Document:

Exhibit 4.3

 

Vodafone Group Plc

 

Vodafone Group Plc 1999

Long Term Stock Incentive Plan

 

	
    Incorporating amendments   to
    	
27 July 2000
    
	
    Expiry Date
    	
23 May 2009
    
	
    Shareholder Approval
    	
24 May 1999
    

 

 

1                                         Definitions

 

“ADS” means one American Depository Share of the Company.

 

“Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

“Auditors” means the auditors for the time being of the Company.

 

“Award” means any award of an Option, an SAR, a Restricted Share or a Stock Unit under the Plan.

 

“Board” means the Company’s Board of Directors, as constituted from time to time.

 

“Change in Control” means the occurrence of any of the following events:

 

(a)                                 A person obtaining Control as a result of making:

 

(i)                                     a general offer to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or

 

(ii)                                  a general offer to acquire all the shares in the Company which are of the same class as the shares over which Awards have been granted.

 

(b)                                 A person becoming bound or entitled to acquire shares in the Company under Sections 428 to 430F of the Companies Act 1985.

 

(c)                                  Under Section 425 of the Companies Act 1985, the Court sanctioning a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies.

 

(d)                                 The giving of a notice of a meeting to consider a resolution for the voluntary winding-up of the Company.

 

In respect of Awards granted within 12 months of the Merger, both:

 

(e)                                  Any “person” (as defined below) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 20% of the total voting power represented by the Company’s then outstanding voting securities; and

 

(f)                                   The beneficial ownership by such person of securities representing such percentage has not been approved by a majority of the “continuing directors” (as defined below); or

 

For purposes of Subsection (e) above, the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.

 

In respect of Awards granted within 12 months of the Merger, a change in the composition of the Board occurs, as a result of which fewer than two-thirds of the incumbent directors are directors who either:

 

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(g)                                  Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

 

(h)                                 Were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”);

 

For purposes of Subsection (g) above, the term “look-back date” shall mean the date 24 months prior to the date of the event that may constitute a Change in Control.

 

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

 

“Committee” means a committee of the Board, as described in Article 2.

 

“Company” means Vodafone Group Plc.

 

“Control” has the meaning given to that expression in Section 840 of the Income and Corporation Taxes Act 1988.

 

“Employee” means an employee of the Company or a Subsidiary.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Exercise Price,” in the case of an Option, means the amount for which one Ordinary Share or ADS may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of an SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Ordinary Share or ADS in determining the amount payable upon exercise of such SAR.

 

“Fair Market Value” means either the market price of an Ordinary Share or an ADS, determined by the Committee as follows:

 

(i)                                     If the Ordinary Shares or ADSs are traded over-the-counter on the date in question and are traded on the Nasdaq system or The Nasdaq National Market, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq system or The Nasdaq National Market;

 

(j)                                    If the Ordinary Shares or ADSs are traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and

 

(k)                                 If neither of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

Whenever possible, the determination of the Fair Market Value of an ADS by the Committee shall be based on the prices reported in the Western Edition of The Wall Street Journal. Such determination shall be conclusive and binding on all persons; or,

 

where applicable, the market price of an Ordinary Share, being the middle market quotation of an Ordinary Share on the dealing day preceding the date in question, as derived from the Daily Official List of the London Stock Exchange.

 

“ISO” means an incentive stock option described in section 422(b) of the Code.

 

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“Merger” means the completion of the merger of the Company or a Subsidiary with AirTouch Communications, Inc.

 

“NSO” means an employee stock option not described in sections 422 or 423 of the Code.

 

“Option” means an option to acquire Ordinary Shares or ADSs which may be an ISO or NSO, in either case, granted under Article 5 of the Plan and entitling the holder to purchase one Ordinary Share or one ADS.

 

“Optionee” means an individual or estate who or which holds an Option or SAR.

 

“Ordinary Share” means one ordinary share in the capital of the Company.

 

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

“Participant” means an individual or estate who or which holds an Award.

 

“Plan” means this Vodafone Group Plc 1999 Long Term Stock Incentive Plan, as amended from time to time.

 

“Restricted Share” means an Ordinary Share or an ADS awarded under Article 8 of the Plan.

 

“SAR” means a stock appreciation right granted under Article 7 of the Plan.

 

“SAR Agreement” means the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR.

 

“Stock Award Agreement” means the agreement between the Company and the recipient of a Restricted Share or Stock Unit which contains the terms, conditions and restrictions pertaining to such Restricted Share or Stock Unit.

 

“Stock Option Agreement” means the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her Option.

 

“Subsidiary” means a company which is both under the Control of the Company and a subsidiary of the Company within the meaning of Section 736 of the Companies Act 1985 and a subsidiary of the Company within the meaning of Section 424 of the Code.

 

2                                         Administration

 

2.1                               Committee Composition

 

The Plan shall be administered by the Committee. The Committee may delegate such of the administration of the Plan as it considers appropriate to such person or persons as it changes.

 

2.2                               Committee Responsibilities

 

The Committee or its delegees shall have the sole and absolute discretion to:

 

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2.2.1                     select the Employees who are to receive Awards under the Plan;

 

2.2.2                     determine the type, number, vesting requirements and other features and conditions of such Awards;

 

2.2.3                     interpret the Plan; and

 

2.2.4                     make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

 

2.3                               Granting of Awards

 

No Awards may be granted at any time when there is an embargo on dealing in securities of the Company, whether by virtue of the United Kingdom Listing Authority’s Model Code for Securities Transactions by Directors of Listed Companies or of the provisions of any legislation or other regulations for the time being in force.

 

3                                         Shares Available for Grants

 

3.1                               Numerical Limit

 

The maximum number of Ordinary Shares which may be allocated on the exercise of ISOs may not exceed 100 million. The limitation of this Section 3.1 is subject to the further limits of this Section 3 and shall be subject to adjustment pursuant to Article 10.

 

3.2                               Percentage Limits

 

3.2.1                     The number of Ordinary Shares which may be allocated under the Plan on any day will not exceed 10% of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Ordinary Shares which have been allocated in the previous ten years under the Plan and any other employee share plan adopted by the Company.

 

3.2.2                     The number of Ordinary Shares which may be allocated under the Plan on any day will not exceed 5% of the ordinary share capital of the Company in issue immediately prior to that day, when added to the total number of Ordinary Shares which have been allocated in the previous five years under the Plan and any other employee share plan adopted by the Company.

 

3.2.3                     The number of Ordinary Shares which may be allocated under the Plan on any day will not exceed 5% of the ordinary share capital of the Company in issue immediately prior to that day, when added to the total number of Ordinary Shares which have been allocated in the previous ten years under the Plan and any other executive share plan adopted by the Company.

 

3.2.4                     Where the right to acquire Ordinary Shares was released or lapsed without being exercised the Ordinary Shares concerned will be ignored when calculating the limits in this Section 3.2. Ordinary Shares allocated on the exercise of options, restricted shares, stock

 

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units and SARs granted under plans operated by AirTouch Communications, Inc (“AirTouch”) prior to the Merger will be ignored when calculating the limits in this Section 3.2.

 

3.2.5                     Allocate means in relation to any share option plan the placing of unissued Ordinary Shares under option and in relation to other types of employee share plan the issue and allotment of Ordinary Shares.

