Document:

Exhibit 4.3

 

Dated 1st March 2012

 

DIAGEO PLC (1)

 

DIAGEO NA (2)

 

IVAN MENEZES (3)

 

SERVICE AGREEMENT

 

1

 

CONTENTS

 

	
Clause
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS   AND INTERPRETATION
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
APPOINTMENT
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
DURATION OF   THE EMPLOYMENT
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
TERMINATION
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
SCOPE OF THE   EMPLOYMENT
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
HOURS OF WORK
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
PLACE OF WORK
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
COMPENSATION   AND BENEFITS
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
EXPENSES
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
VACATION
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
SICKNESS   BENEFITS
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
OTHER BENEFITS
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
RESTRICTIONS   DURING THE EMPLOYMENT
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
CONFIDENTIAL   INFORMATION AND COMPANY DOCUMENTS
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
INVENTIONS AND   OTHER INTELLECTUAL PROPERTY
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
TERMINATION
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
RESTRICTIVE   COVENANTS
    	
 
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
18.
    	
FORMER   CONTRACTS OF EMPLOYMENT
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
19.
    	
CHOICE OF LAW   AND ARBITRATION
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
20.
    	
GENERAL
    	
 
    	
20
    

 

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This Agreement is made on 1st March 2012

 

Between

 

(1)                                Diageo PLC (registered in England and Wales under number  23307) whose registered office is at Lakeside Drive, London, NW10 7HQ (“Company”);

 

(2)                                Diageo North America, Inc. whose registered office is at 801 Main Avenue, Norwalk CT 06851, United States of America (“Diageo NA”); and

 

(3)                                Ivan Menezes of 339 Elm Street, New Canaan, CT, 06840: (“Executive”).

 

It is agreed

 

1.                                     DEFINITIONS AND INTERPRETATION

 

1.1                              Definitions

 

In this Agreement unless the context otherwise requires the following expressions have the following meanings:

 

Accrued Salary and Benefits means unpaid Salary, expense reimbursements, and unused vacation days earned and accrued in accordance with Clause 10, in each case accrued through the Termination Date, and all other amounts owed, if any, due under any compensation, retirement or benefit plans of the Group to which Executive is entitled as of the Termination Date (but excluding any benefits under Clause 8.2)

 

AGM means annual general meeting of the Company

 

Board means the board of directors for the time being of the Company, any authorised director or any committee of directors for the time being, or any person authorised by the board to act on its behalf

 

Cause means any of the reasons for termination of employment set out at Clause 16.1

 

CEO means the Chief Executive Officer of Diageo PLC from time to time

 

Commencement Date means 1 March 2012

 

Confidential information means details of suppliers and distributors and their terms of business, details of customers and their requirements, the prices charged to and terms of business with customers, marketing plans and sales forecasts, financial information, operational information, contract strategy, allocation of financial resources, plans relating to distributors or business, results and forecasts (save to the extent that these are included in published audited accounts), any proposals relating to the acquisition or disposal of a company or business or any part thereof or to any proposed expansion or contraction of activities, details of employees and officers and of the remuneration and other benefits paid to them, trade secrets, information relating to research activities, inventions, secret processes, products (including products under development), product law in strategies, designs, formulae and product lines, any information which is treated as confidential or which the Executive is told or ought reasonably to know is confidential and any information which has been given to the Company or any Group Company in confidence by customers, suppliers or other persons

 

Corporate Change means the Company coming under the control of any person or persons acting in concert (as those terms are defined for the time being in the City Code on Takeovers and Mergers) not having control of the Company at the date of this Agreement, to the extent

 

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such event also constitutes a “change in control event” (as defined in U.S. Treasury Regulation §1.409A-3(i)(5)).

 

Disabled means where the Executive has been  absent from or unable to perform the Executive’s job duties for an aggregate period of six (6) months during any twelve (12) month period because Executive is physically or mentally incapacitated so as to render Executive incapable of performing Executive’s usual and customary duties under this Agreement with reasonable accommodation

 

Employer means Diageo North America, Inc.

 

Employment means the Executive’s employment with the Employer under this Agreement

 

Good Reason means: (i) elimination of the Executive’s position without the Executive being offered a comparable alternative position by a Group Company (a comparable position is an alternative executive level position within 90% of target cash compensation), which is not remedied by the Employer or a Group Company promptly after receipt of written notice of Executive’s intent to resign for Good Reason from the Executive; or (ii) a reduction in Executive’s Salary, excluding for such purpose any isolated, insubstantial, and inadvertent action not taken in bad-faith and which is remedied by the Employer promptly after receipt of written notice thereof from the Executive.

 

Group means the Company and the Group Companies

 

Group Company means any company which is for the time being a subsidiary or holding company of the Company and any subsidiary of any such holding company and for the purposes of this Agreement the terms subsidiary and holding company shall have the meanings ascribed to them by section 1159 Companies Act 2006 or in any subordinate legislation made under the Companies Act 2006 (and Group Companies shall be interpreted accordingly)

 

Incentive means any benefit accrued to the Executive at the relevant time under the Diageo Annual Incentive Plan

 

Intellectual Property means all patents, registered designs, trademarks and service marks (whether registered or not and including any applications for the foregoing), copyrights, design rights, semiconductor topography rights, database rights and all other intellectual property and similar proprietary rights subsisting in any part of the world  (whether or not capable of registration)  and including  (without limitation)  all such rights in materials, works,  prototypes, inventions, discoveries, techniques, computer programs, source codes, data, technical, commercial or confidential information, trading, business or brand names, goodwill or the style of presentation of the goods or services or any improvement of any of the foregoing and the right to apply for registration or protection of any of them and in existing applications for the protection of any of the above

 

Release means a full and complete release by the Executive of all claims of whatever nature against the Employer, each Group Company and each officer of the Employer and each Group Company, (in a form approved by the Employer)

 

Remuneration Committee means the Remuneration Committee of the Board from time to time

 

Salary means the salary at the relevant time as referred to in Clause 8.1.

 

Termination Date means the date of the termination of the Employment

 

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1.2                              Interpretation & Construction

 

(a)                                 References  to Clauses, Exhibits and Schedules are unless otherwise stated to Clauses, Exhibits of and Schedules to this Agreement.

 

(b)                                 The headings to the Clauses are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

(c)                                  Reference to this Agreement or to any other document is a reference to this Agreement or to that other document as modified, amended, varied, supplemented, assigned, novated or replaced from time to time.

 

(d)                                 Reference to a provision of law or subordinate legislation or code is a reference to that provision as extended, applied, amended, consolidated or re-enacted or as the application thereof is modified from time to time and shall be construed as including reference to any order, instrument, regulation or other subordinate legislation from time to time made under it.

 

2.                                     APPOINTMENT

 

2.1                              The Company shall appoint the Executive and the Executive agrees to act as Chief Operating Officer of the Company with effect from the Commencement Date or in such other capacity (appropriate to the Executive’s skills, experience and qualifications) of an equivalent status as the Board from time to time reasonably directs on the terms of this Agreement.

 

2.2                              The Executive shall remain an employee of Diageo NA and will not be an employee of the Company.

 

2.3                              The Executive may be required to act as a director of the Company and other Group Companies (either as executive or non-executive) as the Board requires from time to time.  The Company reserves the right on giving written notice to the Executive to terminate any office of directorship immediately at any time.

 

3.                                     DURATION OF THE EMPLOYMENT

 

3.1                              The Employment under this Agreement shall commence on the Commencement Date and, subject to the provisions of this Agreement, shall continue unless and until terminated in accordance with Clause 4.

 

3.2                              The Executive shall be an at-will employee.  Nothing in this Agreement shall give the Executive the right to continued employment with Diageo NA or any Group Company.  The Executive’s at-will status can only be altered by a written document signed by a duly authorised officer of Diageo NA and the Executive.

 

4.                                     TERMINATION

 

4.1                              Circumstances of Termination

 

The Employment may be terminated under the following circumstances:

 

(a)                                 Death and Disability

 

In the event of the death of Executive, the Employment shall automatically terminate.  If the Executive, in the reasonable opinion of the Board, becomes Disabled, the Employer may terminate the Employment, on ninety (90) days advance written notice to the Executive.

 

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(b)                                 Termination for Cause

 

The Employer may terminate the Employment at any time for Cause in accordance with Clause 16.1.

 

(c)                                  Termination Without Cause or Resignation Other than for Good Reason

 

The Employer may terminate this Agreement and Executive’s employment without Cause at any time on ninety (90) days advance written notice to the Executive.  Executive may resign at any time in the absence of Good Reason and will provide one hundred and eighty (180) days advance written notice to the Employer.

 

(d)                                 Termination by Executive for Good Reason

 

The Executive may terminate the Employment at any time for Good Reason on thirty (30) days’ advance written notice to the Employer.  The Executive must give such notice within thirty (30) days of Employer’s notification to the Executive that his position is being eliminated or his Salary is being reduced (provided in either case the Employer does not promptly remedy the cause of the Good Reason) or else the Executive waives his right to terminate for Good Reason.

 

4.2                              Payment in Lieu of Notice

 

The Employer shall have the discretion to terminate the Employment lawfully without any notice or on notice less than that required by Clause 4.1 (including where notice is given by the Executive) by paying the Executive a sum equal to Salary and the cost to the Employer of providing contractual benefits (excluding any benefits under Clause 8.2), as reasonably determined by Employer, in respect of that part of the period of notice which the Employer has not honoured (less any appropriate tax and other required deductions).  This amount shall be paid within thirty (30) days after Termination Date.

 

4.3                              Payments upon Termination of the Employment

 

(a)                                Compensation Upon Termination by reason of Death or Disability

 

In the event the Employment is terminated by reason of death or by the Employer by reason of Disability, the Employer’s sole obligation, except as otherwise provided in a benefit plan in which the Executive is a participant on the Termination Date, shall be to pay the Executive (or to the legal representative of Executive’s estate upon death) any Accrued Salary and Benefits and a pro-rated Incentive (subject to the discretion of the Board) to the extent Executive is eligible at the Termination Date.  Said payments shall be made within thirty (30) days after the Termination Date.

