Document:

EX-4.2

 

    Exhibit 4.2

    Vodafone Group Plc

 

    RULES OF THE VODAFONE
    GLOBAL INCENTIVE PLAN

 

 

    Table of
    Contents

 

	 	 	 	 	 
	

    Contents

	
 
	
    Page

	 

	

    1 Introduction

	
 
	 
	
    1
	 

	

    2 Definitions

	
 
	 
	
    1
	 

	

    3 Granting Awards

	
 
	 
	
    3
	 

	

    4 Terms of Awards to be set by Grantor

	
 
	 
	
    4
	 

	

    5 Form of Awards

	
 
	 
	
    5
	 

	

    6 No transfer of Awards

	
 
	 
	
    5
	 

	

    7 Limits on the use of newly issued shares
    and treasury shares

	
 
	 
	
    6
	 

	

    8 Normal Vesting of Awards

	
 
	 
	
    6
	 

	

    9 Termination of Employment before Vesting
    Date and death

	
 
	 
	
    7
	 

	

    10 Takeovers and restructurings

	
 
	 
	
    8
	 

	

    11 Exchange of Awards

	
 
	 
	
    10
	 

	

    12 Tax

	
 
	 
	
    11
	 

	

    13 General

	
 
	 
	
    11
	 

	

    14 Changing the Plan and termination

	
 
	 
	
    14
	 

	

    15 Governing law and jurisdiction

	
 
	 
	
    14
	 

	

    16 Special terms for Forfeitable Shares

	
 
	 
	
    15
	 

	

    17 Special terms for Options

	
 
	 
	
    17
	 

	

    18 Special terms for Conditional Awards

	
 
	 
	
    20
	 

	

    19 Special provisions for Directors

	
 
	 
	
    22
	 

    

    i

Table of Contents

    General
    Items

 

    1  Introduction

 

    This Plan is intended to give Members of the Group flexibility
    to grant to eligible employees a number of different types of
    awards — which would normally be granted under
    different plans — under one consistent set of rules.

 

    An Award under the Plan can take the form of:

 

			
	 	    • 
	
    Forfeitable Shares — which are Shares
    transferred to the Participant at the time of Award, on the
    basis that they must be given back if the Award lapses.

	 
	 	    • 
	
    a Nil-cost Option — which is a right to buy
    Shares on Vesting for nothing or a nominal amount.

	 
	 	    • 
	
    a Market Value Option — which is a right to buy
    Shares at a price set by reference to the market value of the
    Shares at the time of Award. Because the value of these options
    depends on growth in the share price, these can be exercised for
    longer than Nil-Cost Options.

	 
	 	    • 
	
    a Conditional Award — which is a right to be
    given Shares on Vesting.

 

    Grant and vesting of all types of Award work in similar ways but
    there are some differences in the mechanics of how they are
    granted and what happens after they Vest. These are set out in
    the separate sections for each type of Award.

 

    Rule 19 sets out special provisions which apply to
    Directors of the Company.

 

    The schedules allow for grants of particular types of Awards in
    a way which attracts favourable tax treatment or complies with
    special rules in various countries.

 

    This introduction does not form part of the rules.

 

    2  Definitions

 

    In these rules:

 

    “Acquiring Company” means a person who obtains
    or has Control of the Company following a transaction of the
    sort described in rule 10 or, if no person then has Control
    of the Company, the Company;

 

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

 

    “Award Date” means the date which the Committee
    set for the grant of an Award;

 

    “Business Day” means a day on which the London
    Stock Exchange (or, if relevant and if the Committee determine,
    any stock exchange nominated by the Committee on which the
    Shares are traded) is open for the transaction of business;

 

    “Committee” means, subject to rule 10.4,
    the remuneration committee of the board of directors of the
    Company or any other committee or other body to whom the board
    of directors delegates some or all of their functions under
    these rules;

 

    “Company” means Vodafone Group Plc;

 

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

 

    “Control” has the meaning given to it by
    Section 840 of the Income and Corporation Taxes Act 1988;

 

    “Dealing Restrictions” means restrictions
    imposed by statute, order, regulation or Government directive,
    or by the Model Code or any code adopted by the Company based on
    the Model Code;

 

    “Director” means any director of the Company,
    any member of the Group Executive Committee and, any other
    person designated, from time to time, by the Committee;

    

    1

Table of Contents

 

    General
    Items

 

    “Expected Value” means the value of an Award on
    the Award Date using a valuation methodology determined by the
    Committee, which takes account of the sum of all various
    possible performance outcomes at Vesting and which reflects the
    probabilities of achieving different performance outcomes,
    rather than the maximum outcome only;

 

    “Forfeitable Shares” means Shares held in the
    name of or for the benefit of a Participant subject to the
    Forfeitable Share Agreement ;

 

    “Forfeitable Share Agreement” means the
    agreement referred to in rule 16.1 (Forfeitable Share Agreement);

 

    “Grantor” means the Company or any other Member
    of the Group which grants Awards under the Plan with the
    approval of the Committee;

 

    “HMRC” means HM Revenue and Customs;

 

    “ITEPA” means Schedule 4 to the Income Tax
    (Earnings and Pensions) Act 2003;

 

    “London Stock Exchange” means London Stock
    Exchange plc;

 

    “JV Company” means any company or undertaking:

 

    (a) in the ordinary share capital of which the Company has
    an interest in shares of any class of at least five per cent in
    nominal value of the allotted shares of that class; and

 

    (b) which is not a Subsidiary; and

 

    (c) which is designated by the Committee as a JV Company
    (for some or all purposes under the Plan)

 

    or any undertaking which is a subsidiary undertaking of such a
    company or undertaking.

 

    For the purpose of this definition,
    “undertaking” shall have the meaning given to
    it by Section 259 of the Companies Act 1985 and, in this
    definition, that section shall apply to the references to
    “shares” and to “ordinary share capital” in
    the same way as it applies to references to “shares”
    in Part VII of that Act. “Subsidiary
    undertaking” shall have the meaning given to it by
    Section 258 of the Companies Act 1985.

 

    “Market Value Option” means an Option the
    Option Price of which is sent by reference to the market value
    of a Share or an American Depository Share (ADS) on or around
    the Award Date;

 

    “Member of the Group” means:

 

    (a) the Company; and

 

    (b) its Subsidiaries from time to time;

 

    (c) any JV Company and

 

    (d) any other company which is associated with the Company
    and is so designated by the Committee (for some or all purposes
    under the Plan);

 

    “Model Code” means the UK Listing Authority
    Model Code for transactions in securities by directors, certain
    employees and persons connected with them;

 

    “Option” means a right to acquire Shares
    granted under the Plan;

 

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

 

    “Participant” means a person holding an Award
    or his personal representatives;

 

    “Performance Condition” means any performance
    condition imposed under rule 4.1 (Performance Conditions);

 

    “Performance Period” means the period in
    respect of which a Performance Condition is to be satisfied;

    

    2

Table of Contents

 

    General
    Items

 

 

    “Plan” means these rules known as “The
    Vodafone Global Incentive Plan” as amended from time to
    time;

 

    “Regulatory Information Service” means a
    service that is approved by the Financial Services Authority as
    meeting the Primary Information Provider criteria and is on the
    list of Regulatory Information Services maintained by the
    Financial Services Authority;

 

    “Shares” means, subject to rules 11, 17.2
    and 18.1, fully paid ordinary shares in the capital of the
    Company or American Depository Shares (ADS) representing those
    shares;

 

    “Subsidiary” means a company which is a
    subsidiary of the Company within the meaning of Section 736
    of the Companies Act 1985;

 

    “Termination of Employment” means a Participant
    ceasing to be an employee of a Member of the Group. For these
    purposes a Participant will not be treated as ceasing to be an
    employee of a Member of the Group until he ceases to be a
    permanent employee or director of all Members of the Group or,
    if the Grantor so decides, he recommences permanent employment
    with or becomes a director of a Member of the Group within 14
    calendar days;

 

    “Vesting” means:

 

    (a) in relation to an Option, the Option becoming
    exercisable;

 

    (b) in relation to a Conditional Award, a Participant
    becoming entitled to have the Shares issued or transferred to
    him subject to these rules; and

 

    (c) in relation to an Award of Forfeitable Shares, the
    restrictions in the Forfeitable Share Agreement ceasing to have
    effect.

 

    “Vesting Date” means the date set by the
    Grantor under rule 4.3.4 and, if not set by the Grantor,
    shall be the third anniversary of the Award Date.

 

    3  Granting
    Awards

 

	

	

    See also

    Approved

    Options

    

    See also

    Special

    Provisions for

    Directors

    

	

    3.1 Eligibility

 

    The Grantor may grant an Award to any employee (including an
    executive director) of any Member of the Group. However, unless
    the Committee decides otherwise, an Award may not be granted to
    an employee who, on the Award Date, has given or received notice
    of termination of employment, whether or not such termination is
    lawful.

 

    3.2 Approval
    of Committee

 

    Awards may only be granted by a Member of the Group (other than
    the Company) with the approval of the Committee.

 

    3.3 Awards
    by reference to a Participant’s investment in
    Shares

 

    The Grantor may decide that the number of Shares subject to an
    Award will be determined by reference to:

 

    3.3.1 the number of Shares held by or on behalf of
    the Participant on any date or dates set by the Grantor; or

 

    3.3.2 the number of Shares bought by or on behalf of
    the Participant within a period set by the Grantor; or

 

    3.3.3 the gross equivalent of an amount invested by
    or on behalf of the Participant in Shares within a period set by
    the Grantor.

