Document:

Telecom Restricted Share Scheme Rules

 “EXHIBIT 4.6” 
  
  
 TELECOM RESTRICTED SHARE SCHEME - 2007 
  
  
 (amended August 2008) 

 TABLE OF CONTENTS 
  

					
	 	  	PART I - PRELIMINARY AND INTERPRETATION	  	1
			
	 1
	  	Preliminary	  	1
			
	 2
	  	Interpretation	  	1
			
		  	PART II - OPERATION OF THE SCHEME	  	4
			
	 3
	  	Offers	  	4
			
	 4
	  	Loan	  	4
			
	 5
	  	Acceptance	  	4
			
	 6
	  	Transfer Date	  	5
			
	 7
	  	KiwiSaver Contribution	  	7
			
	 8
	  	Obligations of Nominee	  	9
			
		  	PART III - TERMINATION OF EMPLOYMENT	  	10
			
	 9
	  	Sale and Repayment	  	10
			
		  	PART IV - CORPORATE EVENTS	  	14
			
	 10
	  	Complete Acquisition, Fundamental Change, Business Sale	  	14
			
	 11
	  	Early Transfer	  	14
			
	 12
	  	Capital Changes	  	15
			
	 13
	  	Capital Return	  	16
			
	 14
	  	Other Adjustment	  	16
			
		  	PART V - GENERAL	  	18
			
	 15
	  	No divestment	  	18
			
	 16
	  	Administration of Scheme	  	18
			
	 17
	  	Rights attaching to Shares	  	18
			
	 18
	  	Amendment	  	18
			
	 19
	  	Miscellaneous	  	19

 Date: 2 August 2007 (amended on 25 August 2008) 
 PART I - PRELIMINARY AND INTERPRETATION 
  

	1	Preliminary 

  

	1.1	This is the Telecom Restricted Share Scheme 2007. 

  

	1.2	This document applies to allocations to Executives made after 2 August 2007. 

  

	2	Interpretation 

  

	2.1	In this document unless the context otherwise requires: 

 Allocated Shares means the number of Shares allocated to an Executive pursuant to clause 5.3 
 Allocation Date
means the date on which Shares are, or are to be, allocated to an Executive (specified in the offer document) 
 Allocation
Price means the volume weighted average market price of Shares on the Exchange for the 20 Business Days immediately preceding the date of issue 
 Board means the board of directors of Telecom from time to time 
 Bonus means a
cash bonus from a Subsidiary for an Executive which, after first deducting tax at the highest marginal tax rate applying to the Executive, is equal to the Loan 
 Bonus Issue means any distribution or allocation of securities or other benefits (other than cash) to Shareholders for which Shareholders are not to provide consideration 
 Breach means a breach of Telecom’s constitution, the listing and/or other rules governing the Exchange or any other stock exchange on
which Shares are quoted, and/or any statute, regulation or Telecom’s internal procedures for insiders 
 Business Day means
a day on which the Exchange is open for trading 
 Business Sale means, in respect of an Executive: 
  

	 	(a)	the Subsidiary by which that Executive is employed is disposed of to a person not a member of the Group; or 

  

	 	(b)	the business in which that Executive is employed is disposed of to a person not a member of the Group and the Executive, as a result of that disposal, becomes an employee of that
person or of an associate of that person 

 Capital Change means a Rights Offer, Bonus Issue, Capital Return, or
any other reconstruction of, or adjustment to, the capital or capital structure of Telecom of any nature 
 Capital Return means
any payment of cash to Shareholders which is, or is to be, accompanied by a reduction in the number of Shares, or the proportion of economic interest in Telecom, held by Shareholders to which the Capital Return applies 
 Complete Acquisition means any transaction or arrangement which has one of the following results: 
  

	 	(a)	all of the Shares held by the Nominee are compulsorily acquired by any person; or 

  

	 	(b)	all of the Shares are acquired by a person, or by a person and that person’s associates; or 

  

	 	(c)	all of the Shares are cancelled, cease to exist, or are transferred or exchanged, and in substitution for Shares the Nominee receives or is to receive cash, securities, or other
benefits 

 Dividend means a payment of cash in respect of Shares which is not a Capital Return

 Early Termination means: 
  

	 	(a)	cessation of an Executive’s Employment (unless the Executive immediately assumes further Employment or is on non-permanent leave of absence with employer approval);

  

	 	(b)	an Executive purporting to act in breach of clause 15.1; and/or 

  

	 	(c)	Telecom being put into liquidation (or suffering a similar event), before the Transfer Date 

 Employee Contribution means a contribution to a KiwiSaver Scheme required to be deducted from a Bonus or part Bonus 
 Employer Contribution means a contribution to be made to a KiwiSaver Scheme by an employer of an Executive as a result of a Bonus or part
Bonus being paid 
 Employment means employment by Telecom or a Subsidiary 
  

 1 

 TELECOM RESTRICTED SHARE SCHEME 
 Event has the meaning in clause 14 
 Exchange means New Zealand Exchange
Limited’s NZSX 
 Excluded Shares means (subject to clause 11.4) at any date Executive’s Shares: 
  

	 	(a)	the Allocation Date of which was less than one year before that date; and 

  

	 	(b)	the Qualifying Date of which is more than one year after that date 

 Executive means an executive who is Employed 
 Executive’s Shares in respect of an Executive means
the Shares held by the Nominee for that Executive 
 Fundamental Change means the occurrence of one of the following events:

  

	 	(i)	control of 50% or more of the voting rights in Telecom is held by one person or by one person and that person’s associates; or 

  

	 	(ii)	all or a material part of the business of the Group is disposed of to a person not a member of the Group by one transaction or a series of related transactions, or any
reconstruction or merger affecting Telecom occurs (not being a Complete Acquisition), and as a result of that disposal, reconstruction, or merger there is in the opinion of the Board a change in the essential nature of the business of the Group,

 if (but only if) the Board determines that as a result of the occurrence of that event Shares held by the Nominee for
Executives should be transferred to Executives 
 Group means Telecom and its subsidiaries 
 Initial Test Date means a date within 20 Business Days after the Qualifying Date, determined by the Board 
 KiwiSaver Scheme means a ‘KiwiSaver’ scheme under the KiwiSaver Act 2006 
 Lender means the Subsidiary providing the Loan 
 Loan means an interest-free loan to an Executive equal to the Total Price, reduced if applicable pursuant to clause 6.3, clause 9.4(e), clause 9.5(b)(ii) clause 9.5(c)(ii) or 13.1(b)(iv), 
 Nominee means the person appointed from time to time by Telecom to hold Shares on behalf of an Executive 
 Notification Date means the date the Board delivers a notice pursuant to clause 6.1 
 Performance Hurdle means the performance hurdle (if any) specified in the offer document 
 Qualifying Date means the Qualifying Date specified in the offer document or, if that date is not a Business Day, the first Business Day
after such date 
 Redundancy means the termination of Employment of an Executive by reason of that Executive’s position
becoming surplus to the Group’s requirements, or any other involuntary termination of an Executive’s Employment which the Board in its discretion determines constitutes redundancy, but does not include termination of Employment in the
course of a Business Sale 
 Relevant Shares has the meaning in clause 9.4(a) 
 Re-Test Date means a date within 20 Business Days after the Specified Date, determined by the Board 
 Rights Offer means any offer of securities or benefits to Shareholders for which Shareholders are to provide consideration 
 Scheme means the Telecom Restricted Share Scheme 2007 
 Share means an ordinary share in Telecom 
 Shareholder means a holder of a Share

 Shortfall has the meaning in clause 7.3(b) 
 Specified Date means the Specified Date (if any) specified in the offer document or, if that date is not a Business Day, the first Business Date after such date, after which the Board will re-test
achievement of a Performance Hurdle 
 Subsidiary means a subsidiary of Telecom 
 Telecom means Telecom Corporation of New Zealand Limited 
 Total Price means the aggregate value of Shares allocated, or to be allocated, to an Executive (specified in the offer document) 
 Transfer Date means the date on which Transferable Shares are, or are to be, transferred to an Executive and released from the Scheme,
being: 
  

	 	(a)	the Notification Date after which a Share, to which a Performance applies, is determined by the Board pursuant to clause 6.1 or clause 9.5(a) (as the case may be) to be a
Transferable Share; or 

  

	 	(b)	the Qualifying Date, if no Performance Hurdle applies in respect of a Share 

  

 2 

 TELECOM RESTRICTED SHARE SCHEME 
  

 Transferable Share means a Share: 
  

	 	(a)	that the Board has determined is to be transferred pursuant to clause 6.1 or clause 9.5(a) (as the case may be); or 

  

	 	(b)	a Share in relation to which no Performance Hurdle applies 

 Unvested Share means (subject to clause 11.4) a Share, in relation to which a Performance Hurdle applies and the relevant Initial Test Date has passed, that the Board has determined pursuant to clause 6.1 or clause 9.5(a) (as
the case may be) is not to be transferred on the Notification Date applicable to such Initial Test Date. 
  

