Exhibit 4.1

BT GROUP PLC

BT GROUP PLC US EMPLOYEE STOCK PURCHASE PLAN

Adopted by the Board on April 14, 2011

Approved by shareholders on July 13, 2011

Amended by the Remuneration Committee on July 31, 2019

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BT GROUP PLC

US EMPLOYEE STOCK PURCHASE PLAN

1. Purpose of Plan

The purpose of the BT Group plc US Employee Stock Purchase Plan (the “Plan”) is to provide employees of the Participating Companies (as defined below) with an opportunity to purchase either ordinary shares (“ Shares ”) or American Depositary Shares (“ ADSs ”) of BT Group plc (the “ Parent ”), at the election of the Parent. It is the intention of the Parent to have the Plan qualify as an “ Employee Stock Purchase Plan ” under Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”). The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. Participation in the Plan will provide eligible employees of the Participating Companies who wish to acquire an interest in the Parent with a method of doing so which is both convenient and on a basis more favourable than would otherwise be available. It is believed that employee participation in ownership of the Parent on this basis will be to the mutual benefit of the employees, the Parent and the Participating Companies.

2. Participating Companies

For purposes of the Plan, “ Participating Company ” means each corporation (i) as to which the Parent, directly or indirectly through an unbroken chain of corporations, owns more than fifty per cent of the total combined voting power of all classes of stock issued by such corporation; and (ii) which is designated by the Parent as a Participating Company for purposes of the Plan. The Parent may establish further schemes or plans based on the Plan but modified to take account of local tax, exchange control or securities laws in territories other than the United States of America, provided that:

(a) any Shares made available under such further schemes or plans are treated as counting against any limits on individual or overall participation in the Plan; and

(b) any such scheme or plan is not inconsistent with the requirements of Section 423 of the Code.

3. Employees Eligible to Participate

Except as otherwise provided in this Rule 3, any employee who is employed by any Participating Company that adopts the Plan with the consent of the Parent (an “ Employing Corporation ”), is eligible to participate in the Plan. An eligible employee shall commence participation under the Plan on the first trading day of the calendar quarter next following the date on which the employee provides a payroll deduction authorisation form in accordance with Rule 5 or, if the employee does so on the first trading day of a calendar quarter, on that day. Upon re-employment of a former participant whose employment with a Participating Company is terminated, the former participant will become eligible to participate in the Plan as if such former participant were employed by a Participating Company for the first time. The term “ employee ” shall not include a non-employee member of the board of directors of an Employing Corporation. The Parent may establish minimum service or other eligibility requirements consistent with Section 423(b)(4) of the Code. Any exclusions established with respect to a particular Offer must be applied to all employees of every Employing Corporation whose employees are granted options under that particular Offer; provided, however, that the terms of different Offers may provide for different exclusions of employees as permitted by Section 423 of the Code.

4. Eligible Compensation

Compensation eligible for payroll deductions shall be base salary and commissions (if any) paid in each payroll period. Eligible compensation does not include overtime, bonuses, severance pay, incentive pay, shift premium differentials, pay in lieu of vacation, imputed income for income tax purposes, patent and award fees, awards and prizes, back pay awards, reimbursement of expenses and living allowances, educational

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allowances, expense allowances, disability benefits under any insurance program, fringe benefits, deferred compensation, compensation under the Parent’s stock plans, amounts paid for services as an independent contractor, or any other compensation excluded in the discretion of the Parent. The Parent may designate the Board of Directors (the “ Board ”) as responsible for the administration of the Plan, or a committee of the Board consisting of one or more individuals, or one or more designated individuals, to whom the Board has delegated its authority to administer the Plan in accordance with the Parent’s Articles of Association and, in addition, may, in its sole discretion, make different designations for different purposes. Compensation shall be determined before giving effect to any salary reduction agreement pursuant to a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code or to any similar reduction agreement pursuant to any cafeteria plan (within the meaning of Section 125 of the Code) and, as determined in the discretion of the Parent, any other salary reduction agreement such as pursuant to a dependent care plan (within the meaning of Section 129 of the Code) or a qualified transportation fringe plan (within the meaning of Section 132(f) of the Code).

5. Offer Date

The Parent may make one or more offers (an “ Offer ” or “ Offers ”) under the Plan, on any date within 42 days after the date on which the Parent releases to the public its quarterly, semi-annual or annual results for any financial period or on any other date, if the Parent determines that exceptional circumstances exist which justify doing so. If the Parent cannot make Offers because of restrictions imposed by statute, order, regulation or government directive, or by any code adopted by the Parent based on the London Stock Exchange’s model code for securities transactions by directors of listed companies, the Parent may make Offers within 42 days after the lifting of such restrictions. No option granted pursuant to an Offer shall have a term of more than 27 months measured from the date of grant of the option.

Offers may be consecutive or may overlap. The terms of each Offer need not be identical. Separate Offers may be established for different Employing Corporations.

In order to participate in an Offer, an eligible employee must sign and forward to the Employing Corporation a duly completed payroll deduction authorization form authorizing regular payroll deductions, which may not exceed the maximum percentage of the employee’s eligible compensation per pay period, to be applied toward the acquisition of Shares or ADSs, as appropriate, pursuant to the Offer. The “ maximum percentage ” means the per cent of eligible compensation available for payroll deductions which shall be specified by the Parent at the beginning of the term of each Offer, which shall not exceed 15%. Participants under the Plan can forward a new payroll deduction authorization form at any time in order to amend their percentage of eligible compensation, provided that the maximum percentage is not exceeded. Any such change will take effect from the next practicable calendar quarter.

6. Participation

Subject to the limitations set out in the Plan, on the effective date of an Offer, each then eligible employee will be granted an option to acquire, through payroll deductions, as many Shares or whole and fractional ADSs, as appropriate, as the employee may acquire with up to the maximum percentage of eligible compensation to be received by the employee during the term of the Offer. However, every such eligible employee who does not complete a payroll deduction authorization form in accordance with Rule 5 during the initial enrolment period applicable to that Offer will be deemed not to have accepted the option, and the option will therefore lapse at the end of the initial enrolment period. On the first trading day of the calendar quarter following submission of an employee’s payroll deduction authorisation form in accordance with Rule 5, each Late Joiner will be granted an option to acquire, through payroll deductions, as many Shares or whole and fractional ADSs, as appropriate, as the employee may acquire with up to the maximum percentage of eligible compensation to be received by the employee during the remainder of the term of the Offer. For purposes of the Plan:

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a “trading day” is a day on which Shares are traded on the London Stock Exchange or, if appropriate ADSs are traded on the New York Stock Exchange, the NASDAQ National Market System (“NASDAQ”) or the principal national securities exchange on which the ADSs are then listed or admitted to trading;

a “Late Joiner” is any employee who (i) though eligible, does not elect to participate within the period for initial enrolment determined by the Parent; or (ii) elected to participate within the initial enrolment period, withdrew from participation, and has since elected to recommence participation; or (iii) becomes eligible to participate in the Plan during the term of the Offer.

Each participant in an Offer shall agree to provide written notification to the Employing Corporation at its principal office of any disposition of Shares or ADSs acquired pursuant to the Plan prior to the expiration of the holding periods set forth in Section 423(a) of the Code. Each employee granted options as part of the same Offer (whether or not employed by the same Employing Corporation) under the Plan shall have the same rights and privileges under the Plan, except that the number of Shares or ADSs, as appropriate, each participant may acquire will depend upon his compensation and the percentage payroll deduction the employee authorizes.

7. Participation Limitations

Except to the extent that a lesser number of Shares is established by the Parent in advance of an Offer, the maximum number of Shares or ADSs which an employee will be permitted to acquire pursuant to any one Offer will be that number of Shares or ADSs determined by multiplying (a) the amount of the employee’s monthly eligible compensation on the date the employee is first granted an option pursuant to that Offer by (b) the number of months from such date to the end of the term of the Offer and by dividing the product of such multiplication by an amount (the “ fair market value ”) equal to the closing price of a Share or an on the relevant Stock Exchange on which the Shares or ADSs, as appropriate, are then listed or admitted to trading on the option grant date. If no reported sales take place on the applicable date, such fair market value will be determined based on the average of the high bid and low asked price of the Shares or ADSs on such date, or if no such quotation is made on such date, on the next preceding day on which there were quotations, provided that such quotations shall have been made within the ten (10) trading days preceding the applicable date of the Shares or ADSs on such date. When the foregoing participation limitation is reached, payroll deductions shall cease, and any amount of excess funds as of the date that the participation limitation has been reached shall be returned to the employee.

Notwithstanding anything herein to the contrary, no employee shall be permitted to acquire any Shares or ADSs under the Plan if the employee, immediately after the acquisition, owns or would own, Shares, ADSs or other shares (including all Shares or ADSs which may be acquired under outstanding options under the Plan) possessing 5% or more of the total combined voting power or value of all classes of shares of capital stock of the Employing Corporation or of its parent or subsidiary corporation (as such terms are defined in Section 424 of the Code). For purposes of the foregoing limitation, the rules of Section 424(d) (relating to attribution of stock ownership) of the Code shall apply in determining share ownership, and shares which the employee may acquire under outstanding options shall be treated as shares owned by such employee. Further, if pursuant to the terms of the Plan, an employee would be granted an option that violates Section 423(b)(8) of the Code, such option shall not be granted and in its place the employee shall be granted an option to acquire Shares or ADSs which permits the employee’s rights to acquire Shares, ADSs or other shares under all stock purchase plans of the Employing Corporation and its parent and subsidiary corporations (as such terms are defined in Section 424 of the Code) to accrue at a rate which does not exceed $25,000 of the fair market value of such Shares or ADSs (determined at the time such right to acquire is granted) for each calendar year in which such option is outstanding at any time.

