Schedule).  For the purposes of this Rule 11, the
Dividend Shares are those acquired under this Plan and those acquired under any
other plan approved under the Schedule. 
In exercising their powers in relation to the acquisition of Dividend
Shares the Trustees must treat Participants fairly and equally.

 

11.7       If the amounts received by the Trustees exceed the
limit in Rule 11.6, the balance shall be paid to the participant as soon
as practicable.

 

11.8       The Trustees shall apply all the cash dividend to
purchase Shares on behalf of the Participant on the Acquisition Date.  The number of Dividend Shares purchased on
behalf of each Participant shall be determined by the Market Value of the
Shares on the Acquisition Date.

 

Certain amounts not
reinvested to be carried forward

 

11.9       Subject to Rule 11.7, any amount that is not
reinvested:

 

11.9.1                      because the amount of the cash dividend is
insufficient to acquire a Share; or

 

11.9.2                      because there is an amount remaining after acquiring
the Dividend Shares;

 

17

 

may be retained by the Trustees and carried
forward to be added to the amount of the next cash dividend to be reinvested.

 

11.10     If, during the period of three years beginning with
the date on which the dividend was paid:

 

11.10.1                it is not reinvested; or

 

11.10.2                the Participant ceases to be in Relevant Employment;
or

 

11.10.3                a Plan Termination Notice is issued

 

the amount shall be repaid to the Participant
as soon as practicable.  On making such a
payment, the Participant shall be provided with the information specified in
section 234A(4) to (11) of the Taxes Act 1988 (information
relating to distributions to be provided by nominee) as if it were a
payment to which sub-section 4(b) of that section applies.

 

Holding Period for Dividend
Shares

 

11.11     The Holding Period shall be a period of three years,
beginning with the Acquisition Date.

 

11.12     A Participant may during the Holding Period direct the
Trustees:

 

11.12.1     to accept an offer for any of his Dividend Shares if the acceptance or
agreement shall result in a new holding being equated with those shares for the
purposes of capital gains tax; or

 

11.12.2     to accept an offer of a Qualifying Corporate Bond (whether alone or with
other assets or cash or both) for his Dividend Shares if the offer forms part
of such a general offer as is mentioned in paragraph 11.12.3; or

 

11.12.3     to accept an offer of cash, with our without other assets, for his
Dividend Shares if the offer forms part of a general offer which is made to holders
of shares of the same class as his shares or to holders of shares in the same
company, and which is made in the first instance on a condition such that if it
is satisfied the person making the offer shall have control of that company,
within the meaning of section 416 of the Taxes Act 1988; or

 

11.12.4     to agree to a transaction affecting his Dividend Shares or such of them
as are of a particular class, if the transaction would be entered into pursuant
to a compromise, arrangement or scheme applicable to or affecting;

 

(a)                     all
of the ordinary share capital of the Company or, as the case may be, all the
shares of the class in question; or

 

(b)                    all
the shares, or all the shares of the class in question, which are held by a
class of shareholders identified otherwise than by reference to their
employment or their participation in a plan approved under the Schedule.

 

18

 

11.13     Where a Participant is charged to tax in the event of their Dividend
Shares ceasing to be subject to the Plan, they shall be provided with the
information specified in section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee)
as if it were a payment to which sub-section 4(b) of that section applies.

 

19

 

PART E

 

12.         COMPANY
RECONSTRUCTIONS

 

12.1       The following
provisions of this Rule 12 apply if there occurs in relation to any of a
Participant’s Plan Shares (referred to in this Rule 12 as “the Original
Holding”):

 

12.1.1       a transaction which results in a new holding (referred to in this Rule 12
as “the New Holding”) being equated with the Original Holding for the purposes
of capital gains tax; or

 

12.1.2       a transaction which would have that result but for the fact that what
would be the new holding consists of or includes a Qualifying Corporate Bond.

 

12.2       If an issue of shares
of any of the following description (in respect of which a charge to income tax
arises) is made as part of a company reconstruction, those shares shall be
treated for the purposes of this Rule as not forming part of the New
Holding:

 

12.2.1       redeemable shares or securities issued as mentioned in section 209(2)(c) of
the Taxes Act 1988;

 

12.2.2       share capital issued in circumstances such that section 210(1) of
the Taxes Act 1988 applies; or

 

12.2.3       share capital to which section 249 of the Taxes Act 1988 applies.

 

12.3       In this Rule 12:

 

“Corresponding Shares” in relation to any New
Shares, means the Shares in respect of which the New Shares are issued or which
the New Shares otherwise represent;

 

“New Shares” means shares comprised in the New
Holding which were issued in respect of, or otherwise represent, shares
comprised in the Original Holding.

 

12.4       Subject to the
following provisions of this Rule 12, references in this Plan to a
Participant’s Plan Shares shall be respectively construed, after the time of
the company reconstruction, as being or, as the case may be, as including
references to any New Shares.

 

12.5       For the purposes of
the Plan:

 

12.5.1       a company reconstruction shall be treated as not involving a disposal of
Shares comprised in the Original Holding; and

 

12.5.2       the date on which any New Shares are to be treated as having been
appropriated to or acquired on behalf of the Participant shall be that on which
Corresponding Shares were so appropriated or acquired.

 

12.6       In the context of a
New Holding, any reference in this Rule 12 to shares includes securities
and rights of any description which form part of the New Holding for the
purposes of Chapter II of Part IV of the Taxation of Chargeable Gains Act
1992.

 

20

 

13.         RIGHTS
ISSUES

 

13.1       Any shares or
securities allotted under clause 10 of the Deed shall be treated as Plan Shares
identical to the shares in respect of which the rights were conferred.  They shall be treated as if they were awarded
to or acquired on behalf of the Participant under the Plan in the same way and
at the same time as those shares.

 

13.2       Rule 12.1 does
not apply:

 

13.2.1       to shares and securities allotted as the result of taking up a rights
issue where the funds to exercise those rights were obtained otherwise than by
virtue of the Trustees disposing of rights in accordance with this rule; or

 

13.2.2       where the rights to a share issue attributed to Plan Shares are
different from the rights attributed to other ordinary shares of the company.

 

 

CLIFFORD
CHANCE LLP

200
Aldersgate Street

London

EC1A 4JJ

 

21

 

APPENDIX A

 

The Diageo 2001 Share
Incentive Plan (“the Plan”): Free Share Agreement

 

PLEASE USE BLOCK CAPITALS
AND READ THE WHOLE OF THE AGREEMENT BEFORE SIGNING BELOW

 

This agreement is between:

 

	
   

  Participant (“the
  Participant)

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Home Address:

  	
   

  
	
   

  	
   

  
	
  Payroll Number:

  	
   

  
	
   

  	
   

  
	
   

  Company (“the Company”)

  	
   

  
	
   

  	
   

  
	
  Name: Diageo plc

  	
   

  
	
   

  	
   

  
	
  Registered Address: 8 Henrietta Place,
  London, W1G 0NB

  	
   

  
	
   

  	
   

  
	
  Registered Number: 23307

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

This agreement sets out the terms on which the
Participant agrees to take part under the terms of the Plan and is subject to
the rules of the Plan.