 

(b)                                 Compensation Upon Termination for Cause or Resignation Other than for Good Reason

 

If the Employment is terminated by the Employer for Cause or by the Executive for any reason other than a Good Reason, the Employer’s sole obligation shall be to pay the Executive when due any Accrued Salary and Benefits.

 

(c)                                  Compensation Upon Resignation for Good Reason

 

If the Employment is terminated by Executive for Good Reason within thirty (30) days following an event that constitutes Good Reason, then the Employer shall pay Executive:

 

(i)                                    when due any Accrued Salary and Benefits; and

 

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(ii)                                 a pro-rated Incentive (subject to the discretion of the Board) to the extent Executive is eligible at the Termination Date. This payment will be paid according to Clause 4.4; and

 

(iii)                              subject to the Executive signing a Release within the twenty-one (21) day period immediately following the Termination Date and not revoking such Release, a sum equal to eleven (11) months of Salary and the cost to the Employer of providing contractual benefits for that eleven (11) month period (excluding any benefits under Clause 8.2), as reasonably determined by Employer.  This payment will be paid according to Clause 4.4.

 

(d)                                 Compensation Upon Termination Without Cause

 

If the Employment is terminated by the Employer without Cause, the Employer shall pay the Executive:

 

(i)                                    when due, any Accrued Salary and Benefits; and

 

(ii)                                 a pro-rated Incentive (subject to the discretion of the Board) to the extent Executive is eligible at the Termination Date. This payment will be paid according to Clause 4.4; and

 

(iii)                              subject to the Executive signing a Release within the twenty-one (21) day period immediately following the Termination Date and not revoking such Release, a sum equal to nine (9) months of Salary and the cost to the Employer of providing contractual benefits for that nine (9) month period (excluding any benefits under Clause 8.2), as reasonably determined by Employer.  This payment will be paid according to Clause 4.4.

 

4.4                              Payment Under Clause 4.3(c) or Clause 4.3(d)

 

(a)                                 Any payment to be made to the Executive under Clause 4.3(c)(iii) or Clause 4.3(d)(iii) (the “Payment”) shall be paid as follows:

 

(i)                                    Five (5) months worth of the Payment (if the payment is made under Clause 4.3(c)(iii)) or three (3) months worth of the Payment (if the payment is made under Clause 4.3(d)(iii)) shall be paid within thirty (30) days of Termination Date; and

 

(ii)                                 the remainder of the Payment shall be paid in six (6) equal monthly installments which shall commence six (6) months after the Termination Date.  At the discretion of the Board, such installment payments will:

 

(A)                              cease to be payable upon the Executive commencing new employment or engagement (“New Employment”) for which his basic salary payable in the first year of that New Employment (“New Salary”) will, in the reasonable opinion of the Board, be not significantly lower than the Salary paid during the last twelve (12) months of his Employment (“Old Salary”);

 

(B)                              cease to be payable in full but continue to be payable in part upon the Executive commencing New Employment for which his New Salary will, in the reasonable opinion of the Board, be significantly lower than his Old Salary, but in excess of the Threshold.  In these circumstances, each installment payable after the Executive has commenced the New Employment shall be reduced by a sum equal to

 

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one twelfth of the New Salary.  For the purposes of this provision, “Threshold” shall mean an annualized sum of $350,000 (such sum to be increased by the same percentage increase to Salary as takes place between the date of this Agreement and the Termination Date); or

 

(C)                              continue to be payable and not be reduced if the Executive commences New Employment for which his New Salary will, in the reasonable opinion of the Board be equal to or lower than the Threshold.

 

(b)                                 In order to be eligible to receive a Payment under this Clause, the Executive must:

 

(i)                                    comply with his obligations under the Agreement during the notice period, as requested by the Board; and

 

(ii)                                 notify the Board promptly when he obtains New Employment, providing the Board with details of the New Salary.

 

(c)                                  If a pro-rated Incentive payment is payable pursuant to Clause 4.3(c)(ii) or 4.3(d)(ii) it shall be paid to the Executive at the same time as any Incentive payments are paid to other eligible employees still in active employment or such earlier date as the Board determines in its sole discretion but in any event no later than 31 December following the end of the relevant financial year to which the Incentive relates.

 

4.5                              409A

 

(a)                                 General

 

The intent of the parties to this Agreement is that the payments and benefits under this Agreement comply with or are exempt from Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and guidance promulgated thereunder (collectively, “Section 409A”).  Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

 

(b)                                 Separation from Service

 

Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that are designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Employer within the meaning of Section 409A (a “Separation from Service”).

 

(c)                                  Specified Employee

 

Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by Employer at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service with the Employer or (ii) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to

 

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Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.

 

(d)                                 Expense Reimbursements

 

To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred; provided that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

(e)                                  Installments

 

Executive’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.  The Employer may accelerate the payment of any amount under this Agreement; provided, that, no payment under this Agreement shall be accelerated unless such acceleration would not result in additional tax or interest pursuant to Section 409A.

 

4.6                              Corporate Change

 

If at any time within 12 months of a Corporate Change, either the Employer terminates the Employment (other than for Cause), or the Executive resigns for Good Reason, the Employer shall be obliged to make the payments under Clause 4.3(c) or 4.3(d) as appropriate, except that said payment will be paid in a lump sum, subject to Clause 4.5.

 

5.                                     SCOPE OF THE EMPLOYMENT

 

5.1                              During the Employment the Executive shall:

 

(a)                                 devote the whole of his time, attention and skill to the business and affairs of the Company and the Group during the hours of work described in Clause 5 except during holidays and periods of absence due to ill health;

 

(b)                                 faithfully, competently and diligently perform such duties and exercise such powers consistent with his position as may from time to time be assigned to or vested in him by the Board, to the standard reasonably required by the Board.  Such powers and duties may exceptionally fall outside the normal ambit of the Executive’s position but will not be duties inappropriate to the Executive’s status;

 

(c)                                  use his best endeavours to promote and maintain the interests and reputation of the Group;

 

(d)                                 report to the CEO (or such other person being a member of the Board as the Board may from time to time nominate and notify the Executive);

 

(e)                                  obey the reasonable and lawful directions of the Board;

 

(f)                                   comply with all the Group’s rules, regulations, policies and procedures from time to time in force including but not limited to the Diageo Code of Business Conduct;

 

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(g)                                  comply with the articles of association of any Group Company of which he is a director and all statutory, fiduciary and common law duties that apply to him from time to time and do all such things as are necessary to ensure compliance with the UK Corporate Governance Code,

 

(h)                                 travel to such places (within or outside the United States) in such manner and on such occasions as the Board may from time to time reasonably determine;

 

(i)                                     refrain from doing or permitting any matter which causes any regulatory authority in the United States, United Kingdom or elsewhere to withdraw permission or in any way prevent the Executive from carrying out his duties under this Agreement;

 

(j)                                    not at any time without the prior consent of the Board incur on behalf of the Company or any Group Company any capital expenditure in excess of such sum as may be authorised from time to time by the Board or enter into on behalf of the Company or any Group Company any commitment, contract or arrangement which is otherwise than in the normal course of business or is outside the scope of his normal duties or is of an unusual or onerous or long term nature;

 

(k)                                 not without the prior consent of the Board seek or accept from any actual or prospective customer, controller or supplier of the Group any gift, gratuity or benefit which breaches the Diageo Code of Business Conduct and, in particular, the provisions of that Code relating to Acceptance of Entertainment and Gifts.  In case of doubt, the Executive shall consult the Board in relation to these matters; and

 

(l)                                     keep the Board at all times promptly and fully informed (in writing if so requested) of his conduct of the business of the Company and any Group Company and provide such explanations in connection with it as the Board may require.

 

5.2                              Alternative Duties

 

The Board shall be entitled at any time to require the Executive to perform duties consistent with his role and status not only for the Company but also for any Group Company including, if so required, acting as a director of any Group Company.  The Board may at its discretion remove or procure the removal of the Executive from any directorship to which he is appointed under this clause.  The Employer may at its sole discretion transfer this Agreement to any Group Company at any time.

 

5.3                              Non executive positions

 

The Executive shall be entitled to take up such non-executive appointments as are approved by the Board from time to time (such approval not to be unreasonably withheld) but only to the extent that the discharge of his duties under this Agreement is not impaired as a result.

 

5.4                              Data Processing

 

The Executive consents to the processing of personal data, including sensitive data, of which the Executive is the subject, details of which are specified in the applicable Data Privacy Policy.  In particular:

 

(a)                                 The Executive agrees that personal data relating to the Executive which has been or is in the future obtained by the Group may be held and processed by the Group either by computer or manually for any purpose relating to the administration, management and operation of the Executive’s employment, or in relation to the Group’s legal obligations or business needs; and

 

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(b)                                 The Executive hereby agrees that sensitive data concerning the Executive which has been or is in the future obtained by the Group may also be held and processed as above for the purposes of keeping under review equality of opportunity and for ensuring the Group’s compliance with any legal obligations;

 

(c)                                  Due to the multinational nature of the Group’s business, it may be necessary for the Group’s overseas offices to have access to information held about the Executive by the Group. However, it is only intended that information about the Executive will be used by the Group’s overseas offices for the purposes of enabling the Group to deal with business or personnel issues connected with the Executive’s employment, including advising relevant statutory authorities in order to obtain a work permit or visa or assisting in the Executive’s secondment to an overseas office for payroll purposes. The Executive agrees that, where appropriate, personal information about the Executive may be transferred to the Group’s overseas offices.