	

    

    3

Table of Contents

	

 

    General
    Items

 

    3.4 Timing
    of grant

 

    Awards may not be granted at any time after 25 July 2015
    and may only be granted within 42 calendar days starting on any
    of the following:

 

    3.4.1 the date of the Company’s annual general
    meeting; or

 

    3.4.2 the date of shareholder approval of the Plan
    or any amendment to it; or

 

    3.4.3 the day after the announcement of the
    Company’s results through a Regulatory Information Service
    for any period; or

 

    3.4.4 any day on which the Committee resolves that
    exceptional circumstances exist which justify the grant of
    Awards; or

 

    3.4.5 any day on which changes to the legislation or
    regulations affecting employee share plans are announced,
    effected or made; or

 

    3.4.6 the lifting of Dealing Restrictions which
    prevented the granting of Awards during any period specified
    above.

 

    Approved Options may not be granted under Schedule 1 before
    that Schedule has been approved by HMRC.

 

	

    See also

    Special

    Provisions

    for Directors

    

	

    4  Terms
    of Awards to be set by Grantor

 

    4.1 Performance
    Conditions

 

    4.1.1 When granting an Award, the Grantor may make
    its Vesting conditional on the satisfaction of one or more
    conditions linked to the performance of the Company, as set by
    the Committee. A Performance Condition must (subject to
    rule 4.1.2) be objective and specified at the Award Date
    and may provide that an Award will lapse to the extent it is not
    satisfied. The purpose of the Performance Condition will be to
    ensure that the Vesting of Awards is subject to the satisfaction
    of demanding targets linked to the performance of the Company.

 

    4.1.2 A Performance Condition may allow the
    Committee, having determined the extent to which any objective
    condition is satisfied, to decide, in its discretion, that the
    Award will not Vest or will Vest to a lesser extent than that to
    which the objective condition is satisfied. That decision need
    not be made on objective grounds.

 

    4.1.3 In exceptional circumstances, the Grantor,
    with the approval of the Committee, may waive or change a
    Performance Condition in accordance with its terms or if
    anything happens which causes the Grantor and the Committee
    reasonably to consider it appropriate.

 

    4.2 Other
    conditions

 

    4.2.1 The Grantor, with the approval of the
    Committee, may set other conditions which are specified at the
    Award Date and may provide that an Award will lapse to the
    extent it is not satisfied.

 

    4.2.2 In exceptional circumstances, the Grantor,
    with the approval of the Committee, may amend or waive these
    conditions if anything happens which causes the Committee
    reasonably to consider it appropriate.

 

    4.3 Other
    terms to be set on grant

 

    When granting an Award, the Grantor will specify:

 

    4.3.1 whether the Award is:

 

    (i) an Award of Forfeitable Shares (see rule 16);

 

    (ii) a Nil-Cost Option (see rule 17);

 

    (iii) a Market Value Option (see rule 17);

	

    

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    General
    Items

 

    (iv) a Conditional Award (see rule 18);

 

    (v) or a combination of these;

 

    4.3.2 subject to rules 7 and 19.2 the number of
    Shares subject to the Award;

 

    4.3.3 the terms of any Performance Condition or
    other condition;

 

    4.3.4 the Vesting Date;

 

    4.3.5 whether the Participant is entitled to receive
    any cash or shares in respect of dividends under rule 17.4
    (for Options) or 18.3 (for Conditional Awards);

 

    4.3.6 the Award Date; and

 

	

      See also

      Options
    

	

 

    4.3.7 in the case of an Option, the Option Price and
    the latest date on which the Option will lapse under
    rule 17.6.4;

 

    4.3.8 which, if any, of the schedules to these rules
    will apply to the Award.

 

    These terms will be set out in the deed referred to in
    rule 5.1.

 

    5  Form
    of Awards

 

	

      See also

      Forfeitable

      Shares
    

	

 

    5.1 Award
    certificates

 

    Awards will be granted by deed.

 

    Each Participant will be informed of the terms of his Award (to
    the extent not set out in the Plan) as soon as practicable after
    the Award Date. This may be done by giving the Participant the
    deed referred to above (or a copy of it) or in such other manner
    (including by electronic means) as the Company may allow.

 

    An Award of Forfeitable Shares will be subject to the
    Forfeitable Share Agreement. See rule 16 for more
    information on how Awards of Forfeitable Shares are granted.

 

    5.2 No
    payment

 

    A Participant is not required to pay for the grant of any Award.

 

    5.3 Disclaimer
    of Award

 

    Any Participant may disclaim all or part of his Award at any
    time within 90 calendar days after the Award Date by notice in
    writing to any person nominated by the Grantor. If this happens,
    the Award will be deemed never to have been granted under the
    Plan. A Participant is not required to pay for the disclaimer. A
    notice of disclaimer received on or after the 90th day
    after the Award Date shall have no effect.

 

    6  No
    transfer of Awards

 

    A Participant may not transfer, assign or otherwise dispose of
    an Award or any rights in respect of it. If he does, whether
    voluntarily or involuntarily, then it will immediately lapse.
    This rule 6 does not apply:

 

    (a) to the transmission of an Award on the death of a
    Participant to his personal representatives; or

 

    (b) to the transfer, assignment or other disposal of an
    Award, with the prior consent of the Committee, subject to any
    terms and conditions the Committee imposes.

	

    

    5

Table of Contents

	

 

    General
    Items

 

 

    7  Limits
    on the use of newly issued shares and treasury shares

 

    7.1 10%
    in 10 years limit

 

    The number of Shares which may be allocated under the Plan on
    any day must not exceed 10 per cent of the ordinary share
    capital of the Company in issue immediately before that day,
    when added to:

 

    7.1.1 the number of Shares which have been allocated
    under the Plan in the previous 10 years and

 

    7.1.2 the number of Shares which have been allocated
    on an all-employee basis, under the Plan and any other employee
    share plan operated by the Company, in the previous
    10 years.

 

    7.2 5%
    in 10 years limit

 

    The number of Shares which may be allocated under the Plan on
    any day must not exceed 5 per cent of the ordinary share
    capital of the Company in issue immediately before that day,
    when added to the number of Shares which have been allocated,
    other than on an all-employee basis, under the Plan and any
    other employee share plan adopted by the Company, in the
    previous 10 years.

 

    7.3 Exclusion

 

    7.3.1 Where the right to acquire Shares is released
    or lapses, the Shares concerned are ignored when calculating the
    limits in this rule 7.

 

    7.3.2 Shares allocated in connection with options,
    restricted shares, stock units or SARs granted under plans
    operated by AirTouch Communications, Inc prior to the merger
    between the Company and AirTouch Communications, Inc will be
    ignored when calculating the limits in this rule 7.

 

    7.4 Definitions
    for this rule 7

 

    7.4.1 For the purposes of this rule 7, Shares
    are “allocated” if they have been issued or may
    be issued for the purposes of satisfying an Award. For so long
    as the Committee considers that it is best practice to count
    treasury shares for the purposes of the limits in this
    rule 7, Shares are also “allocated” if they have
    been or may be transferred out of treasury for the purposes of
    satisfying Awards.

 

    7.4.2 For the purposes of this rule 7, Shares
    are allocated on an “all-employee basis” if
    they are offered or allocated:

 

    (i) by a Member of the Group to all or substantially all
    employees of that or any other Member of the Group on similar
    terms; or

 

    (ii) under an all-employee share plan.

 

    For these purposes, Shares may be allocated or offered on
    similar terms even though the terms on which they are offered or
    allocated may vary by reference to the employees’
    remuneration, age, length of service or the country in which he
    works.

 

    8  Normal
    Vesting of Awards

 

    8.1 Time
    of vesting

 

    Except where rules 9 or 10 apply, an Award shall Vest on
    the latest of the following:

 

    8.1.1 the date on which the Committee has determined
    the extent to which any Performance Condition and other
    conditions if applicable, are satisfied;

 

    8.1.2 the Vesting Date;

	

    

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Table of Contents

	

 

    General
    Items

 

    8.1.3 the date on which any Dealing Restriction
    which prevent Vesting on the dates specified above ceases to
    apply.

 

    8.2 Determination
    of Performance Condition

 

    As soon as reasonably practicable after the end of the
    Performance Period, the Committee will determine whether and to
    what extent any Performance Condition has been satisfied and how
    many Shares Vest for each Award.

 

    8.3 Consequences
    of Vesting

 

    The consequences of Vesting for each type of Award are set out:

 

    8.3.1 for Forfeitable Shares, in rule 16.7;

 

    8.3.2 for Options in rule 17.5;

 

    8.3.3 for Conditional Awards in rule 18.4.

 

	

    See also

    special

    provisions

    for Spanish

    employees
    

	

 

    9  Termination
    of Employment before Vesting Date and death

 

    9.1 General
    rule on Termination of Employment

 

    Unless rule 9.2 applies, a Participant’s Award will
    lapse on Termination of Employment.

 

    9.2
    Termination of Employment in special circumstances

 

    9.2.1 This rule 9.2.1 applies on Termination of
    Employment 90 calendar days or more after the Award Date by
    reason of:

 

    (i) redundancy, ill-health, injury or disability, as
    established to the satisfaction of the Company or the
    Participant’s employing company;

 

    (ii) death;

 

    (iii) the Participant’s employing company ceasing to
    be under the Control of the Company or a Member of the Group;

 

	

      See also

      Special

      Provisions

      for Directors
    

	

 

    (iv) a transfer of the undertaking, or the part of the
    undertaking, in which the Participant works to a person which is
    neither under the Control of the Company nor a Member of the
    Group;

 

    (v) retirement with the agreement of the Company or the
    Participant’s employing
    company1;

 

    (vi) any other reason, if the Committee so decides in
    general or in any particular case.