 

The definitions in the Plan Rules apply to
this agreement:

 

PARTICIPANT

 

1.           I
agree to accept the Free Shares in Diageo plc awarded to me under the Plan.

2.           I
agree to leave the Free Shares in the hands of the Trustees, and not to assign,
charge or otherwise dispose of my beneficial interest in the shares for the
whole of the Holding Period of [insert time - not less
than 3 and not more than 5 years].

3.           I
have read this agreement and agree to be bound by it and by the rules of
the Plan.

 

COMPANY

 

4.           The
Company agrees to arrange for shares in Diageo plc to be awarded and bought for
me, according to the rules of the Plan.

5.           [Insert
the terms (or a cross reference to an explanation of the terms) on which the
Free Shares will be awarded].

 

 

	
  Signature:

  	
   

  	
   

  	
  Date:

  	
  /

  	
  /

  

 

22

 

Rights and Obligations

 

6.           I
agree that taking part in the Plan does not affect my rights, entitlements and
obligations under my contract of employment, and does not give me any rights or
additional rights to compensation or damages if my employment ceases.

7.           I
may ask the Trustees for my Free Shares at any time after the end of the
Holding Period, but I may have to pay income tax and National Insurance
Contributions when they are taken out of the Plan.

8.           I
agree to allow the Trustees to sell some or all of my shares to pay any income
tax and National Insurance Contributions in respect of my shares ceasing to be
subject to the Plan, unless I provide them in advance with sufficient funds to
pay these amounts.

9.           If
there is a rights issue, I agree to allow the Trustees to sell some of the
rights attached to my shares in the Plan, in order to fund the exercise of the
rights attached to other shares held by me in the Plan.

10.         I
can at any time withdraw from this agreement, by writing to my employer.

11.         I
agree that withdrawal from this agreement will not affect the terms on which I
agreed to accept any shares that have already been awarded to or bought for me
under the terms of the Plan.

12.         I
understand that my obligations during the Holding Period will end:

(a)           if I cease to be in Relevant Employment;

(b)           if the Company terminates the Plan in accordance with
Clause 21 of the Deed and I have consented to the transfer of the Shares to me.

13.         I
understand that my obligations under the Holding Period are subject to:

(a)           the right of the Trustees to sell my shares to meet
PAYE obligations;

(b)           the Trustees accepting at my direction an offer for my
shares in accordance with the Plan.

 

23

 

APPENDIX
B

 

The
Diageo 2001 Share Incentive Plan (“the Plan”): Partnership Share Agreement

 

PLEASE USE BLOCK CAPITALS
AND READ THE WHOLE OF THE AGREEMENT BEFORE SIGNING BELOW

 

This agreement is between:

 

	
   

  Participant (“the
  Participant)

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Home Address:

  	
   

  
	
   

  	
   

  
	
  Payroll Number:

  	
   

  
	
   

  	
   

  
	
   

  Company (“the Company”)

  	
   

  
	
   

  	
   

  
	
  Name: Diageo plc

  	
   

  
	
   

  	
   

  
	
  Registered Address: 8 Henrietta Place,
  London, W1G 0NB

  	
   

  
	
   

  	
   

  
	
  Registered Number: 23307

  	
   

  
	
   

  	
   

  
	
   

  Trustees (“the Trustees”)

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Registered Address [if any]:

  	
   

  
	
   

  	
   

  

 

This agreement sets out the terms on which the
Participant agrees to buy shares under the terms of the Plan and is subject to
the rules of the Plan.  The
definitions in the Plan Rules apply to this agreement:

 

NOTICE TO PARTICIPANT ABOUT POSSIBLE EFFECT ON
BENEFITS

 

Deductions from your pay to buy Partnership
Shares under this agreement may affect your entitlement to or the level of,
some contributory social security benefits, statutory maternity pay and
statutory sick pay.

 

They may also have a similar effect in respect
of some contributory social security benefit paid to your wife or husband.

 

With this agreement you should have been given
information on the effect of deductions from your pay to buy Partnership Shares
on entitlement to social security benefits, statutory sick pay and statutory
maternity pay.  The effect is
particularly significant if your earnings are brought below the lower earnings
limit for National Insurance purposes, and is explained in the information: it
is therefore important that you read it. 
If you have not been given a copy, ask your employer for it.  Otherwise a copy may be obtained from any
office of the Inland Revenue, the Department of Social Security, or, in
Northern Ireland, the Department for Social Development.  You should take the information you have been
given into account in deciding whether to buy Partnership Shares.

 

24

 

	
   

  	
   

  	
   

  
	
  PARTICIPANT

  	
  £

  	
  *

  
	
   

  	
   

  	
   

  

 

1.           I
agree to allow my employer to deduct the following amount per [insert period] from my Salary:

2.           I
agree that these deductions will be used to buy Partnership Shares in Diageo
plc for me.

3.           I
agree to accept Matching Shares in Diageo plc awarded to me under the Plan and
leave them in the hands of the Trustees, and not to assign, charge or otherwise
dispose of my beneficial interest in the shares for the whole of the Holding
Period of three years.

4.           I
understand that shares may fall in value as well as rise.

5.           I
have read this agreement and agree to be bound by it and by the rules of
the Plan.

 

COMPANY

 

6.           The
Company agrees to arrange for shares in Diageo plc to be bought for me,
according to the rules of the Plan.

7.           The
Company agrees to provide [insert number]
Matching Share(s) for every [insert number]
Partnership Share(s).

8.           The
Company undertakes to notify me of any restriction on the number of Partnership
Shares available in the (or each) Award.

 

TRUSTEES

 

9.           The
Trustees agree to keep my Salary deductions in [insert name
of bank/building society] until they are used to buy shares in
Diageo plc for me.

 

 

	
  Signature:

  	
   

  	
   

  	
  Date:

  	
  /

  	
  /

  

 

*            Insert
amount between [ ] and [ ] [per month] and not more than 10% of salary.

 

Rights and Obligations

 

1.           I
agree that taking part in the Plan does not affect my rights, entitlements and
obligations under my contract of employment, and does not give me any rights or
additional rights to compensation or damages if my employment ceases.

2.           I
may stop the deductions at any time, or begin them again, by writing to my
employer, but I may not make up any amounts missed when deductions were
stopped.

3.           I
agree that the deductions from my salary, or the number of shares that I
receive may be scaled down if the limit on the number of shares set by the
Company for this Award is exceeded.

4.           I
may ask the Trustees for my Partnership Shares at any time, but I may have to
pay income tax and National Insurance Contributions when they are taken out of
the Plan.

5.           I
agree to allow the Trustees to sell some or all of my shares to pay any income
tax and National Insurance Contributions in respect of my shares ceasing to be
subject to the Plan, unless I provide them in advance with sufficient funds to
pay these amounts.

 

25

 

6.           I
agree that any deductions not used to buy shares will at the discretion of the
Trustees be repaid to me after the deduction of any necessary income tax and/or
National Insurance Contributions, or will be carried forward and added to the
next deduction.  I further agree that if
I cease to be in Relevant Employment and the total deductions held in the Plan
which have not been used to buy shares equal 50 pence or less that amount shall
be paid on my behalf to the Trustee and the Trustee shall give the deductions
to a charity chosen at the discretion of the Trustee but if the total of such
deductions exceeds 50 pence the money shall be returned to me.

7.           If
there is a rights issue, I agree to allow the Trustees to sell some of the
rights attached to my shares in the Plan, in order to fund the exercise of the
rights attached to other shares held by me in the Plan.

