Document:

Exhibit 4.1

 

FedEx
Corporation

 

INCENTIVE STOCK PLAN

(AS AMENDED)

 

1.                                      Purpose

 

The
purpose of the FedEx Corporation Incentive Stock Plan (the “Plan”) is to aid
the Company and its subsidiaries in securing and retaining key employees and
directors of outstanding ability and to motivate them to exert their best
efforts to achieve the long-term goals of the Company and its
subsidiaries.  The Company believes that
the ownership or increased ownership of the Company’s Common Stock by employees
and directors will further align their interests with those of the Company’s
other stockholders and will promote the long-term success of the Company.

 

2.                                      Definitions

 

Unless the
context clearly indicates otherwise, for purposes of the Plan, the following
terms shall have the respective meanings indicated below:

 

“Award” means an
award granted under the Plan, which may be in the form of Restricted Shares or
a Stock Option.

 

“Board of Directors” means
the Board of Directors of the Company.

 

“Code” means the
Internal Revenue Code of 1986, as amended. 
A reference to any provision of the Code shall include reference to any
successor provision of the Code.

 

“Common Stock” means
the common stock, par value $0.10 per share, of the Company.

 

“Company” means
FedEx Corporation, a Delaware corporation.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended.  A reference to any provision of the Exchange
Act or rule promulgated under the Exchange Act shall include reference to any
successor provision or rule.

 

“Incentive Stock Option”
means a Stock Option or portion thereof that is intended to be an “incentive
stock option” within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

 

“Non-Management Director” means
a member of the Board of Directors who is not an employee of the Company or any
of its subsidiaries.

 

“Non-Qualified Option”
means a Stock Option or portion thereof that is not an Incentive Stock Option.

 

 

“Participant” means
any individual who receives an Award.

 

“Restricted
Shares” means shares of Common Stock granted under the Plan
that are subject to certain restrictions as provided in Section 8.

 

“Restricted
Stock Award” means a grant of Restricted Shares under the
Plan.

 

“Stock
Option” is a right granted under the Plan to purchase a
specified number of shares of Common Stock at a specified price.  A Stock Option may be an Incentive Stock
Option or a Non-Qualified Option.

 

3.                                      Term
of the Plan

 

The Plan shall be
effective as of the date on which it is approved by the Company’s stockholders.  Unless the Plan is earlier terminated in
accordance with the provisions hereof, no Award shall be granted under the Plan
after May 31, 2013, but outstanding Stock Options and restrictions on
Restricted Shares may extend beyond such date.

 

4.                                      Administration
of the Plan

 

(a)                                  The Committee.  The Plan shall be administered by
those members, not less than two, of the Compensation Committee of the Board of
Directors, each of whom qualifies as both an “outside director” within the
meaning of Section 162(m) of the Code and a “non-employee director” as
defined in Rule 16b-3 under the Exchange Act (the “Committee”).

 

(b)                                 Authority
of the Committee.

 

(1)                                  Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority and discretion to: (i) select Participants and make Awards; (ii)
determine the types of Awards and the number of shares of Common Stock covered
by Awards; (iii) establish the terms, conditions, restrictions and other
provisions of Awards; and (iv) amend, modify, cancel or suspend Awards.

 

(2)                                  The
Committee shall have sole and complete authority and discretion to interpret
the Plan and all agreements and other documents and instruments relating to
Awards, to adopt, amend and rescind rules for the administration of the Plan
and to make such other determinations and take such other actions that it deems
necessary or advisable for the effective administration of the Plan.

 

(3)                                  All
decisions of the Committee relating to the Plan or any Award shall be final,
conclusive and binding on all persons. 
Committee decisions shall be made by a majority of its members present
at any meeting at which a quorum is present. 
Any decision reduced to writing and signed by all of the members of the
Committee shall be as fully effective as if it had been made at a meeting duly
held.

 

(c)                                  Limitation
of Liability.  Neither the Board of
Directors nor the Committee, nor any member of either, shall be liable for any
act, omission, interpretation, construction or determination made in good faith
in connection with the Plan or any Award.

 

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5.                                      Types
of Awards

 

The
Committee may grant Stock Options and Restricted Shares under and subject to
the provisions of the Plan.