 

    9.2.2 Where rule 9.2.1 applies, a
    Participant’s Award will not lapse on Termination of
    Employment but will Vest on the date of Termination of
    Employment.

 

    9.2.3 The number of Shares in respect of which the
    Award Vests under rule 9.2.2 shall be reduced in accordance
    with the following formula (provided that that number shall not
    exceed the number of Shares subject to the Award):

	 	 	 	 	 	 	 
	
 
	
 
	
    a x
	
 
	
     b

    
 c
    
	
 
	
 

 

 

    1This
    clause only applies to Awards granted after 29 January
    2007. The clause applicable to Awards granted before that date
    reads “retirement in accordance with a Participant’s
    contract of employment or early retirement at age 60 or
    over with the agreement of the Company or the Participant’s
    employing company”.

	

    

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    General
    Items

 

    where:

 

			
	 	    a  =  
	
    the number of Shares subject to the Award;

 

			
	 	    b  =  
	
    the number of complete calendar months from the start of the
    Performance Period (or, if there is no Performance Condition,
    from the Award Date) until the date of Termination of Employment;

 

			
	 	    c  =  
	
    the number of complete calendar months from the start of the
    Performance Period (or, if there is no Performance Condition,
    from the Award Date) until the end of the Performance Period (or
    if there is no Performance Condition, the Vesting Date).

 

    The Award shall immediately lapse as to the balance.

 

    Unless the Committee decides otherwise, this rule 9.2.3
    shall not apply to any Awards made on an all-employee basis (as
    defined in rule 7.4.2).

 

	

      See also

      Special

      Provisions

      for Directors
    

	

 

    9.2.4 Where an Award which is subject to a
    Performance Condition Vests under rule 9.2.2, the Committee
    may decide that, in addition to the pro-rata reduction under
    that rule, it will only Vest to the extent that any Performance
    Condition is satisfied on the Termination of Employment. Where
    it does so, the Committee will determine the extent to which the
    Performance Condition has been satisfied in the manner specified
    in the Performance Condition or, if this is not specified in the
    Performance Condition, in such manner as it considers
    reasonable. The Award will immediately lapse to the extent that
    the Performance Condition is not satisfied.

 

    However, if the Award Vests under this rule 9.2.4:

 

    (i) before the end of the financial year in which the Award
    is made, the Performance Condition will not be applied. Instead,
    the number of Shares in respect of which the Award Vests shall
    be determined in accordance with the formula in rule 9.2.3
    but “a” in that formula will be 50% of the number of
    Shares subject to the Award; or

 

    (ii) after the end of the Performance Period but before the
    Committee has announced whether or not the Performance
    Conditions have been satisfied, then the Award will not Vest on
    Termination of Employment but will Vest in accordance with
    rule 8.1.

 

    9.2.5 The Committee must exercise any discretion
    provided for in rules 9.2.1 to 9.2.4 within 90 calendar
    days after Termination of Employment and the Award will be
    deemed to have lapsed or Vested (as appropriate) on the date of
    Termination of Employment.

 

    9.2.6 The Committee may determine that an Award will
    not Vest in accordance with 9.2.2 but will continue in effect
    and Vest or lapse in accordance with its terms (including any
    Performance Condition but not including this rule 9,
    (except in so far as it relates to death) and the number of
    Shares in respect of which it Vests will be reduced in the
    manner described in rule 9.2.3.

 

    9.3 Sale
    of Shares on Vesting of all-employee Awards

 

    Unless the Committee decides otherwise, on the Vesting of an
    Award made on an all-employee basis (as defined in
    rule 7.4.2) under this rule 9, the Shares to which the
    Participant is entitled will be sold on his behalf and the
    proceeds remitted to the Participant as soon as practicable
    after the date of Termination of Employment.

 

    10  Takeovers
    and restructurings

 

    10.1 Takeover

 

    10.1.1 Where a person (or a group of persons acting
    in concert) obtains Control of the Company as a result of making
    an offer to acquire Shares, an Award will Vest, subject to
    rule 10.1.3, on the date the person obtains Control but
    only to the extent that any Performance Condition has been
    satisfied. The Award will lapse as to the balance.

 

    10.1.2 Where an Award vests under rule 10.1.1,
    the Committee will determine the extent to which any Performance
    Condition has been satisfied in the manner specified in the
    Performance Condition or, if this is not

	

    

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    General
    Items

 

    specified in the Performance Condition, in such manner as they
    consider reasonable. In addition, the Committee may decide that
    the extent to which an Award will Vest will be further reduced
    pro rata to reflect the acceleration of Vesting.

 

	

      See also

      Approved

      Options
    

	

 

    10.1.3 An Award will not Vest under rule 10.1.1
    but will be exchanged under rule 11 (Exchange of Awards):

 

    (i) if a Participant accepts an offer to exchange his
    Award; or

 

    (ii) if the Committee, with the consent of the Acquiring
    Company, decides, before the person obtains Control, that the
    Awards will be automatically exchanged;

 

    (iii) if the shareholders of the Acquiring Company,
    immediately after it has obtained Control, are substantially the
    same as the shareholders of the Company before it obtained
    Control.

 

    Rule 10.1.3(iii) will not apply if the Committee considers
    that there are exceptional circumstances.

 

    10.2
    Scheme of arrangement

 

    10.2.1 If, under section 425 of the Companies
    Act 1985, a court sanctions a compromise or arrangement in
    connection with the acquisition of Shares, an Award will Vest on
    the date of court sanction but only to the extent that any
    Performance Condition has been satisfied. The Award will lapse
    as to the balance. This rule 10.2 also applies where there
    is an equivalent procedure under any non-UK legislation.

 

    10.2.2 Where an Award vests under rule 10.2.1,
    the Committee will determine the extent to which any Performance
    Condition has been satisfied in the manner specified in the
    Performance Condition or, if this is not specified in the
    Performance Condition, in such manner as they consider
    reasonable. In addition, the Committee may decide that the
    number of Shares in respect of which the Award will Vest will be
    reduced pro rata to reflect the acceleration of Vesting.

 

	

      See also

      Approved

      Options
    

	

 

    10.2.3 An Award will not Vest under rule 10.2.1
    but will be exchanged under rule 11 (Exchange of Awards):

 

    (i) if the Participant accepts an offer to exchange his
    Award; or

 

    (ii) if the Committee, with the consent of the Acquiring
    Company, decides before court sanction, that the Awards will be
    automatically exchanged;

 

    (iii) if the shareholders of the Acquiring Company,
    immediately after the effective date of the compromise,
    arrangement or procedure, are substantially the same as the
    shareholders of the Company before the effective date.

 

    Rule 10.2.3(iii) will not apply if the Committee considers
    that there are exceptional circumstances.

 

    10.3 Demerger
    or other corporate event

 

    10.3.1 If the Committee becomes aware that the
    Company is or is expected to be affected by any demerger,
    distribution (other than an ordinary dividend) or other
    transaction not falling within rules 10.1 (Takeover), or
    10.2 (Scheme of arrangement) which, in the opinion of the
    Committee, would affect the current or future value of any
    Award, the Committee may allow an Award to Vest but only to the
    extent that any Performance Condition has been satisfied and
    subject to any other conditions the Committee may decide to
    impose. The Award will lapse as to the balance.

 

    10.3.2 Where an Award Vests under rule 10.3.1,
    the Directors will determine the extent to which any Performance
    Condition has been satisfied and the proportion of the Award
    which will Vest in the manner specified in the Performance
    Condition or, if this is not specified in the Performance
    Condition, in such manner as they consider reasonable. In
    addition, the Directors may decide that the number of Shares in
    respect of which the Award will Vest will be reduced pro rata to
    reflect the acceleration of Vesting.

 

    10.3.3 The Company will notify any Participant who
    is affected by the Committee exercising their discretion under
    this rule 10.3.

	

    

    9

Table of Contents

	

 

    General
    Items

 

    10.4 Composition
    of the Committee for this rule 10

 

    In this rule 10, the “Committee” means those
    people who were members of the remuneration committee of the
    Company immediately before the change of Control.

 

    10.5 Overseas
    transfer

 

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

 

    10.5.1 suffer a tax disadvantage in relation to his
    Awards (this being shown to the satisfaction of the
    Committee); or

 

    10.5.2 become subject to restrictions on his ability
    to deal with his Awards or to hold or deal in the Shares or the
    proceeds of the sale of the Shares acquired on vesting or
    exercise because of the security laws or exchange control laws
    of the country to which he is transferred

 

    then, if the Participant continues to hold an office or
    employment with a Member of the Group, the Committee may decide
    that the Awards will Vest on a date they choose before or after
    the transfer takes effect. The Award will Vest to the extent
    they permit and will not lapse as to the balance.

 

	

      See also

      Approved

      Options

    

	

    11  Exchange
    of Awards

 

    11.1 Timing
    of exchange

 

    If an Award is to be exchanged under rule 10 (Takeovers and
    restructuring) the exchange will take place as soon as
    practicable after the relevant event.