	2.2	In the definitions of “Complete Acquisition” and “Fundamental Change” the expressions “associate”, “control” and “voting right”
have the meaning in the Takeovers Code 2001. 

  

	2.3	In this document: 

  

	 	(a)	the singular includes the plural and vice versa, and words importing any gender include the other genders; 

  

	 	(b)	a reference to a person includes any individual, partnership, committee and incorporated or unincorporated body (whether or not having a separate legal personality);

  

	 	(c)	a reference to amend includes modify, delete, add and vary; 

  

	 	(d)	a reference to apply includes apply under assignment or set off; 

  

	 	(e)	where a word or expression is defined, other parts of speech and grammatical forms of that word or expression have a corresponding meaning; 

  

	 	(f)	a reference to the Scheme means the Scheme as amended from time to time; 

  

	 	(g)	a reference to a person includes its successors and permitted assigns; and 

  

	 	(h)	headings are inserted for convenience only and shall be ignored in interpretation. 

  

 3 

 TELECOM RESTRICTED SHARE SCHEME 
  

 PART II - OPERATION OF THE SCHEME 
  

	3	Offers 

  

	3.1	Telecom may offer under the Scheme Shares to an Executive. 

  

	3.2	An Executive will not (subject to clause 7) be required to pay any amount under the Scheme to Telecom or a Subsidiary from the Executive’s own funds. 

 

	3.3	Each offer (acceptance of which will be conditional on approval by Telecom) will be made in an offer document, and will: 

  

	 	(a)	specify the Total Price; 

  

	 	(b)	have attached a copy of the Scheme (unless the Executive has previously participated in the Scheme); 

  

	 	(c)	have attached a copy of an investment statement for the offer (if made in New Zealand); 

  

	 	(d)	specify the Allocation Date; 

  

	 	(e)	specify the Qualifying Date, the Performance Hurdle (if any) and the Specified Date (if any); 

  

	 	(f)	specify whether the Nominee will pay to the Executive any dividends on the Shares to which the offer relates; 

  

	 	(g)	have attached a loan agreement; 

  

	 	(h)	refer to Telecom’s internal procedures for insiders; 

  

	 	(i)	have attached a form requesting consent to acquire the Shares, in terms of those procedures; and 

  

	 	(j)	specify the period during which the offer may be accepted. 

  

	4	Loan 

  

	4.1	The Lender will lend to the Executive (interest-free) the Total Price if Shares are to be allocated to the Executive. 

  

	5	Acceptance 

  

	5.1	An Executive who wishes to accept an offer of Shares must return to Telecom, within the time specified, and completed by the Executive: 

  

	 	(a)	the acceptance part of the offer document, confirming the Executive’s acceptance; 

  

 4 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(b)	the form requesting consent to acquire the Shares, in terms of Telecom’s internal procedures for insiders (if applicable); and 

  

	 	(c)	the agreement for the Loan. 

  

	5.2	In accepting an offer of Shares, an Executive: 

  

	 	(a)	will be deemed to have directed the Lender to apply the Loan in payment to Telecom of the Total Price as payment for the Shares (this deemed direction discharging fully the
Executive’s obligation to pay for the Shares); 

  

	 	(b)	will be deemed to have directed Telecom that the Shares be held under the Scheme on behalf of the Executive by the Nominee; 

  

	 	(c)	acknowledges that acceptance is conditional on approval by Telecom, and the Executive is bound by the Scheme; and 

  

	 	(d)	acknowledges that participation in the Scheme does not affect the terms of the Executive’s Employment. In no event will Telecom or a Subsidiary be deemed by making an offer or
a Loan (as the case may be) or otherwise to have represented that an Executive’s Employment will continue until and/or beyond the Qualifying Date or the Transfer Date. 

  

	5.3	An acceptance will be invalid and of no effect if it would give rise to a Breach. If an acceptance does not give rise to a Breach, Telecom will if Telecom approves that acceptance:

  

	 	(a)	determine the number of Shares (existing and/or new) to be allocated to the Executive by dividing the Total Price by the Allocation Price; 

  

	 	(b)	allocate the Shares to the Executive; and 

  

	 	(c)	send the Executive confirmation of the allocation and the Allocation Price. 

  

	6	Transfer Date 

  

	6.1	On the Initial Test Date and again on the Re-Test Date, the Board will: 

  

	 	(a)	determine whether a Share is to be transferred to an Executive and released from the Scheme by measuring performance against the Performance Hurdle (if any) applicable to the
relevant Share; and 

  

	 	(b)	within two Business Days, notify the Executive in writing of the determination, 

 and those Shares which are determined to be Transferable Shares pursuant to clause 6.1(a) shall, in accordance with clause 6.2 (but subject to clause 6.3), be transferred to the Executive on the relevant Notification
Date. If the Board determines on the Initial Test Date that no Shares are to be transferred to an Executive all Shares will continue to be held under the Scheme on behalf of the Executive by the Nominee. For the avoidance of doubt, nothing in this
clause 6.1 applies in respect of a Share in relation to which no Performance Hurdle applies. 
  

 5 

 TELECOM RESTRICTED SHARE SCHEME 
  

	6.2	Unless clause 6.3 applies, on the Transfer Date: 

  

	 	(a)	an Executive will be entitled to the Bonus; 

  

	 	(b)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the Bonus be applied in repayment of the Loan (this deemed direction discharging fully the
Executive’s obligation to repay the Loan); and 

  

	 	(c)	the Nominee will (subject to clause 7) transfer to the Executive the Executive’s Shares. 

  

	6.3	This clause 6.3 shall apply where a notice given by the Board pursuant to clause 6.1 provides that the Board has determined that only some of an Executive’s Shares are
Transferable Shares. If this clause 6.3 applies, then clause 6.2 shall not apply and on the relevant Notification Date: 

  

	 	(a)	the Executive will be entitled to part of the Bonus based on this formula: 

  

					
	part Bonus = Bonus ×	 	  A
	  	
		 	B	  	

 where 
  

	 	A	is the number of the Executive’s Shares which the Board has determined in respect of the relevant Initial Test Date or Re-Test Date (as the case may be) are Transferable Shares

  

	 	B	is the number of the Executive’s Allocated Shares 

  

	 	(b)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the part Bonus be applied in part repayment of the Loan (this deemed direction discharging
the Executive’s obligation to repay the Loan to the extent of the after tax amount of the part Bonus); 

  

	 	(c)	the Nominee will (subject to clause 7) transfer to the Executive the Executive’s Transferable Shares; and 

  

	 	(d)	the Executive’s Shares that are not Transferable Shares will not be transferred to the Executive by the Nominee and will, subject to clause 6.4, continue to be held under the
Scheme on behalf of the Executive by the Nominee. 

  

	6.4	To the extent that on the Re-Test Date the Board has determined pursuant to clause 6.1 that some or all of an Executive’s Shares are not to be transferred to the Executive and
released from the Scheme, such Executive will be deemed to have: 

  

	 	(a)	sold to the Nominee beneficial ownership of such Shares for a price equal to the Allocation Price of those Shares; and 

  

	 	(b)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive for such Shares in repayment of the Loan (this deemed direction discharging
fully the Executive’s obligation to repay the Loan). 