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8. Option Price

The option price at which Shares or ADSs may be acquired under any option granted under the Plan shall be 85% of the fair market value of a Share or an ADS, as appropriate on the last dealing day of the relevant Option Period for each Offering.

For purposes of determining the option price, “ fair market value ” in relation to a Share on any day means an amount equal to the average of the high and low sales prices of Shares recorded on the London Stock Exchange on the day before the applicable valuation date and in relation to an ADS on any day means an amount equal to the average of the high and low sales prices of ADSs recorded on the New York Stock Exchange, NASDAQ or the principal national securities exchange on which the ADSs are then listed or admitted to trading on the day before the applicable valuation date.

9. Deduction of Pay and Exercise of Options

(a) Subject to paragraph 9(b) below, at the end of each payroll period, each participant shall have deducted from his pay the amount authorized. This amount shall be held for the credit of the participant by the Employing Corporation as part of its general funds and may, at the sole discretion of the Parent, accrue interest. Subject to paragraph 9(b) below, on the last trading day of each month, quarter, six months, or other interval, as determined by the Parent, in its sole discretion, prior to the commencement of an offer from time to time (“ Option Period ”), during the term of the Offer a participant will be deemed to have exercised the participant’s option to acquire, at the option price, the number of Shares or whole and fractional ADSs, as appropriate, which may be acquired with the amount deducted from the participant’s compensation during that Option Period. The Parent shall designate an independent custodian (the “ Custodian ”), which shall acquire Shares or ADSs under the Plan as agent for the participants. The Custodian shall purchase or subscribe at the applicable option price, as many Shares or whole and fractional ADSs as may be acquired with the funds received from each participant for that month. Upon receipt of the Shares or ADSs so acquired, the Custodian will allocate to the account of and hold for each participant the number of Shares or whole and fractional ADSs to which that participant is entitled.

(b) The Parent may, at its discretion, at any time during the term of an Offer suspend for any period that it determines to be appropriate (the Suspension Period ) both the deduction of any amounts from participants’ pay and the exercise of participants’ options under paragraph 9(a) above, so that no deductions from participants’ pay and no options will be exercised during the Suspension Period. Participants will be advised, in the form that the Parent determines, of the operation of a Suspension Period and the period for which the Suspension Period will apply.

(c) Subject to limitations imposed and rules adopted by the Parent from time to time, a certificate representing the number of whole Shares or ADSs to which a participant is entitled will be issued to the participant upon written request, along with a check for the value of any fractional ADSs held. Unless otherwise permitted by the Parent and requested by the participant, Shares or ADSs acquired under the Plan will be held by and in the name of, or in the name of a nominee of, the Custodian, for the benefit of each participant, who shall from that time be a beneficial stockholder of the Parent. A participant’s rights as a stockholder of record of the Parent begin when a certificate, evidencing the Shares or ADSs registered in the participant’s name, is issued. The Parent may, in its sole discretion, cause to be made, as a condition precedent to any acquisition of Shares or ADSs under the Plan, appropriate arrangements with the participant for the withholding of any applicable federal, state, local or foreign withholding or other taxes. During a participant’s lifetime, such participant’s options shall be exercisable only by the participant.

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10. Number of Shares to be Offered

(a) Subject to paragraph 10(d) below, the number of Shares that may be allocated under the Plan shall be determined as follows:

(i) the number of Shares which may be allocated under the Plan on any day will not exceed 10 per cent of the ordinary share capital of the Parent in issue immediately before that day, when added to the total number of Shares which have been allocated in the previous 10 years under the Plan and any other employee share plan operated or adopted by the Parent; and

(ii) the number of Shares which may be allocated under the Plan on any day will not exceed 5 per cent of the ordinary share capital of the Parent in issue immediately prior to that day, when added to the total number of Shares which have been allocated in the previous 5 years under the Plan and any other employee share plan operated or adopted by the Parent.

For purposes of this paragraph 10(a), “ allocate ” means in relation to any share option plan, placing unissued Shares or treasury Shares (as defined in Section 162A(3) of the Companies Act 1985) (“Treasury Shares”) under option and, in relation to other types of employee share plans, the issue and allotment of Shares or transfer of Treasury Shares.

(b) Where the right to acquire Shares or ADSs was released or lapsed without being exercised or deemed to be exercised, the Shares concerned will be ignored when calculating the limits in paragraph 10(a) above. To the extent that an option or award is to be satisfied with the transfer of Shares, other than Treasury Shares, already in issue, that option or award will not be treated as granted over unissued Shares or Treasury Shares.

(c) Where Treasury Shares transferred or Shares issued under the Plan are to be taken into account for the purposes of the limit in paragraph 10(a) above and a variation of the equity share capital of the Parent has taken place between the date of transfer or issue of any such Shares and the date on which the limit is to be calculated, the number of such Shares which will be taken into account for the purposes of any such limit will be adjusted in such manner as the Parent considers appropriate to take account of the variation.

(d) Notwithstanding paragraphs 10(a), (b) and (c) above, the maximum number of Shares that may be acquired under the Plan may not exceed 20 million plus that number of Shares that were authorized but unissued under the BT Group plc (Qualified) Plan as of the date of shareholder approval of this Plan.

11. Administration and Amendment of the Plan

The Plan shall be administered in the manner prescribed by paragraph 4 above. Subject to this paragraph 11, the Parent may, in its sole discretion, prescribe rules and regulations from time to time for the administration of the Plan and may make decisions relating to questions which may arise with respect to its interpretation or application, or remedy any ambiguity or inconsistency in the Plan Rules. Any interpretation, determination (including, without limitation, a determination of fact) or other action made or taken by the Parent shall be final and binding. The Parent may determine the terms and conditions of Offers under the Plan and the Parent may modify, amend, or terminate the Plan at any time, provided, however , that the Parent may not make any alterations which would materially and adversely affect an option previously granted without the consent of the optionee. In addition, the Parent may not, without the prior approval of shareholders in a general meeting, make amendments or modifications that would:

(a) reduce the applicable option price per Share or ADS, as appropriate;

(b) require shareholder approval under Section 423 of the Code or any applicable stock exchange listing requirements;

(c) increase the maximum number of Shares or ADSs which may be acquired under the Plan either in the aggregate or by an individual employee; or

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(d) be to the advantage of participants and affect the provisions (if any) relating to (i) the persons to whom, or for whom, securities, cash or other benefits are provided under the Plan (“ Interested Persons ”) or (ii) the basis for determining an Interested Person’s entitlement to, and the terms of, securities, cash or other benefits to be provided and for the adjustment thereof (if any) in the event of a capitalization issue, rights issue, sub-division or consolidation of shares or reduction of capital or any other variation of capital;

provided that the foregoing (except for clause (b) above) shall not prevent minor amendments to benefit the administration of the Plan, to take account of change in applicable law or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the Plan or for the Parent or any Participating Company.

12. Withdrawal from Participation (Recommencement of Participation

A participant may, at any time and for any reason, by giving written notice of the participant’s desire in this regard to the Parent or its designee, elect to withdraw from any further participation in an Offer. Subject to limitations imposed and rules adopted by the Parent from time to time, the participant withdrawing will, as soon as practicable, receive a certificate representing any Shares or whole ADSs credited to the participant’s account as of the date of withdrawal and a check for any funds credited to the participant’s account and not applied toward the acquisition of Shares or ADSs as of that date, and for the value of any fractional ADSs held. During the remainder of the term of any Offer, but only once, an eligible employee may recommence participation in that Offer by executing and delivering to the Employing Corporation a new payroll deduction authorization form. Recommencement shall begin in accordance with Rules 3 and 6 as if the eligible employee was commencing participation for the first time.

13. Rights Not Transferable

Except for transfers by will or under the laws of descent and distribution, no employee shall have the right to sell, assign, transfer, pledge or otherwise dispose of or encumber either the employee’s right to participate in the Plan or the employee’s interest in the Shares or ADSs held by the Custodian, and such right and interest shall not be liable for or subject to the debts, contracts or liabilities of the employee. If any action is taken by the employee contrary to the provisions of this paragraph 13, or any claim asserted by another party in respect of such right and interest, that action or claim will be treated as notice of withdrawal, and, except as may otherwise be required by law, the provisions of paragraph 12 will apply.

14. Termination of Employment

In the event of a participant’s retirement, death or other termination of employment, no payroll deductions will be made from any compensation then due and owing to such participant at such time, and, if the participant or his representative requests, subject to limitations imposed and rules adopted by the Parent from time to time, a certificate representing the number of Shares or whole ADSs then credited to the participant’s account, and a check for the value of any fractional ADSs held and for any excess funds contributed as of that date (and not eligible for the acquisition of Shares or ADSs) will be issued and delivered to the participant or his representative. Nothing in this Plan shall confer any greater employment rights to any employee of any Participating Company, and each Employing Corporation hereby reserves the right to terminate any employee’s employment with or without notice or cause.

15. Reorganization

In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, offering of rights or any other change in the structure of the equity share capital of the Parent, including the ADSs, the Parent may make such adjustments (including retrospective adjustments), if any, as it may deem appropriate, in its sole discretion, in the number, kind and price of Shares or ADSs available for acquisition under the Plan, and in the minimum and maximum number of Shares or ADSs which a participant is entitled to acquire.