 

    11.2 Terms
    of exchange

 

    Where a Participant is granted a new award in exchange for an
    existing Award, the new Award:

 

    11.2.1 must confer a right to acquire shares in the
    Acquiring Company or another body corporate determined by the
    Acquiring Company;

 

    11.2.2 subject to the rest of this rule 11,
    will be governed by the same terms as applied to the existing
    Award immediately before exchange;

 

    11.2.3 must be equivalent to the existing Award,
    subject to rule 11.2.5;

 

    11.2.4 will be treated as having been acquired at
    the same time as the existing Award and, subject to
    rule 11.2.5, will Vest in the same manner and at the same
    time;

 

    11.2.5 must either:

 

    (i) be subject to a Performance Condition which is, in the
    opinion of the Committee, equivalent to any Performance
    Condition applying to the existing Award; or

 

    (ii) not be subject to any Performance Condition but be in
    respect of the number of shares which is equivalent to the
    number of Shares comprised in the existing Award which would
    have Vested under rule 10.1, 10.2 or 10.3 (in which case,
    the Award will lapse as to the balance);

 

    11.2.6 will be governed by the Plan as if references
    to Shares were references to the shares over which the new award
    is granted and references to the Company were references to the
    Acquiring Company or the body corporate determined under
    rule 11.2.1.

	

    

    10

Table of Contents

	

 

    General
    Items

 

 

    12  Tax

 

    12.1 Withholding
    of tax

 

    The Company, the Grantor, any employing company or the trustee
    of any employee benefit trust may withhold such amount and make
    such arrangements as it considers necessary to meet any
    liability to taxation or social security contributions in
    respect of an Award. These arrangements may include the sale of
    Shares on behalf of a Participant or a reduction in number of
    Shares to which the Participant would otherwise be entitled,
    unless, in either case, the Participant discharges the liability
    himself.

 

    12.2 Elections
    to transfer social security liabilities

 

    The Participant must, if required by the Grantor or the Company
    to do so, enter into any election to transfer the liability to
    employer social security contributions in respect of an Award.
    The Grantor shall not be required to issue or transfer any
    Shares or make any cash payment under the Plan until he does so.

 

    13  General

 

    13.1 Committee’s
    decisions final and binding

 

    The decision of the Committee on the interpretation of the Plan
    or in any dispute relating to an Award or matter relating to the
    Plan will be final and conclusive.

 

    13.2 Documents
    sent to shareholders

 

    The Company may send to Participants copies of any documents or
    notices normally sent to the holders of its Shares at or around
    the same time as issuing them to the holders of its Shares.

 

    13.3 Regulations

 

    The Committee can make or vary regulations for the
    administration and operation of the Plan but these must be
    consistent with its rules.

 

    13.4 Terms
    of employment

 

    13.4.1 For the purposes of this rule 13.4,
    “Employee” means any person who is or will be
    eligible to be a Participant or any other person.

 

    13.4.2 This rule 13.4 applies:

 

    (i) whether the Company has full discretion in the
    operation of the Plan, or whether the Company could be regarded
    as being subject to any obligations in the operation of the Plan;

 

    (ii) during an Employee’s employment or employment
    relationship; and

 

    (iii) after the termination of an Employee’s
    employment or employment relationship, whether the termination
    is lawful or unlawful.

 

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

 

    13.4.4 The grant of Awards on a particular basis in
    any year does not create any right to or expectation of the
    grant of Awards on the same basis, or at all, in any future year.

	

    

    11

Table of Contents

	

 

    General
    Items

 

    13.4.5 No Employee is entitled to participate in the
    Plan, or be considered for participation in it, at a particular
    level or at all. Participation in one operation of the Plan does
    not imply any right to participate, or to be considered for
    participation in any later operation of the Plan.

 

    13.4.6 Without prejudice to an Employee’s right
    in respect of an Award subject to and in accordance with the
    express terms of the Plan and the Performance Condition, no
    Employee has any rights in respect of the exercise or omission
    to exercise any discretion, or the making or omission to make
    any decision, relating to the Award. Any and all discretions,
    decisions or omissions relating to the Award may operate to the
    disadvantage of the Employee, even if this could be regarded as
    capricious or unreasonable, or could be regarded as in breach of
    any implied term between the Employee and his employer,
    including any implied duty of trust and confidence. Any such
    implied term is excluded and overridden by this rule 13.4.

 

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

 

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

 

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

 

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

 

    13.4.8 Participation in the Plan is permitted only
    on the basis that the Participant accepts all the provisions of
    its rules, including in particular this rule 13.4. By
    participating in the Plan, an Employee waives all rights under
    the Plan, other than the right to acquire shares subject to and
    in accordance with the express terms of the Plan and the
    Performance Condition, in consideration for, and as a condition
    of, the grant of an Award under the Plan.

 

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

 

    13.4.10 Each of the provisions of this
    rule 13.4 is entirely separate and independent from each of
    the other provisions. If any provision is found to be invalid
    then it will be deemed never to have been part of these rules
    and to the extent that it is possible to do so, this will not
    affect the validity or enforceability of any of the remaining
    provisions.

 

    13.5 Employee
    trust

 

    Subject to rule 13.6, the Company and any Subsidiary of the
    Company may provide money to the trustee of any trust or any
    other person to enable them or him to acquire shares to be held
    for the purposes of the Plan, or enter into any guarantee or
    indemnity for those purposes, to the extent permitted by
    Section 153 of the Companies Act 1985.

 

    13.6 Satisfying
    Awards to employees of JV Companies

 

    Notwithstanding the terms of any Award or any other term of the
    Plan, no Award made to an employee of a JV Company shall be
    satisfied in any way which would involve the Company or any
    Subsidiary giving financial assistance (as defined in
    Chapter VI of Part V of the Companies Act
    1985) directly or indirectly for the purpose of satisfying
    the Award, unless that financial assistance is permitted under
    UK legislation at that time.

 

    13.7 Data
    protection

 

    By participating in the Plan the Participant consents to the
    holding and processing of personal data provided by the
    Participant to the Company or a Member of the Group for all
    purposes relating to the operation of the Plan. These include,
    but are not limited to:

 

    13.7.1 administering and maintaining Participant
    records;

	

    

    12

Table of Contents

	

 

    General
    Items

 

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

 

    13.7.3 providing information to future purchasers of the
    Company or the business in which the Participant works;

 

    13.7.4 transferring information about the
    Participant to a country or territory outside the European
    Economic Area.

 

    13.8 Consents

 

    All allotments, issues and transfers of Shares will be subject
    to any necessary consents under any relevant enactments or
    regulations for the time being in force in the United Kingdom or
    elsewhere. The Participant will be responsible for complying
    with any requirements he needs to fulfil in order to obtain or
    avoid the necessity for any such consent.

 

    13.9 Articles
    of association

 

    Any Shares acquired under the Plan are subject to the articles
    of association of the Company from time to time in force.

 

    13.10 Rights
    attaching to Shares

 

    Shares issued on Vesting or exercise of an Award will rank
    equally in all respects with the Shares in issue on the date of
    allotment. They will not rank for any rights attaching to Shares
    by reference to a record date preceding the date of allotment.
    Where Shares are transferred, including transferred out of
    treasury, the Participant will be entitled to all rights
    attaching to the Shares by reference to a record date on or
    after the transfer date. The Participant will not be entitled to
    rights before that date.

 

    13.11 Listing
    of Shares

 

    If and so long as the Shares are listed on the Official List of
    the UK Listing Authority and traded on the London Stock
    Exchange, the Company will apply for listing of any Shares
    issued under the Plan as soon as practicable.

 

    13.12 Notices

 

    13.12.1 Any notice or other document which has to be
    given to a person who is or will be eligible to be a Participant
    under or in connection with the Plan may be:

 

    (i) delivered or sent by post to him at his home address
    according to the records of his employing company or such other
    address as the Company or a Member of the Group considers
    appropriate; or

 

    (ii) sent by
    e-mail or
    fax to any
    e-mail
    address or fax number which according to the records of his
    employing company is used by him;

 

    (iii) given by any other electronic means (including the
    updating of a personalised web-page) allowed by the Company.

 

    13.12.2 Any notice or other document which has to be
    given to the Company or other duly appointed agent under or in
    connection with the Plan may be delivered or sent by post to it
    at its registered office (or such other place as the Committee
    or duly appointed agent may from time to time decide and notify
    to Participants) or sent by
    e-mail or
    fax to any
    e-mail
    address or fax number notified to the Participant.

 

    Notices sent by post will be deemed to have been given on the
    second day after the date of posting. However, notices sent by
    or to a Participant who is working overseas will be deemed to
    have been given on the seventh day after the date of posting.
    Notices sent by
    e-mail or
    fax, in the absence of evidence to the contrary, will be deemed
    to have been received on the day after sending.

	

    

    13

Table of Contents

	

 

    General
    Items

 

 

    14  Changing
    the Plan and termination

 

    The Committee may amend the Plan by resolution. But no amendment
    which would be to the advantage of present or future
    Participants may be made without prior approval of the Company
    in general meeting to the provisions relating to eligibility,
    overall limits, maximum individual entitlement or the adjustment
    of Awards following a variation of share capital, except for
    minor amendments to benefit the administration of the Plan, to
    take account of a change in legislation or to obtain or maintain
    favourable tax, exchange control or regulatory treatment for
    participants or any Member of the Group or in accordance with
    rule 4.1.3 or 4.2.2.

 

    The Committee may give written notice (by electronic means or
    otherwise) of any changes made to any Participant affected.

 

    15  Governing
    law and jurisdiction

 

    English law governs the Plan and all Awards and their
    construction. The English Courts have non-exclusive jurisdiction
    in respect of disputes arising under or in connection with the
    Plan or any Award.