 

6.                                      Stock
Subject to the Plan

 

(a)                                  Restricted
Shares.  The maximum number of shares
of Common Stock available to be issued under the Plan pursuant to Restricted
Stock Awards is 1,250,000 shares (subject to adjustment as provided in Section
14).

 

(b)                                 Stock
Options.  The maximum number of shares
of Common Stock that may be optioned and sold under the Plan pursuant to Stock
Options is 12,500,000 shares (subject to adjustment as provided in Section
14).

 

(c)                                  Restoration
of Shares.  To the extent any shares
of Common Stock covered by an Award are forfeited, not issued or cease to be
issuable for any reason, including, without limitation, because the Award is
terminated, canceled or expires unexercised, then the shares of Common Stock
subject to such Award may again be used for further Awards under the Plan.

 

(d)                                 Source
of Stock.  Shares of Common Stock
issued under the Plan may consist, in whole or in part, of authorized but
unissued shares or treasury shares.  No
fractional shares of Common Stock shall be issued under the Plan.

 

7.                                      Eligibility
and Participation in the Plan

 

(a)                                  Eligible Recipients.  Unless
otherwise determined by the Committee,

 

(1)                                  key employees, including officers, of the Company
and its subsidiaries who are from time to time responsible for the management,
growth and protection of the business of the Company and its subsidiaries are
eligible to receive Restricted Shares and Stock Options; and

 

(2)                                  Non-Management Directors are eligible to receive
Stock Options, but not Restricted Shares.

 

(b)                                 Grant of Awards.  The Committee shall, in its sole
and complete discretion and subject to the provisions of the Plan, (1) select
from time to time the employees, from among those eligible, who shall receive
Awards, (2) determine the type of Award to be granted and
(3) determine and establish the terms, provisions, conditions and
restrictions of each Award, including the number of shares of Common Stock
subject to the Award.  Subject to the
provisions of the Plan, Awards may be granted singly or in combination with
other Awards or in combination with, in replacement of, as alternatives to or
as the payment form for grants or rights under any other compensation plan,
contract or agreement of the Company or any subsidiary.  Non-Management Directors may be granted Stock
Options as provided in Section 9(d).

 

(c)                                  No Right to Receive Award.  No employee
or Non-Management Director shall have any right to receive an Award or, having
received an Award, to receive a future Award.

 

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(d)                                 Rights
of Employees and Others.

 

(1)                                  Neither
the Plan nor any Award shall (i) confer upon any employee or
Non-Management Director any right to remain employed by, or to continue to
provide services to, the Company or any subsidiary, (ii) limit in any way the
right of the Company or any subsidiary to terminate any individual’s employment
by or service on behalf of the Company or any subsidiary, whether or not such
individual is a Participant, or (iii) require the Board of Directors to
nominate any director for reelection by the Company’s stockholders.

 

(2)                                  No
person shall have any rights or claims under or pursuant to the Plan except in
accordance with the provisions of the Plan.

 

8.                                      Provisions
Applicable to Restricted Stock Awards

 

(a)                                  Terms, Conditions and Restrictions.  The
Committee shall establish the terms, conditions, restrictions and other
provisions of each Restricted Stock Award. Unless otherwise specified by the
Committee, shares subject to a Restricted Stock Award shall be restricted for a
period of at least one year and not more than ten years (the “Restriction
Period”).  Except as provided in Section
8(g) below, the Participant must remain employed by the Company or a
subsidiary during the Restriction Period or otherwise forfeit all right,
title and interest in and to the Restricted Shares.  Notwithstanding the foregoing, if a
Participant retires at or after the age of 55, but before the age of 60, the
Restriction Period shall continue after the Participant’s retirement in
accordance with the terms of the Restricted Stock Award or until the earlier to
occur of the events described in Sections 8(g)(3) and (4) below.

 

(b)                                 Agreements;
Stock Legend.  Each Restricted Stock
Award will be evidenced by a written agreement, in such form as may be
specified by the Committee, issued by the Company and setting forth the terms,
conditions, restrictions and other provisions of such Award.  As a condition to receiving a Restricted
Stock Award, each proposed recipient must execute and deliver such agreement to
the Company.  Certificates for Restricted
Shares may, if the Committee so determines, bear a legend referring to the
restrictions and the instruments to which such shares are subject.