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16. Approval of Stockholders; Effectiveness of the Plan

The Plan was adopted by the Board on April 14, 2011, and approved by an ordinary resolution of the shareholders, in accordance with the requirements of Section 423(b)(2) of the Code.

17. Termination of Plan

The Plan and all rights of participants will terminate on the earliest of: (a) the date as of which participants have exercised options to acquire the maximum number of Shares that may be acquired under the Plan pursuant to paragraph 10(c); (b) the date as of which the Parent terminates the Plan; or (c) the tenth anniversary of adoption date. Upon termination of the Plan, all payroll deductions shall cease and all amounts credited to the participants’ accounts shall be equitably applied to the acquisition of the Shares or ADSs then available under the Plan and all funds accumulated under the Plan not utilized to acquire Shares or ADSs will be refunded to the applicable participants.

18. Required Governmental Approvals; Certain Restrictions

The Plan, and all options granted under and other rights inherent in the Plan, are subject to receipt by the Parent of all necessary approvals or consents of governmental agencies which the Parent, in its sole discretion, shall deem necessary or advisable. Subject to paragraph 11 above, all options granted under the Plan and all other rights inherent in the Plan are subject to such termination and/or modification as may be required or advisable in order to obtain any such approval or consent or which, as a result of consequences attaching to any such approval or consent, may be required or advisable in the judgement of the Parent in order to avoid adverse impact on the Parent’s and the Participating Companies overall wage and salary policy.

The Plan, file grant and exercise of options under the Plan, and the obligation to sell and deliver Shares or ADSs upon exercise of options, shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any government or regulatory agency as may be required. Shares or ADSs shall not be required to be issued or delivered prior to (i) the listing or quotation of such ADSs on any stock exchange or regulated over-the-counter market and (ii) the completion of any registration or qualification of such Shares or ADSs under any federal or state law, or any ruling or regulation of any government body which the Parent shall, in its sole discretion, determine to be necessary or advisable.

19. Interpretation

Words used in the singular shall be deemed to include both the singular and the plural, unless the context indicates otherwise.

20. Expenses

Expenses of administering the Plan shall be borne by the Parent; provided, however , that the Parent may, in its sole discretion, require any Employing Corporation to enter into such arrangement to reimburse the Parent for any costs borne by the Parent directly or indirectly in respect of such Employing Corporation’s officers or employees.

21. Rights of Participants and Eligible Employees

Participation in the Plan is outside the terms of any contract of employment. Options under the Plan are not pensionable. The rights and obligations of a participant under the terms and conditions of the participant’s employment by any Participating Company will not be affected by the participant’s participation in the Plan or any right the participant may have to participate in it. An eligible employee who participates under the Plan waives all and any rights to compensation or damages in consequence of the termination of the employee’s office or employment with a Participating Company for any reason whatsoever insofar as those rights arise or may arise from the employee ceasing to have rights under the Plan as a result of such termination or from the loss or diminution in value of such rights or expectation under the Plan in any circumstances.

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22. Governing Law

All rights and obligations under the Plan shall be construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

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Exhibit 4.2

BT GROUP PLC

BT GROUP INCENTIVE SHARE PLAN

As approved by the Board on 14 April 2011 and approved by ordinary resolution of Shareholders in general meeting on 13 July 2011 and amended by the Remuneration Committee on 28 October 2014, on 9 July 2015, 25 October 2016 and 31 July 2019.

Expiry date 13 July 2021

THE RULES OF THE BT GROUP INCENTIVE SHARE PLAN

CONTENTS

THE RULES OF THE BT GROUP INCENTIVE SHARE PLAN

The Board will, from time to time, set the policies for the Company’s operation and administration of the Plan within the terms of the Rules, which may include the determination of:

An Award can be granted at any time provided that the Date of Grant of an Award is not during a Closed Period.

Awards cannot be transferred, assigned, charged or otherwise disposed of. On the death of a Participant, his Awards can be transmitted to his personal representatives. A Participant can renounce his Award within 30 days following the Date of Grant and, to the extent renounced, the Award will be treated as if it had never been granted. If a Participant purports to transfer, assign, charge or otherwise dispose of his Award otherwise than as permitted by this Rule 1.3, his Award shall immediately lapse.

The Company will, from time to time and at its discretion, grant Awards or request the Trustee to grant Awards to one or more recommended Eligible Executives, in accordance with the Rules.

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An Award will be granted subject to a performance target selected by the Remuneration Committee which will, subject to the relevant provisions under the Rules, have to be met before the Award can Vest. The grant or Vesting of an Award can be subject to any additional terms and conditions the Company considers appropriate. The performance target and any additional terms and conditions which the Vesting of an Award is subject to will be specified at the Date of Grant. If Awards are exchanged under Rule 5.7 the performance target can be varied at the discretion of the Remuneration Committee to take account of this.

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If an event or transaction occurs which causes the Company to consider that the performance target subject to which a subsisting Award has been granted is no longer appropriate, the Company may substitute or vary the performance target in such manner (and make such consequential amendments to the rules) as:

The subsisting Award shall then take effect subject to the performance target as so substituted or varied.

Awards can be subject to different performance targets for each Eligible Executive.

The number of Shares which can be allocated under the Plan on any day, when aggregated with the number of Shares allocated in the previous 10 years under:

The references in this Rule 3 to the “allocation” of Shares mean, in the case of any share option plan, the placing of unissued Shares or (for so long as UK institutional shareholders recommend) Treasury Shares under option and, in the case of any other Employees’ Share Scheme, the issue and allotment of Shares, or (for so long as UK institutional shareholders recommend) the transfer of Treasury Shares. For the purposes of the limit in this Rule 3:

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Where Treasury Shares transferred, or Shares issued, under the Plan or any other Employees’ Share Scheme of the Company are to be taken into account for the purposes of any of the limits in this Rule 3 and a Variation in the equity share capital of the Company has taken place between the date of transfer or issue of any such Shares and the date on which any such limit is to be calculated, the number of such Shares which will be taken into account for the purposes of any such limit will be adjusted in such manner as the Company considers appropriate to take account of the Variation.

The Remuneration Committee will, from time to time, set an individual limit on the Market Value (at the Date of Grant) of the Shares the subject of an Award granted to a Participant on an annual basis. This limit cannot be exceeded without the prior approval of the Remuneration Committee.

A Participant has no voting rights attaching to the Shares the subject of his Award, nor a right to any dividends nor any other rights attaching to the Shares the subject of such Award prior to the Vesting of the Award in respect of those Shares. However, the Company may, or the Trustee may on the recommendation of the Company, increase the number of Shares the subject of a Participant’s Award after any dividend has been paid in relation to the Shares. Any such increase will be made as follows:

and in either case, the number of shares by which the Award is increased must have, unless Rule 4.3 applies, a Market Value on the date of increase which is as close as possible equal in value to the aggregate dividend (net of any taxes) paid in respect of the same number of Shares as those under the Award.

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Subject to Rule 4.3, if there is a Variation affecting the share capital of the Company prior to the Vesting of an Award, if the Company thinks it appropriate it, or the Trustee on the recommendation of the Company, may adjust the number of Shares the subject of that Award . Any Participant whose Award is adjusted will be notified in writing of any such adjustment.

If there is a Variation which is a demerger of the Company, if the Company thinks it appropriate it, or the Trustee on the recommendation of the Company, may adjust an Award so as to be over shares in the Employing Company (“the Adjusted Award”). Each Adjusted Award will be equivalent to the Award which was adjusted (“the Unadjusted Award”) prior to the adjustment. An Adjusted Award will not be regarded as equivalent to an Unadjusted Award unless:

The provisions of the Plan shall, for this purpose, be construed as if the Adjusted Awards were granted under the Plan at the same time as the Unadjusted Awards. References to the “Company” shall, in relation to the Adjusted Award, be taken as references to the Employing Company and references to “Share” shall be taken as references to a fully-paid share in the Employing Company. The Company will procure the Trustee’s agreement to any amendment to the applicable employee share ownership trust to give effect to this Rule 4.3.

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If, before an Award has Vested, an offeror (either alone or together with any party acting in concert with him) obtains Control of the Company as a result of a general offer to acquire the whole of the issued ordinary share capital of the Company (or such part of it which is not at the time owned by the offeror and any party acting in concert with the offeror) a Participant’s Award will Vest as soon as the change of Control takes effect, but only to the extent specified by the Remuneration Committee in accordance with Rule 5.2.

The Remuneration Committee will confirm as soon as practicable after the general offer has been made the minimum extent to which an Award may Vest, to the extent that the performance target has been met up to the change of Control taking effect. Subject to this, the Remuneration Committee may in its absolute discretion decide to take other factors into account, which it believes to be relevant in permitting the Award to Vest beyond the extent to which the performance target has been met.

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The Company will use its best endeavours to procure that to the extent a Participant’s Award Vests in accordance with Rule 5.1, the offeror will make an offer to acquire from the Participant his Shares on the same terms as Shares of the same class were acquired under the general offer.

If, before an Award has Vested, the court directs that a meeting of the holders of Shares should be convened under Section 899 of the Companies Act 2006 to consider a scheme of arrangement, a Participant’s Award will Vest on the date the scheme of arrangement is sanctioned by the court, but only to the extent specified by the Remuneration Committee in accordance with Rule 5.5. If however, the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, where such holding company would, following the scheme of arrangement, have substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement, Rule 5.7 may, with the consent of the Board, apply. If it does apply, Awards will not Vest under this Rule 5.4.