8.           I
can at any time withdraw from this agreement by writing to my employer.  Any unused deductions will be returned to me
after the deduction of any necessary income tax and/or National Insurance
Contributions.

9.           I
agree that withdrawal from this agreement will not affect the terms on which I
agreed to buy shares already held for me under the Plan.

 

Matching Shares

 

10.         The
ratio of Matching Shares to Partnership Shares is 1 Matching Share for every 2
Partnership Shares and may be varied by the Company.

11.         If
the ratio varies, the Company will notify me before the Partnership Shares are
bought for me.

12.         I
will lose my Matching Shares if:

·      I cease to be in Relevant Employment, or

·      I withdraw the Partnership Shares in respect of which the Matching
Shares were awarded

within 3 years from the date of the Award,
unless the employment ceases for one of the following reasons -

(a)           injury
or disability

(b)           redundancy

(c)           transfer
of employment to which the Transfer of Undertaking (Protection of Employment)
Regulations 1981 apply

(d)           change of control or other circumstances ending the
Associated Company status of the company by which I am employed

(e)           retirement
on or after reaching Retirement Age

(f)            death.

 

Partnership Share Money held by Trustees

 

13.         The
Trustees are under no obligation to keep the deductions in an interest-bearing
account, but if they do, they will pay the interest to me.

 

Holding Period: Matching Shares

 

14.         I
understand that my obligations during the Holding Period will end:

(a)           if I
cease to be in Relevant Employment, and this may lead to forfeiture of the
Matching Shares;

(b)           if the Company terminates the Plan in accordance with
Clause 21 of the Deed and I have consented to the transfer of the Shares to me.

15.         I
understand that my obligations under the Holding Period are subject to:

(a)           the
right of the Trustees to sell my shares to meet PAYE obligations;

(b)           the
Trustees accepting at my direction an offer for my shares in accordance with
the Plan.

 

26Exhibit
4.4

 

Dated 14 October 2009

 

RULES OF THE DIAGEO PLC 2009

INTERNATIONAL SHARE MATCH PLAN

 

	
   

  	
  Shareholder authority: 14 October 2009

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Directors’ adoption: 26 August 2009

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Expiry date: 13 October 2019

  	
   

  

 

 

Linklaters
LLP

One
Silk Street

London
EC2Y 8HQ

 

Telephone
(+44) 20 7456 2000

Facsimile (+44) 20 7456 2222

 

Ref C Peake

 

 

Diageo
plc 2009 International Share Match Plan

 

Introduction

 

Under the Diageo plc 2009 International Share
Match Plan, employees may be invited to contribute post-tax sums from their
annual bonus, salary or personal resources, to be invested in Diageo plc shares
(investment shares).  Provided that
participants continue to hold these shares for a retention period, usually of
three years, they will be awarded additional shares at the end of the period
(Matching Award).

 

1                                      Meanings of words used

 

In these Rules:

 

“Appropriation Day”
means the date set by the Directors under rule 3.3;

 

“Company” means
Diageo plc;

 

“Contribution”
means an amount contributed by a Qualifying Employee as described in rule 3.3;

 

“Control” has
the meaning given to it by Section 995 of the Income Tax Act 2007;

 

“Directors”
means the board of directors of the Company or a duly authorised person or
group of persons;

 

“Group” means
the Company and:

 

(i)                                   any subsidiary of the Company within the meaning of Section 1159
of the Companies Act 2006; and

 

(ii)                                any other company which the Directors designate as a
member of the Group for some or all purposes under the Plan;

 

“Investment Share”
means a Share acquired on behalf of a Qualifying Employee under rule 5;

 

“Matching Award”
means a right to a acquire Shares at the end of the Retention Period in
accordance with the provisions of rule 6;

 

“Matching Share Ratio”
means the ratio between the number of Shares subject to a Matching Award
granted to a Qualifying Employee and the number of Investment Shares acquired
on his behalf;

 

“The London Stock Exchange”
means the London Stock Exchange plc;

 

“Participant”
means any person (including any person acquiring his beneficial interest in any
Shares by operation of law) on behalf of whom Investment Shares have been
acquired or to whom a Matching Award has been granted;

 

“Plan” means
this plan known as “The Diageo plc 2009 International Share Match Plan” the
provisions of which are set out in these Rules;

 

“Qualifying Employee”
means any person who, on a date or dates determined by the Directors:

 

1

 

(i)                                   is an employee (including an executive director) of a
member of the Group which the Directors decide will participate who:

 

(a)                               has such qualifying period (if any) of continuous
service or has been employed at such time as the Directors may determine;

 

(b)                              is not under notice of termination of employment
either received or given unless the Directors decide otherwise; and

 

(c)                               in respect of all employees or employees in a
particular territory satisfies any other specified conditions, or

 

(ii)                                is an employee (including an executive director) of a
member of the Group and is nominated by the Directors (or is nominated as a
member of a category of such employees).

 

“Retention Period”
means the period of three years starting with the Appropriation Day, or such
other period starting on the Appropriation Day that the Directors determine in
their discretion;

 

“Rules” means
these rules as amended from time to time;

 

“Shares” means,
subject to rule 11, fully paid ordinary shares in the capital of the
Company or depository receipts representing such Shares;

 

“Takeover” has
the meaning given to that term by rule 9.

 

2                                      Special schedules

 

The Rules of the Plan are subject, in the
case of each Participant, to any special schedules adopted by the Directors
which may be appropriate to the jurisdiction in which he is employed or any tax
regime to which he may be subject on the Appropriation Day or subsequently, as
specified in the schedule, or such other provisions as the Directors will
notify him will apply.

 

3                                      Operation of the Plan

 

3.1                            Frequency of operation

 

The Directors may operate the Plan at such
times as they consider appropriate.

 

3.2                            Time of operation

 

Matching Awards will only be granted within 42
days starting on any of the following:

 

3.2.1                   the day on which the Company’s shareholders approve
the Plan;

 

3.2.2                   the day after the announcement of the Company’s
results through a regulatory information service for any period;

 

3.2.3                   any day on which the Directors resolve that
exceptional circumstances have existed or do exist which justify an operation
of the Plan at a different time to that set out in this rule 3.2; and

 

or, if any restriction imposed by statute,
order, regulation or Government directive, or by any code adopted by the
Company based on the Model Code of the London Stock Exchange prevents the grant
or acquisition during the periods specified above, then within 42 days of the
date on which the restriction no longer applies.

 

2

 

3.3                            Things to be determined on operation of the plan

 

When the Directors resolve to operate the Plan,
they will determine:

 

3.3.1                   the Appropriation Day (which shall be after the last
date for the return of application forms)

 

3.3.2                   the maximum and minimum Contribution, provided that:

 

(i)                                  the maximum annual Contribution may not exceed
£10,000, or the equivalent in local currency; and

 

(ii)                               the minimum annual Contribution will not normally be
less than £100, or the equivalent in local currency;

 

3.3.3                   the method or methods by which Qualifying Employees
can provide the Contributions, which may include:

 

(i)                                  agreeing to invest a post-tax bonus earned by the
Qualifying Employees;

 

(ii)                               paying money to any other person nominated by the
Directors for the purpose, in such manner and at such time or times as may be
determined by the Directors; and/or

 

(iii)                            at the discretion of the Directors, deductions from
salary; and

 

3.3.4                   the Matching Share Ratio, which may be between one
Share subject to a Matching Award for ten Investment Shares and one Share
subject to a Matching Award for two Investment Shares inclusive.