	

    

    14

Table of Contents

	

 

    Forfeitable
    Shares

 

 

    16  Special
    terms for Forfeitable Shares

 

    16.1 Granting
    an Award of Forfeitable Shares

 

    A Participant who is granted an Award of Forfeitable Shares must
    enter into an agreement with the Grantor that:

 

    16.1.1 to the extent that the Award lapses under the
    Plan, the Shares will forfeited and he will immediately transfer
    his interest in the Shares to the Grantor or as the Grantor may
    direct, for no consideration or nominal consideration, to any
    person (which may include the Company, where permitted)
    specified by the Grantor; and

 

    16.1.2 he will not transfer, assign or dispose of
    any Forfeitable Shares or any rights in respect of them before
    Vesting and if he does his Award will lapse except in the case
    of:

 

    (i) the transmission of his Forfeitable Shares on his death
    to his personal representatives; or

 

    (ii) the transfer, assignment or other disposal of his
    Forfeitable Shares, with the prior consent of the Committee,
    subject to any terms and conditions the Committee may impose.

 

    The Participant must also sign any other documentation,
    including a power of attorney or blank stock transfer form,
    requested by the Grantor.

 

    If he does not sign the Forfeitable Share Agreement or any other
    documents requested by the Grantor within a period specified by
    the Grantor, the Award will lapse at the end of that period.

 

    16.2 Transfer
    of shares on Award

 

    On or after the grant of an Award of Forfeitable Shares, the
    Grantor will procure that the relevant number of Shares are
    transferred to the Participant or to another person to be held
    for the benefit of the Participant under the terms of the Plan.

 

    16.3 Tax
    elections

 

    The Participant must enter into any elections in relation to
    Forfeitable Shares required by the Grantor or the Company,
    including elections under Part 7 of the Income Tax
    (Earnings and Pensions) Act 2003. If he does not do so within a
    period specified by the Grantor or the Company, the Award will
    lapse at the end of that period.

 

    16.4 Retention
    of share certificates

 

    The Grantor or the Company may retain the share certificates or
    other documents of title relating to any Forfeitable Shares
    until an Award of Forfeitable Shares Vests.

 

    16.5 Voting
    and dividends

 

    Except to the extent specified in the Forfeitable Share
    Agreement, the Participant will be entitled to vote (or instruct
    any person holding the Forfeitable Shares on his behalf how to
    vote) and to receive dividends and will have all other rights of
    a shareholder in respect of Forfeitable Shares where the record
    date for the right falls on or after the date on which the
    Forfeitable Shares are issued or transferred to him.

 

    16.6 Variations
    in share capital, rights issues, demergers etc

 

    If there is:

 

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

 

    16.6.2 a rights issue; or

	

    

    15

Table of Contents

	

 

    Forfeitable
    Shares

 

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

 

    16.6.4 a special dividend or distribution,

 

    the Participant will, subject to the Forfeitable Share
    Agreement, have the same rights as any other shareholder in
    respect of his Forfeitable Shares. Any shares, securities or
    rights allotted to a Participant as a result of such an event
    shall be:

 

    16.6.5 treated as if they were awarded to the
    Participant under the Plan in the same way and at the same time
    as the Forfeitable Shares in respect of which the rights were
    conferred; and

 

    16.6.6 subject to the rules of the Plan and the
    terms of the Forfeitable Share Agreement.

 

    However, securities bought by a Participant pursuant to a rights
    issue will not be treated as described in rules 16.6.5 and
    16.6.6 except to the extent they are bought using the proceeds
    of sale of rights under that rights issue.

 

    16.7 Consequences
    of Vesting for Forfeitable Shares

 

    To the extent that an Award of Forfeitable Shares Vests, the
    Forfeitable Share Agreement will cease to apply to the Shares.
    If the Shares are held by any person for the benefit of the
    Participant, that person may transfer the Shares to or to the
    order of the Participant.

 

    16.8 Consequences
    of lapse for Forfeitable Shares

 

    To the extent that an Award of Forfeitable Shares lapses, the
    Participant shall transfer his interest in the Shares as
    described in the Forfeitable Share Agreement.

	

    

    16

Table of Contents

	

 

    Options

 

 

    17  Special
    terms for Options

 

    17.1 Option
    Price

 

    The Option Price of an Option shall be set by the Grantor at the
    date of Award and:

 

    17.1.1 in the case of a Nil-Cost Option, may be zero
    or any other amount;

 

    17.1.2 in the case of a Market Value Option over
    Shares, shall not be less than:

 

	

      See also

      special

      provisions

      for US

      employees
    

	

 

    (i) the closing middle market quotation of a Share (taken
    from the Daily Official List of the London Stock Exchange) on
    the Business Day immediately preceding the Award Date; or

 

    (ii) if the Committee so decides, the average of the
    closing middle market quotations of a Share (taken from the
    Daily Official List of the London Stock Exchange) over the 5
    Business Days before the Award Date.

 

	

      See also

      special

      terms for

      Italian

      optionholders
    

	

 

    17.1.3 in the case of a Market Value Option over
    ADSs shall not be less than the closing price of an ADS on the
    New York Stock Exchange on or averaged over the period specified
    in rule 17.1.2; or

 

    17.1.4 in the case of a Market Value Option which is
    intended to qualify for any favourable tax treatment, may be
    determined in accordance with any other formula related to the
    Market Value of a Share or an ADS which will enable the Option
    to qualify for that favourable tax treatment.

 

	

      See also

      Approved

      Options
    

	

 

    17.2 Variations
    in share capital, demergers and special distributions

 

    If there is:

 

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

 

    17.2.2 a rights issue; or

 

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

 

    17.2.4 a special dividend or distribution;

 

    the Committee may:

 

    17.2.5 adjust the number of type of shares or
    securities comprised in an Option; and/or

 

    17.2.6 adjust the Option Price; and/or

 

    17.2.7 change of identity of the Company or
    Companies whose Shares are subject to the Option.

 

    This may include retrospective adjustments.

 

    The Option Price of a Market Value Option to subscribe for
    Shares may be adjusted to a price less than nominal value only
    if the Committee resolves to capitalise the reserves of the
    Company, subject to any necessary conditions. This
    capitalisation will be of an amount equal to the difference
    between the adjusted Option Price payable for the Shares to be
    issued on exercise and the nominal value of such Shares on the
    date of allotment of the Shares. If, at the time of exercise,
    the Committee does not resolve to capitalise the reserves of the
    Company for this purpose then the adjustment under this
    rule 17.2 will be deemed not to have taken place.

 

    17.3 Voting
    and dividends

 

    A Participant shall not be entitled to vote, to receive
    dividends or to have any other rights of a shareholder in
    respect of Shares subject to an Option until the Shares are
    issued or transferred to the Participant.

	

    

    17

Table of Contents

	

 

    Options

 

    17.4 Dividend
    equivalent

 

    An Option may include the right (subject to rule 12 (Tax))
    to receive cash or Shares (as determined by the Grantor) equal
    in value to the amount per Share of any dividend the record date
    for which falls between the Award Date and the date of exercise
    and multiplied by the number of Shares subject to the Option.
    These payments may be made:

 

    17.4.1 to the extent only and as soon as practicable
    after the Option is exercised; or

 

    17.4.2 as soon as practicable after the relevant
    dividend is paid.

 

    Unless otherwise specified at the Award Date, the amount paid
    will be calculated on the basis of the amount paid to an
    individual shareholder who is resident and domiciled in the UK
    for all tax purposes.

 

    17.5 Consequences
    of Vesting for Options

 

    A Participant may exercise an Option, to the extent it has
    Vested, at any time after it has Vested.

 

    17.6 Periods
    for exercise of Options

 

    Subject to rule 17.7, an Option which has Vested will be
    exercisable:

 

    17.6.1 where it has Vested as a result of the
    Participant ceasing to be an employee (see rule 9), for
    twelve months from the date of Termination of Employment;

 

    17.6.2 where it has Vested as a result of the
    Participant’s death (see rule 9.2.1(ii)), for
    12 months from his death;

 

	

      See also

      Approved

      Options
    

	

 

    17.6.3 where the Option has Vested under
    rule 10 (e.g. as a result of a takeover or reconstruction),
    for six months from the date of Vesting or, if earlier, the date
    six weeks after the date on which a notice to acquire Shares
    under section 429 of the Companies Act 1985 or any other
    equivalent local legislation is first served; and

 

    17.6.4 in all other cases for six months from the
    date of Vesting of a Nil-Cost Option or for 10 years after
    the Award Date of a Market Value Option (or such shorter period
    as the Committee may specify on grant).

 

    Where a Participant dies during an exercise period the Option
    will be exercisable for 12 months from the date of death.
    This rule 17.6 does not extend the exercise period of an
    Option which has Vested under rule 10.

 

    17.7 Lapse
    of Options

 

    An Option will lapse at the end of any exercise period specified
    in rule 17.6.

 

    For the avoidance of doubt:

 

    17.7.1 an Option can lapse under rule 9.1 even
    though it may have previously Vested;

 

    17.7.2 in the event of any conflict, the provision
    of these rules (including any schedules) which results in the
    Option ceasing to be exercisable or lapsing earliest shall take
    precedence.