 

3.2.6                     For the avoidance of doubt Ordinary Shares issued to a trustee or trustees of a trust for the benefit of those persons named in Section 743 Companies Act 1985 established by the Company or any Subsidiary for the purposes of this Plan shall be included in the limits set out in Sections 3.2.1 to 3.2.5 inclusive.

 

3.3                               Additional Shares

 

If Restricted Shares, Stock Units, Options or SARs are forfeited or if Options or SARs terminate for any other reason before being exercised, then the corresponding Ordinary Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Ordinary Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available under Section 3.2 and the balance shall again become available for Awards under the Plan. If SARs are exercised, then only the number of Ordinary Shares (if any) actually issued in settlement of such SARs shall reduce the number available under Section 3.2 and the balance shall again become available for Awards under the Plan. The foregoing notwithstanding, the aggregate number of Ordinary Shares that may be issued under the Plan upon the exercise of ISOs shall not be increased when Restricted Shares are forfeited.

 

3.4                               Dividend Equivalents

 

Any dividend equivalents distributed under the Plan shall not be applied against the number of Restricted Shares, Stock Units, Options or SARs available for Awards, whether or not such dividend equivalents are converted into Stock Units.

 

3.5                               Issue of Shares

 

On the issue of Ordinary Shares, such shares shall, if required, be converted at the Company’s expense into American Depository Shares. Options, Restricted Shares, Stock Units and SARs shall be denominated in the form of Ordinary Shares or ADSs.

 

4                                         Eligibility

 

4.1                               General Rules

 

The Committee may designate any Employee as a Participant.

 

4.2                               Incentive Stock Options

 

Only Employees who are employees of the Company or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(6) of the Code are satisfied.

 

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5                                         Options

 

5.1                               Stock Option Agreement

 

Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a cash payment or in consideration of a reduction in the Optionee’s other compensation or under seal or as a deed for no consideration. A Stock Option Agreement may provide that new Options will be granted automatically to the Optionee when he or she exercises the prior Options.

 

5.2                               Number of Shares

 

Each Stock Option Agreement shall specify the number of Ordinary Shares or ADSs subject to the Option and shall provide for the adjustment of such number in accordance with Article 10.

 

5.3                               Exercise Price

 

Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an ISO shall in no event be less than 100% of the Fair Market Value of an Ordinary Share or an ADS on the date of grant and the Exercise Price under an NSO shall in no event be less than the par value of the Ordinary Share or ADSs subject to such NSO. In the case of an NSO, a Stock Option Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the NSO is outstanding.

 

5.4                               Exercisability and Term

 

Each Stock Option Agreement shall specify the date when all or any instalment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. NSOs may also be awarded in combination with Restricted Shares or Stock Units, and such an Award may provide that the NSOs will not be exercisable unless the related Restricted Shares or Stock Units are forfeited.

 

5.5                               Effect of Change in Control

 

The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become fully exercisable as to all Ordinary Shares or ADSs subject to such Option in the event that a Change in Control occurs with respect to the Company. If, in respect of Options granted within 12 months of the date of the Merger, the Committee finds that there is a reasonable possibility that, within the succeeding six months, a Change in Control will occur with respect to the Company, then the Committee at its sole discretion may determine that any or all outstanding

 

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Options shall become fully exercisable as to all Ordinary Shares or ADSs subject to such Options.

 

5.6                               Modification or Assumption of Options

 

Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new options for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option.

 

6                                         Payment for Option Shares

 

6.1                               General Rule

 

The entire Exercise Price of Ordinary Shares or ADSs issued upon exercise of Options shall be payable in cash at the time when such Ordinary Shares or ADSs are purchased, except as follows:

 

6.1.1                     In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6.

 

6.1.2                     In the case of an NSO, the Committee may at any time accept payment in any form(s) described in this Article 6.

 

6.2                               Exercise/Sale

 

To the extent that this Section 6.2 is applicable, payment may be made by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Ordinary Shares or ADSs and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

6.3                               Exercise/Pledge

 

To the extent that this Section 6.3 is applicable, payment may be made by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Ordinary Shares or ADSs to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

6.4                               Promissory Note

 

To the extent that this Section 6.4 is applicable, payment may be made with a full-recourse promissory note; provided that the par value of the Ordinary Shares shall be paid in cash.

 

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6.5                               Other Forms of Payment

 

To the extent that this Section 6.5 is applicable, payment may be made in any other form that is consistent with applicable laws, regulations and rules or under any other arrangements approved by the Committee, which may include the delivery of Ordinary Shares or ADSs.

 

7                                         Stock Appreciation Rights

 

7.1                               SAR Agreement

 

Each grant of an SAR under the Plan shall be evidenced by an SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

 

7.2                               Number of Shares

 

Each SAR Agreement shall specify the number of Ordinary Shares or ADSs to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 10.

 

7.3                               Exercise Price

 

Each SAR Agreement shall specify the Exercise Price. An SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding.

 

7.4                               Exercisability and Term

 

Each SAR Agreement shall specify the date when all or any instalment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. An SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. SARs may also be awarded in combination with Options, Restricted Shares or Stock Units, and such an Award may provide that the SARs will not be exercisable unless the related Options, Restricted Shares or Stock Units are forfeited. An SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or at any subsequent time. An SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

 

7.5                               Effect of Change in Control

 

The Committee may determine, at the time of granting an SAR or thereafter, that such SAR shall become fully exercisable as to all Ordinary Shares or ADSs subject to such SAR in the event that a Change in Control occurs with respect to the Company. If, in respect of SARs granted within 12 months of the date of the Merger, the Committee finds that there is a reasonable possibility that, within the succeeding six months, a Change in Control will occur with respect to the Company, then the Committee at its sole discretion may determine that any or all outstanding SARs shall become fully exercisable as to all Ordinary Shares or ADSs subject to such SARs.

 

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7.6                               Exercise of SARs

 

If, on the date when an SAR expires, the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion. Upon exercise of an SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company Ordinary Shares, ADSs, cash or a combination of Ordinary Shares, ADSs and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Ordinary Shares or ADSs received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Ordinary Shares or ADSs subject to the SARs exceeds the Exercise Price.

 

7.7                               Modification or Assumption of SARs

 

Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of an SAR shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such SAR.

 

8                                         Restricted Shares and Stock Units

 

8.1                               Time, Amount and Form of Awards

 

Awards under the Plan may be granted in the form of Restricted Shares, in the form of Stock Units, or in any combination of both. Restricted Shares or Stock Units may also be awarded in combination with NSOs or SARs, and such an Award may provide that the Restricted Shares or Stock Units will be forfeited in the event that the related NSOs or SARs are exercised.

 

8.2                               Payment for Awards

 

To the extent that an Award is granted in the form of newly issued Restricted Shares, the Award recipient, as a condition to the grant of such Award, may be required to provide consideration to the Company in the form of cash rendered in an amount equal to the par value of such Restricted Shares. To the extent that an Award is granted in the form of Restricted Shares already in issue or in the form of Stock Units, no consideration shall be required of the Award recipients.

 

8.3                               Vesting Conditions

 

Each Award of Restricted Shares or Stock Units shall become vested, in full or in instalments, upon satisfaction of the conditions specified in the Stock Award Agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company (as determined by the Company’s independent auditors) for a specified period of one or more years equal or exceed a target determined in advance by the Committee. A Stock Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of making an Award or thereafter, that such Award shall become fully vested in the event that a Change in Control occurs with respect to the Company.