 

4                                      Invitation and application

 

4.1                            Invitation to participate

 

4.1.1                   Subject to rule 4.3, the Directors may invite any
Qualifying Employee selected by them to participate in the Plan but
substantially all employees of the Company or any member of the Group whose employees
are Qualifying Employees must be invited on similar terms.

 

4.1.2                   The invitation will be accompanied by details of the
application procedure and such other documents, if any, as the Directors
decide. All documents will be in a form determined by the Directors on their
absolute discretion, and may be in electronic format.

 

4.1.3                   The invitation documents will specify matters referred
to in rule 3.3.

 

4.2                            Agreement to be bound by rules

 

By applying to participate in the Plan, a
Qualifying Employee will be deemed to have agreed:

 

4.2.1                   to make Contributions on the basis specified;

 

4.2.2                   to the purchase and holding of Investment Shares on
his behalf in the manner specified in the rules (as varied by the
invitation documents);

 

4.2.3                   to do all such further things as may be required to
facilitate the operation of the Plan in accordance with the rules and
invitation documents including, without 

 

3

 

limitation, such
things as may be necessary to enable the Company to determine at any time
whether or not rule 6.2 applies.

 

4.3                            Limit on issue of new Shares

 

4.3.1                   The number of Shares committed to be issued under the
Plan on any day will not exceed 10 per cent of the ordinary share capital of
the Company in issue immediately before that day, when added to the total
number of Shares which have been issued or committed to be issued in the
previous 10 years under the Plan and any other employee share plan operated by
the Company.

 

4.3.2                   In determining the above limits no account shall be
taken of any Shares where the right to acquire Shares was released or lapsed.

 

5                                      Investment Shares

 

5.1                            Acquisition and holding of Investment Shares

 

Subject to rule 8.1.1, as soon as
reasonably practicable after the date specified in the invitation documents for
applying to participate in the Plan, the Company will procure that each
Qualifying Employee’s Contributions are applied in the acquisition of Shares on
behalf of the Qualifying Employee (including an allocation of Shares already
held) in accordance with the following rules:

 

5.1.1                   Investment Shares will only be acquired on behalf of a
Qualifying Employee who has duly complied with the application procedure and
made Contributions as required by the invitation documents.

 

5.1.2                   Where Shares are acquired using Qualifying Employees’
Contributions at more than one price, the number of Shares acquired for or on
behalf of each Qualifying Employee may be based on the average price of
acquisition.

 

5.1.3                   Shares which have been acquired (for example, by an
employee trust) before the receipt of Contributions may be allocated to a
Qualifying Employee as Investment Shares in consideration of his Contributions.
Where this happens, the number of Investment Shares allocated will be the
Qualifying Employee’s Contribution divided by

 

(i)                           the average of the middle market quotations of a Share
as derived from the London Stock Exchange Daily Official List on the three days
preceding the date of allocation, rounded down to the nearest whole Share; or

 

(ii)                        such other price as the Directors determine.

 

5.1.4                   Where Investment Shares are subscribed, they will be
subscribed at no more than and no less than

 

(i)                           the average of the middle market quotations of a Share
as derived from the London Stock Exchange Daily Official List on the three days
preceding the date of subscription; or

 

(ii)                        such other price as the Directors determine.

 

5.1.5                   The Directors may require the Qualifying Employee to
surrender documents of title in relation to the Investment Shares or may
arrange for them to be held by another 

 

4

 

person on his behalf
on the terms of the Plan and otherwise on such terms as the Directors may set.

 

5.1.6                   Any Contributions which cannot be used to acquire a whole
Share will be returned to the Qualifying Employee if they are more than £5.00
and given to a charity selected by the Directors if they are less, unless the
Directors decide otherwise.

 

5.2                            Notification of appropriation

 

After Investment Shares are acquired on behalf
of a Participant, he will be notified of:

 

5.2.1                   the number and description of the Investment Shares;

 

5.2.2                   the price at which they were acquired or treated as
having been acquired; and

 

5.2.3                   the date on which they were acquired or allocated to
him.

 

This notification will be in such format as the
Directors decide, including electronic format.

 

5.3                            Dividends on Investment Shares

 

Unless the Directors decide otherwise, all
dividends or other cash distributions payable in respect of Investment Shares,
by reference to a record date after the date of acquisition or allocation will
be used to acquire additional Shares on behalf of the Participant, which will
be held on the same terms as the underlying Investment Shares. Where the
Directors determine that dividends will not be reinvested, they will be paid in
cash to the Participant.

 

5.4                            Voting

 

If Investment Shares are held in the
Participant’s name, the Participant may vote in respect of the Investment
Shares. If they are not, the Directors may make arrangements for the
Participant to be given the opportunity to direct the holder as to how to vote
on such terms as they may decide.

 

6                                      Matching Award

 

6.1                            Grant of Matching Award

 

As soon as reasonably practicable after the
Appropriation Day, the Company will grant a Matching Award to each Participant.
The number of Shares subject to it will be the number of Investment Shares
acquired by him or on his behalf multiplied by the Matching Share Ratio
(rounded down to the nearest whole Share).

 

6.2                            Lapse on sale of Investment Shares

 

If the Participant transfers, assigns or
otherwise disposes of any Investment Shares during the Retention Period, the
corresponding Matching Award will immediately lapse as to the same proportion
of the Shares subject to it as the proportion of the Investment Shares which
have been transferred, assigned or disposed of.

 

This will not apply to:

 

6.2.1                   a disposal of Investment Shares (or an undertaking to
dispose of them) on a Takeover;

 

6.2.2                   the sale of sufficient entitlements nil-paid in
relation to a Investment Share to take up the balance of the entitlements under
a rights issue;

 

5

 

6.2.3                   a disposal which is required to meet any liability to
tax or social security contributions in respect of Investment Shares or the
corresponding Matching Award; or

 

6.2.4                   the transfer of Investment Shares to a person’s
personal representatives following his death.

 

No consideration is payable for the grant of a
Matching Award. A Participant must not transfer, assign or otherwise dispose of
a Matching Award or any rights in respect of it during the Retention Period. If
he does so, whether voluntarily or involuntarily, the Matching Award will
lapse. This will not apply to the transfer of a Matching Award to a person’s
personal representatives following his death.

 

7                                      End of the Retention Period

 

7.1                            Matching Award

 

As soon as reasonably practicable after the end
of the Retention Period, the Company will procure that the number of Shares
subject to the Participant’s Matching Award is issued or transferred to him.

 

The Directors may decide, at any time, to
satisfy a Matching Award by paying to the Participant an amount equal to the
market value of the Shares subject to his Matching Award on the last day of the
Retention Period. If they do so, no Shares will be issued or transferred.

 

7.2                            Investment Shares

 

At the end of the Retention Period, a
Participant’s Investment Shares will cease to be subject to the restrictions
set out in these rules and, if they are not held in the name of the
Participant, may be transferred to him (or to his order) at the Company’s or
the Participant’s direction.