 

(c)                                  Rights
with Respect to Shares.  A
Participant who receives a Restricted Stock Award shall have all rights of
ownership with respect to such underlying shares of Common Stock, including the
right to vote such shares and to receive any dividends paid thereon, subject,
however, to the provisions of the Plan, the agreement relating to the
Restricted Stock Award and any legend on the certificate for such shares.  Until such time as any restrictions imposed
pursuant to Section 8(a) on any Restricted Shares shall terminate, the
Company or its designee will hold the certificate(s) for such Restricted Shares
in escrow on such Participant’s behalf.

 

(d)                                 Transferability
Restriction.  Shares of Common Stock
subject to a Restricted Stock Award may not be sold, pledged, assigned,
exchanged, encumbered, hypothecated, transferred or disposed of in any manner
during the Restriction Period applicable thereto.

 

(e)                                  Additional
Shares Received With Respect to Restricted Shares.  Any shares of Common Stock or other
securities of the Company received by a Participant as a stock dividend

 

4

 

on, or in connection with a
stock split or combination, share exchange, reorganization, recapitalization,
merger, consolidation or otherwise with respect to, shares of Common Stock
received as a Restricted Stock Award shall have the same status, be subject to
the same restrictions and bear the same legend, if any, as the shares received
pursuant to the Restricted Stock Award.

 

(f)                                    Tax
Reimbursement.  In the sole
discretion of the Committee, any agreement relating to a Restricted Stock Award
may provide for a tax reimbursement cash payment to be made by the Company in
favor of any Participant in connection with the tax consequences resulting from
a Restricted Stock Award, the lapse of restrictions on any Restricted Shares or
the payment by a Participant of any taxes related thereto, subject to such
conditions as the Committee may specify.

 

(g)                                 Lapse
of Restrictions.  Unless otherwise
determined by the Committee, any restrictions imposed pursuant to Section
8(a) on Restricted Shares shall terminate with respect to such shares on
the earliest to occur of the following, provided, that no restrictions
shall lapse less than six months from the date of award in the event of (2) and
(3) below, unless otherwise specified by the Committee:

 

(1)                                  the
expiration of the Restriction Period (including pursuant to Section 15(b)(1)
below);

 

(2)                                  the
Participant’s retirement at or after the age of 60;

 

(3)                                  the
Participant’s permanent disability; or

 

(4)                                  the
Participant’s death.

 

Upon the termination of such restrictions, the certificates for such
shares of Common Stock shall be released from escrow and delivered to the
Participant or, in the event of the Participant’s death, the Participant’s
personal representative and any legend on such certificates shall be removed.

 

9.                                      Provisions
Applicable to Stock Options

 

(a)                                  Limit
on Awards.  No Participant shall
receive Stock Options for more than 600,000 shares of Common Stock during any
fiscal year of the Company.

 

(b)                                 Agreements.  Each Stock Option will be evidenced by a written
agreement, in such form as may be specified by the Committee, issued by the
Company and setting forth the terms, conditions and other provisions of the
Stock Option, including the number of shares of Common Stock covered by the
Stock Option, the exercise price per share, the term of the Stock Option and
the vesting schedule.  A Participant may
not exercise a Stock Option until he or she executes and delivers such
agreement to the Company.

 

(c)                                  Terms
and Conditions.  All Stock Options
shall be subject to the following terms and conditions and to such other terms
and conditions consistent with the terms of the Plan as the Committee shall
determine:

 

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(1)                                  Option
Price.  The exercise price per share
shall be determined by the Committee, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of grant.  The “Fair Market Value” of the Common Stock
on a particular date shall mean, for all purposes under the Plan, the average
of the high and low sales prices of the Common Stock as reported on the New
York Stock Exchange composite tape on that date.  In the event that such method for determining
Fair Market Value is not practicable, then the Committee shall determine the
Fair Market Value of the Common Stock in such manner as it deems appropriate.

 

(2)                                  Time
of Exercise of Option.  Unless
otherwise determined by the Committee, each Stock Option shall be exercisable
during and over such period ending not later than ten years from the grant
date.  Unless otherwise determined by the
Committee, no Stock Option shall be exercisable prior to the first anniversary
of the grant date, except as provided in Sections 9(c)(4) and 15(b)(2)
below.