The Remuneration Committee will confirm as soon as practicable after the date of the court’s direction the minimum extent to which an Award may Vest, to the extent that the performance target has been met up to the date the scheme of arrangement is sanctioned by the court. Subject to this, the Remuneration Committee may decide to take other factors into account, which it believes to be relevant in permitting the Award to Vest beyond the extent to which the performance target has been met.

If there is a resolution for a member’s voluntary winding-up of the Company, the Awards will Vest in full conditionally on the resolution being passed.

If, before an Award has Vested, any company (the “Acquiring Company”) obtains Control of the Company in pursuance of a compromise or arrangement sanctioned by the court under Section 899 of the Companies Act 2006 and the Acquiring Company has agreed that the outstanding Awards may be exchanged under this Rule 5.7, the Company may determine that an Award shall be exchanged under this Rule 5.7. On this basis, Participants’ Awards (“Old Awards”) will be automatically surrendered in consideration of the grant to Participants of new awards (“New Awards”) which, in the opinion of the Company, are equivalent to the Old Awards (before the change of Control) but relate to shares in a different company. The New Awards will not be regarded as equivalent to the Old Awards unless:

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References to Shares will, in relation to the New Award, be taken as references to shares of the company whose shares are under New Awards. References to the Company shall be taken to be references to the company whose shares are under the New Awards, where appropriate. The New Awards will not Vest/lapse if Rule 5 applies following and in respect of the change of Control which led to the grant of the New Awards. The Company will procure the Trustee’s agreement to any amendment to the applicable employee share ownership trust to give effect to this Rule 5.7. This Rule 5.7 will only apply if the purpose and effect of the scheme of arrangement is to create a new holding company for the Company and the Board consents, as set out in Rule 5.4.

If, at any time within the period of 12 months following the date of any change of Control of the Company (other than a change of Control as a consequence of a scheme of arrangement under Section 899 of the Companies Act 2006 the effect of which was to create a new holding company for the Company, where such holding company had, following the scheme of arrangement, substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement), a Participant’s Employment:

the Participant will be entitled to receive an amount which is equal in value to the difference between the aggregate Market Value of the Shares he became entitled to when his Award Vested under Rule 5.1 or Rule 5.4 and the aggregate Market Value of the Shares he would have become entitled to had the Award Vested at that time as if the performance target had been met in full. For the purposes of this Rule 5.8, the Market Value used shall be the Market Value of a Share as at the date his Award Vested. Any amount payable under this Rule 5.8 shall be payable, subject to any deduction required by law to be made, within thirty days after the cessation of Employment concerned and in such currency as the Company shall determine in its absolute discretion.

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Unless otherwise provided in the Rules, if a Participant ceases to be in Employment before the end of the Incentive Period, all his Awards will lapse in full on the date he so ceases. Notwithstanding any other provision in the Rules, no Award may Vest more than ten years after the Date of Grant.

If a Participant ceases or is to cease to be in Employment before the end of the Incentive Period because of death, injury, ill health or disability:

If a Participant ceases or is to cease to be in Employment before the end of the Incentive Period because of his Redundancy, all his Awards will lapse on the date he so ceases. The Company may, however, at its discretion, Vest, or recommend the Trustee to Vest, as soon as possible, all or part of any Award and/or preserve all or part of any Award to the extent that it is not Vested immediately. The Award, to the extent that it is preserved, must be preserved until the end of the Incentive Period and will continue to be subject to the Rules. To the extent that the Company or the Trustee has not exercised its discretion to Vest or preserve all or part of an Award, it will lapse on the date the Company, or Trustee confirms its decision (as the case may be).

If a Participant ceases to be in Employment before the end of the Incentive Period because the company in the Group which employs him ceases to be a Participating Company or an Associated Company or because of the transfer or sale of the undertaking (or part of the undertaking) in which he is employed to a person who is neither a Participating Company nor an Associated Company, all his Awards will lapse on the day he so ceases. The Company may however, at its discretion, Vest, or recommend the Trustee to Vest, as soon as possible, all or part of any Award and/or preserve all or part of any Award to the extent that it is not Vested immediately. The Award, to the extent that it is preserved, must be preserved until the end of the Incentive Period and will continue to be subject to the Rules. To the extent that the Company or the Trustee has not exercised its discretion to Vest or preserve all or part of an Award, it will lapse on the date the Company, or the Trustee, confirms its decision (as the case may be).

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If a Participant’s Award is to Vest under Rule 6, any performance target which applies to its Vesting will be treated as if it had been waived, unless the Company decides otherwise. If the Company does decide otherwise, Awards will, at the discretion of the Company, and when the relevant event in Rule 6 takes place, either lapse in part and/or, to the extent that they do not lapse, they will be preserved or Vest on whatever basis the Company decides.

If, before the end of the Incentive Period, a Participant gives or is given notice to leave Employment or ceases to be in Employment without any notice having been given in any circumstances other than the ones referred to in Rule 6.2, Rule 6.3 or Rule 6.4, his Award will lapse on that date, unless the Company decides otherwise.

If a Participant ceases to be in Employment before the end of the Incentive Period, but continues to provide services to the Group or becomes employed by an Associated Undertaking, the Company may decide that the Participant is deemed not to have ceased Employment and that his Awards will continue to be held subject to the Rules. Rules 5 to 6 will apply when he subsequently ceases to provide services to the Group, or when he ceases to be employed by an Associated Undertaking and is not re-employed by a member of the Group, or in such other circumstances as the Company may determine.

If the Company or the Trustee decides to exercise any discretion it has under this Rule 6 as regards Vesting or preservation of an Award it must do so not later than the date which is three months after the date the Participant ceases Employment, failing which the Award will be treated as lapsing in full on the date he so ceases. In the three month period following a Participant ceasing Employment, an Award will not be capable of Vesting under any other provision of the Rules, unless the Company or the Trustee exercises its discretion to preserve an Award.

To the extent that a Participant’s Award lapses, he is not entitled to any Shares which are the subject of that Award.

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At the end of the Incentive Period and to the extent that an Award has not already Vested under Rule 5 or Rule 6, the Remuneration Committee, in its absolute discretion, will decide as soon as practically possible to what extent the performance target relevant to each Award has been met. To the extent that the Remuneration Committee decides that it has been met, the Award will Vest (subject to Rule 7.3) as soon as practically possible following the Remuneration Committee’s decision. The relevant number of Shares will be transferred as soon as practicable to a Participant who up until the end of the Incentive Period:

If the performance target is one which provides for Vesting in proportion to the extent that the performance target has been met, the Award will Vest in proportion to the extent that the performance target has, in the Remuneration Committee’s view, been met at the end of the Incentive Period.

If the Remuneration Committee decides that the performance target which applies to an Award has not been met at the end of the Incentive Period, the Awards will lapse on the date the Remuneration Committee so confirms.

A Participant’s Award may be granted subject to the Remuneration Committee’s discretion to Vest his Award (to the extent that the performance target has been met) as to some, but not all of the Shares the subject of that Award as soon as practicable following the end of the Incentive Period. If a Participant’s Award was granted on this basis, the Remuneration Committee will decide at the same time as it exercises its discretion under Rule 7.1 what proportion of the Award will Vest thereafter and when such proportions shall Vest (the “Deferred Award”) PROVIDED THAT if a Participant ceases Employment before the Deferred Award has Vested, it shall Vest in full on the date he so ceases Employment. The Remuneration Committee’s decision to postpone the Vesting of all of the Shares under the Award will be taken based on the extent to which any awards granted to the Participant under the BT Executive Share Plan, the BT Deferred Bonus Plan, the BT Group Deferred Bonus Plan and the BT Group Retention Share Plan also vests in the financial year of the Company in which the end of the Incentive Period falls. The Rules will continue to apply in respect of any part of an Award which has not yet Vested.

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When an Award has Vested, the Participant will be entitled to Shares the subject of that Award. The number of Shares he is entitled to (which will be transferred to the Participant as soon as reasonably practicable) will depend on any exercise of the Remuneration Committee’s decision under Rule 7.3, and the extent to which any applicable performance target has been met. It will also be subject to any withholdings in accordance with Rule 8.2 that may be necessary on account of a Participant’s Tax Liability in respect of the Award.

Unless the Participant makes arrangements (satisfactory to the Company) to provide payment in respect of his Tax Liability, the Company or any relevant company in the Group will make arrangements to sell on behalf of the Participant such number of Shares the subject of the Award which has Vested as is necessary to discharge the Tax Liability.

Subject to the rest of this Rule 9, the Company can amend the Rules at any time. The Trustee will be notified of any amendment to the Rules.

The Company can adopt additional sections of the Rules applicable in any jurisdiction under which Awards may be subject to as additional and/or modified terms and conditions, having regard to any securities, exchange control or taxation laws, which may apply to the Participant, the Company, any Participating Company or Associated Company. Any additional sections must conform to the basic principles of the Plan and must not enlarge to the benefit of Participants the limits in the Rules.

No amendment will be made under Rule 9.1 which would adversely and materially affect the existing rights of a Participant unless it is made with his consent or by a resolution passed as if the Awards constituted a separate class of share capital and the provisions of the Articles of Association of the Company and of the Companies Act 2006 relating to class meetings (with the necessary amendments) applied to that class.