  

	6.5	Nothing in this clause 6 applies to Shares to which clause 9.5 applies. 

  

 6 

 TELECOM RESTRICTED SHARE SCHEME 
  

	7	KiwiSaver Scheme 

 Employee Contribution

  

	7.1	If an Employee Contribution is required to be deducted from a Bonus or part Bonus, Telecom shall notify the Executive to that effect and the Executive shall, within such time as
Telecom specifies, elect either: 

  

	 	(a)	that the number of Shares to be transferred to the Executive be reduced to a number determined in accordance with the following formula: 

  

					
	 N =
	  	  B – K
	  	
		  	AP	  	

 Where 
  

					
	N	  	=	  	the reduced number of shares to be transferred to the Executive
			
	B	  	=	  	the Bonus or part Bonus after deducting tax at the highest marginal tax rate applying to the Executive
			
	K	  	=	  	the Employee Contribution
			
	AP	  	=	  	the Allocation Price; or

  

	 	(b)	that the Executive pay from the Executive’s own funds (which may be effected by way of deduction from the Executive’s salary) an amount equal to the Employee Contribution,
in which case the number of Shares to be transferred to the Executive shall not be reduced. 

 If the Executive does not make an
election within the time specified by Telecom, the Executive shall be deemed to have elected the alternative in clause 7.1(a). 
 Employee Contribution - Deemed Share Sale 
  

	7.2	If the Executive elects, or is deemed to elect, the alternative in clause 7.1(a), the Executive will be deemed, immediately before payment of the Bonus or part Bonus, to have:

  

	 	(a)	sold to the Nominee, at a price equal to the Allocation Price, beneficial ownership of a number of Shares equal to the difference between the number actually transferred to the
Executive and the number which would have been transferred but for the application of clause 7.1(a); and 

  

	 	(b)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive under 7.2(a) in payment of the Employee Contribution. If, by reason of rounding
of a number of Shares pursuant to clause 19.3, the amount due to the Executive is less than the Employee Contribution, Telecom shall pay the balance of the Employee Contribution. 

 Employer Contribution 
  

	7.3	If an Employer Contribution will be required to be made as a result of a Bonus or part Bonus being paid then: 

  

	 	(a)	the amount of the Bonus or part Bonus shall be reduced by the amount of the Employer Contribution; 

  

 7 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(b)	the Executive shall be required to repay the Loan by an amount equal to the shortfall in repayment of the Loan (as against the amount which would have been repaid if the reduction
referred to in clause 7.3(a) had not been made (the “Shortfall”)), which repayment shall be funded in accordance with clause 7.3(c) or 7.3(d); 

  

	 	(c)	if the Executive elects, or is deemed to elect, the alternative in clause 7.1(a), the Executive will be deemed, immediately before payment of the Bonus or part Bonus, to have:

  

	 	(i)	sold to the Nominee beneficial ownership of a number of Shares the Allocation Price of which is equal to the Shortfall; and 

  

	 	(ii)	directed the Nominee to apply the amount due to the Executive under clause 7.3(c)(i) in reduction of the Loan. If, by reason of rounding of a number of Shares pursuant to clause
19.3, the amount due to the Executive is less than the Shortfall, Telecom shall pay the balance of the Shortfall; 

  

	 	(d)	if the Executive elects the alternative in clause 7.1(b), the Executive shall repay the Shortfall from the Executive’s own funds (which may be effected by way of deduction from
the Executive’s salary). 

 Complete Acquisition 
  

	7.4	If a Complete Acquisition occurs, and the Executive elects, or is deemed to elect, the alternative in clause 7.1(a), then: 

  

	 	(a)	the number of Shares in respect of which the Executive is, pursuant to clause 11.1(b)(ii), to receive the consideration shall be a number calculated in accordance with clause
7.1(a), less (if an Employer Contribution is required to be made) a number calculated in accordance with clause 7.3(c)(i); and 

  

	 	(b)	if any Employer Contribution is required to be made, the Nominee will repay the Shortfall from the consideration received for the Executive’s Shares. 

Capital Return 
  

	7.5	If a part Bonus is to be paid under clause 13.1(b)(iii) then the Executive shall not be required to make an election under clause 7.1, and: 

  

	 	(a)	the Nominee shall deduct from the amount payable to the Executive under clause 13.1(b)(ii): 

  

	 	(i)	any Employee Contribution; and 

  

	 	(ii)	any Shortfall; and 

  

 8 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(b)	the Nominee shall repay the Shortfall. 

 Clause 7
Paramount 
  

	7.6	This clause 7 shall prevail over any other provision of this document. For the avoidance of doubt, this clause 7.6 does not prevent any amendment or alteration being made pursuant
to clause 14 or clause 18. 

  

	8	Obligations of Nominee 

  

	8.1	The Nominee will: 

  

	 	(a)	hold in its name on trust for an Executive under the Scheme legal ownership of Shares allocated to the Executive; 

  

	 	(b)	in the case of Shares allocated to an Executive prior to 1 September 2008, pay to the Executive all Dividends received by the Nominee in respect of the Executive’s Shares
allocated prior to 1 September 2008 (less all relevant withholdings); 

  

	 	(c)	in the case of Shares allocated to an Executive on or after 1 September 2008, not pay to the Executive any dividends on those Shares, except to the extent (if any) specified in
the offer document; and 

  

	 	(d)	not exercise any voting rights attaching to those Shares. 

  

 9 

 TELECOM RESTRICTED SHARE SCHEME 
  

 PART III - TERMINATION OF EMPLOYMENT 
  

	9	Sale and Repayment 

  

	9.1	Where: 

  

	 	(a)	an Executive ceases to be Employed (unless the Executive immediately assumes further Employment or is on non-permanent leave of absence with employer approval);

  

	 	(b)	an Executive purports to act in breach of clause 15.1; and/or 

  

	 	(c)	Telecom is put into liquidation (or suffers a similar event), 

 before the Transfer Date, the Executive will be deemed (subject to clause 9.3) immediately before Early Termination to have: 
  

	 	(d)	sold to the Nominee for the Total Price beneficial ownership of the Executive’s Shares; and 

  

	 	(e)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive for the Shares in repayment of the Loan (this deemed direction discharging fully
the Executive’s obligation to repay the Loan). 

  

	9.2	For the purpose of clause 9.1(d), Telecom and the Executive acknowledge that the Total Price is: 

  

	 	(a)	the value of the Shares; and 

  

	 	(b)	the lowest price they would have agreed for the Shares if payment had been required on the Allocation Date (in terms of the rules in the Income Tax Act 2004 concerning the accrual
treatment of income and expenditure). 

  

	9.3	Where Early Termination: 

  

	 	(a)	is caused by the Executive’s death or Redundancy; and 

  

	 	(b)	occurs on or after the date half-way through the period from the Allocation Date to the Qualifying Date, 

 Telecom may (but has no obligation whatever to), subject to clause 9.4, arrange for the Executive an early entitlement to part of the Bonus based on this
formula: 
  

					
	 part Bonus = Bonus ×
	  	  N
	  	
	  	T	  	

 where 
  

			
	N	  	is the number of days from the Allocation Date to the date of Early Termination (both inclusive) provided that, where Early Termination occurs after the Qualifying Date, “N” shall
be deemed to be the same number of days at “T”
		
	T	  	is the number of days from the Allocation Date to the Qualifying Date (both inclusive)

 Where Telecom does so, the Executive will be deemed to have directed (with effect from the
Allocation Date) that the part Bonus be applied in part repayment of the Loan (this deemed direction discharging the Executive’s obligation to repay the Loan to the extent of the after tax amount of the part Bonus), and the Nominee will
(subject to clause 7) transfer to the Executive 

  

 10 

 TELECOM RESTRICTED SHARE SCHEME 
  

 
the corresponding number of Shares it holds for the Executive (determined by dividing the part Bonus (after deducting tax at the highest marginal tax rate
applying to the Executive) by the Allocation Price). 
 Clause 9.1 will otherwise apply to the balance of the Shares held by the Nominee for
the Executive and the balance of the Loan. 
  