 

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8.4                               Form and Time of Settlement of Stock Units

 

Settlement of vested Stock Units may be made in the form of cash, Ordinary Shares or ADSs or any combination. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Ordinary Shares or ADSs over a series of trading days. Vested Stock Units may be settled in a lump sum or in instalments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 10.

 

8.5                               Death of Recipient

 

Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate.

 

8.6                               Creditors’ Rights

 

A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Award Agreement.

 

9                                         Voting and Dividend Rights

 

9.1                               Restricted Shares

 

The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other shareholders. A Stock Award Agreement may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. Such additional Restricted Shares shall not reduce the number of Ordinary Shares available under Article 3.

 

9.2                               Stock Units

 

The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Ordinary Share or ADS (as appropriate) while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, Ordinary Shares or ADSs, or in a combination. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions as the Stock Units to which they attach.

 

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10                                  Protection Against Dilution

 

10.1                        Adjustments

 

In the event of a subdivision of the outstanding Ordinary Shares, a declaration of a dividend payable in Ordinary Shares, a declaration of a dividend payable in a form other than Ordinary Shares in an amount that has a material effect on the price of Ordinary Shares, a combination or consolidation of the outstanding Ordinary Shares (by reclassification or otherwise) into a lesser number of Ordinary Shares, a recapitalisation, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of

 

10.1.1              the number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Article 3;

 

10.1.2              the number of Stock Units included in any prior Award which has not yet been settled;

 

10.1.3              the number of Ordinary Shares or ADSs covered by each outstanding Option and SAR or

 

10.1.4              the Exercise Price under each outstanding Option and SAR.

 

Except as provided in this Article 10, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

 

10.2                        Reorganisations

 

In the event that the Company is a party to a merger or other reorganisation, outstanding Options, SARs, Restricted Shares and Stock Units shall be subject to the agreement of merger or reorganisation. Such agreement may provide, without limitation, for the assumption of outstanding Awards by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting and accelerated expiration, or for settlement in cash.

 

11                                  Awards Under Other Plans

 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Ordinary Shares or ADSs issued under this Plan. Such Ordinary Shares or ADSs shall be treated for all purposes under the Plan like Ordinary Shares or ADSs issued in settlement of Stock Units and shall, when issued, reduce the number of Ordinary Shares available under Article 3.

 

12                                  Limitation on Rights

 

12.1                        Retention Rights

 

Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an employee, consultant or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries reserve the right to terminate the service of any employee, consultant or director at any time, with or without cause, subject to applicable

 

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laws, the Company’s memorandum and articles of association and a written employment agreement (if any).

 

12.2                        Exclusion from Liability for Damages

 

Nothing in the Plan will in any way be construed as imposing on the Company or a Subsidiary a contractual obligation as between the Company or a Subsidiary and a Employee to offer participation in the Plan.

 

Any person who ceases to be an employee (including a consultant or director) of the Company, a Parent, a Subsidiary or an Affiliate because of dismissal or termination of employment (however caused) or who is under notice of termination of employment will in no circumstances be entitled to claim any compensation in respect of the operation of the Plan including but not limited to the application of tax policies maintained by the Company, its Parents, Subsidiaries or Affiliates. If necessary, that person’s terms of employment will be varied accordingly.

 

12.3                        Stockholders’ Rights

 

A Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Ordinary Shares or ADSs covered by his or her Award prior to the issuance of a stock certificate for such Ordinary Shares or ADSs. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such certificate is issued, except as expressly provided in Articles 8, 9 and 10.

 

12.4                        Regulatory Requirements

 

Any other provision of the Plan notwithstanding, the obligation of the Company to issue Ordinary Shares or ADSs under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of ADSs pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of the related Ordinary Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.

 

13                                  Limitation on Payments

 

13.1                        Basic Rule

 

This Article 13 shall not apply to a Participant’s Award if:

 

13.1.1              the Committee, at the time of making such Award or at any time thereafter, specifies in writing that such Award shall not be subject to this Article 13; or

 

13.1.2              a written employment agreement between the Company and such Participant expressly provides that his or her Awards shall not be subject to the limitation described in this Article 13.

 

If this Article 13 applies to an Award, it shall supersede any other provision of the Plan. In the event that the independent auditors most recently selected by the Board (the “Auditors”) determine that any payment or transfer by the Company to or for the benefit of a Participant, whether paid or payable (or transferred or transferable) pursuant to the terms of this Plan or otherwise (a “Payment”), would be nondeductible by the Company for federal income tax

 

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purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Article 13, the “Reduced Amount” shall be the amount, expressed as a present value, which maximises the aggregate present value of the Payments without causing any Payment to be nondeductible by the Company because of section 280G of the Code.

 

13.2                        Reduction of Payments

 

If the Auditors determine that any Payment would be nondeductible by the Company because of section 280G of the Code, then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may then elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of his or her election within 10 days of receipt of notice. If no such election is made by the Participant within such 10-day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Article 13, present value shall be determined in accordance with section 280G(d)(4) of the Code. All determinations made by the Auditors under this Article 13 shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or her under the Plan.

 

13.3                        Overpayments and Underpayments

 

As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors hereunder, it is possible that Payments will have been made by the Company which should not have been made (an “Overpayment”) or that additional Payments which will not have been made by the Company could have been made (an “Underpayment”), consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the United States Internal Revenue Service against the Company or the Participant which the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant which he or she shall repay to the Company, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount which is subject to taxation under section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.

 

13

 

13.4                        Related Corporations

 

For purposes of this Article 13, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of the Code.

 

14                                  Withholding Taxes

 

14.1                        Arrangements to meet taxes

 

To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations or any obligation of any person to taxes or other levies that arise in connection with the Plan. The Company shall not be required to issue any Ordinary Shares or ADSs or make any cash payment under the Plan until such obligations are satisfied.

 

14.2                        Share Withholding

 

The Committee may permit a Participant to satisfy any obligation to taxes or other levies described in 14.1 by having the Company:

 

14.2.1              withhold all or a portion of any Ordinary Shares or ADSs that otherwise would be issued to him or her or

 

14.2.2              by surrendering all or a portion of any Ordinary Shares or ADSs that he or she previously acquired.

 

The Company or its agent may sell any such Ordinary Shares or ADSs on behalf of the Participant and retain the proceeds.

 

Such Ordinary Shares or ADSs shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash.

 

15                                  Assignment or Transfer of Awards

 

An Award shall be transferable only as provided in the applicable Stock Option Agreement, SAR Agreement or Stock Award Agreement. Such Agreement may permit a transfer of the Award by beneficiary designation, will or intestate succession. In the case of an Award other than an ISO, such Agreement may also permit a transfer of the Award to the Participant’s spouse or children or step-children under the age of 18. The transferee of an Award shall agree in writing on a form prescribed by the Company to be bound by all provisions of the applicable Stock Option Agreement, SAR Agreement or Stock Award Agreement. An ISO, may not be transferred other than by will or laws of descent and distribution. While the Participant is alive, an ISO may only be exercised by the Participant.

 

16                                  Future of the Plan

 

16.1                        Term of the Plan

 

The Plan, as set forth herein, shall become effective on 24 May 1999. The Plan shall remain in effect until it is terminated under Section 16.2, or, if sooner, 24 May 2009. No ISOs may be granted after 24 May 2009. No Awards may be granted under the Plan after the termination

 

14

 

thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.