 

8                                      Leavers

 

8.1                            General rule on leaving employment

 

8.1.1                   If a Qualifying Employee ceases to be an employee or
director of a member of the Group before the Appropriation Day:

 

(i)                                  no Matching Award will be granted to him;

 

(ii)                               no Investment Shares will be acquired on his behalf
or, if any have already been acquired, the Retention Period will be deemed to
end on the date of cessation in relation to his Investment Shares and rule 7
will apply; and

 

(iii)                            any Contributions made and not used to acquire
Investment Shares will be returned to him (without interest).

 

8.1.2                   If a Participant ceases to be an employee or director of
a member of the Group on or after the Appropriation Day, the Retention Period
will be treated as ending on the date of cessation in relation to his
Investment Shares. Unless rule 8.2 applies, his Matching Award will lapse.

 

8.2                            Good leavers

 

If a Participant ceases to be an employee or
director of a member of the Group on or after the Appropriation Day for any of
the reasons set out below, then the Retention Period will 

 

6

 

be deemed to end on the date of cessation in
relation to his Investment Shares and his Matching Award and rule 7 will
apply. The reasons are:

 

8.2.1                   injury or disability;

 

8.2.2                   redundancy;

 

8.2.3                   a transfer of the undertaking, or the part of the
undertaking, in which the Participant works to a person which is not a member
of the Group;

 

8.2.4                   the Participant’s employing company ceasing to be a
member of the Group;

 

8.2.5                   retirement with the agreement of the Participant’s
employer; and

 

8.2.6                   the Participant’s death.

 

8.3                            Meaning of “member of the Group”

 

For the purposes of this rule 8, a person
will only cease to be an employee or a director of a member of the Group when
he is no longer an employee or director of any member of the Group.

 

9                                      Takeovers and other corporate events

 

9.1                            Takeovers

 

If there is a Takeover, the Retention Period
will be deemed to end on the date of the Takeover in relation to Investment
Shares and Matching Awards and rule 7 will apply.

 

Alternatively, the Directors may decide that rule 9.5
(exchange of Investment Shares and Matching Award) will apply to some or all
Participants or may allow the Participant to choose whether or not rule 9.5
will apply to him.

 

There is a “Takeover” if:

 

9.1.1                   a person (or a group of persons acting in concert)
obtains Control of the Company as a result of making an offer to acquire
Shares; or

 

9.1.2                   a court sanctions a compromise or arrangement under
section 895 of the Companies Act 2006 in connection with the acquisition of
Shares.

 

The ‘Directors’ for the purposes of this rule 9.1,
will be those people who were the Directors immediately before the Takeover.

 

In the event that a Takeover, as described
above, is proposed and such Takeover is expected to result in the Company
becoming controlled by a new company (the “New Company”), if:

 

(a)                                at least 75% of the shares in the New Company will be
held by substantially the same persons who immediately before the Takeover was
proposed were shareholders in the Company; and

 

(b)                               the Directors and the New Company agree that this rule should
apply,

 

then the Retention Period will not be deemed to
end on the Takeover, but instead rule 9.5 will apply to all Participants.

 

9.2                            Rights issues and changes in share capital

 

If there is:

 

7

 

9.2.1                   a variation in the equity share capital of the
Company, including a capitalisation or rights issue, sub-division,
consolidation or reduction of share capital;

 

9.2.2                   a demerger (in whatever form) or exempt distribution
by virtue of Section 213 of the Income and Corporation Taxes Act 1988;

 

9.2.3                   a special dividend or distribution, or

 

9.2.4                   any other corporate event which might affect the
current or future value of any Award,

 

the Directors may adjust the number or class of
Shares or the identity of the securities subject to a Matching Award in such
manner as they see fit.

 

Any securities which the Participant receives
in respect of his Investment Shares as a result of an event described above
will, unless the Directors decide otherwise, also be treated as Investment
Shares and the restrictions in the rules will apply accordingly. This will
not apply to any Shares which a Participant acquires on a rights issue to the
extent that they exceed the number he would have acquired on a sale of
sufficient rights under the rights issued nil-paid to take up the balance of
the rights.

 

9.3                            Demergers or other corporate events

 

If the Directors become aware that the Company
is or is expected to be affected by any demerger, distribution (other than a
dividend or other cash distribution) or other transaction not falling within rule 9.1
which, in the opinion of the Directors, would affect the current or future
value of Investment Shares and/or the Matching Award, the Directors may decide
that the Retention Period will be deemed to end on the date of the demerger,
distribution or other transaction in relation to some or all Investment Shares
and/or Matching Awards and rule 7 will apply.

 

Alternatively, the Directors may decide that rule 9.5
(exchange of Investment Shares and Matching Award) will apply to some or all
Participants or may allow the Participant to choose whether or not rule 9.5
will apply to him.

 

9.4                            Overseas transfer

 

If a Participant is transferred to work in
another country and, as a result of that transfer he would:

 

9.4.1                   suffer a tax disadvantage in relation to his
Investment Shares or Matching Award (this being shown to the satisfaction of
the Directors); or

 

9.4.2                   become subject to restrictions on his ability to deal
in the Investment Shares or any Shares to be acquired under his Matching Award
or the proceeds of the sale because of the security laws or exchange control
laws of the country to which he is transferred,

 

then, if the Participant continues to hold an
office or employment with a member of the Group, the Directors may decide that
the Retention Period will be deemed to end on the date of transfer or some
other date chosen by the Directors, in relation to some or all of his
Investment Shares and Matching Awards and rule 7 will apply.

 

9.5                            Exchange of Investment Shares and Matching Award

 

Where this rule 9.5 applies to a
Participant by virtue of rule 9:

 

8

 

9.5.1                   The Participant’s Matching Award will be exchanged for
a new award. The new award will be in respect of shares in any body corporate
determined by the company offering the exchange.

 

9.5.2                   The new award shall have equivalent terms to those of
the Matching Award that was exchanged.

 

9.5.3                   The new award will be treated as having been acquired
at the same time as the Matching Award that was exchanged and the Retention
Period will be the same.

 

9.5.4                   The new award will be subject to the rules as
they last had effect in relation to the Matching Award that was exchanged.

 

9.5.5                   With effect from the exchange, the rules will be
construed in relation to the new award as if references to Shares were
references to the shares over which the new award is granted and references to
the Company were references to the body corporate determined under rule 9.5.1.

 

9.5.6                   The Directors may require the Participant to exchange
some or all of his Investment Shares for other securities specified by the
Directors (e.g. on the same terms as any Takeover) or to sell them and use the
proceeds to buy other securities on such terms as the Directors may determine
and these rules will apply to those other securities as if they were
Investment Shares.

 

10                               Tax

 

The Company and any employing company may
withhold any amount and make any arrangements including the sale of Shares on
behalf of the Participant as it considers necessary or desirable to meet any
liability (whether that liability attaches to the Participant or the Company
and/or any employing company) to taxation or social security contributions in
respect of the Participant’s participation in the Plan.

 

11                               General

 

11.1                     Notices

 

All notices under the Scheme shall be in
writing, including in electronic format, at the determination of the Directors
and, if to the Company, shall be either:

 

11.1.1            delivered in person to the Company Secretary; or

 

11.1.2            sent to the Company’s registered office for the time
being (or to such other address as the Directors may from time to time
specify); or

 

11.1.3            if the Directors allow, sent to the e-mail address for
the time being of the Company Secretary (or to such other e-mail address as the
Directors may from time to time specify);

 

11.1.4            given by such other electronic means as the Directors
may approve,

 

and, if to a Participant, shall be either:

 

11.1.5            delivered personally to him at his place of work;

 

11.1.6            sent by post to the Participant at the address which
he shall give in writing to the Company for this purpose, or, failing any such
address, his last home address according to the records of his employing
company; or

 

9

 

11.1.7            sent to his office e-mail address (or such other
e-mail address as he may from time specify);

 

11.1.8            given by such other electronic means as the Directors
may approve.