No amendment to the advantage of Participants (except for an amendment which could be included in an additional section adopted under Rule 9.2) can be made to the provisions in the Rules (if any) relating to:

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without the approval by ordinary resolution of the Company in general meeting, except 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 Eligible Executives or for a member of the Group.

Any notice or other communication in connection with the Plan (including, if permitted, Award certificates) can be given by electronic mail or by personal delivery or by post, (in the case of a company, to its registered office and in the case of an individual to his last known address) or by any other means which a Participating Company and its employees use to communicate with each other. Where a notice or other communication is given by first-class post, it shall be deemed to have been received 72 hours after it was put into the post properly addressed and stamped.

Participants may, but are not entitled to, receive copies of any notice or document sent by the Company to the holders of Shares.

If any Award certificate is worn out, defaced or lost, it can be replaced on such evidence being provided as may be required.

Enough Shares will be available at all times to satisfy all Awards granted.

The Plan will be administered in a manner approved by the Company. No individual will have any authority in relation to the Plan unless that authority has been approved in accordance with the policy set by the Board. The Company’s decision on any matter concerning the Plan, including whether or not any performance targets in relation to an Award have been met, or the interpretation of the Rules, will be final and binding.

The costs of introducing and administering the Plan will be borne by the Company. However, the Company may require any Participating Company to enter into such arrangement to reimburse the Company for any costs borne by the Company directly or indirectly in respect of such Participating Company’s employees.

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The Plan will terminate at the end of the Plan Period or at any earlier time the Company shall decide. Termination of the Plan will not affect the subsisting Awards of Participants.

Benefits under the Plan will not be pensionable. Nothing in the Plan nor in any instrument executed pursuant to it will confer upon any person any right to continue in the employment of the Group, or will affect the right of the Company or any company in the Group to terminate the employment of any person without liability at any time with or without cause, or will impose upon the Group or the Trustee or the Board or their respective agents and employees any liability whatsoever (whether in contract, tort, or otherwise howsoever) in connection with:

Any person who ceases to have the status or relationship of an employee or executive director with the Company or any other company in the Group for any reason whatsoever (whether lawfully or unlawfully) shall not be entitled and shall be deemed irrevocably to have waived any entitlement by way of damages for dismissal or by way of compensation for loss of office or otherwise to any sum, damages, Shares or other benefits to compensate that person for the loss of any rights, benefits or expectations under any Award, the Plan or any instrument executed pursuant to it. If necessary, that person’s terms of employment will be varied accordingly.

10.10 The benefit of Rule 10.8 and Rule 10.9

The benefit of Rule 10.8 and Rule 10.9 is given for the Company and/or the Trustee (where the Award was not granted by the Company), as appropriate for itself and as trustee and agent of the Company (if the benefit is given for the Trustee), and of all the Company’s Subsidiaries or any of its Associated Companies or Associated Undertakings. To the extent that the Company, any Subsidiary, Associated Company or Associated Undertaking of the Company is not party to the grant of an Award, the Company and/or the Trustee, as appropriate, will hold the benefit of Rule 10.8 and Rule 10.9 on trust and as agent for each of them and the Company and/or the Trustee may, at their respective discretion, assign the benefit of this Rule 10.10 to any of them.

Awards are granted incorporating and subject to the Rules.

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Any Shares acquired on the Vesting of Awards are subject to the Articles of Association of the Company as amended from time to time.

The Rules are governed by and interpreted in accordance with the law of England. Each Participant, the Company and any other Participating Company or Associated Company submits to the exclusive jurisdiction of the English courts in relation to any disputes arising out of or in connection with the Plan. The Company may, in its absolute discretion, determine that another law may apply to the application of the Plan outside the United Kingdom.

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THE BT GROUP INCENTIVE SHARE PLAN

U.S. APPENDIX

All U.S. Awards will be evidenced by an instrument(s) in such form or forms as may from time to time be approved by the Company.

The Company shall (i) administer the U.S. Awards in accordance with this U.S. Appendix, (ii) establish from time to time such rules and regulations as it may deem appropriate for the proper administration of the U.S. Awards and (iii) make such determinations under (including, without limitation, factual determinations), and such interpretations of, and take such steps in connection with, the Rules, the U.S. Appendix and/or the U.S. Awards as it may deem necessary or advisable.

Any U.S. Award may be subject to any other provision imposed by the Company that is consistent with the purpose and intent of this Appendix. During the Incentive Period, a Participant may, in the sole authority and discretion of the Company, and subject to such terms, conditions and limitations as the Board may determine from time to time in its sole authority and discretion, have voting and dividend rights with respect to such Participant’s U.S. Award if a certificate relating to the underlying Shares or ADSs has been issued in the Participant’s name.

If any officer, director or shareholder of the Company receives a U.S. Award and therefore becomes subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall take all appropriate action to ensure that such U.S. Awards under this Appendix are exempt from Section 16(b) under the Exchange Act.

The Company may arrange for any U.S. Award to constitute a right to or with respect to ADSs rather than Shares, in which case references to “Shares” in the Plan shall be deemed to be reference to “ADSs”, as the context may require. In its discretion and upon such terms and conditions as it may implement from time to time, the Company may arrange for any U.S. award relating to Shares to be satisfied in the form of ADSs and for any U.S. Award relating to ADSs to be satisfied in the form of Shares.

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It shall be a condition to the obligation of the Company to deliver Shares or ADSs pursuant to any U.S. Award granted to a Participant under the Plan that the Participant pays to the Company (or the Subsidiary that employs the Participant) such amount as may be required by the Company or such Subsidiary for the purpose of satisfying any liability for any U.S. Federal, state or local taxes of any kind required to be withheld with respect of the U.S. Award. Any U.S. Award granted under the Plan to a Participant may require the Company or permit the Participant to elect, in accordance with any applicable rules established by the Company, to withhold or to pay all or part of the amount of such withholding taxes in Shares or ADSs. Such election may be denied by the Company in its sole discretion, or may be made subject to certain conditions specified by the Company. Any payments made in cash under the Plan are the subject of all U.S. Federal, state or local taxes of any kind required to be withheld with respect to them.

No Shares or ADSs may be issued or transferred in connection with a U.S. Award unless the Company shall have determined that such issuance, transfer or settlement is in compliance with or pursuant to an exemption from all applicable U.S. Federal and state securities laws.

For the purposes of the U.S. Awards, where appropriate the following term shall have the following meaning, notwithstanding any contrary provisions in the Plan:-

“ Market Value ” in relation to an ADS means an amount equal the average of the high and low sales prices of ADSs recorded on the New York Stock Exchange on the applicable valuation date.

In Rule 10.1 “72 hours” shall be deleted and replaced by “7 Dealing Days”.

Rule 4.1

Rule 4.1 shall be amended by adding the following sentence to the end thereof:

“For the avoidance of doubt, any increase in the number of Shares subject to a Participant’s U.S. Award pursuant to this Rule 4.1 shall not affect the settlement terms of the U.S. Award in a manner that would be inconsistent with Rule 7.3.”

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Rule 5.7

Rule 5.7.2 shall be amended by adding the following new sentence at the end thereof:

“Such New Awards shall meet the requirements of U.S. Code Section 409A and any applicable regulations relating to substitutions and assumptions of stock rights by reason of a corporate transaction.”

Rule 5.8

Rule 5.8 shall be deleted and replaced with the following new Rules 5.8, 5.9 and 5.10:

If, at any time within the period of 12 months following the date of any change of Control of the Company (other than a change of Control as a consequence of a scheme of arrangement under Section 899 of the Companies Act 2006 the effect of which was to create a new holding company for the Company, where such holding company had, following the scheme of arrangement, substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement), a Participant’s Employment:

the Participant, subject to Rule 5.9, shall be entitled to receive an amount which is equal in value to the difference between the aggregate Market Value of the Shares he became entitled to when his U.S. Award Vested under Rule 5.1 or Rule 5.4 and the aggregate Market Value of the Shares he would have become entitled to had the U.S. Award Vested at that time as if the performance target had been met in full. For the purposes of this Rule 5.8, the Market Value used shall be the Market Value of a Share as at the date his U.S. Award Vested. Any amount payable under this Rule 5.8 shall be payable, subject to any deduction required by law to be made, within thirty days after the cessation of Employment concerned.

For the purposes of Rule 5.8.2, a Participant’s resignation will not be regarded as being due to a Material Diminution unless:

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In the event a U.S. Award becomes Vested prior to the end of the Incentive Period pursuant to Rule 5.1, Rule 5.4 or Rule 5.6, such U.S. Award shall be settled and Shares or ADSs issued or transferred at a time consistent with the provisions of Rule 7.3. Any amount required to be paid to a Participant pursuant to Rule 5.8 shall be paid at a time consistent with the provisions of Rule 7.3. Shares or ADSs transferred with respect to a U.S. Award shall not be held in, or transferred, from the Trust in violation of Code Section 409A(b) “

Rule 6.8

Rule 6.8 shall be deleted and replaced with the following new Rule 6.8:

In the event a Participant’s U.S. Award Vests pursuant to Rule 6.2.1 or the Company elects to Vest all or part of an U.S. Award pursuant to Rule 6.2.2, Rule 6.3, Rule 6.4, or Rule 6.6, such U.S. Award shall be settled and Shares or ADSs issued at a time consistent with the provisions of Rule 7.3. In no event will the Company elect to preserve or continue the U.S. Award of a Participant pursuant to Rule 6.2.2, Rule 6.3, Rule 6.4, Rule 6.6 or Rule 6.7 in a manner that would permit the U.S. Award to be settled at a time that would be inconsistent with the provisions of Rule 7.3.”