 

16.2                        Amendment or Termination

 

The Plan may be amended by resolution of the Board provided that no amendment which would be to the advantage of 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 the Company or its subsidiaries. No amendments to the Plan shall affect any awards granted under the AirTouch Communications, Inc. 1993 Long-Term Stock Incentive Plan.

 

15

 

Schedule 1

Joint Ventures

 

The Committee may designate any employee of any JV Company as a Participant. If it does so, the Plan shall apply in relation to any Award granted to that employee with the modifications set out in this Schedule.

 

1                                         Satisfying awards

 

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.

 

Note: This will generally mean that only newly issued Ordinary Shares or ADSs or cash may be used to satisfy Awards granted to employees of JV Companies.

 

2                                         Inclusion of JV Companies as Subsidiaries

 

References to Subsidiaries (except those in the definition of JV Company below) shall be taken as including JV Companies.

 

3                                         Meaning of JV Company

 

“JV Company” means any company or undertaking:

 

·                                          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

 

·                                          which is not a Subsidiary; and

 

·                                          which is designated by the Directors as a JV Company

 

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.

 

16Exhibit 4.5

 

Vodafone Group Plc

 

RULES OF THE VODAFONE GLOBAL INCENTIVE PLAN 2014

 

	
Shareholders’ Approval:
    	
 
    	
29 July 2014
    
	
 
    	
 
    	
 
    
	
Directors’ Adoption:
    	
 
    	
3 November 2014
    
	
 
    	
 
    	
 
    
	
Expiry Date:
    	
 
    	
28 July 2024
    
	
 
    	
 
    	
 
    
	
Updated:
    	
 
    	
2 November 2015
    
	
 
    	
 
    	
9 May 2016
    
	
 
    	
 
    	
3 March 2017
    
	
 
    	
 
    	
28 July 2017
    
	
 
    	
 
    	
22 January 2018
    

 

 

Table of Contents

 

	
Contents
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1
    	
Introduction
    	
1
    
	
 
    	
 
    	
 
    
	
2
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
3
    	
Granting Awards
    	
4
    
	
 
    	
 
    	
 
    
	
4
    	
Terms of Awards to be   set by Grantor
    	
5
    
	
 
    	
 
    	
 
    
	
5
    	
Form of Awards
    	
6
    
	
 
    	
 
    	
 
    
	
6
    	
No transfer of Awards
    	
6
    
	
 
    	
 
    	
 
    
	
7
    	
Limits on the use of   newly issued shares and treasury shares
    	
6
    
	
 
    	
 
    	
 
    
	
8
    	
Normal Vesting of   Awards
    	
7
    
	
 
    	
 
    	
 
    
	
9
    	
Holding Period
    	
8
    
	
 
    	
 
    	
 
    
	
10
    	
Termination of   Employment and death
    	
9
    
	
 
    	
 
    	
 
    
	
11
    	
Malus and clawback
    	
12
    
	
 
    	
 
    	
 
    
	
12
    	
Takeovers and   restructurings
    	
13
    
	
 
    	
 
    	
 
    
	
13
    	
Overseas transfer
    	
14
    
	
 
    	
 
    	
 
    
	
14
    	
Exchange of Awards
    	
15
    
	
 
    	
 
    	
 
    
	
15
    	
Tax
    	
15
    
	
 
    	
 
    	
 
    
	
16
    	
General
    	
16
    
	
 
    	
 
    	
 
    
	
17
    	
Changing the Plan and   termination
    	
19
    
	
 
    	
 
    	
 
    
	
18
    	
Governing law and   jurisdiction
    	
19
    
	
 
    	
 
    	
 
    
	
19
    	
Special terms for   Forfeitable Shares
    	
20
    
	
 
    	
 
    	
 
    
	
20
    	
Special terms for   Options
    	
22
    
	
 
    	
 
    	
 
    
	
21
    	
Special terms for   Conditional Awards
    	
26
    
	
 
    	
 
    	
 
    
	
22
    	
Special provisions for   Directors
    	
28
    

 

i

 

General terms

 

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 22 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 12 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 12.4, 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 995 of the Income Tax Act 2007;

 

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“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 PLC Director, any member of the Group Executive Committee and, any other person designated, from time to time, by the Committee;

 

“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 19.1 (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;

 

“Holding Percentage” means the percentage of Share received on Vesting or exercise which are subject to a Holding Period, as set by the Committee under rule 4.3.1;

 

“Holding Period” means any period during which Shares received on Vesting or exercise must be held, as set by the Committee under rule 4.3.1;

 

“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 1161 of the Companies Act 2006. “Subsidiary undertaking” shall have the meaning given to it by Section 1162 of the Companies Act 2006.

 

“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

 

2

 

(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;

 

“Plan” means these rules known as “The Vodafone Global Incentive Plan 2014” as amended from time to time;

 

“PLC Director” means any director of the Company;

 

“Prescribed Services” means any services which are the same or similar to those provided by any Member of the Group and/or the relevant Participant during a period of 12 months prior to and on Termination of Employment including, but not limited to, the provision, sale or marketing of any communications products and services; converged communication products and services (including but not limited to voice, data, messaging, broadband connectivity, cellular and internet access) and converged business network and IT products and services (such as access services, managed network services, converged application services and managed hosting services) the same or similar to those provided by Members of the Group as at Termination of Employment;

 

“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 14, 20.2 and 21.1, 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 1159 of the Companies Act 2006;

 

“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.

 

3

 

“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 Tax-Qualified Options

 

3.1                               Eligibility

 

See also Special Provisions for Directors

 

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.

 

3.4                               Timing of grant

 

Awards may not be granted at any time after 28 July 2024 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.

 

4

 

4                                         Terms of Awards to be set by Grantor

 

See also Special Provisions for Directors

 

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 19);

 

(ii)                                  a Nil-Cost Option (see rule 20);

 

(iii)                               a Market Value Option (see rule 20);

 

(iv)                              a Conditional Award (see rule 21);

 

(v)                                 or a combination of these;

 

4.3.2                     subject to rules 7 and 22.2 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 20.4 (for Options) or 21.3 (for Conditional Awards);

 

5

 

4.3.6                     whether the Award is subject to a Holding Period and, if so, the date or dates on which it will end and the Holding Percentage(s);

 

4.3.7                     the Award Date;

 

See also Options

 

4.3.8                     in the case of an Option, the Option Price and the latest date on which the Option will lapse under rule 20.6.4; and

 

4.3.9                     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 19 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.

 

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:

 

6

 

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

 

Where the right to acquire Shares is released or lapses, the Shares concerned are 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 10 or 12 apply and subject to rule 11, 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;

 

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

 

7

 

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 19.7;

 

8.3.2                     for Options in rule 20.5;

 

8.3.3                     for Conditional Awards in rule 21.4.

 

9                                         Holding Period

 

9.1                               No transfer of Shares subject to a Holding Period

 

9.1.1                     If an Award is subject to a Holding Period, the Participant must not transfer, assign or dispose of the Holding Percentage of the Shares issued or transferred to him on Vesting or any rights in respect of them before the end of the Holding Period except with the prior consent of the Committee and subject to any terms and conditions the Committee may impose.