 

5.5                              Group Policies

 

The Group has implemented a Global Computer Usage, Email and Internet Policy, Alcohol Policy, Drugs/Solvent Abuse and Dependency Policy, Expenses Policy and Mobile Phones Policy which the Executive is obliged to comply with at all times during the Employment. In particular, the Executive’s attention is drawn to the sections of the Global Computer Usage, Email and Internet Policy which indicate that any Group Company may from time to time monitor the Executive’s use of its communication systems, namely its computer systems, email systems and telephones. The Executive acknowledges that the Group has a legitimate interest in carrying out this monitoring and that, by signing this Agreement, the Executive consents to it.

 

6.                                     HOURS OF WORK

 

The normal business hours of the Employer are 9.00am to 5.00pm, Monday to Friday. However, the Executive shall be required to work such additional hours as are necessary to fulfil his duties under this Agreement. No payment will be made for any additional hours worked by the Executive.

 

7.                                     PLACE OF WORK

 

The Executive’s place of work will initially be Diageo NA’s offices at 801 Main Avenue, Norwalk CT 06851, United States of America but the Board may require the Executive to work at any other locations (including outside of the United States of America) for such periods as the Board may from time to time require.

 

8.                                     COMPENSATION AND BENEFITS

 

8.1                              The Employer shall pay to the Executive the Salary at the rate of $1,400,000 per annum (or such other sum as may be agreed from time to time). This will be paid in equal monthly instalments in arrears on or about the last working day of the month. The rate of Salary will normally be reviewed annually on 1st October with the first such review expected to be in October 2012.

 

8.2                              In addition to his Salary, the Executive will be eligible to participate in such of the following incentive schemes as exist from time to time for senior executives of the Group, subject always to their respective rules:

 

(a)                                 Diageo Annual Incentive Plan;

 

(b)                                 Diageo Senior Executive Share Option Plan; and/or

 

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(c)                                  Diageo Performance Share Plan (The PSP Plan).

 

The Executive’s participation in and level of any award under such plans and schemes is at the discretion of the Board. If a payment is made or an award is granted under such plan and/or schemes in any one year, this shall not give rise to a contractual entitlement to a payment or award in future years. Any awards granted under these plans will be subject to the terms and conditions of the appropriate plan from time to time. Further, the Board may at its discretion reduce the Executive’s participation in the incentive schemes at (b) and (c) above in the event that he fails to satisfy the minimum shareholding requirement (based on his salary and length of service) applicable to him which will be notified to him from time to time.

 

8.3                              The Salary shall be inclusive of any fees to which the Executive may be entitled as a director of the Company or any Group Company. The Executive agrees to pay forthwith to the Company or procure that the Company is paid all such fees received by him.

 

8.4                              Payment of the Salary to the Executive shall be made either by the Employer or by a Group Company and, if by more than one company, in such proportions as the Board may from time to time think fit.

 

8.5                              The Employer shall be entitled to deduct from any sum due to the Executive under the terms of this Agreement any monies which are owed by the Executive to the Employer.

 

8.6                              All payments described in this Agreement are gross amounts. All payments and benefits described in this Agreement will be subject to deductions of appropriate taxes and social contributions before payment is made to the Executive.

 

9.                                     EXPENSES

 

9.1                              The Employer shall reimburse the Executive in respect of all reasonable expenses wholly, exclusively and necessarily incurred by him in the proper performance of his duties, subject to him providing such receipts or other appropriate evidence as the Employer may require.

 

9.2                              The Executive will be issued with a company credit card on conditions that he:

 

(a)                                 takes good care of such card and immediately reports any loss of it to the Employer;

 

(b)                                 uses the card only for the purposes of the Group’s business in accordance with any applicable Company policy; and

 

(c)                                  returns the card immediately to the Employer on request.

 

10.                              VACATION

 

10.1                       The Executive shall be entitled, in addition to all Public holidays normally observed in Connecticut, to 25 working days’ paid vacation in each vacation year (being the period from 1 January to 31 December).

 

10.2                       In the respective vacation years in which the Employment commences or terminates, the Executive’s entitlement to vacation shall accrue on a pro rata basis for each completed calendar month of service during the relevant year.

 

10.3                       If, on the Termination Date, the Executive has exceeded his accrued vacation entitlement, the value of such excess, (calculated by reference to Clause 10.2 and the Salary), may be deducted by the Employer from any sums due to him, except to the extent such deduction would subject Executive to additional tax under Section 409A of the Code. If the Executive on the Termination Date has accrued but untaken vacation entitlement, the Employer shall at

 

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its discretion either require the Executive to take such unused vacation during any notice period or make a payment to him in lieu of it (calculated as above), provided always that if the Employment is terminated for Cause then the Executive shall not be entitled to any such payment. For these purposes, salary in respect of one day of vacation entitlement shall be calculated as 1/261 of Salary.

 

10.4                       Vacation entitlement for one vacation year cannot be carried forward from one year to the next and failure to take vacation entitlement in the appropriate vacation year will lead to forfeiture of any accrued vacation not taken without any right to payment in lieu of it; provided always that any days of vacation not taken at the Employer’s written request in one year may be carried forward to the next year.

 

11.                              SICKNESS BENEFITS

 

11.1                       If the Executive is absent from his duties as a result of sickness or injury:-

 

(a)                                 for a period of 6 days or less, he will on his return to work on request, complete and produce a self-certificate;

 

(b)                                 for a period of 7 days or more he will, on request, produce medical certificates;

 

to the Employer in respect of such absence.

 

11.2                       If the Executive’s absence shall be occasioned by the actionable negligence of a third party in respect of which damages are recoverable, then the Executive shall:

 

(a)                                 notify the Employer immediately of all the relevant circumstances and of any claim, compromise, settlement or judgment made or awarded in connection with it;

 

(b)                                 give to the Employer such information concerning the above matters as the Employer may reasonably require; and

 

(c)                                  if the Employer so requires, refund to the Employer any amount received by him from any such third party provided that the refund shall be no more than the amount which he has recovered in respect of remuneration.

 

12.                              OTHER BENEFITS

 

12.1                       The Executive shall participate in the appropriate benefit plans of the Group as described in Exhibit 1 to this Agreement. Participation in the benefit plans is subject to and governed by the terms of the applicable plan and subject in each case to any applicable insurer of the plan accepting the Executive (and his family if applicable) for cover under the relevant insurance policy and at normal rates. The provision of such benefits is without prejudice to the Employer’s right at its absolute discretion to terminate the Employment at any time including where the termination of employment would terminate participation in the benefit plan.

 

12.2                       In accordance with Company policy on medical examination, the Executive will be entitled to an annual medical examination and test by a medical practitioner nominated by the Board. The Board may require the Executive at any time to submit to a medical examination with such frequency as is reasonable. The Executive will permit the results of such medical examinations to be disclosed to the Board.

 

12.3                       The Employer will pay up to a maximum amount of US$20,000 of fees per annum for the Executive to receive tax and financial planning advice from an adviser approved by the Employer, with such level of benefits as the Employer shall in its absolute discretion decide. If the Executive is employed for part of a calendar year, he will receive a prorated entitlement.

 

13

 

12.4                       The Employer shall pay on the Executive’s behalf the annual subscription fees for one professional body relevant to the Employment.

 

12.5                       During the Employment, the Employer shall provide or reimburse the Executive for the cost of chauffeur service and round trip business class air fare for the Executive and his family’s annual trip to India together with any additional amount such that the income tax liability of the Executive is no greater than had he not received such benefits.

 

13.                              RESTRICTIONS DURING THE EMPLOYMENT

 

13.1                       During the Employment the Executive shall not directly or indirectly be employed,  engaged, concerned or interested in any activity which the Board reasonably considers may be, or become, harmful to the interests of the Company or of any Group Company or which might reasonably be considered to interfere with the performance of the Executive’s duties under this Agreement.

 

13.2                       Clause 13.1 shall not apply:

 

(a)                                 to the Executive holding (directly or through nominees) investments listed on the Official List of London Stock Exchange PLC or in respect of which dealing takes place in the Alternative Investment Market or any recognised stock exchange as long as he does not hold, directly or indirectly, more than 3 per cent of the issued shares or other securities of any class of any one company; or

 

(b)                                 to any act undertaken by the Executive with the prior written consent of the Board; or

 

(c)                                  to any interest permitted by Clause 5.3.

 

13.3                       The Executive shall comply with every rule of law (including but not limited to the insider dealing provisions contained in Part V of the Criminal Justice Act 1993), the UK Listing Authority’s listing rules’ Model Code for transactions in securities by directors of listed companies, certain employees and persons connected with them and every regulation of the Company for the time being in force in relation to dealings in shares or other securities of the Company or any Group Company. Under Rule 6 of the Model Code, the person to whom notice should be given and from whom acknowledgement must be received before the Executive may deal in securities shall be the Company Secretary of the Company from time to time or such other person as shall be notified to the Executive. The Executive also acknowledges that under the provisions of the Model Code the Executive must seek to ensure compliance with the Model Code by persons connected with the Executive (within the meaning of section 252 of the Companies Act 2006) including, without limitation, the Executive’s spouse and dependent children, and by investment managers acting on the Executive’s behalf or on behalf of connected persons. The Executive undertakes to procure that dealings by or on behalf of such persons are in compliance with the Model Code.

 

14.                              CONFIDENTIAL INFORMATION AND COMPANY DOCUMENTS

 

14.1                       The Executive shall neither during the Employment (except in the proper performance of his duties or for the purpose of obtaining legal, accountancy or pension advice or with the express written consent of the Board) nor at any time (without limit) after the termination of the Employment except in compliance with an order of a competent court, or any regulatory authority:

 

(a)                                 divulge or communicate to any person, company, business entity or other organisation;

 

14

 

(b)                                 use for his own purposes or for any purposes other than those of the Company or any Group Company; or

 

(c)                                  through any failure to exercise due care and diligence, permit or cause any unauthorised disclosure of;

 

any Confidential Information.