Rule 7.3

Rule 7.3 shall be deleted and replaced with the following new Rule 7.3:

The Rules of this Plan and the U.S. Awards made thereunder shall be applied in a manner so as not to constitute a deferral of compensation for purposes of U.S. Code Section 409A. In particular, the periods during which holders of U.S. Awards may receive Shares or ADSs to which they are otherwise entitled (whether pursuant to Rule 5, Rule 6 or this Rule 7) shall be compliant with the short-term deferral exemption provided for under the regulations implementing U.S. Code Section 409A. Accordingly, no U.S. Award shall be paid after the 15 ^th day of the third calendar month following the later of (i) the last day of the fiscal year of the Company or Subsidiary that employs the Participant in which such U.S. Award is no longer subject to a “substantial risk of forfeiture” (as defined for purposes of U.S. Code Section 409A), or (ii) the last day of the calendar year in which such U.S. Award is no longer subject to a substantial risk of forfeiture.”

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THE BT GROUP INCENTIVE SHARE PLAN

DEFINITIONS APPENDIX

INTRODUCTION

The words and expressions used in the Rules which have capital letters have the meanings set out below. In the Rules:

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Exhibit 4.3

BT GROUP PLC

BT GROUP RETENTION SHARE PLAN

As approved by the Board on 14 April 2011 and approved by ordinary resolution of Shareholders in

general meeting on 13 July 2011 and amended by the Remuneration Committee on 9 July 2015,

25 October 2016 and 31 July 2019

Expiry date 13 July 2021

THE RULES OF THE BT GROUP RETENTION SHARE PLAN

CONTENTS

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THE RULES OF THE BT GROUP RETENTION SHARE PLAN

The Board will, from time to time, set the policies for the Company’s operation and administration of the Plan within the terms of the Rules, which may include the determination of:

An Award can be granted at any time provided that the Date of Grant of an Award is not during a Closed Period.

Awards cannot be transferred, assigned, charged or otherwise disposed of. On the death of a Participant, his Awards can be transmitted to his personal representatives. A Participant can renounce his Award within 30 days following the Date of Grant and, to the extent renounced, the Award will be treated as if it had never been granted. If a Participant purports to transfer, assign, charge or otherwise dispose of his Award otherwise than as permitted by this Rule 1.3, his Award shall immediately lapse.

The Company will, from time to time and at its discretion, grant Awards or request the Trustee to grant Awards to one or more recommended Eligible Executives, in accordance with the Rules. An Award can be granted on the basis that it will not Vest in full at the end of one Retention Period, but will Vest in tranches over more than one Retention Period.

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(a) one Award certificate for each tranche of the Award, each specifying the number of Shares under that tranche of the Award, the Retention Period in respect of that tranche of the Award and what proportion of the Award may Vest following the end of that Retention Period; or

(b) one Award certificate for the whole Award, specifying the Retention Period applicable to each tranche of the Award and the number of Shares under each tranche of the Award.

An Award may be subject, in whole or in part, to a performance target selected by the Company which will normally have to be met before the Award (or that part of it subject to the performance target) can Vest. The Vesting of an Award can be subject to any additional terms and conditions the Company considers appropriate. If the Vesting of an Award is subject to any performance target or any additional terms and conditions, these will be specified at the Date of Grant. If Awards are exchanged under Rule 5.9, the performance target can be varied at the discretion of the Remuneration Committee to take account of this.

If an event or transaction occurs which causes the Company to consider that the performance target subject to which a subsisting Award has been granted is no longer appropriate, the Company may substitute or vary the performance target in such manner (and make such consequential amendments to the rules) as:

(a) is reasonable in the circumstances; and

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(b) produces a fairer measure of performance and is neither materially more nor less difficult to satisfy.

The subsisting Award shall then take effect subject to the performance target as so substituted or varied.

Awards can be subject to different performance targets for each Eligible Executive.

The number of Shares which can be allocated under the Plan on any day, when aggregated with the number of Shares allocated in the previous 10 years under:

The references in this Rule 3 to the “allocation” of Shares mean, in the case of any share option plan, the placing of unissued Shares or (for so long as UK institutional shareholders recommend) Treasury Shares under option and, in the case of any other Employees’ Share Scheme, the issue and allotment of Shares, or (for so long as UK institutional shareholders recommend) the transfer of Treasury Shares. For the purposes of the limit in this Rule 3:

Where Treasury Shares transferred, or Shares issued, under the Plan or any other Employees’ Share Scheme of the Company are to be taken into account for the purposes of any of the limits in this Rule 3 and a Variation in the equity share capital of the Company has taken place between the date of transfer or issue of any such Shares and the date on which any such limit is to be calculated, the number of such Shares which will be taken into account for the purposes of any such limit will be adjusted in such manner as the Company considers appropriate to take account of the Variation.

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The Remuneration Committee will, from time to time, set an individual limit on the Market Value (at the Date of Grant) of the Shares the subject of an Award granted to a Participant. This limit cannot be exceeded without the prior approval of the Remuneration Committee. Any subsisting Award will not be taken into account for the purposes of this limit.

A Participant has no voting rights attaching to the Shares the subject of his Award, nor a right to any dividends nor any other rights attaching to the Shares the subject of such Award prior to the Vesting of the Award in respect of those Shares. However, the Company may, or the Trustee may on the recommendation of the Company, increase the number of Shares the subject of a Participant’s Award after any dividend has been paid in relation to the Shares. Any such increase will be made as follows:

and in either case, the number of shares by which the Award is increased must have, unless Rule 4.3 applies, a Market Value on the date of increase which is as close as possible equal in value to the aggregate dividend (net of any taxes) paid in respect of the same number of Shares as those under the Award.

Subject to Rule 4.3, if there is a Variation affecting the share capital of the Company prior to the Vesting of an Award, if the Company thinks it appropriate it, or the Trustee on the recommendation of the Company, may adjust the number of Shares the subject of that Award. Any Participant whose Award is adjusted will be notified in writing of any such adjustment.

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If there is a Variation which is a demerger of the Company, if the Company thinks it appropriate it, or the Trustee on the recommendation of the Company, may adjust an Award so as to be over shares in the Employing Company (“the Adjusted Award”). Each Adjusted Award will be equivalent to the Award which was adjusted (“the Unadjusted Award”) prior to the adjustment. An Adjusted Award will not be regarded as equivalent to an Unadjusted Award unless:

The provisions of the Plan shall, for this purpose, be construed as if the Adjusted Awards were granted under the Plan at the same time as the Unadjusted Awards. References to the “Company” shall, in relation to the Adjusted Award, be taken as references to the Employing Company and references to “Share” shall be taken as references to a fully-paid share in the Employing Company. The Company will procure the Trustee’s agreement to any amendment to the applicable employee share ownership trust to give effect to this Rule 4.3.

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If, before an Award which is subject to a performance target has Vested, an offeror (either alone or together with any party acting in concert with him) obtains Control of the Company as a result of a general offer to acquire the whole of the issued ordinary share capital of the Company (or such part of it which is not at the time owned by the offeror and any party acting in concert with the offeror) that Award will Vest as soon as the change of Control takes effect, but only to the extent specified by the Remuneration Committee in accordance with Rule 5.2.

The Remuneration Committee will confirm as soon as practicable after the general offer has been made the minimum extent to which an Award which is subject to a performance target may Vest, to the extent that the performance target has been met up to the change of Control taking effect. Subject to this, the Remuneration Committee may in its absolute discretion decide to take other factors into account, which it believes to be relevant in permitting the Award to Vest beyond the extent to which the performance target has been met.

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If, before an Award which is not subject to a performance target has Vested, an offeror (either alone or together with any party acting in concert with him) obtains Control of the Company as a result of a general offer to acquire the whole of the issued ordinary share capital of the Company (or such part of it which is not at the time owned by the offeror and any party acting in concert with the offeror) that Award will Vest as soon as the change of Control takes effect. If Rule 5.9 applies, however, Awards will not Vest under this Rule 5.3.

The Company will use its best endeavours to procure that to the extent a Participant’s Award Vests in accordance with Rule 5.1 or Rule 5.3, the offeror will make an offer to acquire from the Participant his Shares on the same terms as Shares of the same class were acquired under the general offer.

If, before an Award which is subject to a performance target has Vested, the court directs that a meeting of the holders of Shares should be convened under Section 899 of the Companies Act 2006 to consider a scheme of arrangement, a Participant’s Award will Vest on the date the scheme of arrangement is sanctioned by the court, but only to the extent specified by the Remuneration Committee in accordance with Rule 5.6. If, however, the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, where such holding company would, following the scheme of arrangement, have substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement, Rule 5.9 may, with the consent of the Board, apply. If it does apply, an Award subject to a performance target will not Vest under this Rule 5.5.

The Remuneration Committee will confirm as soon as practicable after the date of the court’s direction the minimum extent to which an Award which is subject to a performance target may Vest, to the extent that the performance target has been met up to the date the scheme of arrangement is sanctioned by the court. Subject to this, the Remuneration Committee may decide to take other factors into account, which it believes to be relevant in permitting the Award to Vest beyond the extent to which the performance target has been met.