 

9.1.2                     To give effect to this, the Committee may decide that:

 

(i)                                     the Shares may be issued or transferred to another person to be held for the benefit of the Participant instead of to the Participant; and/or

 

(ii)                                  the Company will retain the share certificates or other documents of title relating to the Shares until the end of the Holding Period; and/or

 

(iii)                               the Participant must sign additional documentation, for example a power of attorney or blank stock transfer form,

 

9.1.3                     The Participant must enter into any elections in relation to the Shares subject to a Holding Period required by the Committee, including elections under Part 7 of the Income Tax (Earnings and Pensions) Act 2003.

 

9.1.4                     Shares which are subject to an Option which has Vested but not been exercised will be treated as held in accordance with this rule 9.

 

9.1.5                     Unless the Grantor decides otherwise, in general or in any particular case, the Holding Percentage will be applied to the Shares issued or transferred on Vesting after any deductions or sales required under rule 15 (tax).

 

9.2                               Rights of Participant during the Holding Period

 

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

 

9.2.2                     For the avoidance of doubt, rule 10 (Termination of Employment) and rule 11.1 (Malus) will not apply during a Holding Period but rule 11.2 (Clawback) will apply.

 

8

 

9.3                               Effect of takeovers and restructurings on Holding Period

 

A Holding Period will come to an end on the date on which Awards Vest or are exchanged under rule 12 (takeovers and restructurings). However, if the Committee decides that Awards will be exchanged under rule 12.1.3 then it may decide that Shares subject to a Holding Period will be exchanged for shares in the Acquiring Company and that those shares will be held under this rule 9 until the end of the Holding Period.

 

10                                  Termination of Employment and death

 

See also special provisions for Spanish employees

 

10.1                        General rule on Termination of Employment

 

Unless rule 10.2 applies, a Participant’s Award will lapse on Termination of Employment.

 

10.2                        Termination of Employment in special circumstances

 

A Participant’s Award will not lapse on Termination of Employment after the date which is six complete calendar months from the last day of the month in which the Award Date falls by reason of:

 

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

 

10.2.2              death;

 

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

 

10.2.4              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;

 

See also Special Provisions for Directors

 

10.2.5              retirement with the agreement of the Company or the Participant’s employing company;

 

10.2.6              redundancy (but only in the case of:

 

(i)                                     any Award granted before 1 February 2018; or

 

(ii)                                  any Award granted to a Participant who on Termination of Employment held no Awards which were subject to Performance Conditions); or

 

10.2.7              any other reason, if the Committee so decides in general or in any particular case.

 

10.3                        Continuation of Award

 

10.3.1              Unless rule 10.3.2 or rule 10.4 applies, where rule 10.2 applies, the Award will continue in effect and Vest or lapse in accordance with its terms (including any Performance Condition) and the number of Shares in respect of which it Vests will be reduced in the manner described in rule 10.5.

 

10.3.2              This rule 10.3.2 applies to an Award made on or after 1 February 2018 where that Award continues in effect under rule 10.3.1 and where the relevant Participant’s Termination of Employment was by reason of:

 

(i)                                     retirement within rule 10.2.5; or

 

(ii)                                  redundancy and the Committee decided that rule 10.2.7 should apply.

 

9

 

If, before any such Award Vests, the Participant.

 

(i)                                     accepts employment or office in, or carries on for his own account or for any other person, whether directly or indirectly any business which provides or offers Prescribed Services;

 

(ii)                                  either on his own behalf or for or with any other person, whether directly or indirectly, canvasses or solicits, in competition with any Member of the Group, the custom of any person who at any time during the 12 months prior to the Termination of Employment was a customer or client of, or in the habit of dealing with, any Member of the Group and in respect of whom the Participant had access to confidential information or with whose custom or business the Participant (or employees reporting directly to him) were personally concerned;

 

(iii)                               either on his own behalf or for or with any other person, whether directly or indirectly, canvasses or solicits in competition with any Member of the Group, the custom of any person who was negotiating with any Member of the Group for the supply of goods or services (whether as customer, client, supplier, agent or distributor) during the six months before Termination of Employment; or

 

(iv)                              ether on his own behalf or for or with any other person, whether directly or indirectly, entices or tries to entice away from any Member of the Group any person who was an employee, agent, consultant or associate of such a company on Termination of Employment and who had been an employee, agent, consultant or associate at any time during the six months prior to that date and with whom the Participant had worked closely at any time during that period,

 

the Committee may, in its discretion, and having taken into account all relevant circumstances, determine that the Award will lapse, in whole or in part, before it Vests.

 

10.3.3              Each of the circumstances for lapse of an Award under this rule 10.3 is entirely separate and independent. If any of those circumstances is found to be invalid this will not affect the validity or enforceability of any of the others.

 

10.4                        Early Vesting

 

10.4.1              An Award will Vest on the date of Termination of Employment (or such later date as the Committee may determine) if rule 10.2 applies and:

 

(i)                                     Termination of Employment is by reason of death ill-health, injury or disability, as established to the satisfaction of the Company or the Participant’s employing company; or

 

(ii)                                  if immediately before Termination of Employment the Participant held no Awards which were subject to Performance Conditions.

 

See also Special Provisions for Directors

 

10.4.2              Subject to rule 10.4.3, the Award will only Vest to the extent that any Performance Condition is satisfied on the date of Vesting and rule 10.5 will apply. 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

 

10

 

Performance Condition, in such manner as it considers reasonable. The Award will immediately lapse to the extent that the Performance Condition is not satisfied.

 

10.4.3              If the Award is subject to a Performance Condition and it Vests 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 10.5 but “a” in that formula will be 50% of the number of Shares subject to the Award and rule 10.5 will not otherwise apply.

 

10.5                        Reduction in number of Shares Vesting

 

The number of Shares in respect of which the Award would otherwise Vest under rules 10.3 or 10.4 (as applicable) 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
    

 

where:

 

a                      =                    the number of Shares subject to the Award;

 

b                      =                    the number of complete calendar months from the Award Date until the date of Termination of Employment;

 

c                       =                    the number of complete calendar months from the Award Date until the Vesting Date.

 

The Award shall immediately lapse as to the balance.

 

Unless the Committee decides otherwise, this rule 10.5 shall not apply to any Awards made on an all-employee basis (as defined in rule 7.4.2).

 

10.6                        Changing the time of Vesting

 

If an Award would continue in effect under rule 10.3, the Committee may, at any time, decide that it will, instead, vest early under rule 10.4 or vice versa.

 

10.7                        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 10, 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.

 

10.8                        General

 

The Committee must exercise any discretion provided for in rule 10.2 no later than 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.

 

11

 

11                                  Malus and clawback

 

11.1                        Malus

 

If one or more of the events listed in rule 11.3 occurs, the Committee may decide that:

 

11.1.1              an Award will lapse wholly or in part;

 

11.1.2              an Award will Vest to a lesser extent than it would otherwise have Vested; and/or

 

11.1.3              Vesting will be delayed for such period as it may determine.

 

11.2                        Clawback

 

If one or more of the events listed in rule 11.3 occurs, the Committee may decide, at any time in the two years following the date of Vesting of an Award granted after 28 July 2017, that the Participant must:

 

11.2.1              transfer to or to the order of the Company a number of Shares determined by the Company which is no more than the number of Shares issued or transferred pursuant to the Award; and/or

 

11.2.2              pay to or to the order of the Company an amount representing the value of the Shares acquired under the Award; and/or

 

11.2.3              pay to or to the order of the Company an amount equal to any cash payment made pursuant to the Award.