 

    17.8 Manner
    of exercise

 

    Options must be exercised by notice in writing or in a form
    specified by the Company and delivered to the Company or other
    duly appointed agent or by telephone or by other electronic
    means approved by the Company. The notice of exercise of the
    Option must be completed, signed (in manuscript or in any other
    form that may be specified by the Company) by the Participant or
    by his appointed agent, and must be accompanied by:

 

    17.8.1 the relevant option certificate (if required
    by the Company); and

	

    

    18

Table of Contents

	

 

    Options

 

    17.8.2 correct payment in full of the Option Price
    for the number of Shares being acquired or details of
    arrangements agreed between the Participant and the Company made
    for the payment of the Option Price for the number of Shares
    being acquired.

 

    17.9 Issue
    or transfer of Shares after exercise

 

    Subject to rule 12 and 18.5, Shares will be issued or
    transferred (from treasury or otherwise) to or to the order of
    the Participant within 30 calendar days of the date of receipt
    of payment of the Option Price and the documents required under
    rule 17.8.

 

    However, if the issue or transfer is prevented by any Dealing
    Restrictions, the Shares will be issued or transferred as soon
    as is practicable following the lifting of the Dealing
    Restrictions.

 

	

      See also

      Approved

      Options

    

	

    17.10 Other
    ways of satisfying an Option (e.g. SARs)

 

    The Grantor, subject to the approval of the Committee, may
    decide to satisfy an Option by:

 

	

      See also

      special

      provisions for

      US

      employees
    

	

 

    17.10.1 paying (subject to rule 12 (Tax)) a
    cash amount which is equal to the amount by which the market
    value of the Shares in respect of which the Option is exercised,
    as at date of exercise, exceeds the Option Price; or

 

    17.10.2 procuring the issue or transfer of Shares to
    the value of the cash amount specified above.

 

    If the Committee does this, the Participant need not pay the
    Option Price or, if he has paid it, the Company will repay it to
    him.

 

    The Grantor may determine that Awards will be satisfied in cash
    at the Award Date or at any time subsequently.

	

    

    19

Table of Contents

	

 

    Conditional
    Awards

 

 

    18  Special
    terms for Conditional Awards

 

    18.1 Variations
    in share capital, demergers and special distributions

 

    If there is:

 

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

 

    18.1.2 a rights issue; or

 

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

 

    18.1.4 a special dividend or distribution;

 

    The Committee may:

 

    18.1.5 adjust the number of type of shares or
    securities comprised in a Conditional Award; and/or

 

    18.1.6 change of identity of the company or
    companies whose shares are subject to the Option.

 

    This may include retrospective adjustments.

 

    18.2 Voting
    and dividends

 

    A Participant shall not be entitled to vote, to receive
    dividends or to have any other rights of a shareholder in
    respect of Shares subject to a Conditional Award until the
    Shares are issued or transferred to the Participant.

 

    18.3 Dividend
    equivalent

 

    A Conditional Award may include the right (subject to
    rule 12 (Tax)) to receive cash or Shares (as determined by
    the Grantor) equal in value to the amount per Share of any
    dividend the record date for which falls between the Award Date
    and the date of Vesting and multiplied by the number of Shares
    subject to the Conditional Award. These payments may be made:

 

    18.3.1 to the extent only and as soon as practicable
    after the Conditional Award Vests; or

 

    18.3.2 as soon as practicable after the relevant
    dividend is paid.

 

    Unless otherwise specified at the Award Date, the amount paid
    will be calculated on the basis of the amount paid to an
    individual shareholder who is resident and domiciled in the UK
    for all tax purposes.

 

    18.4 Consequences
    of Vesting for Conditional Awards

 

    Subject to rules 12, 18.5 and 18.6, Shares will be issued
    or transferred (from treasury or otherwise) to or to the order
    of the Participant within 30 calendar days of the date of
    Vesting of a Conditional Award.

 

    However, if the issue or transfer is prevented by any Dealing
    Restrictions, the Shares will be issued or transferred as soon
    as is practicable following the lifting of the Dealing
    Restrictions.

 

    18.5 Cash
    alternative

 

    The Grantor, subject to the approval of the Committee, may
    decide to satisfy a Conditional Award by paying (subject to
    rule 12 (Tax)) a cash amount equal to the market value of
    the Shares subject to the Conditional Award.

	

    

    20

Table of Contents

	

 

    Conditional
    Awards

 

    18.6 Sale
    of Shares on Vesting of all-employee Awards

 

    Unless the Committee decides otherwise, and subject to
    rule 9.3, on the Vesting of an Award made on an
    all-employee basis (as defined in rule 7.4.2), the Participant
    will, subject to 12.1, be given the choice to either sell all of
    the Shares to which he is entitled, or to have all such Shares
    issued or transferred to him. If the Participant does not
    register his choice in the manner prescribed by the Committee,
    the Shares to which he is entitled will be sold on his behalf
    and the proceeds remitted to the Participant as soon as
    practicable after the Vesting Date.

	

    

    21

Table of Contents

	

 

    Special
    Provisions for Directors

 

 

    19  Special
    provisions for Directors

 

    This rule 19 applies, notwithstanding anything else in the
    rules or any schedule, to any Award made to a person who, on the
    Award Date, is a Director.

 

    19.1 Performance
    Conditions for all Awards to Directors

 

    Except where the Award was made on an all-employee basis (as
    defined in rule 7.4.2), the Grantor shall always make
    Vesting of an Award granted to a Director conditional on the
    satisfaction of one or more conditions linked to the performance
    of the Company as described in rule 4.1.

 

    19.2 Individual
    limits for Directors

 

    To ensure that there is strong linkage between pay and
    performance, the majority of the Directors total remuneration is
    delivered by performance linked incentive plans. Except where
    the Committee determines that exceptional circumstances apply in
    the case of a significant recruit the maximum Expected Value of
    all Awards made to a Director in any financial year shall not
    exceed 400% of base salary as at the Award Date.

 

    Awards shall be excluded from the calculations under this
    rule 19.2 if they are made on an all-employee basis within
    the meaning of rule 7.4.2.

 

    19.3 Vesting
    on leaving employment

 

    Where a Director’s Award is to Vest because rule 9.2.1
    (Termination of Employment in special circumstances) applies,
    the Award will only Vest to the extent that the Performance
    Condition is satisfied on the date of Termination of Employment
    (as described in rule 9.2.4) and will lapse as to the
    balance.

 

    For the avoidance of doubt:

 

    19.3.1 the number of Shares in respect of which the
    Award Vests will also be reduced in accordance with
    rule 9.2.3; and

 

    19.3.2 the Committee may determine that the Award
    will not Vest but will continue in effect in accordance with
    rule 9.2.6.

	

    

    22

Table of Contents

	

	

 

    Schedule 1

    United Kingdom — Tax-Favoured Options

 

    The Grantor may designate any Market Value Option (which is not
    capable of satisfaction as a SAR or in cash) as an Approved
    Option. If it does, the provisions of the rules relating the
    Market Value Options will apply to the Approved Option, subject
    to this Schedule. No other types of Awards may be designated as
    Approved Options under this Schedule.

 

    The terms of Approved Options have been approved by HMRC under
    Schedule 4 of ITEPA under reference number X23006/EJM.

 

    1  Eligibility
    to be granted Approved Options

 

    Approved Options may only be granted to an employee of:

 

    1.1 the Company;

 

    1.2 Subsidiary;

 

    1.3 any jointly-owned company (within the meaning of
    paragraph 34 ITEPA) designated by the Committee; or

 

    1.4 any other entity designated by the Committee and
    agreed by HMRC,

 

    and cannot be granted to anybody who is:

 

    1.5 excluded from participation because of
    paragraph 9 of ITEPA (material interest provisions); or

 

    1.6 a director who is required to work less than
    25 hours a week (excluding meal breaks) for the Company.

 

    2  Shares
    subject to an Approved Option

 

    The Shares subject to an Approved Option must satisfy
    paragraphs 16 to 20 of ITEPA. If they cease to satisfy
    paragraphs 16 to 20 of ITEPA and the Committee notify HMRC
    that they wish the terms of Approved Options to be disapproved,
    the definition of the Option will continue in effect but the
    Option will cease to be an Approved Option and will be treated,
    for the purposes of the rules, as a Market Value Option.

 

    3  Individual
    limit on Approved Options

 

    The Committee must not grant an Approved Option to an Eligible
    Employee which would cause the aggregate market value of:

 

    3.1 the Shares subject to that Approved
    Option; and

 

    3.2 the Shares which he may acquire on exercising
    other Approved Options; and

 

    3.3 the shares which he may acquire on exercising
    his options under any other HMRC approved discretionary scheme
    established by the Company or by any of its associated companies
    (as defined in paragraph 35 of ITEPA)

 

    to exceed the amount permitted under paragraph 6(1) of
    ITEPA (currently £30,000). For the purposes of this
    paragraph, market value is calculated as at the date of grant of
    the options as described in the relevant plan rules.

 

    If the Committee tries to grant an Approved Option which is
    inconsistent with this paragraph 3, the Approved Option
    will be limited and will take effect from the Award Date on a
    basis consistent with that rule.

 

    4  Transferring
    Approved Options

 

    An Approved Option cannot be transferred, assigned or otherwise
    disposed of, except on the transmission of the Approved Option
    on the death of a Participant to his personal representatives.

    

    23

Table of Contents

    5  Variations
    in share capital, demergers and special distributions

 

    5.1 Adjustments may not be made to Approved Options
    under rule 17.2 where there is a demerger (in whatever
    form), an exempt distribution by virtue of Section 213 of
    the Income and Corporation Taxes Act 1988 or a special dividend
    or distribution.