 

(3)                                  Method of Exercise and Payment.  Each Stock Option may be exercised by giving
written notice to the Company specifying the number of shares to be purchased
and accompanied by payment in full (including applicable taxes, if any) in cash
therefor.  No Stock Option shall be
exercised for less than the lesser of 50 shares or the full number of shares
for which the Stock Option is then exercisable. 
No Participant shall have any rights to dividends or other rights of a
stockholder with respect to shares subject to his or her Stock Option until he
or she has given written notice of exercise, paid in full for such shares and,
if requested, given the representation described in Section 10 below.

 

(4)                                  Rights After Termination of Employment.

 

(i)                                     Retirement.  Unless otherwise determined by the Committee,
if a Participant’s employment or directorship terminates by reason of his or
her retirement, the Participant’s Stock Option will continue to vest in
accordance with its terms and may be exercised until the expiration of the
stated period of the Stock Option; provided, however,
that if the Participant dies after such termination of employment or
directorship, any unexercised Stock Option, to the extent to which it was
exercisable at the time of the Participant’s death, may thereafter be exercised
by the legal representative of the estate or by the legatee of the Stock Option
under the last will for a period of twelve months from the date of the
Participant’s death or the expiration of the stated period of the Stock Option,
whichever period is the shorter.

 

(ii)                                  Disability.  Unless otherwise determined by the Committee,
if a Participant’s employment or directorship terminates by reason of permanent
disability, the Participant’s Stock Option may thereafter be exercised in full
(except that no Stock Option may be exercised less than six months from the
grant date) for a period of twenty-four months from the date of such
termination of employment or directorship or the stated period of the Stock
Option, whichever period is the shorter; provided, however,
that if the Participant dies within a period of twenty-four months after such
termination of employment or directorship, any outstanding Stock Option may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Stock Option under the last will for a period of twelve months
from the date of the Participant’s death or the expiration of the stated period
of the Stock Option, whichever period is the shorter.

 

6

 

(iii)                               Death. 
Unless otherwise determined by the Committee, if a Participant’s
employment or directorship terminates by reason of the Participant’s death, the
Participant’s Stock Option may thereafter be exercised in full by the legal
representative of the estate or by the legatee of the Stock Option under the
last will for a period of twelve months from the date of the Participant’s
death or the expiration of the stated period of the Stock Option, whichever
period is the shorter.

 

(iv)                              Other. 
Unless otherwise determined by the Committee, if a Participant’s
employment or directorship terminates for any reason other than death,
retirement or permanent disability, the Participant’s Stock Option shall
thereupon terminate.

 

(d)                                 Grant
of Stock Options to Non-Management Directors.  Non-Management Directors shall not be
eligible to receive any Awards other than Stock Options as specified in this Section 9(d).

 

(1)                                  Discretionary Awards.  The Committee may grant a Non-Qualified
Option to any Non-Management Director for such number of shares of Common Stock
as the Committee shall determine; provided, however, that such
grants of Non-Qualified Options only may be made (i) immediately following an
annual meeting of the Company’s stockholders to any of the Non-Management
Directors who are then incumbent after such meeting and (ii) in connection with
a Non-Management Director’s election or appointment to the Board of Directors
if other than at an annual meeting.

 

(2)                                  Terms and Conditions of Stock Options.  The Committee shall establish the terms and
conditions of Non-Qualified Options granted to Non-Management Directors, provided,
that any Non-Qualified Option granted to a Non-Management Director
(i) shall have an exercise price per share not less than 100% of the Fair
Market Value of the Common Stock on the date of grant and (ii) shall not be
exercisable earlier than one year from the date of grant, except as provided in
Sections 9(c)(4) and 15(b)(2). 
Unless otherwise provided in the Plan, all provisions of the Plan with
respect to the terms of Non-Qualified Options granted to employees shall be
applicable to Non-Qualified Options granted to Non-Management Directors.