 

11.3                        Events giving rise to malus or clawback

 

The events giving rise to malus and clawback are:

 

11.3.1              There has been a material mis-statement in the accounts of the Group, any member of the Group or the member of the Group by which the Participant was employed or the business unit in which he worked.

 

11.3.2              Following Termination of Employment, facts have emerged which if known at the time, would have caused the Award to lapse or would have resulted in the Committee exercising any discretion differently.

 

11.3.3              Information has emerged which would have affected the level of the Award which was granted to the Participant, or the level at which any Performance Conditions were determined to have been satisfied.

 

11.3.4              Any other events if the Committee considers it appropriate that rule 11.1 or 11.2 should apply.

 

11.4                        General

 

11.4.1              For the avoidance of doubt, rules 11.1 or 11.2 can apply even if the Participant was not responsible for the event in question or if it took place before the Vesting or grant of the Award or the grant, Vesting or exercise of an Option or after Termination of Employment.

 

11.4.2              Those rules may be applied in different ways for different Participants in relation to the same or different events or in different ways for different Awards of the same Participant.

 

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11.4.3              Without limiting rule 16.5, the Participant will not be entitled to any compensation in respect of the operation or purported operation of this rule 11.

 

12                                  Takeovers and restructurings

 

12.1                        Takeover

 

12.1.1              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 12.1.3, 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.

 

12.1.2              Where an Award vests under rule 12.1.1, 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 specified in the Performance Condition, in such manner as they consider reasonable. In addition, the extent to which an Award will Vest will, unless the Committee decides otherwise, be further reduced pro rata to reflect the acceleration of Vesting.

 

See also Approved Options

 

12.1.3              An Award will not Vest under rule 12.1.1 but will be exchanged under rule 14 (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 12.1.3(iii) will not apply if the Committee considers that there are exceptional circumstances.

 

12.2                        Scheme of arrangement

 

12.2.1              If, under section 895 of the Companies Act 2006, 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 12.2 also applies where there is an equivalent procedure under any non-UK legislation.

 

12.2.2              Where an Award vests under rule 12.2.1, 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 Tax-Qualified Options

 

12.2.3              An Award will not Vest under rule 12.2.1 but will be exchanged under rule 14 (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;

 

13

 

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

 

12.3                        Demerger or other corporate event

 

12.3.1              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 12.1 (Takeover), or 12.2 (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.

 

12.3.2              Where an Award Vests under rule 12.3.1, 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.

 

12.3.3              The Company will notify any Participant who is affected by the Committee exercising their discretion under this rule 12.3.

 

12.4                        Composition of the Committee for this rule 12

 

In this rule 12, the “Committee” means those people who were members of the remuneration committee of the Company immediately before the change of Control.

 

13                                  Overseas transfer

 

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

 

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

 

(b)                                 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.

 

14

 

See also Tax-Qualified Options

 

14                                  Exchange of Awards

 

14.1                        Timing of exchange

 

If an Award is to be exchanged under rule 12 (Takeovers and restructuring) the exchange will take place as soon as practicable after the relevant event.

 

14.2                        Terms of exchange

 

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

 

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

 

14.2.2              subject to the rest of this rule 14, will be governed by the same terms as applied to the existing Award immediately before exchange;

 

14.2.3              must be equivalent to the existing Award, subject to rule 14.2.5;

 

14.2.4              will be treated as having been acquired at the same time as the existing Award and, subject to rule 14.2.5, will Vest in the same manner and at the same time;

 

14.2.5              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 12.1, 12.2 or 12.3 (in which case, the Award will lapse as to the balance);

 

14.2.6              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 14.2.1.

 

15                                  Tax

 

15.1                        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 or such other arrangements as may be acceptable to the Company, the Grantor, any employing company or the trustee of any employee benefit trust.

 

15.2                        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

 

15

 

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.

 

16                                  General

 

16.1                        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.

 

16.2                        Consistency with remuneration policy and regulatory requirements

 

Nothing in these rules or the terms of any Award will oblige the Grantor or any other person to issue or transfer any shares or make payment (including any remuneration payment or payment for loss of office) which would be inconsistent with:

 

16.2.1              the approved directors’ remuneration policy of the Company and in breach of Chapter 4A of Part 10 of the Companies Act 2006; or

 

16.2.2              any law, regulation, guideline or rule book applicable to any Member of the Group or any remuneration policy adopted pursuant to such a law, regulation, guideline or rule book,

 

and to the extent that any Award is so inconsistent:

 

16.2.3              the Directors may, acting reasonably and in good faith, adjust (retrospectively or otherwise) the number or class of shares or securities comprised in an Award, the Option Price and/or impose additional conditions on the Vesting of such Award; and

 

16.2.4              no Member of the Group will be obliged to seek the approval of any regulator or of its members in general meeting for any such issue, transfer or payment or to changes to its policy to enable such issue, transfer or payment.

 

16.3                        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.

 

16.4                        Regulations

 

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

 

16.5                        Terms of employment

 

16.5.1              For the purposes of this rule 16.5, “Employee” means any person who is or will be eligible to be a Participant or any other person.

 

16.5.2              This rule 16.5 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

 

16

 

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

 

16.5.3              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.

 

16.5.4              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.

 

16.5.5              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.

 

16.5.6              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 16.5.

 

16.5.7              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.

 

16.5.8              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 16.5. 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.

 

16.5.9              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.

 

16.5.10       Each of the provisions of this rule 16.5 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

 

17

 

to do so, this will not affect the validity or enforceability of any of the remaining provisions.

 

16.6                        Employee trust

 

Subject to rule 16.7, 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 Chapter 32 of Part 18 of the Companies Act 2006.

 

16.7                        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 32 of Part 18 of the Companies Act 2006) directly or indirectly for the purpose of satisfying the Award, unless that financial assistance is permitted under UK legislation at that time.

 

16.8                        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:

 

16.8.1              administering and maintaining Participant records;

 

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

 

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

 

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

 

16.9                        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.

 

16.10                 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.

 

16.11                 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.

 

18

 

16.12                 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.

 

16.13                 Notices

 

16.13.1       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.

 

16.13.2       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.

 

17                                  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.

 

18                                  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.

 

19

 

Forfeitable Shares

 

19                                  Special terms for Forfeitable Shares

 

19.1                        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:

 

19.1.1              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

 

19.1.2              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.

 

19.2                        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.

 

19.3                        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.

 

19.4                        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.

 

19.5                        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.

 

20

 

19.6                        Variations in share capital, rights issues, demergers etc

 

If there is:

 

19.6.1              a variation in the equity share capital of the Company, including a capitalisation, subdivision, consolidation or reduction of share capital; or

 

19.6.2              a rights issue; or

 

19.6.3              a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010; or

 

19.6.4              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:

 

19.6.5              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

 

19.6.6              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 19.6.5 and 19.6.6 except to the extent they are bought using the proceeds of sale of rights under that rights issue.

 

19.7                        Consequences of Vesting for Forfeitable Shares

 

Subject to rule 9 (Holding Period), to the extent that an Award of Forfeitable Shares Vests, the Forfeitable Share Agreement will cease to apply to the Shares (but rule 11.2 will continue to apply). 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.