	9.4	Notwithstanding clause 9.3, if: 

  

	 	(a)	a Performance Hurdle applies to the Shares which would (but for this clause 9.4) be transferred to the Executive in accordance with clause 9.3 (“Relevant Shares”);
and 

  

	 	(b)	at the date of Early Termination, the Relevant Shares are not Transferable Shares, 

 then: 
  

	 	(c)	clause 9.5 (and not clause 6) shall apply in respect of the Relevant Shares; 

  

	 	(d)	Telecom shall not pay the part Bonus, and the Relevant Shares will not be transferred, to the Executive in accordance with clause 9.3 until the Board determines in accordance with
clause 9.5(a) that the Relevant Shares may be transferred to the Executive and released from the Scheme; and 

  

	 	(e)	the Executive will be deemed immediately before Early Termination to have: 

  

	 	(i)	sold to the Nominee beneficial ownership of the balance of the Shares held by the Nominee for the Executive for a price equal to the Allocation Price of those Shares; and

  

	 	(ii)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive for such Shares in part repayment of the Loan (this deemed direction discharging
the Executive’s obligation to repay the Loan to the extent of such amount due to the Executive). 

  

	9.5	This clause 9.5 shall apply only where it is stated to apply pursuant to clause 9.4. 

  

	 	(a)	On the Initial Test Date (if the date of Early Termination precedes the Initial Test Date) and again on the Re-Test Date, the Board will: 

  

	 	(i)	determine whether a Relevant Share is to be transferred to an Executive and released from the Scheme by measuring performance against the Performance Hurdle (if any) applicable to
that Relevant Share; and 

  

	 	(ii)	within two Business Days, notify the Executive in writing of the determination, 

 and those Relevant Shares which are determined to be Transferable Shares pursuant to clause 9.5(a)(i) shall, in accordance with clause 9.5(b) (but subject to clause 9.5(c)), be transferred to the Executive on the
relevant Notification Date. If the Board determines on the Initial Test Date that no Relevant Shares are to be transferred to an Executive all Relevant Shares will continue to be held under the Scheme on behalf of the Executive by the Nominee.

  

	 	(b)	Unless clause 9.5(c) applies, on the Transfer Date: 

  

	 	(i)	the Executive will be entitled to the part Bonus referred to in clause 9.3 (“Partial Bonus”); 

  

 11 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(ii)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the Partial Bonus be applied in part repayment of the Loan (this deemed direction
discharging fully the Executive’s obligation to repay the Loan to the extent of the after tax amount of the Partial Bonus); and 

  

	 	(iii)	the Nominee will (subject to clause 7) transfer to the Executive the Executive’s Relevant Shares. 

  

	 	(c)	This clause 9.5(c) shall apply where a notice given by the Board pursuant to clause 9.5(a) provides that the Board has determined that only some of an Executive’s Relevant
Shares are Transferable Shares. If this clause 9.5(c) applies, then clause 9.5(b) shall not apply and on the relevant Notification Date: 

  

	 	(i)	the Executive will be entitled to part of the Partial Bonus based on this formula: 

  

					
	 part Partial Bonus = Partial Bonus ×
	  	  A
	  	
	  	B	  	

 where 
  

			
	A	  	is the number of the Executive’s Relevant Shares which the Board has determined in respect of the relevant Initial Test Date or Re-Test Date (as the case may be) are Transferable Shares

		
	B	  	is the number of the Executive’s Relevant Shares

  

	 	(ii)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the part Partial Bonus be applied in part repayment of the Loan (this deemed direction
discharging the Executive’s obligation to repay the Loan to the extent of the after tax amount of the part Partial Bonus); 

  

	 	(iii)	the Nominee will (subject to clause 7) transfer to the Executive those of the Executive’s Relevant Shares which are Transferable Shares; and 

  

	 	(iv)	the balance of the Executive’s Relevant Shares that are not transferred to the Executive by the Nominee in accordance with clause 9.5(c) will, subject to clause 9.5(d),
continue to be held under the Scheme on behalf of the Executive by the Nominee. 

  

	 	(d)	To the extent that on the Re-Test Date the Board has determined pursuant to clause 9.5(a) that some or all of an Executive’s Relevant Shares are not to be transferred to the
Executive and released from the Scheme, the Executive will be deemed to have: 

  

	 	(i)	sold to the Nominee beneficial ownership of such Relevant Shares for a price equal to the Allocation Price of those Shares; and 

  

	 	(ii)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive for such Shares in repayment of the Loan (this deemed direction discharging
fully the Executive’s obligation to repay the Loan). 

  

 12 

 TELECOM RESTRICTED SHARE SCHEME 
  

	9.6	An Executive who is to receive a Partial Bonus (or part thereof) pursuant to clause 9.5 shall provide such information (in such form and at such times) as may be requested by
Telecom to in order to enable Telecom to comply with all of its legal obligations in relation to the KiwiSaver and related matters. 

  

 13 

 TELECOM RESTRICTED SHARE SCHEME 
  

 PART IV - CORPORATE EVENTS 
  

	10	Complete Acquisition, Fundamental Change, Business Sale 

  

	10.1	If: 

  

	 	(a)	a Complete Acquisition or Fundamental Change occurs, clause 11.1 shall (subject to clause 11.2) apply in respect of all Executives and in respect of all Shares held by the Nominee
for all Executives; or 

  

	 	(b)	a Business Sale occurs, clause 11.1 shall (subject to clause 11.2) apply in respect of Executives to which the definition of that term refers, and in respect of all Shares held by
the Nominee for those Executives. 

  

	11	Early Transfer 

  

	11.1	If this clause 11 applies then (subject to clause 11.2): 

  

	 	(a)	the Executive will be entitled to the Bonus; 

  

	 	(b)	if a Complete Acquisition occurs: 

  

	 	(i)	the Executive will be deemed immediately before the Complete Acquisition to have transferred beneficial ownership of the Executive’s Shares to the Nominee, and directed (with
effect from the Allocation Date) that the Bonus be applied in repayment of the Loan; 

  

	 	(ii)	the Nominee will (subject to clause 7.3) distribute as soon as practicable to the Executive all consideration received by the Nominee for the Executive’s Shares;

  

	 	(c)	if a Fundamental Change or Business Sale occurs: 

  

	 	(i)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the Bonus be applied in repayment of the Loan; 

  

	 	(ii)	the Nominee will (subject to clause 7) transfer to the Executive the Executive’s Shares. 

 A deemed direction by the Executive referred to in clause 11.1(b)(i) or 11.1(c)(i) shall discharge fully the Executive’s obligation to repay the
Loan. 
 The Nominee will not, on any offer for Shares, exercise any right conferred on it under applicable takeover laws. 
  

 14 

 TELECOM RESTRICTED SHARE SCHEME 
  

 Excluded Shares and Unvested Shares 
  

	11.2	If on the occurrence of an event referred to in clause 10.1, the Nominee holds Excluded Shares or Unvested Shares for an Executive, clause 11.1 shall not apply in respect of those
Excluded Shares and Unvested Shares, and 

  

	 	(a)	the Bonus payable to that Executive shall be reduced by the amount referred to in clause 11.3(b); 

  

	 	(b)	the references to the Executive’s Shares in clause 11.1 shall be deemed to exclude the Excluded Shares and the Unvested Shares; and 

  

	 	(c)	clause 11.3 shall apply in respect of the Excluded Shares and the Unvested Shares. 

 Treatment of Excluded Shares and Unvested Shares 
  

	11.3	Upon the occurrence of an event referred to in clause 10.1, each relevant Executive will be deemed to have: 

  

	 	(a)	sold to the Nominee beneficial ownership of the Executive’s Excluded Shares and Unvested Shares for a price equal to the Allocation Price of those Excluded Shares and Unvested
Shares; and 

  

	 	(b)	directed the Nominee (with effect from the Allocation Date) to apply the amount due to the Executive for the Excluded Shares and the Unvested Shares toward repayment of the Loan
(this deemed direction discharging the Executive’s obligation to repay the Loan to the extent of that amount). 

 Board
Discretion 
  

	11.4	The Board may at any time in its discretion determine (either generally or in respect of specific Executives or specific categories of Shares) that Shares which would otherwise be
Excluded Shares or Unvested Shares in terms of the definitions of those terms, are not to be treated as Excluded Shares or Unvested Shares (as the case may be). 

