Exhibit
4.12


Prospectus


 





 


Imperial
Tobacco Finance PLC


(Incorporated
with limited liability in England and Wales with registered number 3214426)


 


Imperial
Tobacco Finance (2)PLC


(Incorporated
with limited liability in England and Wales with registered number 05667337)


 


€10,000,000,000


Debt
Issuance Programme


Irrevocably
and unconditionally guaranteed by


 


Imperial
Tobacco Group PLC


(Incorporated
with limited liability in England and Wales with registered number 3236483)


 


This Prospectus amends,
restates and supersedes the offering circular dated 2nd June 2004. Any Notes
issued after the date hereof under the Debt Issuance Programme described in
this Prospectus (the “Programme”) are issued subject to the provisions set out
herein. This Prospectus will not be effective in respect of any Notes issued
under the Programme prior to the date hereof.


 


Under the Programme, Imperial
Tobacco Finance PLC and Imperial Tobacco Finance (2) PLC (each an “Issuer” and
together, the “Issuers”), subject to compliance with all relevant laws, regulations
and directives, may from time to time issue debt securities (the “Notes”)
guaranteed by Imperial Tobacco Group PLC (the “Guarantor” or “Imperial Tobacco”).
The aggregate nominal amount of Notes outstanding will not at any time exceed
€10,000,000,000 (or the equivalent in other currencies). 


 


Application has been made to
the Financial Services Authority in its capacity as competent authority under
the Financial Services and Markets Act 2000 (the “UK Listing Authority”) for
Notes issued under the Programme for the period of 12 months from the date of
this Prospectus to be admitted to the official list of the UK Listing Authority
(the “Official List”) and to the London Stock Exchange plc (the “London Stock
Exchange”) for such Notes to be admitted to trading on the London Stock
Exchange’s EEA Regulated Market (the “Market”). References in this Prospectus
to Notes being “listed” (and all related references) shall mean that such Notes
have been admitted to trading on the Market and have been admitted to the
Official List. The Market is a regulated market for the purposes of the
Investment Services Directive (93/22/EEC). However, unlisted Notes may be
issued pursuant to the Programme. The relevant Final Terms (as defined below)
in respect of the issue of any Notes will specify whether or not such Notes
will be listed on the Official List and admitted to trading on the Market (or
any other stock exchange).


 


Each Series (as defined
below) of Notes in bearer form will be represented on issue by a temporary global
note in bearer form (each a “temporary Global Note”) or a permanent global note
in bearer form (each a “permanent Global Note”). Notes in registered form will
be represented by registered certificates (each a “Certificate”), one
Certificate being issued in respect of each Noteholder’s entire holding of
Registered Notes of one Series. Global Notes and Certificates may be deposited
on the issue date with a common depositary on behalf of Euroclear Bank
S.A./N.V., as operator of the Euroclear System (“Euroclear”) and Clearstream
Banking, société anonyme (“Clearstream, Luxembourg”). The provisions governing
the exchange of interests in Global Notes for other Global Notes and definitive
Notes are described in “Summary of Provisions Relating to the Notes while in
Global Form”. 


 


Tranches of Notes(as defined below)
may be rated or unrated. Where a Tranche of Notes is rated, the applicable rating(s)
will be specified in the relevant Final Terms. A rating is not a recommendation
to buy, sell or hold Notes and may be subject to suspension, reduction or withdrawal
at any time by the assigning rating agency.


 


In the case of any Notes
which are to be admitted to trading on a regulated market within the European
Economic Area or offered to the public in a Member State of the European
Economic Area in circumstances which require the publication of a prospectus
under the Prospectus Directive (2003/71/EC) (the “Prospectus Directive”), the
minimum denomination shall be €50,000 (or its equivalent in any other currency
as at the date of issue of the Notes).


 


Prospective investors should
have regard to the factors described under the section headed “Risk Factors” in
this Prospectus.


 


Arranger


JPMorgan Cazenove


Dealers


 


	
  ABN AMRO

  	
   

  	
  Barclays Capital

  
	
  BayernLB

  	
   

  	
  BNP PARIBAS

  
	
  Calyon
  Corporate and Investment Bank

  	
   

  	
  Citigroup

  
	
  Commerzbank
  Corporates & Markets

  	
   

  	
  Deutsche Bank

  
	
  HSBC

  	
   

  	
  ING Wholesale Banking

  
	
  JPMorgan
  Cazenove

  	
   

  	
  Morgan Stanley

  
	
  The Royal
  Bank of Scotland

  	
   

  	
  WestLB AG

  
	
   

  	
   

  	
   

  
	
  13th January 2006

  	
   

  	
   

  



 

















 


This
Prospectus comprises a base prospectus for the purposes of Article 5.4 of the
Prospectus Directive and for the purpose of giving information with regard to
the Issuers, the Guarantor and the Notes which, according to the particular
nature of the Issuers, the Guarantor and the Notes, is necessary to enable
investors to make an informed assessment of the assets and liabilities,
financial position, profit and losses and prospects of the Issuers and the
Guarantor, and of the rights attaching to the Notes.


 


The Issuers
and the Guarantor accept responsibility for the information contained in this
Prospectus. To the best of the knowledge of the Issuers and the Guarantor
(which have taken all reasonable care to ensure that such is the case) the
information contained in this Prospectus is in accordance with the facts and
does not omit anything likely to affect the import of such information. 


 


This
Prospectus is to be read in conjunction with all documents incorporated herein
by reference (see “Documents Incorporated by Reference” below).