 

These restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through any breach by the Executive of the provisions of this Agreement or other default of the Executive.

 

14.2                       The Executive acknowledges that all books, notes, memoranda, records, lists of customers and suppliers and employees, correspondence, documents, computer and other discs and tapes, data listings, codes, designs and drawings and other documents and material whatsoever (whether made or created by the Executive or otherwise) relating to the business of the Company or any Group Company (and any copies of the same), whether or not such material is Confidential Information:

 

(a)                                 shall be and remain the property of the Company or the relevant Group Company; and

 

(b)                                 shall be handed over by the Executive to the Company or to the relevant Group Company on demand and in any event on the termination of the Employment and the Executive shall certify that all such property has been handed over on request by the Board.

 

Provided that following the termination of the Employment, the Executive shall be provided with reasonable access to Board Minutes and agendas of the Company or any Group Company relating to a period during which he was a director of the Company or such Group Company which shall nevertheless remain confidential.

 

15.                              INVENTIONS AND OTHER INTELLECTUAL PROPERTY

 

15.1                       The parties foresee that the Executive may make inventions or create other Intellectual Property in the course of his duties and agree that in this respect the Executive has a special responsibility to further the interests of the Company and any Group Company.

 

15.2                       The Executive agrees that he will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all of his right, title and interest throughout the world in and to any and all Intellectual Property, whether or not patentable or registrable under copyright, trademark or similar laws, which he may solely or jointly develop, or cause to developed, during the term of the Employment, whether during working hours or otherwise (collectively referred to as “Developed Intellectual Property”). The Executive further acknowledges that all Developed Intellectual Property which are original works of authorship or otherwise constitute copyrightable subject matter are “works made for hire” within the meaning of the United States Copyright Act and any similar laws of other jurisdictions (to the greatest extent permitted by applicable law) and are compensated by the Executive’s salary.

 

15.3                       The Executive agrees to keep and maintain adequate and current written records of all Developed Intellectual Property during the term of the Employment with the Company. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks, and/or any other suitable format. Such records and any other materials or media embodying Developed Intellectual Property or Confidential Information will be available to and remain the sole property of the Company at all times. The Executive agrees not to remove any of the foregoing records, materials or media from the

 

15

 

Company’s place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company for the purpose of furthering the Company’s business.

 

15.4                       The Executive agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Developed Intellectual Property in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company shall deem necessary in order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to such Developed Intellectual Property. The Executive further agrees that such obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement until the expiration of the last right in such Intellectual Property to expire in any country of the world. If the Company is unable because of the Executive’s mental or physical incapacity or unavailability or for any other reason to secure his signature to apply for or to pursue any application for any United States or foreign patents or mask work, trademark or copyright registrations covering Developed Intellectual Property assigned to the Company as above, then the Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of Intellectual Property registrations with the same legal force and effect as if originally executed by the Executive. The Executive hereby waives and irrevocably quitclaims to the Company any and all claims, of any nature whatsoever, which the Executive may now or hereafter have for infringement of any and all Intellectual Property assigned to the Company.

 

16.                              TERMINATION

 

16.1                       Notwithstanding any other provisions of this Agreement, in any of the following circumstances the Employer may terminate the Employment with immediate effect by serving written notice on the Executive to that effect.  In such event the Executive shall not be entitled to any further payment from the Employer or the Group except as set out in Clause 4.3(b). The circumstances are if the Executive:

 

(a)                                 is guilty of any gross misconduct or gross incompetence;

 

(b)                                 commits any serious breach of this Agreement, or any wilful neglect or unreasonable refusal to discharge his duties provided that if such breach is capable of remedy, he shall have failed to remedy it within such reasonable period as is specified in a written notice from the Board pointing out the breach and requiring it to be remedied;

 

(c)                                  repeats or continues (after warning) any breach of this Agreement;

 

(d)                                 is guilty of any fraud, dishonesty or conduct tending to bring himself, the Company or any Group Company into disrepute;

 

(e)                                  commits any act of bankruptcy or takes advantage of any statute for the time being in force offering relief for insolvent debtors;

 

(f)                                   is convicted or enters a plea of guilty or of no contest, to a felony involving moral turpitude or other convictions which might reasonably be thought to affect adversely the performance of his duties;

 

16

 

(g)                                  is disqualified from holding office in the Company or in any other company by reason of any order made under the Company Directors Disqualification Act 1986 or any other enactment of any relevant jurisdiction or is found to have committed any serious disciplinary offence by any professional or other body, which undermines the confidence of the Board in his continued employment under this Agreement;

 

(h)                                 resigns other than at the request of the Board or otherwise ceases to be, or becomes prohibited by law from being, a director of the Company, otherwise than at the Company’s request; or

 

(i)                                     is in breach of the Diageo Code of Business Conduct or the rules or regulations of the UK Listing Authority (including the Model Code for transactions in securities by directors of listed companies).

 

Any delay by the Employer in exercising such right of termination shall not constitute a waiver of it. The proper exercise by the Employer of its right of termination under this Clause is without prejudice to any other rights or remedies which it or any Group Company may have or be entitled to exercise against the Executive.

 

16.2                       If the Employer believes that it may be entitled to terminate the Employment, whether pursuant to Clause 16.1 or otherwise, or if the Employer believes it is necessary in order to investigate a complaint against the Executive, it shall be entitled (but without prejudice to its right subsequently to terminate the Employment on the same or any other ground) to suspend the Executive on full pay and exclude him from the Group’s premises for so long as it may think fit.

 

16.3                       On the termination of the Employment or if requested to do so by the Board in circumstances where the Executive has been prevented from performing his duties through long term sickness (for an aggregate period of six (6) months), the Executive shall:

 

(a)                                 at the request of the Board resign from office as a director of the Company and all offices held by him in any Group Company and shall transfer to the Company without payment or as the Company may direct any qualifying shares held by him as nominee for the Company or any Group Company, provided however that such resignation shall be without prejudice to any claims which the Executive may have against the Company or any Group Company arising out of the termination of the Employment; and

 

(b)                                 immediately deliver to the Company or the Employer all materials within the scope of Clause 14.2, any company car, mobile telephone or other Company or Group Company equipment in his possession and all keys, credit cards, and other property of or relating to the business of the Company or of any Group Company which may be in his possession or under his power or control;

 

and the Executive irrevocably authorises the Board to appoint any person in his name and on his behalf to sign any documents and do any things necessary or requisite to give effect to his obligations under this Clause 16.3.

 

16.4                      If the Employment shall be terminated (otherwise than in circumstances set out in Clause 4.6) for the purpose of reorganisation, reconstruction or amalgamation for whatever reason and the Executive is offered employment with any concern or undertaking resulting from such reorganisation, reconstruction or amalgamation on terms and conditions which as a whole are no less favourable than the terms of this Agreement, then he shall have no claim against the Company or any Group Company in respect of the termination of the Employment.

 

17

 

16.5                       The Executive shall not at any time after the Termination Date make any public statement in relation to the Company or any Group Company or any of their officers or employees. The Executive shall not without the Board’s consent after the termination of the Employment represent himself as being employed by or connected with the Company or any Group company.

 

17.                              RESTRICTIVE COVENANTS

 

17.1                       The Executive will not (without the previous consent in writing of the Board) during the Employment and for the period of nine (9) months immediately after the Termination Date whether as principal or agent, and whether alone or jointly with, or as a director, manager, partner, shareholder, employee or consultant of any other person, firm, company or organisation directly or indirectly:

 

(a)                                 be engaged, concerned or interested in the businesses of AB lnbev, Bacardi Limited, Brown Forman, Carlsberg A/S, Heineken NV, PernodRicard or SAB Miller. The Company may notify the Executive from time to time of additions to the foregoing list of companies, such additions being businesses which are similar to and compete with any business being carried on by the Company or by any Group Company;

 

(b)                                 in competition with the Company or any Group Company negotiate with, solicit business from or entice away from the Company or any Group Company (or endeavour to do any of the foregoing) the business of any person, firm, company or organisation who or which to his knowledge is and has been a customer of (or who had regular business dealings with) the Company or with any Group Company during the period of 12 months immediately preceding the Termination Date and with whom he had direct dealings or personal contact or for whom he was responsible on behalf of the Company or any Group Company in the course of the Employment during that period, so as to harm the goodwill or otherwise damage the business of the Company or of any other Group Company;

 

(c)                                  in competition with the Company or any Group Company undertake to provide any service or manufacture or supply any product similar to those with which he was concerned in the course of the Employment during the period of twelve (12) months immediately preceding the Termination Date to or for any person who is or was a customer or supplier to (or who had regular business dealings with) the Company or any other Group Company during the period of 12 months immediately preceding the Termination Date and with whom he had direct dealings or personal contact or for whom he was responsible on behalf of the Company or any Group Company in the course of the Employment during that period.

 

For the purposes of Clauses 17.1(b) and Clause 17.1(c) “customer” shall include any third party with whom the Company or any Group Company was (during the said period) in negotiation in respect of the provision of goods or services;

 

(d)                                 interfere or seek to interfere with the supply to the Company or any Group Company of any goods or services by any supplier who during the period of 12 months immediately preceding the Termination Date shall have supplied goods or services to the Company or any Group Company and with whom the Executive has had business dealings, nor will he interfere or seek to interfere with the terms on which such supply during such period as aforesaid has been made;

 

(e)                                  solicit or entice away or endeavour to solicit or entice away from the Company or any Group Company any person who is an employee of or otherwise works for the Employer or any Group Company and;

 

18

 

(i)                                    who is at the Termination Date or was within the period of 12 months immediately preceding that date part of the senior management of the Employer or any other Group Company; or

 

(ii)                                 who by reason of their knowledge of trade secrets or Confidential Information of the Employer or any Group Company or knowledge or influence over the clients, customers or suppliers of the Company or any Group Company is likely to be able to assist or benefit a business which competes or proposes to compete with the Company or any Group Company;

 

provided that this Clause 17.1(e) shall only apply to employees with whom the Executive had personal dealings in period of twelve (12) months preceding the Termination Date;

 

(f)                                   employ or engage for the provision of work or services any person who is an employee of or otherwise works for the Company or any Group Company and:

 

(i)                                    who is at the Termination Date or was within the period of 6 months immediately preceding that date part of the senior management of the Company or any other Group Company; or

 

(ii)                                 who by reason of their knowledge of trade secrets or Confidential Information of the Company or any Group Company or knowledge or influence over the clients, customers or suppliers of the Company or any Group Company is likely to be able to assist or benefit a business which competes or proposes to compete with the Company or any Group Company;

 

provided that this Clause 17.1(f) shall only apply to employees with whom the Executive had personal dealings in period of six (6) months preceding the Termination Date.