  

	12	Capital Changes 

  

	12.1	If: 

  

	 	(a)	a Rights Offer occurs, the Nominee shall not accept that Rights Offer, but shall, if in the opinion of the Board it is practicable to do so, dispose of the Nominee’s rights
under that Rights Offer, and account to each Executive for the consideration received on that disposal attributable to that Executive’s Shares other than Unvested Shares (less all expenses of that disposal); 

  

	 	(b)	 a Bonus Issue occurs, the Nominee shall hold the securities or other benefits received by the Nominee in respect of an Executive’s Shares for that Executive,
and those rights or other benefits shall be deemed to form part of the Executive’s Shares provided that any 

  

 15 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	 
Shares received by the Nominee in respect of Unvested Shares shall deemed to also be Unvested Shares; 

  

	 	(c)	a Capital Return occurs, clause 13 shall apply; or 

  

	 	(d)	any other Capital Change occurs, that Capital Change shall be dealt with in accordance with clause 14. 

  

	13	Capital Return 

  

	13.1	On the occurrence of a Capital Return: 

  

	 	(a)	if that Capital Return is on the basis that holders of Shares may elect whether or not to participate in it, the Nominee shall elect not to participate in it in respect of all
Executive’s Shares; 

  

	 	(b)	if that Capital Return is on the basis that it applies to all holders of Shares, without any election by holders of Shares: 

  

	 	(i)	the number of Shares held by the Nominee for each Executive shall be reduced by the same ratio as the total number of Shares is reduced on the Capital Return;

  

	 	(ii)	the Nominee shall (subject to clause 7.5) pay to each Executive the amount received by the Nominee on the Capital Return in respect of that Executive’s Shares;

  

	 	(iii)	the Executive will be paid part of the Bonus based on this formula: 

  

					
	part Bonus = Bonus ×	 	  A
	  	
		 	B	  	

 Where 
  

			
	A	  	is the number of the Executive’s Shares which are cancelled on the Capital Return;
		
	B	  	is the total number of the Executive’s Shares before the Capital Return; and

  

	 	(iv)	the Executive will be deemed to have directed (with effect from the Allocation Date) that the part Bonus be applied in part repayment of the Loan (this deemed direction discharging
the Executive’s obligation to repay the Loan to the extent of the after tax amount of the part Bonus). 

  

	14	Other Adjustment 

  

	14.1	If: 

  

	 	(a)	there occurs any offer for or acquisition of securities of Telecom, reconstruction or amalgamation affecting Telecom, Capital Change, disposal of businesses or assets of the Group,
or other event of any nature which in the opinion of the Board affects or will affect the position or rights of, or benefits to, Executives, Telecom, the Nominee, or the Lender, in respect of the Scheme (collectively an “Event”);
and 

  

 16 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(b)	either that Event is not provided for under Scheme, or in the opinion of the Board the manner in which the Scheme applies on the occurrence of that Event produces a result which is
inappropriate or unfair to Executives or to Telecom or to both, 

 the Board may make such alterations to the rights,
obligations, or benefits of Executives, Telecom, the Lender and/or the Nominee, and/or take or cause Telecom, the Lender, and/or the Nominee to take, such steps, as in the opinion of the Board are appropriate or desirable as a result of the
occurrence of that Event. In making any decision under this clause in respect of a Capital Return, if it is intended that return of capital constitutes a pro rata cancellation for the purposes of the Income Tax Act 2007, the Board shall have due
regard to that requirement. 
  

 17 

 TELECOM RESTRICTED SHARE SCHEME 
  

 PART V - GENERAL 
  

	15	No divestment 

  

	15.1	An Executive may not (including by operation of law) transfer, assign, or otherwise dispose of or create any interest (including any security, or legal or equitable interest) in a
Share held by the Nominee for the Executive (except as required by the Scheme). 

  

	15.2	Clause 9.1 will apply on any purported transfer, assignment, other disposition or creation of interest in breach of clause 15.1 (and the purported transfer, assignment,
disposition or creation will be void). 

  

	16	Administration of Scheme 

  

	16.1	The Board will administer all aspects of the Scheme, including the offering of Shares. Any matter to be determined by Telecom will be determined as the Board sees fit in its sole
discretion. The decision of the Board as to: 

  

	 	(a)	the exercise of any discretion conferred on the Board or Telecom by the Scheme; 

  

	 	(b)	the interpretation of this document; 

  

	 	(c)	any other matter touching upon the Scheme, 

 shall be
conclusive and binding on Executives, Telecom, the Nominee and the Lender and shall not be capable of being challenged or appealed. 
  

	16.2	Without limiting clause 16.1, the Board may determine in its sole discretion: 

  

	 	(a)	whether a Fundamental Change has occurred; and 

  

	 	(b)	the date on which a Complete Acquisition or Fundamental Change occurred. 

  

	16.3	The Board may delegate (to the extent permitted by law) to any person (and revoke any delegation of) any or all of its powers, discretions, rights and obligations under the Scheme
from time to time as it sees fit, and references to “Telecom” and the “Board” will be construed accordingly. 

  

	17	Rights attaching to Shares 

  

	17.1	Shares allocated to an Executive will rank equally with all other Shares at the Allocation Date, except for any dividend or other benefit in respect of Shares with a record date
before the Allocation Date. 

  

	18	Amendment 

  

	18.1	Telecom may from time to time, subject to clause 18.2: 

  

	 	(a)	vary any term of an Executive’s participation in the Scheme, with the agreement of the Executive; or 

  

 18 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(b)	amend the Scheme, if it considers that: 

  

	 	(i)	the interests of Executives are not materially prejudiced; or 

  

	 	(ii)	the amendment is fair and appropriate having regard to the proper interests of Executives, Telecom, and/or shareholders of Telecom; or 

  

	 	(c)	terminate the Scheme. 

  

	18.2	Telecom: 

  

	 	(a)	may not amend the Scheme (or vary any term of an Executive’s participation in the Scheme) if this would give rise to a Breach; but 

  

	 	(b)	may amend or terminate the Scheme if Telecom considers that this would avoid giving rise to a Breach. 

  

	18.3	Telecom will give notice of any amendment to or termination of the Scheme to all Executives affected. 

  

	19	Miscellaneous 

  

	19.1	References (direct or indirect) in the Scheme to actions or obligations of a Subsidiary (including the Lender) or the Nominee impose an obligation on (and enforceable against)
Telecom to procure performance of those actions or obligations. A Subsidiary, the Lender and the Nominee may be one or more persons. 

  

	19.2	All actions (including directions) and consequences deemed to occur under the Scheme will occur irrevocably and unconditionally (subject to clause 18). 

  

	19.3	If a calculation under the Scheme produces a fraction of a cent or Share, the product will be rounded to the nearest whole number favourable to the Executive.

  

	19.4	The Scheme represents all of the terms on which Shares are allocated under the Scheme, except those which Telecom implies to give effect to the Scheme. 

  

	19.5	No failure, delay or indulgence by Telecom in exercising any power or right conferred on it under the Scheme will operate as a waiver of that power or right; nor will a single
exercise of a power or right preclude further exercises, or the exercise of any other power or right under the Scheme. 

  

	19.6	Any dispute which arises under the Scheme will be determined by Telecom. Telecom’s decision will be final. 

  

	19.7	All notices and other communications under the Scheme will be in writing and addressed to the recipient at the address or facsimile number from time to time designated by the
recipient. Unless any other designations are given: 

  

 19 

 TELECOM RESTRICTED SHARE SCHEME 
  

	 	(a)	the addresses and facsimile numbers of Telecom and an Executive are those set out in the offer document; and 

  

	 	(b)	notices or communications to Telecom will be addressed and marked to the attention of Telecom’s Company Secretary. 

 Any notice or communication will be deemed to have been received: 
  

	 	(c)	at the time of delivery, if delivered by hand; 

  

	 	(d)	on the second Business Day after the date of mailing, if sent by post or airmail with postage prepaid; or 

  

	 	(e)	on the day on which confirmation of proper transmission is received (on transmission), if sent by facsimile. 