 

All notices to the Company, however sent, shall
be deemed to be served only upon actual receipt. Notices to the Participant
shall, if delivered personally to him at his place of work, be deemed to be
served upon such delivery and, if sent by first-class post to the appropriate
address as determined above, shall be deemed to be served forty-eight hours (or
seven days, if the address is outside the UK) after the posting to such address
of a properly address and prepaid enveloped containing such notice.

 

Notices sent by e-mail shall be deemed to be
served when receipt has been acknowledged or evidenced.

 

11.2                     Listing

 

If and so long as Shares are listed on the
London Stock Exchange, the Company will apply for a listing for any Shares
issued under the Plan after their allotment.

 

11.3                     Ranking

 

Any Shares issued on subscription will rank equally
in all respects with the Shares then in issue.

 

11.4                     Documents sent to shareholders

 

The Company may send to the Participants copies
of any documents or notices normally sent to the holders of its Shares.

 

11.5                     Directors’ decision final and binding

 

The decision of the Directors on the
interpretation of the Rules or in any dispute or question affecting any
Qualifying Employee or Participant under the Plan will be final and conclusive.

 

11.6                     Regulations

 

The Directors may make or vary regulations for the
administration and operation of the Plan but these must be consistent with the
Rules.

 

11.7                     Data protection

 

By participating in the Plan the Participant
consents to the holding and processing of personal information provided by the
Participant to any member of the Group, trustee or third party service
provider, for all purposes relating to the operation of the Plan. These
include, but are not limited to:

 

11.7.1            administering and maintaining Participant records;

 

11.7.2            providing information to members of the Group,
trustees of any employee benefit trust, registrars, brokers or third party
administrators of the Plan;

 

11.7.3            providing information to future purchasers or merger
partners of the Company, the Participant’s employing company, or the business
in which the Participant works;

 

11.7.4            transferring information about the Participant to a
country or territory that may not provide the same statutory protection for the
information as the Participant’s home country.

 

10

 

The Participant is entitled, on payment of a
fee, to a copy of the personal information held about him or her, if anything
is inaccurate the participant had the right to have it corrected.

 

11.8                     Cash alternative in relation to Investment Shares

 

In the event that the regulatory, tax or other
laws applicable to a Participant change during the Retention Period, and the
effect of such change is that it is no longer, in the opinion of the Directors,
appropriate for the Investment Shares to continue to be held by or on behalf of
the Participant, the Directors may:

 

11.8.1            decide that the Investment Shares held by or on behalf
of the Participant will be sold on the Participant’s behalf; and

 

11.8.2            decide that at the end of the Retention Period the
Participant will be entitled to receive, on the last day of the Retention
Period, a cash amount equal to the market value of the original number of
Investment Shares plus, in the Directors’ discretion, any dividends paid
thereon during the Retention Period (to the extent that such dividends have not
already been paid to the Participant).

 

If they so decide, the Participant will not be
entitled to any further rights in respect of the Investment Shares. For the
avoidance of doubt, where Investment Shares are sold in accordance with rule
11.8.1, the Participant will not be entitled to receive immediately the
proceeds of such sale, but the proceeds will be held on the same terms as the
original Investment Shares, in such manner as the Directors may determine.

 

12                               Terms of employment

 

12.1                     Meaning of “Employee”

 

For the purposes of this rule, “Employee” means any employee of a member of the Group.

 

12.2                     Employee’s rights

 

12.2.1            This rule applies during an Employee’s employment and
after the cessation of an Employee’s employment, whether or not the cessation
is lawful.

 

12.2.2            Nothing in the rules or the operation of the Plan
forms part of the contract of employment of an Employee. The rights and
obligations arising from the employment relationship between the Employee and
his employer are separate from, and are not affected by, the Plan.
Participation in the Plan does not create any right to, or expectation of,
continued employment.

 

12.2.3            No Employee has a right to participate in the Plan.
Participation in the Plan on a particular basis in any year or number of years,
whether consecutive or otherwise, does not create any right to or expectation
of participation in the Plan on the same basis, or at all, in any future year.

 

12.2.4            The terms of the Plan do not entitle the Employee to
the exercise of any discretion in his favour.

 

12.2.5            The Employee will have no claim or right of action in
respect of any decision, omission or discretion, which may operate to the
disadvantage of the Employee even if it is unreasonable, irrational or might
otherwise be regarded as being in breach of the duty of trust and confidence
(and/or any other implied duty) between the Employee and his employer.

 

11

 

12.2.6            No Employee has any right to compensation for any loss
in relation to the Plan, including any loss in relation to:

 

(i)                                  any loss or reduction of rights or expectations under the Plan in any
circumstances (including lawful or unlawful termination of employment);

 

(ii)                               any exercise of a discretion or a decision taken in relation to
participation in the Plan, or any failure to exercise a discretion or take a
decision;

 

(iii)                            the operation, suspension, cessation or amendment of the Plan.

 

12.2.7            Participation in the Plan is permitted only on the
basis that the Participant accepts all the provisions of the rules, including
this rule. By completing an application form, an Employee waives all rights
under the Plan, other than the right to acquire shares subject to and in
accordance with the express terms of the Plan in consideration for, and as a
condition of, the participation in the Plan.

 

12.2.8            Nothing in this Plan confers any benefit, right or
expectation on a person who is not an Employee. No such third party has any
rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this Plan. This does not affect any other right or remedy of a third
party.

 

12.2.9            Benefits under the plan do not constitute part of the
Employee’s remuneration and do not affect termination, pension or other
employment-related payments or entitlements.

 

13                               Amendments

 

13.1                     Directors’ powers

 

Subject to rule 13.2, the Directors may at any
time change any of the provisions of the Plan in any way.

 

13.2                     Shareholders’ approval

 

13.2.1            Except as described in rule 13.2.2, the Company in
general meeting must approve in advance by ordinary resolution any proposed
change to the advantage of present or future Participants which relate to the
following:

 

(i)                                  the persons to whom or for whom Shares may be provided
under the Plan;

 

(ii)                               the limitations on the number of Shares which may be
issued under the Plan;

 

(iii)                            the maximum participation of a Participant under the
Plan;

 

(iv)                           any rights attaching to the appropriations;

 

(v)                              any rights of Participants in the event of a
capitalisation issue, rights issue, sub-division or consolidation of shares or
reduction or any other variation of capital of the Company;

 

(vi)                           the terms of this rule 13.2.1.

 

13.2.2            The Directors need not obtain the approval of the
Company in general meeting for any minor changes:

 

(i)                                  to benefit the administration of the Plan;

 

12

 

(ii)                               to comply with or take account of the provisions of
any proposed or existing legislation;

 

(iii)                            to take account of any changes to the legislation; or

 

(iv)                           to obtain or maintain favourable tax, exchange control
or regulatory treatment of the Company, any Subsidiary or any present or future
Participant.