 

19.8                        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.

 

21

 

Options

 

20                                  Special terms for Options

 

20.1                        Option Price

 

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

 

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

 

See also special provisions for US employees

 

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

 

(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

 

20.1.3              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 20.1.2; or

 

20.1.4              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 Tax-Qualified Options

 

20.2                        Variations in share capital, demergers and special distributions

 

If there is:

 

20.2.1              a variation in the equity share capital of the Company, including a capitalisation, subdivision, consolidation or reduction of share capital; or

 

20.2.2              a rights issue; or

 

20.2.3              a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010; or

 

20.2.4              a special dividend or distribution;

 

the Committee may:

 

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

 

20.2.6              adjust the Option Price; and/or

 

20.2.7              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

 

22

 

Company for this purpose then the adjustment under this rule 20.2 will be deemed not to have taken place.

 

20.3                        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.

 

20.4                        Dividend equivalent

 

An Option may include the right (subject to rule 15 (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. The value may be calculated on the basis that dividends are reinvested. These payments may be made:

 

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

 

20.4.2              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.

 

20.5                        Consequences of Vesting for Options

 

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

 

See also Tax-Qualified Options

 

20.6                        Periods for exercise of Options

 

Subject to rule 20.7, an Option which has Vested will be exercisable:

 

20.6.1              where it has Vested as a result of the Participant ceasing to be an employee (see rule 10), for twelve months from the date of Termination of Employment or, if later, the date of Vesting;

 

20.6.2              where it has Vested as a result of the Participant’s death (see rule 10.2.2), for 12 months from his death;

 

20.6.3              where the Option has Vested under rule 12 (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 979 of the Companies Act 2006 or any other equivalent local legislation is first served; and

 

20.6.4              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 20.6 does not extend the exercise period of an Option which has Vested under rule 12.

 

20.7                        Lapse of Options

 

An Option will lapse at the end of any exercise period specified in rule 20.6.

 

23

 

For the avoidance of doubt:

 

20.7.1              an Option can lapse under rule 10.1 or 11.1 even though it may have previously Vested;

 

20.7.2              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.

 

20.8                        Manner of exercise

 

Subject to rule 20.9, 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:

 

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

 

20.8.2              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.

 

20.9                        Automatic exercise of Options

 

20.9.1              To the extent that an Option has Vested but has not been exercised by the close of the Business Day before a date on which it is to lapse automatically under these rules and it is in the money on that day, the Company may treat it as having been exercised on that day.

 

20.9.2              If they do so, the Company will arrange for sufficient of the Shares resulting from the exercise to be sold on behalf of the Participant to raise an amount (after costs of sale) equal to the Option Price and any tax or social security required to be withheld under rule 15. The remaining Shares subject to the Option will be issued or transferred as set out in rule 20.10.

 

20.9.3              An Option is ‘in the money’ on any day, if the Committee estimates that, if all the Shares resulting from exercise were sold on that day, the sale proceeds (after making a reasonable allowance for any costs of sale) would be more than the Option Price.

 

20.9.4              The Participant may give notice to the Company, at any time before the Business Day referred to in rule 20.9.1 that that rule should not apply to the Option.

 

20.10                 Issue or transfer of Shares after exercise

 

Subject to rules 9 (Holding Period), 11.2 (Clawback) 15 (Tax) and 20.11(Other ways of satisfying an Option), 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 20.8.

 

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.

 

24

 

20.11                 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 Tax-Qualified Options

 

20.11.1       paying (subject to rule 15 (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

 

See also special provisions for US employees

 

20.11.2       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.

 

25

 

Conditional Awards

 

21                                  Special terms for Conditional Awards

 

21.1                        Variations in share capital, demergers and special distributions

 

If there is:

 

21.1.1              a variation in the equity share capital of the Company, including a capitalisation, subdivision, consolidation or reduction of share capital; or

 

21.1.2              a rights issue; or

 

21.1.3              a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010; or

 

21.1.4              a special dividend or distribution;

 

The Committee may:

 

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

 

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

 

This may include retrospective adjustments.

 

21.2                        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.

 

21.3                        Dividend equivalent

 

A Conditional Award may include the right (subject to rule 15 (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. The value may be calculated on the basis that dividends are reinvested. These payments may be made:

 

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

 

21.3.2              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.

 

21.4                        Consequences of Vesting for Conditional Awards

 

Subject to rules 9, 11.2,15, 21.5 and 21.6, 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.

 

26

 

21.5                        Cash alternative

 

The Grantor, subject to the approval of the Committee, may decide to satisfy a Conditional Award by paying (subject to rule 15 (Tax)) a cash amount equal to the market value of the Shares subject to the Conditional Award.

 

21.6                        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 rule 15, 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.

 

27

 

Special Provisions for Directors

 

22                                  Special provisions for Directors

 

This rule 22 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.

 

22.1                        Performance Conditions for all Awards to PLC 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 PLC Director conditional on the satisfaction of one or more conditions linked to the performance of the Company as described in rule 4.1.

 

22.2                        Individual limits for PLC Directors

 

To ensure that there is strong linkage between pay and performance, the majority of the PLC 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 PLC Director in any financial year shall not exceed 400% of base salary as at the Award Date or such other limit as may be set out in the approved directors’ remuneration policy current at the time of Award.

 

Awards shall be excluded from the calculations under this rule 22.2 if they are made on an all-employee basis within the meaning of rule 7.4.2.

 

22.3                        Vesting on leaving employment

 

An Award will lapse on Termination of Employment if the Committee considers that the Director has resigned or in other circumstances if the Committee, in its discretion, so determines. Rules 10.1 and 10.2 will not apply to the Award.

 

Subject to rule 22.4, if the Award does not lapse, it will continue in effect or lapse as described in rule 10.3 and the number of Shares in respect of which it Vests will be reduced in the manner described in rule 10.5 and, for the avoidance of doubt, the Committee may exercise its discretion under rule 10.6 (but rule 10.4.3 will not apply).

 

22.4                        Award lapses if Director competes or solicits

 

Unless the Committee decides otherwise, an Award which continues in effect under rule 22.3, will lapse if, before it Vests, the Director:

 

22.4.1              accepts employment or office in, or carries on for his own account or for any other person, whether directly or indirectly any business which provides or offers Prescribed Services;

 

22.4.2              either on his own behalf or for or with any other person, whether directly or indirectly, canvasses or solicits, in competition with any Member of the Group, the custom of any person who at any time during the 12 months prior to the Termination of Employment was a customer or client of, or in the habit of dealing with, any Member of the Group and in respect of whom the Director had access to confidential information or with whose custom or business the Director (or employees reporting directly to him) were personally concerned;

 

22.4.3              either on his own behalf or for or with any other person, whether directly or indirectly, canvasses or solicits in competition with any Member of the Group, the custom of any person who was negotiating with any Member of the Group for the supply of

 

28

 

goods or services (whether as customer, client, supplier, agent or distributor) during the six months before Termination of Employment;

 

22.4.4              either on his own behalf or for or with any other person, whether directly or indirectly, entices or tries to entice away from any Member of the Group any person who was an employee, agent, consultant or associate of such a company on Termination of Employment and who had been an employee, agent, consultant or associate at any time during the six months prior to that date and with whom the Director had worked closely at any time during that period.