  

	19.8	The Scheme and the Loan will be governed by and construed in accordance with New Zealand law. 

  

 20Telecom Share Rights Scheme relating to allocations made prior to August 2007

 “EXHIBIT 4.7” 
 THE TELECOM SHARE RIGHTS SCHEME - 2007 
 (amended August 2008) 

 TELECOM SHARE RIGHTS SCHEME 
 TABLE OF CONTENTS 
  

					
		  	PART I - PRELIMINARY AND INTERPRETATION	  	1
	1	  	Preliminary	  	1
	2	  	Interpretation	  	1
		  	PART II - OPERATION OF THE SCHEME	  	4
	3	  	Grants	  	4
	4	  	Rejection Of Grant	  	4
	5	  	Exercise of Options	  	4
	6	  	Procedure for Exercise and Lapse	  	4
	7	  	Rights on Exercise	  	6
		  	PART III - TERMINATION OF EMPLOYMENT	  	7
	8	  	Termination of Employment	  	7
		  	PART IV - CORPORATE EVENTS	  	8
	9	  	Application of clause 10	  	8
	10	  	Early Exercise	  	8
	11	  	Capital Changes	  	8
	12	  	Other Adjustment	  	9
	13	  	No Divestment	  	10
	14	  	Administration of Scheme	  	10
	15	  	Amendment	  	10
	16	  	Miscellaneous	  	11

 Date: 2 August 2007 (amended 25 August 2008) 
 PART I - PRELIMINARY AND INTERPRETATION 
  

	1	Preliminary 

  

	1.1	This is the Telecom Share Rights Scheme 2007. 

  

	1.2	This document applies to grants to Executives made after 2 August 2007. 

  

	2	Interpretation 

  

	2.1	In this document unless the context otherwise requires: 

 Board means the board of directors of Telecom from time to time 
 Bonus Issue means any distribution or
allocation of securities or other benefits (other than cash) to Shareholders for which Shareholders are not to provide consideration 
 Breach means a breach of Telecom’s constitution, the listing and/or other rules governing the Exchange or any other stock exchange on which Shares are quoted, and/or any statute, regulation or Telecom’s internal
procedures for insiders 
 Business Day means a day on which the Exchange is open for trading 
 Business Sale means, in respect of an Executive: 
  

	 	(a)	the Subsidiary by which that Executive is employed is disposed of to a person not a member of the Group; or 

  

	 	(b)	the business in which that Executive is employed is disposed of to a person not a member of the Group and the Executive, as a result of that disposal, becomes an employee of that
person or of an associate of that person. 

 Capital Change means a Rights Offer, Bonus Issue, Capital Return, or
any other reconstruction of, or adjustment to, the capital or capital structure of Telecom of any nature 
 Capital Return means
any payment of cash to Shareholders which is, or is to be, accompanied by a reduction in the number of Shares, or the proportion of economic interest in Telecom, held by Shareholders to which the Capital Return applies 
 Commencement Date means the date from and including which an Executive is entitled to participate in the Scheme, specified in the Grant;

 Complete Acquisition means any transaction or arrangement which has one of the following results: 
  

	 	(a)	any person becomes entitled to exercise a right of compulsory acquisition in respect of Shares; or 

  

	 	(b)	all of the Shares are acquired by a person, or by a person and that person’s associates; or 

  

	 	(c)	all of the Shares are cancelled, cease to exist, or are transferred or exchanged, and in substitution for Shares Shareholders receive or are to receive cash, securities, or other
benefits 

 Employment means employment by Telecom or a Subsidiary 
 Event has the meaning in clause 12 
 Exchange means New Zealand Exchange Limited’s NZSX 
 Excluded Options means at any date (subject to
clause 10.3) Options: 
  

	 	(a)	the Grant of which took place less than one year before that date; and 

  

	 	(b)	the Qualifying Date of which is more than one year after that date 

 Executive means an executive who is Employed 
 Exercisable Option means an Option that the Board has
determined pursuant to clause 6.1 may be exercised or an Option in relation to which no Performance Hurdle applies 
 Exercise Date
means, in respect of an Option, the later of: 
  

	 	(a)	the Notification Date after which an Option, to which a Performance Hurdle applies, is determined by the Board pursuant to clause 6.1 be an Exercisable Option; or

  

	 	(b)	the Qualifying Date, if no Performance Hurdle applies in respect of that Option, subject to clauses 8.2 and 10.1 

 Exercise Notice means notice of the exercise of an Option 
 Exercise Price means nil 
  

 1 

 TELECOM SHARE RIGHTS SCHEME 
  

 Fundamental Change means the occurrence of one of the following events: 
  

	 	(i)	control of 50% or more of the voting rights in Telecom is held by one person or by one person and that person’s associates; or 

  

	 	(ii)	all or a material part of the business of the Group is disposed of to a person not a member of the Group by one transaction or a series of related transactions, or any
reconstruction or merger affecting Telecom occurs (not being a Complete Acquisition), and as a result of that disposal, reconstruction, or merger there is in the opinion of the Board a change in the essential nature of the business of the Group,

 if (but only if) the Board determines that as a result of the occurrence of that event Options held by the Executives should
become exercisable 
 Grant means the grant of an Option 
 Group means Telecom and its subsidiaries 
 Initial Test Date means a date within 20 Business Days after the Qualifying Date, determined by the Board 
 Notification Date means the date the Board delivers a notice pursuant to clause 6.1 
 Option means an option to acquire a Share pursuant to the Scheme 
 Option Lapse Date means the Option
Lapse Date specified in a Grant or, if that date is not a Business Day, the first Business Day after such date, after which Options are to lapse 
 Performance Hurdle means the performance hurdle (if any) specified in a Grant 
 Qualifying Date means
the Qualifying Date specified in a Grant or, if that date is not a Business Day, the first Business Day after such date 
 Redundancy means the termination of Employment of an Executive by reason of that Executive’s position becoming surplus to the Group’s requirements, or any other involuntary termination of an Executive’s
Employment which the Board in its discretion determines constitutes redundancy, but does not include termination of Employment in the course of a Business Sale 
 Re-Test Date means a date within 20 Business Days after the Specified Date, determined by the Board 
 Rights Offer means any offer of securities or benefits to Shareholders for which Shareholders are to provide consideration 
 Scheme means the Telecom Share Rights Scheme 2007 
 Share means an ordinary share in Telecom 

Shareholder means a holder of a Share 
 Specified Date means the Specified Date (if any) specified in a Grant or, if that date is not a Business Day, the first Business Day after such date, after which the Board will re-test achievement of a
Performance Hurdle 
 Subsidiary means a subsidiary of Telecom 
 Telecom means Telecom Corporation of New Zealand Limited 
 Unvested Option means (subject to clause 10.3) an Option, in relation to which a Performance Hurdle applies and the Initial Test Date has passed, that the Board has determined pursuant to clause 6.1 may
not be exercised on the Notification Date applicable to such Initial Test Date. 
  

	2.2	In the definitions of “Complete Acquisition” and “Fundamental Change “ the expressions “associate”, “control” and “voting right”
have the meaning in the Takeovers Code 2001. 

  

	2.3	In this document: 

  

	 	(a)	the singular includes the plural and vice versa, and words importing any gender include the other genders; 

  

	 	(b)	a reference to a person includes any individual, partnership, committee and incorporated or unincorporated body (whether or not having a separate legal personality);

  

	 	(c)	a reference to amend includes modify, delete, add and vary; 

  

 2 

 TELECOM SHARE RIGHTS SCHEME 
  

	 	(d)	a reference to apply includes apply under assignment or set off; 

  

	 	(e)	where a word or expression is defined, other parts of speech and grammatical forms of that word or expression have a corresponding meaning; 

  

	 	(f)	a reference to the Scheme means the Scheme as amended from time to time; 

  

	 	(g)	a reference to a person includes its successors and permitted assigns; and 

  

	 	(h)	headings are inserted for convenience only and shall be ignored in interpretation. 