 

(e)                                  Designation
of Certain Options as Incentive Stock Options.  Stock Options, or portions thereof, granted to employees may in the
discretion of the Committee be designated as Incentive Stock
Options.  In addition to the other
applicable terms and conditions contained in this Section 9, the
aggregate Fair Market Value of the shares of Common Stock covered by an
Incentive Stock Option (determined at the time the Stock Option is granted)
with respect to which an Incentive Stock Option is exercisable for the first
time by any individual Participant during any calendar year (under the Plan and
all other similar plans of the Company and its subsidiaries) shall not exceed
$100,000 (or such other amount as may be specified by Section 422(d) of
the Code).

 

(f)                                    Transferability
Restriction.  Unless otherwise
determined by the Committee, a Stock Option by its terms shall be personal and
may not be sold, pledged, assigned, exchanged, encumbered, hypothecated,
transferred or disposed of in any manner by the Participant other than by will
or by the laws of descent and distribution. 
During a Participant’s lifetime, only the Participant or a duly
appointed legal representative may exercise the Stock Option, unless otherwise
determined by the Committee.

 

7

 

(g)                                 Repricing
Prohibited.  Neither the Committee
nor the Company shall “reprice” outstanding Stock Options for any reason.  For purposes of the Plan, a “repricing” means
lowering the exercise price per share of an outstanding Stock Option or any
other action that has the same effect or is treated as a repricing under
generally accepted accounting principles and includes, without limitation, a
tandem cancellation of a Stock Option at a time when its exercise price per
share exceeds the fair market value of the underlying Common Stock and exchange
for another option or other equity security (unless such cancellation and
exchange occurs in connection with a merger, acquisition, spin-off or other
similar corporate transaction).

 

(h)                                 Use
of Proceeds.  Proceeds received by the Company pursuant to
the exercise of Stock Options shall constitute general funds of the
Company.

 

10.                               Compliance
with Applicable Laws; Investment Representation

 

Notwithstanding any other provision of the Plan or any agreement
relating to a particular Award, the Company shall have no obligation to issue
any shares of Common Stock under the Plan unless such issuance would comply
with all applicable laws and the applicable requirements of any securities
exchange or similar entity.  Prior to the
issuance of any shares of Common Stock under the Plan, the Company may require
a written statement that the Participant is acquiring such shares for his or
her own account for investment and not for the purpose or with the intention of
distributing the shares or any part thereof. 
The certificates representing shares of Common Stock issued under the
Plan may bear such legend or legends as the Committee deems appropriate in
order to assure compliance with applicable securities laws and regulations and
to reflect any restrictions on transfers.

 

11.                               Transfer,
Leave of Absence, Etc.

 

For purposes of the Plan, (a) a transfer of an employee from the
Company to a subsidiary, or vice versa, or from one subsidiary to another, and
(b) a leave of absence, duly authorized in writing by the Company or a
subsidiary, shall not be deemed a termination of employment.

 

12.                               Tax
Withholding

 

All distributions under the Plan (including, without limitation, the
grant of Awards and the issuance of Common Stock pursuant to an Award) are
subject to withholding of all applicable taxes, and the Committee may condition
the delivery of any Award or the issuance of any Common Stock pursuant to an
Award on the satisfaction of applicable withholding obligations (including,
without limitation, by requiring a Participant to relinquish a portion of any
proceeds received by the Participant in connection with the sale of shares
acquired upon exercise of a Stock Option).

 

13.                               Prohibition
on Loans

 

The Company shall not loan funds to any Participant for the purpose of
paying the exercise price associated with any Stock Option or for the purpose
of paying any taxes associated with the issuance, exercising or vesting of any
Award.

 

8

 

14.                               Changes
in Capitalization

 

If the outstanding Common Stock shall at any time be changed or
exchanged as a result of a stock dividend, stock split, share combination,
exchange or reclassification, recapitalization, merger, consolidation or other
corporate reorganization affecting the Common Stock, (a) the number and kind of
shares that have been issued and that may thereafter be issued under the Plan,
(b) the number and kind of shares underlying Restricted Stock Awards still
subject to a Restriction Period, (c) the exercise prices and the number and
kind of shares subject to outstanding Stock Options and (d) such other
terms of Awards as the Committee deems appropriate, shall be approximately and
equitably adjusted by the Committee in its sole and complete discretion.