 

17.2                       For the avoidance of doubt, none of the restrictions contained in Clause 17.1 shall prohibit any activities by the Executive which are not in direct or indirect competition with any business being carried on by the Company or any Group Company at the Termination Date.

 

17.3                       Nothing in Clause 17.1 shall preclude the Executive from holding (directly or through nominees) investments listed on the Official List of London Stock Exchange PLC or in respect of which dealing takes place in the Alternative Investment Market or any recognised stock exchange as long as he does not hold, directly or indirectly, more than 3 per cent of the issued shares or other securities of any class of any one company.

 

17.4                       At no time after the Termination Date shall the Executive directly or indirectly represent himself as being interested in or employed by or in any way connected with the Company or any Group Company, other than as a former employee of the Company or the Employer.

 

17.5                       The Executive agrees that, having regard to all the circumstances, the restrictions contained in this clause are reasonable and necessary for the protection of the Company or of any Group Company and that they do not bear harshly upon him.

 

17.6                       The Executive hereby enters into covenants in the same terms as those contained in Clause 17.1 which shall apply in the event that the Employment is terminated unlawfully.

 

17.7                       The Company and Executive further acknowledge that the time, scope, geographic area and other provisions of Clause 17.1 have been specifically negotiated by sophisticated, commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the provisions in Clause 17.1 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by

 

19

 

reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action. Executive acknowledges that violation of Clause 17.1 of this Agreement will cause the Company and/or the Group irreparable harm for which there is no adequate remedy at law, and as a result, the Company shall be entitled to the issuance of an injunction, restraining order or other equitable relief without bond by a Court of competent jurisdiction restraining Executive from committing or continuing any such violation. Any right to obtain an injunction, restraining order or other equitable relief hereunder shall not be deemed a waiver of any right to assert any other remedy the Company or any Group Company may have at law or in equity.

 

18.                              FORMER CONTRACTS OF EMPLOYMENT

 

18.1                       This Agreement shall be in substitution for any previous contracts,  whether by way of letters of appointment,  agreements or arrangements,  whether written,  oral or implied,  relating to the employment of the Executive, which shall be deemed to have been terminated by mutual consent as from the Commencement Date and the Executive acknowledges that he has no outstanding claims of any kind against the Company or any Group Company in respect of any such contract.

 

18.2                       For the avoidance of doubt, this clause shall not affect benefits which have already accrued to the Executive prior to the date hereof under any pre-existing scheme or arrangement by virtue of which he was entitled to benefits.

 

19.                              CHOICE OF LAW AND ARBITRATION

 

19.1                       This Agreement and the interpretation thereof, shall be governed by the laws of the State of Connecticut without regard to its conflict of law rules and shall be deemed to have been made in the State of Connecticut.

 

19.2                       The parties hereto mutually consent to the resolution by arbitration of all claims or controversies, whether or not arising out of Executive’s employment or its termination that the Executive may have against the Company or any Group Company, or against its directors, officers, employees or agents or that the Company or any Group Company may have against the Executive.

 

19.3                       The parties agree that any arbitration shall be in accordance with the then current employment arbitration procedures of the American Arbitration Association before an arbitrator who is licensed to practice law. The arbitration shall take place in [Connecticut], State of Executive’s work location unless the parties all consent to an alternate location. The parties further agree that arbitration is the exclusive and binding remedy for any such dispute and will be used instead of any court action, which is hereby expressly waived by any party, except for any request by either party for temporary or preliminary injunctive or other equitable relief pending arbitration in accordance with applicable law or an administrative claim with an administrative agency.

 

20.                              GENERAL

 

20.1                       The expiration or termination of this Agreement shall not prejudice any claim which any party may have against the other in respect of any pre-existing breach of or contravention of or non-compliance with any provision of this Agreement nor shall it prejudice the coming into force or the continuance in force of any provision of this Agreement which is expressly or by implication intended to or has the effect of coming into or continuing in force on or after such expiration or termination of the Employment or this Agreement.

 

20

 

20.2                       No failure or delay by the Company or any Group Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise by the Company or any Group Company of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

 

20.3                       The Executive promises to cooperate fully in any investigation that the Company or any Group Company undertakes into matters occurring during the Executive’s Employment. The Employer will reimburse Executive for reasonable expenses incurred in accordance with its Travel and Expense Policy.

 

20.4                       No provision of this Agreement may be amended, changed, modified or waived unless such amendment, change, modification or waiver is agreed to in writing, signed by Executive and by a duly authorized officer of the Company.  No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

 

20.5                       If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

 

20.6                       The Executive represents and warrants that he is not bound by or subject to any court order, agreement, arrangement or undertaking which in any way restricts or prohibits him from entering into this Agreement or from performing his duties under it.

 

20.7                       Regardless of the reason or method bringing about the termination of Employment, all the Executive’s post termination obligations contained in this Agreement, including in particular the restrictive covenants in Clause 17, shall remain in full force and effect.

 

21

 

IN WITNESS of which this Agreement has been executed and delivered as a deed on the first date written above.

 

	
EXECUTED   as a Deed
    	
/s/   Dr. Humer
    
	
by Diageo PLC
    	
Director
    
	
acting by [Director]
    	
 
    
	
and [Director/Secretary]
    	
/s/   Paul Tunnacliffe
    
	
 
    	
Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
EXECUTED   as a Deed
    	
/s/   Gabriel Bisio
    
	
by Diageo NA
    	
Director
    
	
acting by [Director]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
EXECUTED   as a Deed
    	
 
    
	
By Ivan Menezes
    	
/s/   Ivan Menezes
    
	
in the   presence of:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Witness’s
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/   Kathleen O’Brien
    
	
 
    	
 
    
	
Full   Name:
    	
Kathleen   O’Brien
    
	
 
    	
 
    
	
Address:
    	
Fairfield,   CT 06824
    
	
 
    	
U.S.A
    

 

22

 

Exhibit 1

 

You are entitled to participate in the following plans and programs subject to the plan documents of each as amended from time to time.

 

SUMMARY OF BENEFIT PLANS AND PROGRAMS

 

RETIREMENT PROGRAMS

 

·                  Diageo, NA, Inc. Savings 401(K) Plan

·                  Diageo, NA, Inc. Cash Balance Plan (Pension)

·                  Diageo, NA, Inc. Benefit Supplement Plan (Pension)

·                  Diageo, NA, Inc. Supplemental Executive Retirement Plan (Pension)

·                  Diageo, NA, Inc. Executive Retiree Health Plan

·                  Diageo, NA, Inc. Deferred Compensation Plan

 

FINANCIAL PLANNING & SUPPORT PROGRAMS

 

·                  Financial Counseling

·                  Estate Planning

·                  Tax Preparation

 

WELFARE BENEFIT PROGRAMS

 

·                  Medical

·                  Dental

·                  Vision

·                  Life Insurance and AD&D

·                  Disability Insurance

 

OTHER PROGRAMS

 

·                  Perquisite Allowance

·                  Flexible Spending Accounts (FSA)

·                  Vacation and Vacation Buy

·                  Brand Ambassador Program

 

ADDITIONAL PERQUISITES SUBJECT TO GROSS-UP

 

·                  Chauffer Service

·                  Round trip air fare for the Menezes family’s annual trip to India

 

SUPPLEMENTAL PENSION AND RETIREE HEALTH PLAN

 

·                  The Company will provide the Executive with a supplemental pension benefit which is subject to the terms and conditions of the Diageo North America, Inc. Supplemental Executive Retirement Plan (the “Supplemental Plan”).  The Supplemental Plan, when combined with the Executive’s benefit under the Diageo North America Inc. Cash Balance Plan will result in the Company’s combined annual percentage contribution for the Executive being 20%.

·                  The Company will provide the Executive with a retiree medical plan that enables Executive and his family to qualify for retiree medical from age 55.  Executive’s eligibility to participate in the Executive Retiree Health Plan is subject to the terms and conditions of said plan.

 

23Exhibit 4.22

 

	

    	
CLIFFORD CHANCE LLP
    

 

 

THE DIAGEO PLC 2011 ASSOCIATED COMPANIES
 SHARE INCENTIVE PLAN

 

 

Adopted by the Remuneration Committee of the Board of the Company on 23 August 2011

 

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

 

Shares purchased or received under the Plan, any cash received under the Plan and any gains obtained under the Plan are not part of salary for any purpose (except to any extent required by statute).

 

The Plan is being offered for the first time in 2011 in selected countries and the board of Diageo plc shall have the right to decide, in its sole discretion, whether or not further awards will be granted in the future and to which employees those awards will be granted.

 

Exercising an Option which is not a Nil Cost Option under the Plan is an investment opportunity distinct from any employment contract.  Exercising an Option which is not a Nil Cost Option entails the risks associated with an investment.  An individual who exercises an Option which is not a Nil Cost Option is treated as being aware of such risks and accepts such risks of his own free will.

 

The detailed rules of the Plan are set out overleaf.