  

 3 

 TELECOM SHARE RIGHTS SCHEME 
  

 PART II - OPERATION OF THE SCHEME 
  

	3	Grants 

  

	3.1	The Board may make a Grant to an Executive. Each Grant will: 

  

	 	(a)	specify the number of Options granted to the Executive; 

  

	 	(b)	enclose a copy of the Scheme; 

  

	 	(c)	specify the Commencement Date, the Exercise Price, the Performance Hurdle (if any), the Qualifying Date, the Specified Date (if any) and the Option Lapse Date;

  

	 	(d)	enclose an Options certificate; and 

  

	 	(e)	specify the period during which the Executive may reject the Grant. 

  

	4	Rejection of Grant 

  

	4.1	Opportunity 

 An Executive may reject a Grant by
giving the Board notice, and returning to the Board the Options certificate, within 40 Business Days after the Grant. If an Executive rejects a Grant, the Options the subject of that Grant will lapse immediately. 
  

	4.2	Acknowledgement 

 In retaining a Grant (and electing
not to reject the Grant pursuant to clause 4.1), an Executive acknowledges that: 
  

	 	(a)	the terms of the Scheme are binding; and 

  

	 	(b)	participation in the Scheme does not affect the terms of the Executive’s Employment. In no event will Telecom be deemed, by making a Grant or otherwise, to have represented
that an Executive’s Employment will continue until and/or beyond the Qualifying Date or the Exercise Date. 

  

	5	Exercise of Options 

  

	5.1	Options may be exercised on the Exercise Date or any Business Day after the Exercise Date, unless: 

  

	 	(a)	the Board considers that the exercise would give rise to a Breach; or 

  

	 	(b)	the Option has lapsed. 

  

	6	Procedure for Exercise and Lapse 

  

	6.1	Board Determination 

 On the Initial Test Date and
again on the Re-Test Date, the Board will: 
  

	 	(a)	determine whether an Option may be exercised by measuring performance against the Performance Hurdle (if any) applicable to the relevant Option; and 

  

 4 

 TELECOM SHARE RIGHTS SCHEME 
  

	 	(b)	within two Business Days, notify the Executive in writing of the determination. 

 For the avoidance of doubt, nothing in this clause 6.1 applies in respect of an Option in relation to which no Performance Hurdle applies. 
  

	6.2	Exercise 

 An Executive may, as the Executive sees
fit from time to time (subject to clause 5), exercise part or all of that Executive’s Exercisable Options (subject to any minimum number or multiple of a number of Options prescribed by the Board from time to time), by giving the Board an
Exercise Notice. 
  

	6.3	Exercise Notice 

 Any Exercise Notice must specify
the number of Options being exercised and be accompanied by: 
  

	 	(a)	the Options certificate; and 

  

	 	(b)	(if applicable) a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders. 

  

	6.4	Issue 

 Within five Business Days after the date on
which the Board receives: 
  

	 	(a)	an Exercise Notice; 

  

	 	(b)	an Options certificate; and 

  

	 	(c)	(if applicable) a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders, 

 in accordance with this clause, Telecom will issue to the Executive Shares, unless clause 5 precludes the exercise of Options (if so, the Board will give
notice to the Participant accordingly and return the Options certificate). 
  

	6.5	Board Notice 

 The Board will give a further notice
to an Executive who has been precluded (pursuant to clause 5.1(a)) from exercising an Option, as soon as it considers that the exercise would no longer give rise to a Breach. 
  

	6.6	Effective Exercise 

 Subject to clause 6.7, the
Exercise Notice of an Executive precluded (pursuant to clause 5.1(a)) from exercising an Option will take effect 10 Business Days after the date on which the Board gives its notice pursuant to clause 6.5, if the Executive: 
  

	 	(a)	surrenders the Options certificate; and 

  

	 	(b)	(if applicable) delivers a form requesting consent to acquire Shares, in terms of Telecom’s internal procedures for insiders, 

 during that period. If the Executive fails to do so, the Exercise Notice will be deemed to have been revoked. 
  

 5 

 TELECOM SHARE RIGHTS SCHEME 
  

	6.7	Continued Breach 

 If the exercise of Options
pursuant to clause 6.6 would give rise to a Breach, the Board will proceed as if an Exercise Notice had been given pursuant to clause 6.2. 
  

	6.8	Breach 

 If, after the period of six months from the
date on which it first gives notice pursuant to clause 6.4, the Board considers that it is still unable to give notice in respect of an Option pursuant to clause 6.5 and/or the exercise of Options pursuant to clause 6.6 would give rise to a Breach,
then Telecom is in default under the Scheme. Where Telecom is in default under this clause, the Executive and Telecom acknowledge and agree the following: 
  

	 	(a)	Telecom must pay the Executive liquidated damages in the sum equal to the volume weighted average market price of Shares on the Exchange for the Business Days in the month
immediately preceding the date of the Exercise Notice given by the Executive pursuant to clause 6.2, within ten Business Days; and 

  

	 	(b)	that the amount payable under clause 6.8(a) is a genuine pre-estimate of the damages the Executive is likely to suffer as a result of the default; 

  

	 	(c)	that on payment of the amount under clause 6.8(a), all rights that Executive has to specific performance, compensation for breach, loss or damages, or any other remedy are waived
and/or extinguished and the Executive’s Options will lapse immediately. 

  

	6.9	Option Lapse Date 

 Subject to clause 8, each Option
lapses, and ceases to be exercisable, on the earlier of: 
  

	 	(a)	the last possible Notification Date of that Option, if the Board has determined that the Option may not be exercised; and 

  

	 	(b)	the Option Lapse Date of that Option. 

  

	7	Rights on Exercise 

  

	7.1	Shares issued to Executives will be credited as fully paid and will rank pari passu in all respects with all Shares at the date of issue, except for any dividend or other benefit in
respect of Shares where the record date occurs prior to issue. 

  

 6 

 TELECOM SHARE RIGHTS SCHEME 
  

 PART III - TERMINATION OF EMPLOYMENT 
  

	8	Termination of Employment 

 Cessation of
Employment 
  

	8.1	If an Executive ceases to be Employed (unless the Executive immediately assumes further Employment or is on non-permanent leave of absence with employer approval), all of the
Executive’s Options shall lapse immediately, subject to clause 8.2. 

 Redundancy, etc 
  

	8.2	If an Executive’s cessation of Employment: 

  

	 	(a)	is caused by the Executive’s death or Redundancy; and 

  

	 	(b)	occurs on or after the date half way through the period from the Grant of Options (“Specified Options”) to the Qualifying Date of those Options,

 the Board may (but has no obligation whatever to) permit, subject to clause 8.3, the Executive to exercise a number of
Options calculated in accordance with the following formula: 
  

			
	 number of Options = number of Specified Options ×
	 	 N
	 	T

 Where: 
  

	 	N	is the number of days from the Grant of the Specified Options to the date the Executive ceases Employment provided that where the Executive ceases Employment after the Qualifying
Date, “N” shall be deemed to be the same number of days as “T” 

  

	 	T	is the number of days from the Grant of the Specified Options to the Qualifying Date of the Specified Options. 

 If the Board elects to permit the Executive to exercise Options pursuant to this clause, it may fix the Exercise Date for those Options as such date after
the Executive ceases to be Employed as the Board decides. Those Options shall lapse one month after the Exercise Date so fixed. 
  

	8.3	Notwithstanding clause 8.2, if: 

  

	 	(a)	a Performance Hurdle applies to a Specified Option; and 

  

	 	(b)	at the date of cessation of Employment of the Executive, that Specified Option is not an Exercisable Option, 

 the Board shall not permit the Executive to exercise that Specified Option unless and until the Board determines in accordance with clause 6.1 that that
Specified Option may be exercised. That Specified Option shall lapse one month after the relevant Notification Date following such a determination in accordance with clause 6.1. 
  

 7 

 TELECOM SHARE RIGHTS SCHEME 
  

 PART IV - CORPORATE EVENTS 
  

	9	Application of clause 10 

  

	9.1	Clause 10.1 shall (subject to clause 10.2) apply: 

  

	 	(a)	on the occurrence of a Complete Acquisition, or if the Board determines in its discretion that a Complete Acquisition is to occur, in respect of all Executives and in respect of all
Options; 

  

	 	(b)	on the occurrence of a Fundamental Change, in respect of all Executives and in respect of all Options; 

  

	 	(c)	on the occurrence of a Business Sale, in respect of Executives to which the definition of that term applies and in respect of all Options held by those Executives.