 

15.                               Change
of Control

 

(a)                                  Definition.  For purposes of the Plan, the term “Change of
Control” means the occurrence of any of the following events following the
effective date of the Plan:

 

(1)                                  Any
“person” (as such term is used in Sections 13(d) and 14 of the Exchange
Act), other than (i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan (or a trust forming a part thereof) maintained by the
Company or any subsidiary of the Company, (iv) any underwriter temporarily
holding securities of the Company pursuant to an offering of such securities or
(v) any person in connection with a transaction described in clauses (i), (ii)
and (iii) of Section 15(a)(2) below, becomes the “beneficial owner”
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing 30% or more of the total voting power of the Company’s
then outstanding voting securities, unless such securities (or, if applicable,
securities that are being converted into voting securities) are acquired
directly from the Company in a transaction approved by a majority of the
Incumbent Board (as defined below).

 

(2)                                  The
consummation of a merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued, or the sale or other
disposition, in one transaction or a series of transactions, of all or
substantially all of the assets of the Company (a “Corporate Transaction”),
unless:

 

(i)                                     the
stockholders of the Company immediately before such Corporate Transaction will
own, directly or indirectly, immediately following such Corporate Transaction,
at least 60% of the total voting power of the outstanding voting securities of
the corporation or other entity resulting from such Corporate Transaction
(including a corporation or other entity that acquires all or substantially all
of the Company’s assets, the “Surviving Company”) or the ultimate parent
company thereof in substantially the same proportion as their ownership of the
voting securities of the Company immediately before such Corporate Transaction;

 

(ii)                                  the
individuals who were members of the Board of Directors immediately prior to the
execution of the agreement providing for such Corporate Transaction constitute
a majority of the members of the board of directors or equivalent governing
body of the Surviving Company or the ultimate parent company thereof; and

 

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(iii)                               no
person, other than (A) the Company, (B) any subsidiary of the Company, (C) any
employee benefit plan (or a trust forming a part thereof) maintained by the
Company or any subsidiary of the Company, (D) the Surviving Company, (E) any
subsidiary or parent company of the Surviving Company, or (F) any person who,
immediately prior to such Corporate Transaction, was the beneficial owner of
securities of the Company representing 30% or more of the total voting power of
the Company’s then outstanding voting securities, is the beneficial owner of
30% or more of the total voting power of the then outstanding voting securities
of the Surviving Company or the ultimate parent company thereof.

 

(3)                                  The
stockholders of the Company approve a complete liquidation or dissolution of
the Company.

 

(4)                                  Directors
who, as of the effective date of the Plan, constitute the Board of Directors
(the “Incumbent Board”), cease to constitute at least a majority of the Board
of Directors (or, in the event of any merger, consolidation or reorganization
the principal purpose of which is to change the Company’s state of
incorporation, form a holding company or effect a similar reorganization as to
form, the board of directors of such surviving company or its ultimate parent
company); provided, however, that any individual becoming a
member of the Board of Directors subsequent to the effective date of the Plan
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened proxy contest relating to the election of directors.

 

                                                Notwithstanding
the foregoing, a Change of Control will not be deemed to occur solely because
any person (a “Subject Person”) becomes the beneficial owner of more than the
permitted amount of the outstanding voting securities of the Company as a
result of the acquisition of voting securities by the Company which, by
reducing the number of voting securities outstanding, increases the
proportional number of voting securities beneficially owned by the Subject
Person, provided, that if a Change of Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities
by the Company, and after such acquisition by the Company, the Subject Person
becomes the beneficial owner of any additional voting securities that increases
the percentage of the then outstanding voting securities beneficially owned by
the Subject Person to 30% or more of the total voting power, then a Change of
Control will have occurred.

 

(b)                                 Effect
of Change of Control. 
Notwithstanding any other provision of the Plan, upon a Change of
Control:

 

(1)                                  Restricted Shares.  In the event of a Change of Control as
described in Section 15(a)(2), as shall be determined by the
Committee: (i) the stock certificates evidencing any Restricted Shares shall be
canceled and the Company shall make a cash payment to those Participants in an
amount equal to the highest price per share received by the holders of Common
Stock in connection with such Change of Control multiplied by the number of
Restricted Shares then held by such Participant, with any non-cash
consideration to be valued in good faith by the Committee; or (ii) the
Restriction Periods with respect to all outstanding Restricted Shares shall
immediately lapse.  In the event of a
Change of Control as described in Section 15(a)(1), (3) or (4),

 

10

 

the Restriction Periods with respect to all
outstanding Restricted Shares shall immediately lapse.