If, before an Award which is not subject to a performance target has Vested, the court directs that a meeting of the holders of Shares should be convened under Section 899 of the Companies Act 2006 to consider a scheme of arrangement, that Award will Vest on the date the scheme of arrangement is sanctioned by the court. If Rule 5.9 applies, however, that Award will not Vest under this Rule 5.7.

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If there is a resolution for a member’s voluntary winding-up of the Company, the Awards will Vest in full conditionally on the resolution being passed.

If, before an Award has Vested, any company (the “Acquiring Company”):

in either case ignoring any Shares which are already owned by it or a member of the same group of companies; or

and the Acquiring Company has agreed that the outstanding Awards may be exchanged under this Rule 5.9, the Company may determine that an Award shall be exchanged under this Rule 5.9. On this basis, Participants’ Awards (“Old Awards”) will be automatically surrendered in consideration of the grant to Participants of new awards (“New Awards”) which, in the opinion of the Company, are equivalent to the Old Awards (before the change of Control) but relate to shares in a different company The New Awards will not be regarded as equivalent to the Old Awards unless:

References to Shares will, in relation to the New Awards, be taken as references to shares of the company whose shares are under New Awards. References to the Company shall be taken to be references to the company whose shares are under the New Awards, where appropriate. The New Awards will not Vest/lapse if Rule 5 applies following and in respect of the change of Control which led to the grant of the New Awards. The Company will procure the Trustee’s agreement to any amendment to the applicable employee share ownership trust to give effect to this Rule 5.9. This Rule 5.9 shall only apply to Awards which are not subject to a performance target unless a scheme of arrangement occurs under Section 899 of the Companies Act 2006 and the purpose and effect of the scheme of arrangement is to create a new holding company for the Company as set out in Rule 5.5, in which case, this Rule 5.9 may, with the consent of the Board, apply to all subsisting Awards.

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If, following the date of any change of Control of the Company (other than a change of Control as a consequence of a scheme of arrangement under Section 899 of the Companies Act 2006 the effect of which was to create a new holding company for the Company, where such holding company had, following the scheme of arrangement, substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement), a Participant’s Employment:

then, subject to the remainder of this Rule 5.10:

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Unless otherwise provided in the Rules, if a Participant ceases to be in Employment before the end of the Retention Period, all his Awards will lapse in full on the date he so ceases. Notwithstanding any other provision in the Rules, no Award may Vest more than ten years after the Date of Grant.

If a Participant ceases or is to cease to be in Employment before the end of the Retention Period because of death, injury, ill health or disability:

If a Participant ceases or is to cease to be in Employment before the end of the Retention Period because of his Redundancy, all his Awards will lapse on the date he so ceases. The Company may however, at its discretion, Vest as soon as possible, all or part of any Award and/or preserve all or part of any Award to the extent that it is not Vested immediately. The Award, to the extent that it is preserved, must be preserved until the end of the Retention Period and will continue to be subject to the Rules. To the extent that the Company or the Trustee has not exercised its discretion to Vest or preserve all or part of an Award, it will lapse on the date the Company, or the Trustee, confirms its decision (as the case may be).

If a Participant ceases to be in Employment before the end of the Retention Period because the company in the Group which employs him ceases to be a Participating Company or an Associated Company or because of the transfer or sale of the undertaking (or part of the undertaking) in which he is employed to a person who is neither a Participating Company nor an Associated Company, all his Awards will lapse on the day he so ceases. The Company may however, at its discretion, Vest, or recommend the Trustee to Vest, as soon as possible, all or part of any Award and/or preserve all or part of any Award to the extent that it is not Vested immediately. The Award, to the extent that it is preserved, must be preserved until the end of the Retention Period and will continue to be subject to the Rules. To the extent that the Company or the Trustee has not exercised its discretion to Vest or preserve all or part of an Award, it will lapse on the date the Company, or the Trustee, confirms its decision (as the case may be).

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If a Participant’s Awards Vest under Rule 6, any performance target which applies to Vesting will be treated as if it had been waived, unless the Company decides otherwise. If the Company does decide otherwise, Awards will, at the discretion of the Company, and when the relevant event in Rule 6 takes place, either lapse in part and/or to the extent that they do not lapse, will be preserved or Vest on whatever basis the Company decides.

If, before the end of the Retention Period, a Participant gives or is given notice to leave Employment or ceases to be in Employment without any notice having been given in any circumstances other than the ones referred to in Rule 6.2, Rule 6.3 or Rule 6.4, his Award will lapse on that date, unless the Company decides otherwise.

If a Participant ceases to be in Employment before the end of the Retention Period, but continues to provide services to the Group or becomes employed by an Associated Undertaking, the Company may decide that the Participant is deemed not to have ceased Employment and that his Awards will continue to be held subject to the Rules. Rules 5 to 6 will apply when he subsequently ceases to provide services to the Group, or when he ceases to be employed by an Associated Undertaking and is not re-employed by a member of the Group, or in such other circumstances as the Company may determine.

If the Company or the Trustee decides to exercise any discretion it has under this Rule 6 as regards Vesting or preservation of an Award it must do so not later than the date which is three months after the date the Participant ceases Employment, failing which the Award will be treated as lapsing in full on the date he so ceases. In the three month period following a Participant ceasing Employment, an Award will not be capable of Vesting under any other provision of the Rules, unless the Company or the Trustee exercises its discretion to preserve an Award.

To the extent that a Participant’s Award lapses, he is not entitled to any Shares which are the subject of that Award.

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As soon as reasonably practicable following the end of the Retention Period and to the extent that an Award has not already Vested under Rule 5 or Rule 6, the Shares the subject of that part of the Award which is not subject to any performance target will be transferred to a Participant provided that he is still in Employment at the end of the Retention Period.

The Company, in its absolute discretion, will decide to what extent the performance target relevant to all or part of each Award has been met as soon as practically possible. To the extent that it has been met at the end of the Retention Period and to the extent that an Award has not already Vested under Rule 5 or Rule 6, the part of the Award subject to the performance target will Vest as soon as practically possible following the Company’s decision. The relevant number of Shares the subject of that part of the Award will be transferred as soon as practicable to a Participant who up until the end of the Retention Period:

If the performance target is one which provides for Vesting in proportion to the extent that the performance target has been met, the part of the Award which is subject to the performance target will Vest in proportion to the extent that the performance target has, in the Company’s view, been met at the end of the Retention Period.

If the Company decides that any performance target which applies to all or part of the Award has not been met at the end of the Retention Period, the Company can decide to extend the Retention Period. If it does make that decision, the Company will also decide whether:

If the performance target is not met at the end of the Retention Period, extended under this Rule 7.3, that part of the Award to which the performance target applies will lapse and the Participants will not be entitled to any Shares the subject of that part of the Award. Participants will be notified in writing of any of these decisions.

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When an Award has Vested, the Participant will be entitled to Shares the subject of that Award. The number of Shares he is entitled to (which will be transferred to the Participant as soon as reasonably practicable) will depend on the extent to which any applicable performance target has been met and will be subject to any withholdings in accordance with Rule 8.2 that may be necessary on account of a Participant’s Tax Liability in respect of the Award.

Unless the Participant makes arrangements (satisfactory to the Company) to provide payment in respect of his Tax Liability, the Company or any relevant company in the Group will make arrangements to sell on behalf of the Participant such number of Shares the subject of the Award which has Vested as is necessary to discharge the Tax Liability.

Subject to the rest of Rule 9, the Company can amend the Rules at any time. The Trustee will be notified of any amendment to the Rules.

The Company can adopt additional sections of the Rules applicable in any jurisdiction under which Awards may be subject to as additional and/or modified terms and conditions, having regard to any securities, exchange control or taxation laws, which may apply to the Participant, the Company, any Participating Company or Associated Company. Any additional sections must conform to the basic principles of the Plan.

No amendment will be made under Rule 9.1 which would adversely and materially affect the existing rights of a Participant unless it is made with his consent or by a resolution passed as if the Awards constituted a separate class of share capital, and the provisions of the Articles of Association of the Company and of the Companies Act 2006 relating to class meetings (with the necessary amendments) applied to that class.

No amendment to the advantage of Participants (except for an amendment which could be included in an additional section adopted under Rule 9.2) can be made to the provisions in the Rules (if any) relating to:

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without the approval by ordinary resolution of the Company in general meeting, except 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 Eligible Executives or for a member of the Group.

Any notice or other communication in connection with the Plan (including, if permitted, Award certificates) can be given by electronic mail or by personal delivery or by post, (in the case of a company, to its registered office and in the case of an individual to his last known address) or by any other means which a Participating Company and its employees use to communicate with each other. Where a notice or other communication is given by first-class post, it shall be deemed to have been received 72 hours after it was put into the post properly addressed and stamped.

Participants may, but are not entitled to, receive copies of any notice or document sent by the Company to the holders of Shares.

If any Award certificate is worn out, defaced or lost, it can be replaced on such evidence being provided as may be required.

Enough Shares will be available at all times to satisfy all Awards granted.

The Plan will be administered in a manner approved by the Company. No individual will have any authority in relation to the Plan unless that authority has been approved in accordance with the policy set by the Board. The Company’s decision on any matter concerning the Plan, including whether or not any performance targets in relation to an Award have been met, or the interpretation of the Rules, will be final and binding.

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The costs of introducing and administering the Plan will be borne by the Company. However, the Company may require any Participating Company to enter into such arrangement to reimburse the Company for any costs borne by the Company directly or indirectly in respect of such Participating Company’s employees.