 

13.3                     Overseas considerations

 

Notwithstanding any other provision of the
Plan, the Directors may amend or add to the provisions of the Plan by way of
schedule or otherwise as they consider necessary or desirable to facilitate the
operation of the Plan in any jurisdiction or to enable the Plan to take advantage
of any favourable tax treatment provided that any such addition or amendment
does not vary the basic features of the Plan, as described in rule 13.2.1.

 

14                               Termination

 

The Plan will terminate 10 years after the date
of its approval by the Company in general meeting. The Company in general
meeting or the Directors may at any earlier time resolve to terminate the Plan.
After termination, no further Investment Shares will be acquired and no further
Matching Awards will be granted but the provisions of the Plan will continue in
full force and effect in relation to Investment Shares already acquired and
Matching Awards already granted.

 

15                               Governing Law and Jurisdiction

 

English law governs the Plan and its
administration. The English courts have exclusive jurisdiction in respect of
disputes arising under or in connection with the Plan.

 

13

 

Schedule
1

 

Diageo
plc 2009 International Share Match Cash Plan

 

1                                      Purpose

 

The purpose of this schedule is to alter the
provisions of the Plan to provide a cash-only version of the Plan (the “Cash Plan”) for employees in those jurisdictions where, in
the opinion of the Directors, this is preferable for regulatory, tax or other
reasons.

 

2                                      Application of this schedule

 

This schedule applies to any jurisdiction or to
any particular employee as the Directors may from time to time decide.

 

3                                      Meaning of words used

 

3.1                            In this schedule:

 

“Allocation Day” means the date on which Investment Share Units are
allocated to Qualifying Employees in accordance with the Cash Plan. For
employees subject to this schedule, all references in the Plan Rules to the
Appropriation Day or to appropriation shall be taken to refer to the Allocation
Day or to allocation (as applicable);

 

“Allocation Price” means, at the Directors’ discretion, the average of
the middle market quotations of a Share as derived from the London Stock
Exchange Daily Official List on the three days preceding the Allocation Day, or
the price that Investment Shares are treated as having been acquired under the
Plan, or such other price as the Directors determine;

 

“Business Day” means a day on which the London Stock Exchange is open
for the transaction of business;

 

“Dividend Share Unit” means a Share Unit allocated to a Qualifying Employee
in accordance with Cash Plan Rule 6.3;

 

“Investment Share Unit” means a Share Unit allocated to a Qualifying Employee
in respect of his Contribution in accordance with Cash Plan Rule 6.1. For
employees subject to this schedule, all references in the Plan Rules to
Investment Shares shall be taken to refer to Investment Share Units;

 

“Market Value” on any day means the middle market quotation of a
Share as derived from the London Stock Exchange Daily Official List on the
preceding Business Day, or such other value as the Directors determine;

 

“Matching Award Unit” means a Share Unit allocated to a Qualifying Employee
in respect of Investment Share Units in accordance with Cash Plan Rule 6.1. For
employees subject to this schedule, all references in the Plan Rules to
Matching Awards shall be taken to refer to Matching Award Units;

 

“Matching Share Unit Ratio”
means the ratio between the
number of Matching Award Units allocated to a Qualifying Employee and the
number of Investment Share Units allocated to him. The Matching Share Unit
Ratio will be equivalent to the Matching Share Ratio determined for the Plan
from time to time (with one Share subject to a Matching Award being equivalent
to one Matching Award Unit and one Investment Share being equivalent to one
Investment Share Unit). For employees subject to this schedule, all 

 

14

 

references in the Plan Rules to the Matching
Share Ratio shall be taken to refer to the Matching Share Unit Ratio;

 

“Cash Plan” means the Plan as altered by the provisions of this
schedule;

 

“Cash Plan Rules” means the rules of this schedule as amended from time
to time;

 

“Share Unit” means Investment Share Units, Matching Award Units
and Dividend Share Units.

 

4                                      Application of Plan Rules

 

4.1                            Plan Rules 3.3.4 (regarding the Matching Share Ratio),
5 (Investment Shares), 6 (Matching Award), 7 (End of the Retention Period), 9.2
(Rights issues and changes in share capital), 9.4  (Overseas transfer), 9.5 (Exchange of
Investment Shares and Matching Award) and 11.8 (Cash alternative in relation to
Investment Shares) do not apply to employees who are subject to this schedule.

 

4.2                            Except as set out in Cash Plan Rule 4.1, all Plan
Rules apply to employees who are subject to this schedule.

 

4.3                            To the extent there is any inconsistency between the
Plan Rules and this schedule, this schedule will prevail for employees who are
subject to it.

 

5                                      Exchange rate

 

5.1                            For the purpose of calculating any value or cash
amount under the Plan or Cash Plan, the Directors may determine the exchange
rate to be used in converting figures between Pounds Sterling and local
currency.

 

5.2                            The Directors may take such action as they consider
desirable in circumstances where there is a currency fluctuation in relation to
a Participant’s local currency against Pounds Sterling exceeding 20%.

 

6                                      Share Units

 

6.1                            Allocation of Investment Share
Units

 

Subject to Plan Rule 8.1.1 (regarding cessation
of employment by a Qualifying Employee before the Appropriation Day), as soon
as reasonably practicable after the date specified in the invitation documents
for applying to participate in the Cash Plan, the Company will allocate
Investment Share Units in accordance with the following rules:

 

6.1.1                   Investment Share Units will only be allocated to a
Qualifying Employee who has duly complied with the application procedure and
made Contributions as required by the invitation documents.

 

6.1.2                   The number of Investment Share Units allocated to a
Qualifying Employee will be calculated by dividing the amount of his
Contribution by the Allocation Price.

 

6.1.3                   Where the Contribution cannot be divided exactly by
the Allocation Price, any surplus will be returned to the Qualifying Employee
if it is more than £5.00 and given to a charity selected by the Directors if it
is less, unless the Directors decide otherwise.

 

15

 

6.2                            Allocation of Matching Award
Units

 

6.2.1                   As soon as reasonably practicable after the Allocation
Day, the Company will grant Matching Award Units to each Participant.

 

6.2.2                   The number of Matching Award Units to be allocated to
a Participant will be calculated by applying the Matching Share Unit Ratio to
his Investment Share Units and rounding down to the nearest whole Matching
Award Unit.

 

6.2.3                   No consideration is payable for the grant of a
Matching Award Unit. A Participant must not transfer, assign or otherwise
dispose of a Matching Award Unit or any rights in respect of it during the
Retention Period. If he does so, whether voluntarily or involuntarily, the
Matching Award Unit will lapse. This will not apply to the transfer of a
Matching Award Unit to a person’s personal representatives following his death.

 

6.3                            Notification of allocation

 

After Investment Share Units and Matching Award
Units have been allocated to a Participant, he will be notified of:

 

6.3.1                   the number and description of the Investment Share
Units and Matching Award Units;

 

6.3.2                   the Allocation Price used to calculate the number of
Investment Share Units; and

 

6.3.3                   the date on which they were allocated to him.

 

This notification
will be in such format as the Directors decide, including electronic format.

 

6.4                            Dividend Share Units

 

Unless the Directors decide otherwise, the
following shall apply in respect of all dividends or other cash distributions
payable in respect of Shares by reference to a record date after the Allocation
Day:

 

6.4.1                   The Participant will be allocated one notional
dividend in respect of each Investment Share Unit held by him (the notional
dividend amount being equal to the dividend payable on one Share).