 

(2)                                  Stock Options.  In the event of a Change of Control, all
outstanding Stock Options shall become fully vested and immediately
exercisable.  Notwithstanding any other
provision of the Plan, any Participant whose employment or directorship
terminates following a Change of Control may exercise his or her Stock Option
in full for a period ending on the earlier of the date of expiration of such
Stock Option or the date which is twelve months after such termination of
employment or directorship.

 

(c)                                  Deemed
Change of Control.  If the Company
enters into an agreement or series of agreements or the Board of Directors
adopts a resolution that results in the occurrence of a Change of Control, and
the employment or directorship of a Participant is terminated after the
entering into of such agreement or series of agreements or the adoption of such
resolution, then, upon the occurrence of the Change of Control, a Change of
Control shall be deemed to have retroactively occurred on the date of entering
into of the earliest of such agreements or the adoption of such resolution.

 

16.                               Amendments

 

The Board of Directors or the Committee may suspend or terminate the
Plan at any time and the Committee may amend or modify the Plan and amend,
modify, cancel or suspend any Award at any time and from time to time; provided,
however, that without the consent of the Participant affected, no such
suspension, termination, cancellation, amendment or modification may materially
impair the rights of any Participant under any Award theretofore granted,
except as provided in Section 17 below.  Notwithstanding the foregoing, without the
requisite vote of the Company’s stockholders, no such amendment or modification
may:

 

(a)                                  increase
the total number of shares of Common Stock issuable under the Plan pursuant to Section
6;

 

(b)                                 expand
the type of Awards available under the Plan;

 

(c)                                  materially
expand the class of persons eligible to receive Awards;

 

(d)                                 extend
the term of the Plan;

 

(e)                                  materially
change the method of determining the exercise price per share of Stock Options;

 

(f)                                    “reprice”
an outstanding Stock Option;

 

(g)                                 increase
the maximum number of shares subject to Stock Options that may be granted to a
Participant; or

 

(h)                                 delete
or limit the provisions of Section 9(g) (repricing prohibition) or Section 13
(loan prohibition).

 

11

 

In addition, any “material revision” of the Plan (within the meaning of
the rules of the New York Stock Exchange) not listed in Sections 16(a)
through (h) above also shall require the requisite vote of the Company’s
stockholders.

 

17.                               Cancellation of
Outstanding Options

 

If the Committee, after consulting with management of the Company,
determines that application of an accounting standard in compliance with any
statement issued by the Financial Accounting Standards Board concerning the
treatment of Stock Options would have a significant adverse effect on the
Company’s financial statements because of the fact that Stock Options granted
before the issuance of such statement are subject to new accounting rules, then
the Committee in its absolute discretion may cancel and revoke all outstanding
Stock Options to which such adverse effect is attributed and the holders of
such Stock Options shall have no further rights in respect thereof.  Such cancellation and revocation shall be
effective upon written notice by the Committee to the holders of such Stock
Options.

 

18.                               Foreign
Jurisdictions

 

Awards granted to Participants who are foreign nationals or who are
employed by the Company or any of its subsidiaries outside of the United States
may have such terms and conditions different from those specified in the Plan
and such additional terms and conditions as the Committee, in its judgment,
determines to be necessary, appropriate or desirable to foster and promote
achievement of the material purposes of the Plan and to fairly accommodate for
differences in local law, tax policy or custom or to facilitate administration
of the Plan.  The Committee may approve
such sub-plans, appendices or supplements to, or amendments, restatements or
alternative versions of, the Plan as it may consider necessary, appropriate or
desirable, without thereby affecting the terms of the Plan as in effect for any
other purpose.  The special terms and any
appendices, supplements, amendments, restatements or alternative versions,
however, shall not include any provisions that are inconsistent with the terms
of the Plan as then in effect, unless the Plan could have been amended to eliminate
such inconsistency without further approval by the Company’s stockholders.