 

    5.2 The Committee cannot treat an Approved Option as
    being over shares in any other company under rule 17.2.

 

    5.3 No adjustment of Approved Options may be made
    under rule 17.2 without the prior approval of HMRC.

 

    6  Restrictions
    on exercise of an Approved Option

 

    A Participant may not exercise an Approved Option while he is
    excluded from being granted an Approved Option under
    paragraph 9 of ITEPA (material interest provisions).

 

    7  Specified
    Age and redundancy

 

    For the purposes of paragraph 35A of ITEPA, the specified
    age is 55 and redundancy, for the purposes of
    rule 9.2.1(i), has the meaning given to that term by the
    Employment Rights Act 1996.

 

    8  Death

 

    If the Participant dies (irrespective of the death occurring
    during an exercise period), the Approved Option may be exercised
    by his personal representatives within 12 months after his
    death, after which it will lapse.

 

    9  Discretion
    on Vesting, exercise and lapse of Approved Options

 

    9.1 The Committee may extend the period during which
    an Approved Option may be exercised where it has Vested as a
    result of the Participant ceasing to be an employee (see
    rule 9) up to 42 months from the Award Date.

 

    9.2 If the Committee exercise any discretion under
    rules 4.1.2, 4.1.3, 9 or 10 in relation to an Approved
    Option or under paragraph 9.1 above, they must do so fairly
    and reasonably. The words “That decision need not be made
    on objective grounds” in rule 4.1.2 do not apply in
    relation to Approved Options.

 

    9.3 The following replaces rule 4.2.2 in
    relation to Approved Options:

 

    In exceptional circumstances, the Grantor, with the approval of
    the Committee, may amend or waive these conditions if anything
    happens which causes the Committee fairly and reasonably to
    consider it appropriate.

 

    9.4 Rule 17.7.2 does not apply in relation to
    Approved Options.

 

    9.5 Rules 9.3 and 18.6 do not apply in relation
    to Approved Options.

 

    10  Exchange
    of Approved Options

 

    10.1 If HMRC approval of the terms of Approved
    Options is to be maintained, Approved Options can only be
    exchanged, as described in rule 11, if the Acquiring
    Company:

 

    10.1.1 obtains Control of the Company as a result of
    making a general offer to acquire:

 

    (i) the whole of the issued ordinary share capital of the
    Company (other than that which is already owned by it and its
    subsidiary or holding company) made on a condition such that, if
    satisfied, the Acquiring Company will have Control of the
    Company; or

 

    (ii) all the Shares (or all those Shares not already owned
    by the Acquiring Company or its subsidiary or holding
    company); or

 

    10.1.2 obtains Control of the Company under a
    compromise or arrangement sanctioned by the court under
    Section 425 of the Companies Act 1985 or other local
    sanction procedure which the HMRC agrees is equivalent; or

 

    10.1.3 becomes bound or entitled to acquire Shares
    under Sections 428 to 430F of the Companies Act 1985 or
    other local legislation which HMRC agrees is equivalent.

    

    24

Table of Contents

    10.2 Approved Options must be exchanged within the
    period referred to in paragraph 26(2) of ITEPA and with the
    agreement of the company offering the exchange.

 

    10.3 The new Award will be in respect of shares
    which satisfy the conditions of paragraph 27(4) of ITEPA,
    in a body corporate falling within paragraph 16(b) or
    (c) of ITEPA).

 

    11  Takeovers
    and Restructurings

 

    11.1 Rules 10.1.3(ii) and 10.2.3(ii) do not
    apply.

 

    11.2 The words “subject to any other conditions
    the Committee may decide to impose” in rule 10.3.1 do
    not apply in relation to Approved Options.

 

    12  Cash
    alternative

 

    Rule 17.10 does not apply in relation to Approved Options.

 

    13  Changing
    the terms of Approved Options

 

    13.1 The Committee need not obtain the approval of
    the Company in general meeting for any minor changes which are
    necessary or desirable in order to obtain or maintain HMRC
    approval for the terms of Approved Options under ITEPA any other
    enactment.

 

    13.2 If HMRC approval of the terms of Approved
    Options is to be maintained, any change to the Plan under
    rule 14 which requires HMRC approval and which is made
    after it has been approved under ITEPA will only have effect
    when it is approved by HMRC.

 

    14  Withholding
    of tax

 

    The words “or a reduction in number of shares to which the
    Participant would otherwise be entitled” in rule 12.1
    do not apply in relation to Approved Options.

 

    15  Dividend
    equivalent

 

    Rule 17.4 does not apply in relation to Approved Options.

 

    16  Terms
    of employment

 

    The following replaces rule 13.4 in relation to Approved
    Options:

 

    16.1 For the purposes of this Rule,
    “Employee” means any employee of a Member of the Group.

 

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

 

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

 

    16.4 No employee has a right to participate in the
    Plan. Participation in the Plan or the grant of Options on a
    particular basis in any year does not create any right to or
    expectation of participation in the Plan or the grant of Options
    on the same basis, or at all, in any future year.

 

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

 

    16.6 The Employee will have no claim or right of
    action in respect of any decision, omission or discretion, not
    relating to a subsisting option, which may operate to the
    disadvantage of the Employee even if it is unreasonable,
    irrational or might otherwise be regarded as being in breach of
    the duty of trust and confidence (and/or any other implied duty)
    between the Employee and his employer.

    

    25

Table of Contents

    16.7 The Employee will have no claim or right of
    action in respect of any decision, omission or discretion
    relating to a subsisting option which may operate to the
    disadvantage of the Employee.

 

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

 

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

 

    16.8.2 any exercise of a discretion or a decision
    taken in relation to an Option or to the Plan, or any failure to
    exercise a discretion or take a decision;

 

    16.8.3 the operation, suspension, termination or
    amendment of the Plan.

 

    16.9 Participation in the Plan is permitted only on
    the basis that the Participant accepts all the provisions of the
    Rules, including this Rule. By participating in the Plan, an
    Employee waives all rights under the Plan, other than the right
    to exercise an Option subject to and in accordance with the
    express terms of the rules and the Performance Condition, in
    consideration for, and as a condition of, the grant of an Option
    under the Plan.

 

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

    

    26

Table of Contents

    Italy

 

    Schedule 2

    Option Price for Options granted to Italian
    employees1

 

    The Option Price for a Market Value Option granted to any
    employee who may be subject to tax in Italy may, if the
    Committee so decides, be the average closing middle market
    quotation of a Share (as derived from the Official List of the
    London Stock Exchange) over the 30 calendar days preceding and
    including the Award Date or such other price determined by the
    Directors so as to ensure that such employee does not suffer a
    tax disadvantage.

 

 

    1For
    the avoidance of doubt, the Option Price for Options granted to
    Italian employees will not be lower than the Option Price
    calculated in accordance with Rule 17.1.2. The price
    produced by using the formula set out in this Schedule 2
    will only be used as the Option Price if it produces a higher
    price than that produced under Rule 17.1.2.

    

    27

Table of Contents

    United
    States

 

    Schedule 3

    Special provisions for US employees

 

    1  Awards are intended not to constitute
    “non-qualified deferred compensation” within the
    meaning of Section 409A of the US Internal Revenue Code of
    1986, as amended (the “Code”).

 

    2 However, notwithstanding anything to the contrary
    in the Plan or the grant of any Award, if and to the extent the
    Committee shall determine that the terms of the grant,
    substitution or exercise of any Award may result in the failure
    of the such Award to comply with the requirements of
    Section 409A of the Code, or any applicable regulations or
    guidance promulgated by the US Secretary of the Treasury in
    connection therewith, the Committee shall have authority to take
    such action, in its sole discretion, to amend, modify, cancel or
    terminate the Plan or any grant of any Award as it deems
    necessary or advisable either for the Awards to be exempt from
    the application of Section 409A of the Code or to satisfy
    the requirements of Section 409A of the Code, including
    adding conditions with respect to the Vesting of the Awards,
    irrespective of the adverse affect of such action on and without
    the consent of any Participant.

 

    3 The following rules shall not apply to any Award
    if the Committee determines that the application of those rules
    would or could cause the Award to become subject to
    Section 409A of the Code:

 

    3.1 rule 17.1.2(i) (which relates to the Option
    Price); and

 

    3.2 rule 17.10.1 (which allows for an Option to
    be cashed out).

 

    4 If the disposition of Shares acquired pursuant to
    any Award is not covered by a then current registration
    statement under the Securities Act and is not otherwise exempt
    from such registration, such Shares shall be restricted against
    transfer to the extent required under the Securities Act of
    1933, and the Committee may require any person receiving Shares
    pursuant to an Award, as a condition precedent to receipt of
    such Shares, to represent to the Company in writing that the
    Shares acquired by such individual are acquired for investment
    only and not with a view to distribution and that such Shares
    will be disposed of only if registered for sale under the
    Securities Act of 1933 or if there is an available exemption for
    such disposition.

 

    5 Notwithstanding anything else in the Plan, the
    Company shall not be required to take any action which it, in
    its discretion, considers could reasonably be deemed to result
    in a violation of Section 13(k) of the US Securities
    Exchange Act of 1934, as amended.

    

    28

Table of Contents

 

    United
    States — tax-favoured options

 

    Schedule 4

    United States — Tax-favoured options

 

    The Grantor may, on the Award Date, designate any Market Value
    Option as an Incentive Stock Option within the meaning of
    Section 422 of the Code (an “ISO”). If it
    does so, the provisions of the rules relating the Market Value
    Options will apply to the ISO, subject to this Schedule.