 

 

CONTENTS

	
 
    	
 
    	
 
    	
 
    
	
Rule
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions And   Interpretation
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Eligibility
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Grant Of Awards
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Limits
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Vesting Of Awards
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Consequences Of Vesting
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Exercise Of Options
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Cash Alternative
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
Lapse Of Awards
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
Leavers And Deceased   Participants
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Takeovers And Other Corporate   Events
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Adjustment Of Awards
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Alterations
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
Miscellaneous
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 1 : Grant Of A   Forfeitable Shares Award
    	
 
    	
23
    
	
 
    	
 
    	
 
    
	
Schedule 2 : Cash   Conditional Awards
    	
 
    	
24
    
	
 
    	
 
    	
 
    
	
Schedule 3 : Share   Appreciation Rights
    	
 
    	
25
    
	
 
    	
 
    	
 
    
	
Schedule 4 : United States   Addendum
    	
 
    	
26
    
	
 
    	
 
    	
 
    
	
Schedule 5 : Canadian Addendum
    	
 
    	
28
    

 

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                               In this Plan, unless the context otherwise requires:

 

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

 

“Associated Company” means any company (wherever incorporated) in which the Company is directly or indirectly interested in at least 15% of the issued ordinary share capital;

 

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

 

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

 

“Board” means the board of directors of the Company (or, on and after the occurrence of a corporate event described in Rule 11 (Takeovers and other corporate events), for the purposes of making determinations under Rule 11, the board of directors of the Company as constituted immediately before such event occurs) or a duly authorised committee of the board or a duly authorised person;

 

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

 

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

 

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

 

“Dividend Equivalent” means a benefit calculated by reference to dividends paid on Shares as described in Rule 3.6;

 

“Early Vesting Date” means either:

 

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

 

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

 

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

 

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

 

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

 

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

 

“Group Member” means:

 

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

 

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

 

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

 

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

 

“London Stock Exchange” means London Stock Exchange plc or any successor to that company;

 

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

 

“Nil Price Option” means an Option, the Option Price of which is nil or a nominal amount;

 

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

 

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

 

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

 

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

 

“Participating Company” means the Company, any Subsidiary or any Associated Company;

 

“Plan” means the Diageo 2011 Associated Companies Share Incentive Plan as amended from time to time;

 

“Rule” means a rule of the Plan;

 

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

 

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

 

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“Tax Liability” means any amount of tax or social security contributions for which a Participant would or may be liable and for which any Group Member or former Group Member would or may be obliged to (or would or may suffer a disadvantage if it were not to) account to any relevant authority;

 

“UKLA” means the United Kingdom Listing Authority;

 

“US Participant” means a Participant who (i) is resident in the United States of America on the Grant Date or (ii) who becomes subject to US taxation prior to exercise or Vesting of an Award;

 

“Vest” means:

 

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

 

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

 

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

 

and Vesting shall be construed accordingly;

 

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

 

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

 

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

 

2.                                      ELIGIBILITY

 

An individual is eligible to be granted an Award only if he is an employee or an executive director of an Associated Company (excluding an executive director of the Company or members of the executive committee) who is required to devote the whole or substantially the whole of his working time to the service of any Associated Company.

 

3.                                      GRANT OF AWARDS

 

3.1                               Terms of grant

 

Subject to Rule 3.8 (Timing of grant), Rule 3.10 (Approvals and consents) and Rule 4 (Limits), the Board may resolve to grant an Award on:

 

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

 

(b)                                 such additional terms as the Board may specify

 

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

 

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3.2                               Type of Award

 

On or before the Grant Date, the Board shall determine whether an Award shall be a Conditional Award, an Option or a Forfeitable Shares Award.  If the Board does not specify the type of an Award on or before the Grant Date then an Award shall be a Conditional Award.  An Award granted to an employee who is not a US Participant shall be to acquire Shares unless the Board specifies on or before the Grant Date that the Award shall be to acquire ADSs.

 

3.3                               Grant of Award to US Participant

 

An Award granted under Rule 3.1 (Terms of Grant) to a US Participant, shall be subject to the provisions of Schedule 4 (United States Addendum) to the Plan and shall not take the form of an Option under which the Option Price is less than the price calculated under Rules 3.5 (a), (b) or (c) (Option Price).

 

3.4                               Method of grant

 

An Award shall be granted as follows:

 

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

 

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

 

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

 

3.5                               Option price

 

Where an Option (other than a Nil Price Option) is granted with an Option Price under Rule 3.4(b), the Board shall decide before an Option is granted the price at which Shares or ADSs may be acquired by the exercise of that Option, but the price shall not be less than:

 

(a)                                 if Shares are quoted in the London Stock Exchange Daily Official List, the average of the middle-market quotation of the Shares (as derived from that List) for the 3 dealing days before the Grant Date (or on such other dealing day(s) as the Board may decide) provided such dealing day(s) do not fall within any period when dealings in Shares are prohibited under the Company’s share dealing code (unless the proposed grant is permitted by such code);

 

(b)                                 if the Option is granted over ADSs, the average of the closing prices of the ADSs on the New York Stock Exchange for the 3 New York Stock Exchange trading days before the Grant Date;

 

(c)                                  if Rule 3.5(a) or (b) (as appropriate) does not apply, the market value of the Shares or ADSs as determined by the Board; or

 

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(d)                                 the nominal value of those Shares.

 

3.6                               Treatment of Dividends

 

The Board may:

 

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

 

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

 

This Rule shall not apply in the case of a Forfeitable Shares Award under which a Participant is entitled to receive dividends or in the case of an Option with an Option Price calculated under Rule 3.5 (Option Price).

 

3.7                              Method of satisfying Awards

 

An Award may only be satisfied:

 

(a)                                 by the issue of new Shares; or

 

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

 

3.8                               Timing of grant

 

Subject to Rule 3.10 (Approvals and consents), an Award may only be granted:

 

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

 

(i)                                     the day on which the Plan is approved and adopted by the remuneration committee of the Board; or

 

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

 

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

 

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but an Award may not be granted after 22 August 2021 (that is, the expiry of the period of 10 years beginning with the date on which the Plan is approved and adopted by the remuneration committee of the Board).

 

3.9                               Non-transferability and bankruptcy

 

An Award granted to any person:

 

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

 

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

 

3.10                        Approvals and consents

 

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

 

4.                                      LIMITS

 

4.1                               General rule

 

An Award shall not be granted if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.2) to exceed such number as the Board may determine from time to time; and for this purpose ADSs shall be deemed to be the number of Shares represented thereby.

 

4.2                               Meaning of “allocated”

 

For the purposes of Rule 4.1:

 

(a)                                 Shares are allocated:

 

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

 

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

 

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

 

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

 

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

 

For the purposes of Rule 4.2:

 

(a)                                 where:

 

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

 

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

 

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

 

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

 

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

 

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

 

4.4                               Changes to investor guidelines

 

Treasury shares shall cease to count as “allocated” Shares for the purposes of Rule 4.2 if institutional investor guidelines cease to require such Shares to be so counted.

 

4.5                               Individual limit

 

(a)                                 The maximum total market value of Shares or ADSs (calculated as set out in this Rule) over which Awards may be granted to any employee during any financial year of the Company is 375% of his salary (as defined in this Rule), unless Rule 4.5(b) applies.

 

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

 

For the purpose of this Rule 4.5:

 

(i)                                     an employee’s salary shall be taken to be his base salary (excluding benefits in kind), expressed as an annual rate payable by the Participating Companies

 

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to him on the Grant Date (or on such other date as the Board shall reasonably determine).  Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent amount of sterling determined by using any rate of exchange which the Board may reasonably select; and

 

(ii)                                  the market value of the Shares or ADSs over which an Award is granted shall be taken to be, for Shares, an amount equal to the middle-market quotation of Shares (as derived from the London Stock Exchange Daily Official List) on the Grant Date or, for ADSs, the closing price of an ADS on the New York Stock Exchange on the dealing day before the Grant Date or, if the Board so determines, the average of the middle market quotations of a Share or closing price of an ADS for the 3 dealing days before the Grant Date.

 

4.6                               Effect of limits

 

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

 

4.7                               Restriction on use of unissued Shares

 

No Shares may be issued to satisfy the Vesting of any Conditional Award or the exercise of any Option to the extent that such issue would cause the number of Shares allocated (as defined in Rule 4.2 and adjusted under Rule 4.3) to exceed the limit in Rule 4.1 (General rule) except where there is a variation of share capital of the Company which results in the number of Shares so allocated exceeding such limit solely by virtue of that variation.

 

5.                                      VESTING OF AWARDS

 

5.1                               Timing of Vesting:  Normal Vesting Date

 

Subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 5.6 (Restrictions on Vesting: corporate law issues), an Award shall Vest on the later of:

 

(a)                                 the third anniversary of the Grant Date (or such other date as the Board shall determine at the Grant Date as the date of Vesting); and

 

(b)                                 the date on which the Board determines whether any condition imposed on the Vesting of the Award has been satisfied (in whole or part)

 

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

 

5.2                               Extent of Vesting

 

An Award shall only Vest:

 

(a)                                 as permitted by any term or condition imposed on the Vesting of the Award; and

 

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

 

5.3                               Restrictions on Vesting: regulatory and tax issues

 

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

 

(a)                                the Vesting of the Award, and the issue of Shares or ADSs after such Vesting would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company (which, for the purposes of the Plan shall be deemed to apply to any Participant who ceases to be a director or employee of a Group Member if such code applied to the Participant immediately before such cessation), the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

 

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

 

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

 

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

 

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

 

5.4                               Tax liability before Vesting

 

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

 

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

 

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5.5                               Change of jurisdiction

 

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

 

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

 

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

 

5.6                               Restrictions on Vesting: corporate law issues

 

An Award which is to be satisfied by unissued Shares shall not Vest unless and until either:

 

(a)                                 the Participant has entered into such arrangements as the Board requires (and where permitted in the relevant jurisdiction) to pay to the Company the nominal value of each Share subject to the Award in accordance with the Companies Act 2006; or

 

(b)                                 the Board is authorised to capitalise from the reserves of the Company a sum equal to at least the aggregate nominal value of the Shares to be allotted.