 

19.                               Compliance
with Section 16(b)

 

With
respect to Participants who are subject to Section 16 of the Exchange Act (“Reporting
Persons”), transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 under the Exchange Act.  All transactions under the Plan involving
Reporting Persons are subject to such conditions, regardless of whether the
conditions are expressly set forth in the Plan. 
Any provision of the Plan that is contrary to a condition of
Rule 16b-3 shall not apply to such Reporting Persons.

 

 

Adopted September 29, 2003

Amended September 27, 2004 and September 26, 2005

 

12Exhibit
4.2

 

RULES

 

OF

 

THE
FEDEX CORPORATION INCENTIVE STOCK PLAN

 

2005
INLAND REVENUE APPROVED SUB-PLAN FOR THE

 

UNITED
KINGDOM

 

 

Adopted
by the Company on: December 4, 2005

 

Approved
by the Inland Revenue on: December 7, 2005

 

Inland
Revenue reference no: X23020/WPR

 

 

SCHEDULE

 

RULES OF THE FEDEX CORPORATION INCENTIVE
STOCK PLAN

2005 INLAND REVENUE APPROVED SUB-PLAN FOR THE

UNITED KINGDOM

 

1              General

 

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

 

2              Establishment of Sub-Plan

 

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

 

3              Purpose
of Sub-Plan

 

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

 

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

 

4              Inland Revenue approval of Sub-Plan

 

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

 

5              Rules of Sub-Plan

 

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

 

1

 

6              Relationship of Sub-Plan to Plan

 

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

 

7              Interpretation

 

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

 

	
  Approval Date

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Associated Company

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Close Company

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Consortium

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Control

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Eligible Employee

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

2

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  ICTA 1988

  	
   

  	
  the Income
  and Corporation Taxes Act 1988;

  
	
   

  	
   

  	
   

  
	
  Inland Revenue

  	
   

  	
  the UK Board
  of Inland Revenue;

  
	
   

  	
   

  	
   

  
	
  Jointly Owned Company

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Key Feature

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Market Value

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

3

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Material Interest

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Option

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Option Holder

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Ordinary Share Capital

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Plan Administrator

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Relevant Employment

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Schedule 4

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Shares

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Share Certificate

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Share Option Agreement

  	
   

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

  

 

In this
schedule, unless the context otherwise requires:

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

8              Companies
participating in Sub-Plan

 

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

 

9              Shares
used in Sub-Plan

 

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

 

10           Grant of Options

 

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

 

11           Identification
of Options

 

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

 

12           Contents of Share Option
Agreement

 

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

 

12.1         that it
is issued in respect of an Option;

 

12.2         the Date
of Grant of the Option;

 

12.3         the
number of Shares subject to the Option;

 

12.4         the
exercise price per Share under the Option;

 

12.5         any
condition imposed on the exercise of the Option;

 

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

 

5

 

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

 

13           Earliest
date for grant of Options

 

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

 

14           Persons
to whom Options may be granted

 

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

 

15           Options non transferable

 

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

 

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

 

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

 

17           Inland
Revenue limit (£30,000)

 

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

 

18           Exercise
price under Options

 

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

 

19           Exercise of Options

 

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

 

6

 

20           Early Exercise or Lapse of Options

 

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

 

21           Material
Interest

 

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

 

22           Manner of
payment for Shares on exercise of Options

 

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

 

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

 

23           Issue or
transfer of Shares on exercise of Options

 

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

 

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

 

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

 

24           Rights
attaching to Shares issued on exercise of Options

 

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

 

7

 

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

 

25           Amendment
of Sub-Plan

 

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

 

26           Adjustment
of Options

 

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

 

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

 

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

 

27           Tax and
social security withholding

 

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

 

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

 

28           Exercise
of discretion by Plan Administrator

 

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

 

8

 

29           Relationship of Sub-Plan to contract
of employment

 

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

 

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

 

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

 

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

 

30           Disapplication
of certain provisions of Plan

 

The
provisions of the Plan dealing with:

 

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

 

restricted
stock awards pursuant to Section 8 of the Plan;

 

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

 

tax
withholding pursuant to Section 12 of the Plan;

 

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

 

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

 

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

 

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

 

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

 

9

 

31           Term of
the Plan

 

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

 

10

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