 

    1  Definitions

 

    “Code” means the United States of America
    Internal Revenue Code of 1986, as amended;

 

    “Disability” means the inability to engage in
    any substantial gainful activity by reason of any medically
    determinable physical or mental impairment which can be expected
    to result in death or which has lasted or can be expected to
    last for a continuous period of not less than 12 months;

 

    “Subsidiary Corporation” means any corporation
    (other than the Company) in an unbroken chain of corporations
    beginning with the Company if, at the time of the granting of
    the Option, each of the corporations other than the last
    corporation in the unbroken chain owns stock possessing
    50 per cent or more of the total combined voting power of
    all classes of stock in one of the other corporations in such
    chain;

 

    2  Eligibility
    to be granted ISOs

 

    An ISO may only be granted to an Eligible Employee who is an
    employee of the Company or a Subsidiary Corporation.

 

    3  Exercise
    period for ISOs

 

    Notwithstanding anything in the rules, an ISO will lapse, at the
    latest, 10 years (or five years, in the case of an
    individual described in Section 422(b)(6) of the Code
    (relating to certain 10% owners)) after the Award Date.

 

    4  Individual
    Limit on ISOs

 

    To the extent that the aggregate Market Value (determined as of
    the Award Date) of the Shares subject to ISOs held by any
    Participant which first Vest during any calendar year under the
    Plan (or any of the stock option plan required to be taken into
    account under Section 422(d) of the Code) exceeds
    US$100,000, the portion of such grant that exceeds US$100,000
    shall not be an ISO but shall continue in effect as a Market
    Value Option governed by the rules, not including this Schedule.

 

    5  Option
    Price for an ISO

 

    The Option Price of an ISO will not be less than 100% (or 110%,
    in the case of an individual described in Section 422(b)(6)
    of the Code (relating to certain 10% owners)) of the Market
    Value of a Share on the date the ISO is granted.

 

    6  Overall
    limit on number of ISOs

 

    The aggregate number of Shares subject to ISOs will not exceed
    the lower of the limits set out in rule 7 and
    63,000,000 Shares. The Committee may make such adjustments
    as it sees fit to this limit to take account of any transaction
    described in rules 10.3, 16.6, 17.2 or 18.1 (which deal
    with demergers, rights issues and variations in capital).

 

    7  Transferring
    ISOs

 

    An ISO may not be transferred, assigned or otherwise disposed of
    other than by will or the laws of descent and distribution and,
    during the lifetime of such individual, must not be exercisable
    by any other person.

    

    29

Table of Contents

 

    United
    States — tax-favoured options

 

    8  Holding
    requirement

 

    If a Participant disposes of Shares acquired upon exercise of an
    ISO in a “disqualifying disposition” within the
    meaning of Section 422 of the Code less than:

 

    8.1 two years after the Award Date of the
    ISO; or

 

    8.2 one year from the issue or transfer of Shares to
    the Participant on exercise,

 

    or in any other disqualifying disposition within the meaning of
    Section 422 of the Code, the Participant shall notify the
    Company in writing as soon as practicable of the date and terms
    of such disposition. Rule 12 (Tax) will apply to any
    resulting federal, state or local tax or social security
    contributions.

 

    9  Disability

 

    A Participant’s ISO will lapse 12 months after the
    Participant’s Termination of Employment by reason of his
    Disability.

 

    10  Governing
    law

 

    English law governs the ISOs and their construction but ISOs
    will be construed in accordance with the provisions of
    Section 422 of the Code so as to preserve their status as
    Incentive Stock Options.

 

    11  Failure
    to comply with the Code in relation to an ISO

 

    To the extent that an ISO fails to meet any of the requirements
    of Section 422 of the Code, it shall cease to be an ISO but
    shall, from the date of the failure, continue in effect as a
    Market Value Option governed by the rules, not including this
    Schedule.

    

    30EX-4.1

 

EXHIBIT 4.1

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

2008 AMENDED AND RESTATED DISTRIBUTION REINVESTMENT

AND STOCK PURCHASE PLAN

     1.     Participation;
Agent. Corporate Property Associates 15 Incorporated
2008 Amended and Restated Distribution Reinvestment and Stock Purchase Plan
(“Plan”) is available to stockholders of record of
the common stock (“Common
Stock”) of Corporate Property Associates 15 Incorporated
(“CPA® :15”). Phoenix
American Financial Services, Inc. (“Phoenix American”) acting as agent for each
participant in the Plan, will apply cash distributions which become payable to
such participant on shares of CPA® :15 Common Stock (including shares held in
the participant’s name and shares accumulated under the Plan)
and voluntary cash investments made by Plan participants, to the purchase
of additional whole and fractional shares of CPA® :15 Common Stock for such
participant.

     2.     Eligibility. Participation in the Plan is limited to registered owners
of CPA® :15 Common Stock. Shares held by a broker-dealer or nominee must be
transferred to ownership in the name of the stockholder in order to be eligible
for this Plan. Further, a stockholder who wishes to participate in the Plan
may purchase shares through the Plan only after receipt of a prospectus
relating to the Plan. A participating stockholder is not required to include
all of the shares owned by such stockholder in the Plan, but all of the
distributions paid on enrolled shares will be reinvested.

     3.     Stock Purchases. In making purchases for the accounts of participants,
Phoenix American may commingle the funds of one participant with those of other
participants in the Plan. All shares purchased under the Plan will be held in
the name of each participant. Purchase will be made directly from
CPA® :15 at
95% of the estimated net asset value (“NAV”) per
share of CPA® :15 Common
Stock, as estimated by Carey Asset Management Corp., our advisor, or
another firm CPA® :15 chooses for that purpose.
Estimated NAV per share is the most recent appraised value of the
real estate owned by CPA® :15 as increased by the value of
CPA® :15’s other assets and reduced by the total amount of
CPA® :15’s liabilities, and then divided by
the total number of outstanding shares. Phoenix American shall have no
responsibilities with respect to the market value of the
CPA® :15 Common Stock
acquired for participants under the Plan.

     4.     Timing of Purchases. Phoenix American will make every reasonable
effort to reinvest all distributions on the date the cash distribution is paid,
except where necessary to comply with applicable securities laws. If, for any
reason beyond the control of Phoenix American, reinvestment of the
distributions cannot be completed within 30 days after the applicable
distribution payment date, participants’ funds held by Phoenix American will be
distributed to the participant.

     5.     Account Statements. Following the completion of the purchase of shares
after each distribution, Phoenix American will mail to each participant an
account statement showing the cash distributions, the number of shares
purchased with the cash distributions and the year-to-date and cumulative cash
distributions paid.

     6.     Expenses and Commissions. There will be no direct expenses to
participants for the administration of the Plan. Administrative fees
associated with the Plan will be paid by CPA® :15. In no event will any
discounts on shares exceed 5% of the fair market value of such purchased
shares.

     7.     Taxation of Distributions. The reinvestment of distributions does not
relieve the participant of any taxes which may be payable on such
distributions.

     8.     Stock Certificates. No stock certificates will be issued to a
participant.

 

     9.     Voting of Shares. In connection with any matter requiring the vote of
CPA® :15 stockholders, each participant will be entitled to vote all of the
whole shares held by the participant in the Plan. Fractional shares will not
be voted.

     10.     Absence of Liability. Neither CPA® :15 nor Phoenix American or any of
their officers, directors, agents or employees, shall have any responsibility
or liability as to the value of CPA® :15’s shares, any change in the value of,
the shares acquired for any participant’s account, or the rate of return earned
on, or the value of, the interest-bearing accounts, if any, in which
distributions are invested. Neither CPA® :15 nor Phoenix American shall be
liable for any act done in good faith, or for any good faith omission to act,
including, without limitation, any claims of liability (a) arising out of the
failure to terminate a participant’s participation in the Plan upon such
participant’s death prior to the date of receipt of such notice, and (b) with
respect to the time and prices at which shares are purchased for a participant.
NOTWITHSTANDING THE FOREGOING, LIABILITY UNDER THE U.S. FEDERAL SECURITIES
LAWS CANNOT BE WAIVED. Similarly, CPA® :15 and Phoenix American have been
advised that in the opinion of certain state securities commissioners,
indemnification is also considered contrary to public policy and therefore
unenforceable.

     11.     Termination of Participation. A participant may terminate
participation in the Plan at any time by written instructions to that effect to
Phoenix American. To be effective on a distribution payment date, the notice
of termination must be received by Phoenix American at least 15 days before
that distribution payment date. Upon receipt of notice of termination from the
participant, Phoenix American may also terminate any participant’s account at
any time in its discretion by notice in writing mailed to the participant.

     12.     Amendment, Supplement, Termination and Suspension of Plan. This Plan
may be amended, supplemented or terminated by CPA® :15 at any time by the
delivery of written notice to each participant at least 10 days prior to the
effective date of the amendment, supplement or termination. Any amendment or
supplement shall be effective as to the participant unless, prior to its
effective date, Phoenix American receives written notice of termination of the
participant’s account. Amendment may include an appointment by CPA® :15 or
Phoenix American with the approval of CPA® :15 of a successor agent, in which
event such successor shall have all of the rights and obligations of Phoenix
American under this Plan. CPA® :15 may suspend the Plan at any time without
notice to the participants.

     13.     Governing Law. This Plan and the Authorization Card signed by the
participant (which is deemed a part of this Plan) and the participant’s account
shall be governed by and construed in accordance with the laws of the State of
Maryland. This Agreement cannot be changed orally.

2

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