  

	10	Early Exercise 

  

	10.1	If pursuant to clause 9.1 this clause 10.1 applies then (subject to clause 10.2): 

  

	 	(a)	the Exercise Date shall be deemed to have occurred on a date fixed by the Board. That date shall be: 

  

	 	(i)	in the case of a Complete Acquisition such date as the Board in its discretion considers appropriate to enable each Executive to have an opportunity to exercise that
Executive’s Options so that the Shares resulting from that exercise will participate in the Complete Acquisition; or 

  

	 	(ii)	in the case of a Fundamental Change or Business Sale, such date as soon as practicable after that event as the Board in its discretion considers appropriate;

  

	 	(b)	the Options shall lapse on the date one month after the Exercise Date so fixed. 

  

	10.2	Clause 10.1 shall not apply in respect of Excluded Options or Unvested Options. Excluded Options and Unvested Options shall lapse immediately upon the occurrence of an event
specified in clause 9.1. 

  

	10.3	The Board may at any time in its discretion determine that (either generally or in respect of specified Executives or specified categories of Options) Options which would otherwise
be Excluded Options or Unvested Options, in terms of the respective definitions of those terms, are not to be treated as Excluded Options or Unvested Options (as the case may be). 

  

	11	Capital Changes 

  

	11.1	Subject to clause 11.2, if before the exercise of Options: 

 (a) 
  

	 	(i)	a Rights Offer occurs; and 

  

 8 

 TELECOM SHARE RIGHTS SCHEME 
  

	 	(ii)	Shareholders are able to sell their rights under that Rights Offer for consideration, 

 Telecom shall pay to each Executive an amount (less any deductions or withholdings required by law) equal to the amount which that Executive would have received (after any expenses of sale) if the Executive had
exercised all of the Executive’s Options (other than Unvested Options) before the record date for the Rights Offer, and had sold all of the rights under the Rights Offer relating to the Shares arising from the exercise of those Options on the
first day on which it was possible to do so; 
  

	 	(b)	a Bonus Issue occurs, then upon exercise of Options (but not otherwise) Telecom shall issue to the Executive the Shares or other securities or benefits to which the Executive would
have been entitled if on the record date for the Bonus Issue the Executive had been the holder of a number of Shares equal to the number which the Executive would have held if the Executive had exercised those Options immediately before the record
date for the Bonus Issue; 

  

	 	(c)	a Capital Return occurs, and that Capital Return is on the basis that it applies to all holders of Shares, without any election by holders of Shares: 

  

	 	(i)	each Executive’s Options shall be reduced in the same ratio as holdings of Shares are reduced on the Capital Return; and 

  

	 	(ii)	Telecom shall pay to each Executive the amount (less any deductions or withholdings required by law) which that Executive would have received if that Executive had exercised all of
that Executive’s Options, and the Shares resulting from that exercise had participated in the Capital Return; 

  

	 	(d)	any other Capital Change occurs, that Capital Change shall be dealt with in accordance with clause 12. 

  

	11.2	Where the operation of clause 11.1 would give rise to a Breach, the Board may make such alterations to the rights, obligations, or benefits of Executives or Telecom and/or take or
cause Telecom to take such steps, as in the opinion of the Board are appropriate or desirable in order to prevent a Breach. 

  

	12	Other Adjustment 

  

	12.1	If: 

  

	 	(a)	there occurs any offer for or acquisition of securities of Telecom, reconstruction or amalgamation affecting Telecom, Capital Change, disposal of businesses or assets of the Group,
or other event of any nature which in the opinion of the Board affects or will affect the position or rights of, or benefits to, Executives or Telecom in respect of the Scheme (collectively an “Event”); and 

 

	 	(b)	either that Event is not provided for under Scheme, or in the opinion of the Board the manner in which the Scheme applies on the occurrence of that Event produces a result which is
inappropriate or unfair to Executives or to Telecom or to both, the Board may make such alterations to the rights, obligations, or benefits of Executives or Telecom and/or take or cause Telecom to take such steps, as in the opinion of the Board are
appropriate or desirable as a result of the occurrence of that Event. 

  

 9 

 TELECOM SHARE RIGHTS SCHEME 
  

 PART V - GENERAL 
  

	13	No Divestment 

  

	13.1	An Executive may not (including by operation of law) transfer, assign, or otherwise dispose of or create any interest (including any security, or legal or equitable interest) in an
Option. 

  

	14	Administration of Scheme 

  

	14.1	The Board will administer all aspects of the Scheme, including the offering of Shares. Any matter to be determined by Telecom will be determined as the Board sees fit in its sole
discretion. The decision of the Board as to: 

  

	 	(a)	the exercise of any discretion conferred on the Board or Telecom by the Scheme; 

  

	 	(b)	the interpretation of this document; 

  

	 	(c)	any other matter touching upon the Scheme, 

 shall be
conclusive and binding on Executives and Telecom and shall not be capable of being challenged or appealed. 
  

	14.2	Without limiting clause 14.1, the Board may determine in its sole discretion: 

  

	 	(a)	whether a Fundamental Change has occurred; and 

  

	 	(b)	the date on which a Complete Acquisition or Fundamental Change occurred. 

  

	14.3	The Board may delegate (to the extent permitted by law) to any person (and revoke any delegation of) any or all of its powers, discretions, rights and obligations under the Scheme
from time to time as it sees fit, and references to “Telecom” and the “Board” will be construed accordingly. 

  

	15	Amendment 

  

	15.1	Telecom may from time to time, subject to clause 15.2: 

  

	 	(a)	vary any term of an Executive’s participation in the Scheme, with the agreement of the Executive; or 

  

	 	(b)	amend the Scheme, if it considers that: 

  

	 	(i)	the interests of Executives are not materially prejudiced; or 

  

	 	(ii)	the amendment is fair and appropriate having regard to the proper interests of Executives, Telecom, and/or shareholders of Telecom; 

  

	 	(c)	terminate the Scheme. 

  

 10 

 TELECOM SHARE RIGHTS SCHEME 
  

	15.2	Telecom: 

  

	 	(a)	may not amend the Scheme (or vary any term of an Executive’s participation in the Scheme) if this would give rise to a Breach; but 

  

	 	(b)	may amend or terminate the Scheme if Telecom considers that this would avoid giving rise to a Breach. 

  

	15.3	Telecom will give notice of any amendment to or termination of the Scheme to all Executives affected. 

  

	16	Miscellaneous 

  

	16.1	All actions (including directions) and consequences deemed to occur under the Scheme will occur irrevocably and unconditionally (subject to clause 15). 

  

	16.2	If a calculation under the Scheme produces a fraction of a cent or Share, the product will be rounded to the nearest whole number favourable to the Executive.

  

	16.3	The Scheme represents all of the terms on which Options are issued and exercised under the Scheme, except those which Telecom implies to give effect to the Scheme.

  

	16.4	No failure, delay or indulgence by Telecom in exercising any power or right conferred on it under the Scheme will operate as a waiver of that power or right; nor will a single
exercise of a power or right preclude further exercises, or the exercise of any other power or right under the Scheme. 

  

	16.5	Any dispute which arises under the Scheme will be determined by Telecom. Telecom’s decision will be final. 

  

	16.6	All notices and other communications under the Scheme will be in writing and addressed to the recipient at the address or facsimile number from time to time designated by the
recipient. Unless any other designations are given: 

  

	 	(a)	the addresses and facsimile numbers of Telecom and an Executive are those set out in the offer document; and 

  

	 	(b)	notices or communications to Telecom will be addressed and marked to the attention of Telecom’s Company Secretary. 

 Any notice or communication will be deemed to have been received: 
  

	 	(c)	at the time of delivery, if delivered by hand; 

  

	 	(d)	on the second Business Day after the date of mailing, if sent by post or airmail with postage prepaid; or 

  

	 	(e)	on the day on which confirmation of proper transmission is received (on transmission), if sent by facsimile. 

  

	16.7	The Scheme will be governed by and construed in accordance with New Zealand law. 

  

 11

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