 

6.                                      CONSEQUENCES OF VESTING

 

6.1                               Conditional Awards

 

On or as soon as reasonably practicable after the Vesting of a Conditional Award and, in any event, within 30 days of Vesting, the Board shall, subject to Rule 5.3(b) (Payment of Tax Liability) and any arrangement made under Rule 5.3(c) (Restrictions on Vesting: regulatory and tax issues) or Rule 5.6 (Restrictions on Vesting: corporate law issues), allot the Vested Shares or ADSs to the Participant (or a nominee for him).

 

6.2                               Options

 

An Option shall, subject to Rule 7.1 (Restrictions on the exercise of an Option: regulatory and tax issues) and in the case of a Nil Price Option any arrangement made under Rule 5.6 (Restrictions on Vesting: corporate law issues), be exercisable in respect of Vested Shares or ADSs as follows:

 

(a)                                 in the case of a Nil Price Option, for a period of 12 months beginning with the date on which the Option Vests; or

 

(b)                                 in the case of any other Option, until the expiry of 10 years beginning with the Grant Date

 

and, if any Option remains unexercised at the end of the relevant period set out above, the Option shall then lapse unless it lapses earlier under Rule 10.3 (Cessation of

 

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employment in other circumstances), Rule 11.1 (General offers), Rule 11.2 (Schemes of arrangement and winding up) or Rule 11.3 (Demergers and similar events).

 

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

 

6.3                               Forfeitable Shares Award

 

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

 

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

 

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

 

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

 

6.4                              Dividend equivalent

 

If the Board decided at any time under Rule 3.6 (Treatment of Dividends) that a Participant would be entitled to the Dividend Equivalent in relation to Shares or ADSs under their Award, then the provision of the Dividend Equivalent to the Participant shall be made as soon as practicable after Vesting and:

 

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

 

(b)                                 in the case of a provision of Shares or ADSs, Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 5.6 (Restrictions on Vesting: corporate law issues) shall apply as if such provision was the Vesting of an Award.

 

7.                                      EXERCISE OF OPTIONS

 

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

 

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

 

(a)                                 the exercise of the Option and the issue of Shares or ADSs after such exercise would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company  (which, for the purposes of the Plan shall be deemed to apply to any Participant who ceases to be a director or employee of a Group Member if such code applied to the Participant immediately before such cessation), the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

 

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

 

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

 

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

 

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

 

7.2                               Long stop date for exercise

 

An Option may not in any circumstances (and regardless of any other Rule) be exercised after the expiry of 10 years beginning with the Grant Date (or such shorter period beginning with the Grant Date as the Board may have decided before the grant of that Option) and if not exercised shall lapse at the end of such period.

 

7.3                               Exercise in whole or part

 

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

 

7.4                               Method of exercise

 

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

 

7.5                               Allotment timetable

 

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

 

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8.                                      CASH ALTERNATIVE

 

8.1                               Board determination

 

Where a Conditional Award Vests or where an Option has been exercised and Vested Shares or ADSs have not yet been allotted to the Participant (or his nominee), the Board may determine that, in substitution for his right to acquire such number of Vested Shares or ADSs as the Board may decide (but in full and final satisfaction of his right to acquire those Shares or ADSs), he shall be paid by way of additional employment income a sum equal to the cash equivalent (as defined in Rule 8.3) of that number of Shares or ADSs in accordance with the following provisions of this Rule 8.

 

8.2                               Limitation on the application of Rule 8.1

 

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

 

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

 

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

 

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

 

8.3                               Cash equivalent

 

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

 

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

 

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

 

Market value on any day shall be determined as follows:

 

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

 

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

 

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

 

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8.4                               Payment of cash equivalent

 

Subject to Rule 8.5 (Share alternative), as soon as reasonably practicable after the Board has determined under Rule 8.1 that a Participant shall be paid a sum in substitution for his right to acquire any number of Vested Shares or ADSs:

 

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

 

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

 

8.5                               Share alternative

 

If the Board so decides, the whole or any part of the sum payable under Rule 8.3 shall, instead of being paid to the Participant in cash, be applied on his behalf in subscribing for Shares or issuing ADSs at a price equal to the market value by reference to which the cash equivalent is calculated and the Company shall allot to him (or his nominee) the Shares so subscribed for or ADSs so issued.

 

8.6                               Deductions

 

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

 

9.                                      LAPSE OF AWARDS

 

An Award shall lapse:

 

(a)                                 in accordance with the Rules; or

 

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

 

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

 

10.                               LEAVERS AND DECEASED PARTICIPANTS

 

10.1                        Deceased Participants

 

If a Participant dies at a time when he is a director or employee of a Group Member before the Normal Vesting Date then, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 5.6 (Restrictions on Vesting: corporate law issues) and the remainder of this Rule, his Award shall Vest on the date of cessation.  In the case of an Option, the Option may be exercised by the Participant’s personal representatives during the period of 12 months (or, at the Board’s discretion in exceptional circumstances, up to 18 months) after his death and if not exercised shall lapse at the end of that period.

 

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

 

(i)                                     applying any condition imposed on the Vesting of Awards (unless the Board, in exceptional circumstances, decides otherwise); and

 

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

 

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

 

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

 

(a)                                 retirement with the agreement of his employer;

 

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

 

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

 

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

 

subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), Rule 5.6 (Restrictions on Vesting: corporate law issues), Rule 11 (Takeovers and other corporate events) and the remainder of this Rule, his Award shall Vest on the date of cessation.  In the case of an Option, the Participant may exercise the Option during the period of 12 months (or, at the Board’s discretion in exceptional circumstances, up to 18 months) after it Vests and if not exercised the Option shall lapse at the end of that period.

 

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

 

(i)                                     applying any condition imposed on the Vesting of Awards (unless the Board, in exceptional circumstances, decides otherwise) and any other factors considered by the Board to be relevant to reduce the number of Shares or ADSs which Vest; and

 

(ii)                                  reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date (or such other period set by the Board under Rule 5.1(b)) as at the time that the Participant ceases to be a director or employee unless the Board, acting fairly and reasonably, decides 

 

15

 

that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

 

10.3                        Cessation of employment in other circumstances

 

If a Participant ceases to be a director or employee of a Group Member for any reason other than those specified in Rule 10.1 (Deceased Participants) and Rule 10.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group) then any Award held by him shall lapse immediately on such cessation unless the Board, acting fairly and reasonably, decides that his Award shall Vest.  If the Board permits an Award to Vest, Vesting shall, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), Rule 5.6 Restrictions on Vesting: corporate law issues), Rule 11 (Takeovers and other corporate events) and the remainder of this Rule, occur on the date of cessation.  In the case of an Option, the Participant may exercise the Option during the period of 12 months (or, at the Board’s discretion in exceptional circumstances, up to 18 months) after it Vests and if not exercised the Option shall lapse at the end of that period.

 

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

 

(i)                                     applying any condition imposed on the Vesting of Awards (unless the Board, in exceptional circumstances, decides otherwise) and any other factors considered by the Board to be relevant to reduce the number of Shares or ADSs which Vest; and

 

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

 

10.4                        Meaning of ceasing employment

 

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

 

10.5                        Death following cessation of employment

 

If a Participant dies following cessation of employment in circumstances where his Award did not lapse but it has not Vested by the time of his death, it shall Vest 

 

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immediately on his death to the extent determined by reference to the time of cessation in accordance with Rule 10.1, 10.2 or 10.3.

 

11.                               TAKEOVERS AND OTHER CORPORATE EVENTS

 

11.1                        General offers

 

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

 

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

 

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

 

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

 

(i)                                     subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) and Rule 5.6 (Restrictions on Vesting: corporate law issues), all Awards shall Vest on the date of such notification if they have not then Vested and Rule 11.5 (Reduction in number of Vested Shares) shall apply; and

 

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

 

11.2                        Compulsory acquisition, schemes of arrangement and winding up

 

In the event that:

 

(a)                                 any person becomes bound or entitled to acquire shares in the Company under sections 979 to 985 of the Companies Act 2006;

 

(b)                                 under section 899 of the Companies Act 2006 the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a Scheme for the reconstruction of the Company or its amalgamation with any other company or companies; or

 

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

 

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

 

all Awards shall, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), Rule 5.6 (Restrictions on Vesting: corporate law issues) and Rule 11.4 (Internal reorganisations) Vest on the date of such event if they have not then Vested and Rule 11.5 (Reduction in number of Vested Shares) shall apply.

 

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If an event described in this Rule occurs then an Option may, subject to Rule 7.1 (Restrictions on exercise) and Rule 11.4 (Internal reorganisations), be exercised within 1 month (or such longer period as the Board may permit) of such event, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

 

11.3                        Demerger and similar events

 

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

 

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

 

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

 

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

 

11.4                        Internal reorganisations

 

In the event that:

 

(a)                                 an offer (as referred to in Rule 11.1 (General offers)) is made or a compromise or arrangement (as referred to in Rule 11.2(a) (Schemes of arrangement)) is proposed which is expected to result in the Company becoming controlled by a new company (the “New Company”); and

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                 applying any condition imposed on the Vesting of Awards (unless the Board decides otherwise); and

 

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

 

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

 

12.                               ADJUSTMENT OF AWARDS

 

12.1                        General rule

 

In the event of:

 

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

 

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

 

the Board may make such adjustments as it considers appropriate under Rule 12.2 (Method of adjustment).