 

Each of the circumstances for lapse of an Award under this rule 22.4 is entirely separate and independent. If any of those circumstances is found to be invalid this will not affect the validity or enforceability of any of the others.

 

29

 

UK Tax-favoured options

 

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 Tax-Qualified Option. If it does, the provisions of the rules relating the Market Value Options will apply to the Tax-Qualified Option, subject to this Schedule. No other types of Awards may be designated as Tax-Qualified Options under this Schedule.

 

The purpose of this Schedule is to provide, in accordance with Schedule 4, benefits for employees and directors in the form of Tax-Qualified Options.

 

1                                         Eligibility to be granted Tax-Qualified Options

 

Tax-Qualified Options may only be granted to an employee of:

 

(a)                                 the Company;

 

(b)                                 Subsidiary;

 

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

 

(d)                                 any other entity designated by the Committee and agreed provided that its participation does not cause this schedule to cease to be a Schedule 4 Plan,

 

and cannot be granted to anybody who is:

 

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

 

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

 

2                                         Shares subject to an Tax-Qualified Option

 

The Shares subject to a Tax-Qualified Option must satisfy paragraphs 16 to 20 of ITEPA. Except where paragraph 12 below applies, if they cease to satisfy paragraphs 16 to 20 of ITEPA and this schedule is to cease to be a Schedule 4 Plan, the definition of ‘Shares’ in rule 2 will apply but the Option will be treated, for the purposes of the rules, as a Market Value Option.

 

3                                         Individual limit on Tax-Qualified Options

 

The Committee must not grant a Tax-Qualified Option to an eligible employee which would cause the aggregate market value of:

 

(a)                                 the Shares subject to that Tax-Qualified Option; and

 

(b)                                 the Shares which he may acquire on exercising other Tax-Qualified Options; and

 

(c)                                  the shares which he may acquire on exercising his options under any other plan in relation to which the requirements of Parts 2 to 6 of ITEPA are (and are being) met (a ‘Schedule 4 Plan’) 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.

 

30

 

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

 

4                                         Option Price

 

The Option Price of a Tax-Qualified Option will be determined in accordance with rule 20.1 but any restriction referred to in paragraph 5(c) will be ignored when determining the Option Price.

 

5                                         Notification of terms of Tax-Qualified Option

 

The Grantor will ensure that the Participant is notified of the following as soon as practicable after grant of a Tax-Qualified Option:

 

(a)                                 the number and description of the Shares subject to the Option;

 

(b)                                 the Option Price;

 

(c)                                  whether or not the Shares subject to the Option are subject to any restriction (as defined in paragraph 36(3) of Schedule 4) and, if so, the details of any such restrictions;

 

(d)                                 the times at which the Option may be exercised (in whole or in part);

 

(e)                                  the circumstances under which the Option will lapse or be cancelled (in whole or in part), including any conditions to which the exercise of the Option (in whole or in part) is subject; and

 

(f)                                   any mechanism (including any Performance Condition) by way of which any terms referred to in sub-paragraphs (a) and (c) to (e) above can be changed.

 

The notification may be given wholly or partly through the Award Certificate referred to in rule 5.1.

 

6                                         Transferring Tax-Qualified Options

 

A Tax-Qualified Option cannot be transferred, assigned or otherwise disposed of, except on the transmission of the Tax-Qualified Option on the death of a Participant to his personal representatives.

 

7                                         Variations in share capital, demergers and special distributions

 

7.1                               Adjustments may be made to Tax-Qualified Options under rule 20.2 (Variations in share capital etc) only where there is a variation of the capital of which Shares form part and:

 

7.1.1                     the total Option Price after adjustment must be substantially the same as before adjustment; and

 

7.1.2                     the total market value of the Shares subject to the Option must remain substantially the same; and

 

7.1.3                     the Plan must continue to be a Schedule 4 Plan.

 

7.2                               An annual return relating to the Plan submitted to HMRC following any such adjustment must include a declaration that the Plan continues to comply with Schedule 4.

 

31

 

8                                         Restriction on exercise of an Tax-Qualified Option

 

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

 

9                                         Redundancy

 

Redundancy, for the purposes of rule 10.2.1, has the meaning given to that term by the Employment Rights Act 1996.

 

10                                  Death

 

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

 

11                                  Exchange of Tax-Qualified Options

 

11.1                        If HMRC approval of the terms of Tax-Qualified Options is to be maintained, Tax-Qualified Options can only be exchanged, as described in rule 14, if the Acquiring Company:

 

11.1.1              obtains Control of the Company as a result of making a general offer falling within paragraph 25A of ITEPA; or

 

11.1.2              obtains Control of the Company under a compromise or arrangement sanctioned by the court under Section 895 of the Companies Act 2006; or

 

11.1.3              becomes bound or entitled to acquire Shares under Sections 979 of the Companies Act 1985.

 

11.2                        Tax-Qualified 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.

 

11.3                        The new option 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).

 

11.4                        If the Participant does not agree to any exchange of his Tax-Qualified Option under rule 14 when required to do so by the Company, the Tax-Qualified Option will immediately lapse and will not be exchanged.

 

12                                  Takeovers and Restructurings

 

If a Tax-Qualified Option becomes or is to become exercisable under one of rules 12.1 (Takeovers) or 12.2 (scheme of arrangement) and, as a result of the event by virtue of which that rule applies, Shares in the Company would no longer meet the requirements of Part 4 of ITEPA, it may be exercised under that rule only within a 20 day period:

 

(a)                                 before (and conditionally on) the relevant event taking place; or

 

(b)                                 after the relevant event,

 

and will lapse at the end of that period to the extent not so exercised.

 

13                                  Cash alternative

 

Rule 20.11 does not apply in relation to Tax-Qualified Options.

 

14                                  Changing the terms of Tax-Qualified Options

 

The Committee powers under rule 17 are further restricted in relation to Tax-Qualified Options as described in this paragraph.

 

32

 

14.1                        The Option Price of a subsisting Tax-Qualified Option can only be changed pursuant to rule 20.2 (Variations in share capital etc), as varied by this Schedule.

 

14.2                        The number and nature of Shares subject to a subsisting Tax-Qualified Option can only be changed rule 20.2 (Variations in share capital etc) as varied by this Schedule, or any mechanism notified under paragraph 5(f).

 

14.3                        Any change to the other matters notified under paragraph 5 in relation to an outstanding Tax-Qualified Option or under the mechanism referred to above must be done in a fair and reasonable manner.

 

14.4                        An annual return submitted to HMRC following any change to a term of a Tax-Qualified Option which is necessary to comply with Parts 2 to 6 of Schedule 4 must include a declaration that the Plan continues to comply with Schedule 4.

 

15                                  Dividend equivalent

 

Rule 20.4 does not apply in relation to Tax-Qualified Options.

 

33

 

Schedule 2

 

Option Price for Options granted to Italian employees(1)

 

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.

 

(1)         For 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.

 

34

 

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 effect 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 20.1.2(i) (which relates to the Option Price); and

 

3.2                               rule 20.11.1 (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.

 

35

 

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 12.3, 19.6, 20.2 or 21.1 (which deal with demergers, rights issues and variations in capital).

 

36

 

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.

 

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 15 (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.

 

37

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