 

6.4.2                   Notional dividends will normally be converted to
Dividend Share Units. The number of Dividend Share Units allocated to a
Participant will be calculated by dividing the total amount of his notional
dividends plus any surplus under Cash Plan Rule 6.3.3 by the Market Value of a
Share on the date the dividend is paid.

 

6.4.3                   Where under Cash Plan Rule 6.3.2 the notional dividend
amount cannot be divided exactly by the Market Value of a Share, any surplus
will be credited to the next notional dividend payment.

 

6.4.4                   Dividend Share Units will be held on the same terms as
the Participant’s Investment Share Units (except that no Matching Award Units
will be allocated in respect of them).

 

6.4.5                   Where the Directors determine that notional dividends
will not be converted to Dividend Share Units, they will be paid in cash to the
Participant.

 

6.5                            Shareholder Rights

 

The Participant will have no voting or other
shareholder rights in connection with his Share Units.

 

16

 

7                                      Cash payment for Share Units

 

For employees subject to this schedule,
references to Plan Rule 7 (End of the Retention Period) shall be taken to refer
to this Cash Plan Rule 7.

 

7.1                            During the Retention Period

 

7.1.1                   A Participant may at any time direct the Company to
procure that he be made a cash payment in respect of all or part of his
Investment Share Units. The direction and payment will be in such form as the
Directors may decide. The payment will be made as soon as practicable after
receipt of the direction.

 

7.1.2                   The Directors may from time to time set a minimum
number of Investment Share Units in respect of which such a direction may be
made, and/or a maximum number of times per year that such a direction may be
made.

 

7.1.3                   If the Participant gives such a direction during the
Retention Period, the Matching Award Units corresponding to the Investment
Share Units which are the subject of the direction will immediately lapse. This
will not apply to cash payments which are required to meet any liability to tax
or social security contributions in respect of Investment Share Units or the
corresponding Matching Award Units.

 

7.2                            End of the Retention Period

 

As soon as reasonably practicable after the end
of the Retention Period, the Company will procure that the Participant is made
a cash payment in respect of all his vested Share Units (i.e. those Investment
Share Units that have completed the Retention Period and the corresponding
Matching Award Units and Dividend Share Units). The payment will be in such
form as the Company may decide

 

7.3                            Calculation of cash payment

 

The cash payment amount will be calculated as
the total number of Share Units in respect of which the cash payment is to be
made multiplied by the Market Value of a Share on the last day of the Retention
Period (or such other date as predetermined by the Directors) on the basis of
one Share for each Share Unit, plus, at the discretion of the Directors, any surplus
which is held under Cash Plan Rule 6.3 (Dividend Share Units).

 

7.4                            Share alternative

 

7.4.1                   The Directors may decide, at any time, to satisfy some
or all of a Participant’s Share Units by issuing or transferring to him one
Share in respect of each relevant Share Unit. If they do so, no cash payment
will be made to the Participant in respect of those Share Units except, at the
discretion of the Directors, in respect of any surplus which is held under Cash
Plan Rule 6.3 (Dividend Share Units).

 

7.4.2                   If Cash Plan Rule 7.4.1 applies, the number of Shares
to be issued or transferred to the Participant may be reduced by the value of
the Participant’s Contribution (calculated by dividing the Contribution by the
Allocation Price) and the amount of that Contribution will be returned to the
Participant.

 

8                                      Certain corporate events

 

8.1                            Rights issues and changes in
share capital

 

If there is:

 

17

 

8.1.1                   a variation in the equity share capital of the
Company, including a capitalisation or rights issue, sub-division,
consolidation or reduction of share capital;

 

8.1.2                   a demerger (in whatever form) or exempt distribution
by virtue of Section 213 of the Income and Corporation Taxes Act 1988;

 

8.1.3                   a special dividend or distribution, or

 

8.1.4                   any other corporate event which might affect the
current or future value of any Award,

 

the Directors may adjust the number or class of
Share Units or the identity of the securities underlying Share Units in such
manner as they see fit.

 

8.2                            Overseas transfer

 

If a Participant is transferred to work in
another country and as a result of that transfer he would suffer a disadvantage
in relation to his Share Units (this being shown to the satisfaction of the
Directors) then, if the Participant continues to hold an office or employment
with a member of the Group, the Directors may decide that the Retention Period
will be deemed to end on the date of transfer or some other date chosen by the
Directors in relation to some or all of his Share Units and Cash Plan Rule 7
(Cash payment for Share Units) will apply.

 

8.3                            Exchange of Share Units

 

For employees subject to this schedule,
references to Plan Rule 9.5 (Exchange of Investment Shares and Matching Award)
shall be taken to refer to this Cash Plan Rule 8.3.

 

Where this Cash Plan Rule 8.3 applies to a
Participant by virtue of Plan Rule 9 (Takeovers and other corporate events) or
Cash Plan Rule 8 (Certain corporate events):

 

8.3.1                   The Participant’s Share Units will be exchanged for a
new award. The new award will be in respect of shares in any body corporate
determined by the company offering the exchange.

 

8.3.2                   The new award shall have equivalent terms to those of
the Share Units that were exchanged.

 

8.3.3                   The new award will be treated as having been acquired
at the same time as the Share Units exchanged and the Retention Period will be
the same.

 

8.3.4                   The new award will be subject to the rules as they
last had effect in relation to the Share Units that were exchanged.

 

8.3.5                   With effect from the exchange, the rules will be
construed in relation to the new award as if references to Shares were
references to the shares over which the new award is granted and references to
the Company were references to the body corporate determined under Cash Plan
Rule 8.3.1.

 

18

 

Schedule 2

 

Canadian Addendum

 

The Company currently has employees in
Canada.  The Company has been advised
that certain provisions within the Plan may result in adverse tax consequences
for participants in the Plan who are subject to tax in Canada on employment
income. This Addendum (the “Canadian Addendum”) shall therefore apply to
participants in the Plan who are subject to tax in Canada on employment income.

 

The Canadian Addendum is intended to ensure
that, notwithstanding any provisions of the Plan to the contrary, the Company
will settle Matching Awards made to participants in the Plan who are subject to
tax in Canada on employment income using treasury or newly issued Shares of the
Company and will not satisfy Matching Awards in cash or Shares held in a trust.

 

Definitions and Construction

 

1                                      Words and expressions not otherwise defined in the
Canadian Addendum shall have the same meaning as they have in Rule 1 of the
Plan to which this Canadian Addendum is attached.

 

2                                      Unless otherwise provided herein, the provisions of
the Plan Rules will apply to Matching Awards granted under this Canadian
Addendum, however in the event of any conflict between the Plan and this
Canadian Addendum, the terms of this Canadian Addendum shall prevail.

 

3                                      Notwithstanding any provisions of the Plan to the
contrary, Matching Awards granted to participants in the Plan who are subject
to tax in Canada on employment income shall only be satisfied using newly issued
Shares or treasury Shares of the Company.

 

4                                      For the avoidance of doubt, no Shares awarded to
employees who are subject to tax in Canada on employment income shall be
transferred to or from a trustee in respect of the Matching Awards granted
under this Canadian Addendum.

 

5                                      Rule 7.1 of the Plan shall not apply insofar as it
provides the Company with the ability to settle Matching Awards in cash, or
using market purchased Shares held in a trust.

 

19

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