 

12.2                        Method of adjustment

 

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

 

(a)                                 the number of Shares or ADSs comprised in an Award;

 

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

 

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

 

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12.3                        Adjustment below nominal value

 

An adjustment under Rule 12.2 (Method of adjustment) may reduce the price at which Shares may be subscribed for on the exercise of an Option to less than their nominal value, but only if and to the extent that the Board is authorised:

 

(a)                                 to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercised and which are to be allotted after such exercise exceeds the price at which the Shares may be subscribed for; and

 

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

 

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

 

13.                               ALTERATIONS

 

13.1                        General rule on alterations

 

The Board may at any time alter the Plan or the terms of any Award granted under it.

 

13.2                        Alterations to disadvantage of Participants

 

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

 

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

 

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

 

14.                               MISCELLANEOUS

 

14.1                        Employment

 

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

 

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14.2                        Disputes

 

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

 

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

 

14.3                        Share rights

 

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

 

In the case of Forfeitable Shares, where Vested Shares are released from their restrictions under the Plan, Participants will be entitled to all rights attaching to such Shares by reference to a record date on or after the date of the release of such restrictions.

 

14.4                        Notices

 

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

 

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

 

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

 

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

 

14.5                       Third parties

 

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

 

14.6                        Benefits not pensionable

 

Benefits provided under the Plan shall not be pensionable.

 

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14.7                        Data protection

 

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

 

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

 

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

 

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

 

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

 

14.8                        Governing law

 

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

 

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SCHEDULE 1:  GRANT OF A FORFEITABLE SHARES AWARD

 

On or before the grant of a Forfeitable Shares Award, each employee selected for such an Award must enter into an agreement with the Company under the terms of which the employee agrees both in respect of the Shares or ADSs comprised in the Award at the Grant Date and any additional Shares or ADSs that may become subject to the Award under Rule 3.6 (Treatment of Dividends):

 

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

 

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

 

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

 

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

 

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

 

(f)                             that a Forfeitable Shares Award which is to be satisfied by unissued Shares shall not be granted unless and until either:

 

(i)                                     the Participant has entered into such arrangements as the Board requires (and where permitted in the relevant jurisdiction) to pay to the Company the nominal value of each Share subject to the Forfeitable Shares Award in accordance with the Companies Act 2006; or

 

(ii)                                  the Board is authorised to capitalise from the reserves of the Company a sum equal to at least the aggregate nominal value of the Shares to be allotted.

 

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

 

On the Grant Date (or as soon as practicable after the payment date of the relevant dividend in the case of additional Shares or ADSs that are to become subject to the Forfeitable Shares Award under Rule 3.6 (Treatment of Dividends)) either the legal ownership of the Forfeitable Shares shall be held on the Participant’s behalf by a nominee as chosen from time to time by the Board or the Participant shall deposit the share certificate (or any other document of title) relating to the Forfeitable Shares together with a signed but otherwise uncompleted instrument of transfer with such person as the Board may from time to time decide.

 

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SCHEDULE 2:  CASH CONDITIONAL AWARDS

 

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

 

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

 

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

 

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

 

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

 

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

 

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SCHEDULE 3:  SHARE APPRECIATION RIGHTS

 

A Share Appreciation Right (“SAR”) may be granted under this Schedule.  The Rules of the Plan shall apply to a SAR as if it were an Option, except as set out in this Schedule.  Where there is any conflict between the Rules and this Schedule, the terms of this Schedule shall prevail.

 

1.                                      Before the grant of a SAR, the Board shall determine a “base price” for each Share or ADS under the SAR.  The base price shall be subject to the same restrictions as an Option Price set out in Rule 3.5 of the Plan.  There shall be no amount payable on the exercise of a SAR.

 

2.                                      Subject to paragraph 7 below, within 30 days after a SAR has been exercised by a Participant, the Board shall allot to him (or a nominee for him) the number of Shares or ADSs which shall have an aggregate market value (as defined in paragraph 5 below) as near as possible equal to (but not exceeding) the notional gain (as defined in paragraph 4 below).

 

3.                                      The notional gain is the amount by which the aggregate market value of the number of Shares or ADSs in respect of which the SAR is exercised exceeds the aggregate base price (as calculated in accordance with paragraph 1 above) of that number of Shares or ADSs.

 

4.                                      For the purposes of this Schedule the market value of a Share or ADS is:

 

(a)                                 if Shares are quoted in the London Stock Exchange Daily Official List, the middle market quotation of a Share (as derived from that List) on the day before the day on which the SAR is exercised; or

 

(b)                                 if ADSs are quoted on the New York Stock Exchange, the closing price of the ADS on the New York Stock Exchange on the day before the day on which the SAR is exercised;

 

(c)                                  where Shares are not so quoted, such value on the day on which the SAR is exercised as the Board, acting fairly and reasonably, shall decide.

 

5.                                      Shares or ADSs may only be allotted to a Participant (or a nominee for him) who exercises his SAR to the extent that the Board is authorised to capitalise from the reserves of the Company a sum equal to at least the aggregate nominal value of the Shares to be allotted to satisfy the exercise of the SAR and to apply that sum in paying up such amount on such Shares.

 

6.                                      If the Board so decides, the whole or any part of the notional gain determined under paragraph 4 above shall, instead of being delivered to the Participant (or his nominee) in Shares or ADSs under paragraph 3 above, be paid in cash.

 

7.                                      Any payment of cash under paragraph 6 above will be subject to deduction of such amount (on account of tax and similar liabilities) as may be required by law or as the Board may reasonably consider to be necessary or desirable.

 

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SCHEDULE 4: UNITED STATES ADDENDUM

 

This Addendum (the “US Addendum”) shall apply for all US Participants who are eligible to receive Awards pursuant to Rule 2 of the Plan. In the event that a Participant becomes a US Participant after the grant of an Award, such Award is modified in a manner consistent with this US Addendum.

 

1.                                      The purpose of this US Addendum is to ensure that Awards granted to US Participants under the Plan comply, as applicable, with the requirements of section 409A of the United States Code Internal Revenue Code of 1986, as amended (the “US Tax Code”) and the regulations thereunder. Notwithstanding the foregoing, this US Addendum should be interpreted and applied in a manner consistent with other legal requirements in the relevant jurisdictions, including, but not limited to, applicable securities laws.  Provisions of this US Addendum may be amended pursuant to Rule 13 of the Plan to take into account changes in the US Tax Code, including changes made to section 409A of the US Tax Code and the regulations thereunder.

 

2.                                      Words and phrases in this US Addendum shall have the same meaning as defined in Rule 1.1 of the Plan except as provided below.

 

3.                                      Except as noted in this US Addendum, the Rules described in the Plan apply to Awards granted under the Plan.

 

4.                                      This US Addendum shall apply as of the effective date of the Plan.

 

SECTION 409A COMPLIANCE

 

5.                                      Notwithstanding anything in the Plan to the contrary, Awards granted to a US Participant shall be subject to the following, as applicable:

 

(a)                                 Options granted to US Participants are intended to satisfy the nonstatutory stock option exemption provided in Treasury Regulation § 1.409A-1(b)(5)(i)(A).

 

(b)                                 An Option granted to a US Participant shall be granted with an Option Price determined in accordance with Rule 3.5 of the Plan, provided that in no event will the Option Price be less than “fair market value” on the Grant Date as defined in Treasury Regulation § 1.409A-1(b)(5). To the extent a Participant who has been granted an Option becomes subject to US taxation and such Option is determined to have been granted with an Option Price less than fair market value on the Grant Date, as so defined, such Option shall be exercisable only as follows: (a) if such Option is Vested in the year the Participant becomes subject to US taxation, such Option shall be exercisable only in the first calendar year after the year in which the Participant becomes subject to US taxation, and (b) if such Option is not Vested in the year the Participant becomes subject to US taxation, such Option shall be exercisable only in the first calendar year after the year in which the substantial risk of forfeiture (within the meaning of section 409A of the US Tax Code) lapses.

 

26

 

(c)                                  Adjustments made pursuant to Rule 12 of the Plan with respect to any Award  issued to or held by a US Participant shall be made in accordance with Treasury Regulation § 1.409A-1(b)(5).

 

(d)                                 No Nil Price Options shall be granted to US Participants.

 

(e)                                  Notwithstanding anything in the Plan to the contrary, payment with respect to any US Participant who Vests in a Conditional Award, or Cash Conditional Award (as described in Schedule 2 of the Plan) or who becomes entitled to a Dividend Equivalents (as defined in Rule 6.4 of the Plan) shall be made no later than 21⁄2 months following the end of the calendar year in which such Award or Dividend Equivalent Vests.

 

(f)                                   Notwithstanding anything in the Plan to the contrary, Rule 10.2 (a) (Retirement with the agreement of his employer) will not apply to Conditional Awards or Cash Conditional Awards held by US Participants.  Where an individual retires in such circumstances, Rule 10.3 (Cessation of employment in other circumstances) shall apply ignoring the reference to retirement.

 

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SCHEDULE 5: CANADIAN ADDENDUM

 

The Company has been advised that certain provisions within the Plan may result in adverse tax consequences for employees of Associated Companies 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 (“Canadian Participants”).

 

The Canadian Addendum is intended to ensure that, notwithstanding any provisions of the Plan to the contrary, the Company will settle Awards made to Canadian Participants using newly issued Shares.

 

1.                                      Words and expressions not otherwise defined in this Canadian Addendum shall have the same meaning as they have in Rule 1.1 of the Plan.

 

2.                                      The Plan will apply to Awards granted under this Canadian Addendum but 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, Awards granted to Canadian Participants shall only be satisfied using newly issued Shares.

 

4.                                      For the avoidance of doubt, no Shares granted to Canadian Participants shall be transferred to or from a trustee in respect of the Awards granted under this Canadian Addendum.

 

5.                                      Rule 8 of the Plan (Cash Alternative) shall not apply and it shall not be possible to satisfy Awards granted under the Plan to Canadian Participants using cash.

 

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