The Plan will terminate at the end of the Plan Period or at any earlier time the Company shall decide. Termination of the Plan will not affect the subsisting Awards of Participants.

Benefits under the Plan will not be pensionable. Nothing in the Plan nor in any instrument executed pursuant to it will confer upon any person any right to continue in the employment of the Group, or will affect the right of the Company or any company in the Group to terminate the employment of any person without liability at any time with or without cause, or will impose upon the Group or the Trustee or the Board or their respective agents and employees any liability whatsoever (whether in contract, tort, or otherwise howsoever) in connection with:

Any person who ceases to have the status or relationship of an employee or executive director with the Company or any other company in the Group for any reason whatsoever (whether lawfully or unlawfully) shall not be entitled and shall be deemed irrevocably to have waived any entitlement by way of damages for dismissal or by way of compensation for loss of office or otherwise to any sum, damages, Shares or other benefits to compensate that person for the loss of any rights, benefits or expectations under any Award, the Plan or any instrument executed pursuant to it. If necessary, that person’s terms of employment will be varied accordingly.

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The benefit of Rule 10.8 and Rule 10.9 is given for the Company and/or the Trustee (where the Award was not granted by the Company), as appropriate for itself and as trustee and agent of the Company (if the benefit is given for the Trustee), and of all the Company’s Subsidiaries or any of its Associated Companies or Associated Undertakings. To the extent that the Company, any Subsidiary or Associated Company or Associated Undertaking of the Company is not party to the grant of an Award, the Company and/or the Trustee, as appropriate, will hold the benefit of Rule 10.8 and Rule 10.9 on trust and as agent for each of them and the Company and/or the Trustee may, at their respective discretion, assign the benefit of this Rule 10.10 to any of them.

Awards are granted incorporating and subject to the Rules.

Any Shares acquired on the Vesting of Awards are subject to the Articles of Association of the Company as amended from time to time.

The Rules are governed by and interpreted in accordance with the law of England. Each Participant, the Company and any other Participating Company or Associated Company submits to the exclusive jurisdiction of the English courts in relation to any disputes arising out of or in connection with the Plan. The Company may, in its absolute discretion, determine that another law may apply to the application of the Plan outside the United Kingdom.

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THE BT GROUP RETENTION SHARE PLAN

U.S. APPENDIX

All U.S. Awards will be evidenced by an instrument(s) in such form or forms as may from time to time be approved by the Company.

The Company shall (i) administer the U.S. Awards in accordance with this U.S. Appendix, (ii) establish from time to time such rules and regulations as it may deem appropriate for the proper administration of the U.S. Awards and (iii) make such determinations under (including, without limitation, factual determinations), and such interpretations of, and take such steps in connection with, the Rules, the U.S. Appendix and/or the U.S. Awards as it may deem necessary or advisable.

Any U.S. Award may be subject to any other provision imposed by the Company that is consistent with the purpose and intent of this Appendix. During the Retention Period, a Participant may, in the sole authority and discretion of the Company, and subject to such terms, conditions and limitations as the Board may determine from time to time in its sole authority and discretion, have voting and dividend rights with respect to such Participant’s U.S. Award if a certificate relating to the underlying Shares or ADSs has been issued in the Participant’s name.

If any officer, director or shareholder of the Company receives a U.S. Award and therefore becomes subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall take all appropriate action to ensure that such U.S. Awards under this Appendix are exempt from Section 16(b) under the Exchange Act.

The Company may arrange for any U.S. Award to constitute a right to or with respect to ADSs rather than Shares, in which case references to “Shares” in the Plan shall be deemed to be reference to “ADSs”, as the context may require. In its discretion and upon such terms and conditions as it may implement from time to time, the Company may arrange for any U.S. award relating to Shares to be satisfied in the form of ADSs and for any U.S. Award relating to ADSs to be satisfied in the form of Shares.

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It shall be a condition to the obligation of the Company to deliver Shares or ADSs pursuant to any U.S. Award granted to a Participant under the Plan that the Participant pay to the Company (or the Subsidiary that employs the Participant) such amount as may be required by the Company or such Subsidiary for the purpose of satisfying any liability for any U.S. Federal, state or local taxes of any kind required to be withheld with respect to it. Any U.S. Award granted under the Plan to a Participant may require the Company or permit the Participant to elect, in accordance with any applicable rules established by the Company, to withhold or to pay all or part of the amount of such withholding taxes in Shares or ADSs. Such election may be denied by the Company in its sole discretion, or may be made subject to certain conditions specified by the Company. Any payments made in cash under the Plan are the subject of all U.S. Federal, state or local taxes of any kind required to be withheld with respect to them.

No Shares or ADSs may be issued or transferred in connection with a U.S. Award unless the Company shall have determined that such issuance, transfer or settlement is in compliance with or pursuant to an exemption from all applicable U.S. Federal and state securities laws.

For the purposes of the U.S. Awards, where appropriate the following term shall have the following meaning, notwithstanding any contrary provisions in the Plan:-

“ Market Value ” in relation to an ADS means an amount equal to the average of the high and low sales prices of ADSs recorded on the New York Stock Exchange on the applicable valuation date.

In Rule 10.1, “72 hours” shall be deleted and replaced by “7 Dealing Days”.

Rule 4.1

Rule 4.1 shall be amended by adding the following sentence to the end thereof:

“For the avoidance of doubt, any increase in the number of Shares subject to a Participant’s U.S. Award pursuant to this Rule 4.1 shall not affect the settlement terms of the U.S. Award in a manner that would be inconsistent with Rule 7.3.”

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Rule 5.9

Rule 5.9 (ii) shall be amended by adding the following new sentence at the end thereof:

“Such New Awards shall meet the requirements of U.S. Code Section 409A and any applicable regulations relating to substitutions and assumptions of stock rights by reason of a corporate transaction.”

Rule 5.10

Rule 5.10 shall be deleted and replaced with the following new Rules 5.10, 5.11 and 5.12:

If, at any time within the period of 12 months following the date of any change of Control of the Company (other than a change of Control as a consequence of a scheme of arrangement under Section 899 of the Companies Act 2006 the effect of which was to create a new holding company for the Company, where such holding company had, following the scheme of arrangement, substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement), a Participant’s Employment:

the Participant, subject to Rule 5.11, shall be entitled to receive an amount which is equal in value to the difference between the aggregate Market Value of the Shares he became entitled to when his U.S. Award Vested under Rule 5.1, Rule 5.3, Rule 5.5 or Rule 5.7 and the aggregate Market Value of the Shares he would have become entitled to had the U.S. Award Vested at that time as if the performance target had been met in full. For the purposes of this Rule 5.10, the Market Value used shall be the Market Value of a Share as at the date his U.S. Award Vested. Any amount payable under this Rule 5.10 shall be payable, subject to any deduction required by law to be made, within thirty days after the cessation of Employment concerned.

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For the purposes of Rule 5.10.2, a Participant’s resignation will not be regarded as being due to a Material Diminution unless:

In the event a U.S. Award becomes Vested prior to the end of the Incentive Period pursuant to Rule 5.1, Rule 5.4 or Rule 5.6, such U.S. Award shall be settled and Shares or ADSs issued or transferred at a time consistent with the provisions of Rule 7.3. Any amount required to be paid to a Participant pursuant to Rule 5.8 shall be paid at a time consistent with the provisions of Rule 7.3. Shares or ADSs transferred with respect to a U.S. Award shall not be held in, or transferred, from the Trust in violation of Code Section 409A(b) “

Rule 6.8

Rule 6.8 shall be deleted and replaced with the following new Rule 6.8:

“ 6.8 Compliance with U.S. Code Section  409A – Changes in Employment Status

In the event a Participant’s U.S. Award Vests pursuant to Rule 6.2.1 or the Company elects to Vest all or part of an U.S. Award pursuant to Rule 6.2.2, Rule 6.3, Rule 6.4, or Rule 6.6, such U.S. Award shall be settled and Shares or ADSs issued at a time consistent with the provisions of Rule 7.4. In no event will the Company elect to preserve or continue the U.S. Award of a Participant pursuant to Rule 6.2.2, Rule 6.3, Rule 6.4, Rule 6.6 or Rule 6.7 in a manner that would permit the U.S. Award to be settled at a time that would be inconsistent with the provisions of Rule 7.4.”

Rule 7.4

The following shall be added to the Rules as Rule 7.4:

“7.4 No Deferral of Compensation is Permitted

The Rules of this Plan and the U.S. Awards made thereunder shall be applied in a manner so as not to constitute a deferral of compensation for purposes of U.S. Code Section 409A . In particular, the periods during which holders of U.S. Awards may receive Shares or ADSs to which they are otherwise entitled (whether pursuant to Rule 5, Rule 6 or this Rule 7) shall be compliant with the short-term deferral exemption provided for under the regulations implementing U.S. Code Section 409A. Accordingly, no U.S. Award shall be paid after the 15th day of the third calendar month following the later of (i) the last day of the fiscal year of the Company or Subsidiary that employs the Participant in which such U.S. Award is no longer subject to a “substantial risk of forfeiture” (as defined for purposes of U.S. Code Section 409A), or (ii) the last day of the calendar year in which such U.S. Award is no longer subject to a substantial risk of forfeiture.”

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THE BT GROUP RETENTION SHARE PLAN

DEFINITIONS APPENDIX

INTRODUCTION

The words and expressions used in the Rules which have capital letters have the meanings set out below. In the Rules:

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