 


Each of the
Issuers and the Guarantor having made all reasonable enquiries confirms that
this document contains all information with respect to each of the Issuers, the
Guarantor, the Guarantor and its subsidiaries and affiliates taken as a whole
(the “Group”) and the Notes that is material in the context of the issue and
offering of the Notes, the statements contained in it relating to the Issuers,
the Guarantor and the Group are in every material particular true and accurate
and not misleading, the opinions and intentions expressed in this Prospectus
with regard to the Issuers, the Guarantor and the Group are honestly held, have
been reached after considering all relevant circumstances and are based on
reasonable assumptions, there are no other facts in relation to the Issuers,
the Guarantor, the Group or the Notes the omission of which would, in the
context of the issue and offering of the Notes, make any statement in this
Prospectus misleading in any material respect and all reasonable enquiries have
been made by the Issuers and the Guarantor to ascertain such facts and to
verify the accuracy of all such information and statements.


 


In addition
to the guarantee provided by the Guarantor, the Notes are irrevocably and
unconditionally guaranteed by way of an amended and restated deed of guarantee
dated 13th January 2006 by Imperial Tobacco Limited. Such guarantee will
terminate in the circumstances set out in the deed of guarantee and summarised
in paragraph 9 of “General Information” in this Prospectus.


 


No person has
been authorised to give any information or to make any representation other
than those contained in this Prospectus in connection with the issue or sale of
the Notes and, if given or made, such other information or representation must not
be relied upon as having been authorised by the Issuers, the Guarantor or any
of the Dealers or the Arranger (as defined in “Overview of the Programme”).
Neither the delivery of this Prospectus nor any sale made in connection
herewith shall, under any circumstances, create any implication that there has
been no change in the affairs of the Issuers or the Guarantor since the date hereof
or the date upon which this Prospectus has been most recently amended or
supplemented or that there has been no adverse change in the financial position
of the Issuers or the Guarantor since the date hereof or the date upon which
this Prospectus has been most recently amended or supplemented or that any
other information supplied in connection with the Programme is correct as of
any time subsequent to the date on which it is supplied or, if different, the
date indicated in the document containing the same.


 


The
distribution of this Prospectus and the offering or sale of the Notes in
certain jurisdictions may be restricted by law. Persons into whose possession
this Prospectus comes are required by the Issuers, the Guarantor, the Dealers
and the Arranger to inform themselves about and to observe any such
restriction.


 


The Notes
have not been and will not be registered under the United States Securities Act
of 1933, as amended (the “Securities Act“) and include Notes in bearer form
that are subject to U.S. tax law requirements. Subject to certain exceptions,
Notes may not be offered, sold or delivered within the United States or to U.S.
persons (as defined in Regulation S under the Securities Act). For a description
of certain restrictions on offers and sales of Notes and on distribution of
this Prospectus, see “Subscription and Sale”.


 


This
Prospectus does not constitute an offer of, or an invitation or solicitation by
or on behalf of the Issuers, the Guarantor or the Dealers to subscribe for, or
purchase, any Notes.


 


The Arranger
and the Dealers have not separately verified the information contained in this
Prospectus. None of the Dealers or the Arranger makes any representation,
express or implied, or accepts any responsibility, with respect to the accuracy
or completeness of any of the information in this Prospectus. Neither this
Prospectus nor any other financial statements are intended to provide the basis
of any credit or other evaluation and should not be considered as a
recommendation by any of the Issuers, the Guarantor, the Arranger or the
Dealers that any recipient of this Prospectus or any other financial statements
should purchase the Notes. Each potential purchaser of Notes should determine
for itself the relevance of the information contained in this Prospectus and
its purchase of Notes should be based upon such investigation as it deems
necessary. None of the Dealers or the Arranger undertakes to review the
financial condition or affairs of the Issuers or the Guarantor during the life
of the arrangements contemplated by this Prospectus nor to advise any investor
or potential investor in the Notes of any information coming to the attention
of any of the Dealers or the Arranger.


 


In connection with
the issue of any Tranche, the Dealer or Dealers (if any) named as the
stabilising manager(s) (the “Stabilising Manager(s)”) (or persons acting on
behalf of any Stabilising Manager(s)) in the applicable Final Terms may over-allot
Notes (provided that, in the case of any Tranche to be admitted to trading on
the Market, the aggregate principal amount of Notes allotted does not exceed
105% of the aggregate principal amount of the relevant Tranche) or effect
transactions with a view to supporting the market price of the Notes at a level
higher than that which might otherwise prevail. However, there is no assurance
that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising
Manager) will undertake stabilisation action. Any stabilisation action may
begin on or after the date on which adequate public disclosure of the terms of
the offer of the relevant Tranche is made and, if begun, may be ended at any
time, but it must end no later than the earlier of 30 days after the issue date
of the relevant Tranche and 60 days after the date of the allotment of the
relevant Tranche.


 


In this
Prospectus, unless otherwise specified or the context otherwise requires,
references to ”euro“ and “€” are to the
currency introduced at the start of the third stage of European economic and
monetary union pursuant to the Treaty establishing the European Community, as
amended, references to “US dollars”, “US$” and “$” are to the currency of the
United States of America and references to “Sterling” and “£” are to the
currency of the United Kingdom.


 


2

















 


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
  Documents Incorporated
  by Reference

  	
   

  	
  3

  
	
  Supplemental Prospectus

  	
   

  	
  3

  
	
  Overview of the Programme

  	
   

  	
  4

  
	
  Risk Factors

  	
   

  	
  7

  
	
  Terms
  and Conditions of the Notes

  	
   

  	
  15

  
	
  Use of Proceeds

  	
   

  	
  30

  
	
  Summary
  of Provisions Relating to the Notes while in Global Form

  	
   

  	
  31

  
	
  Imperial
  Tobacco Finance PLC

  	
   

  	
  34

  
	
  Imperial
  Tobacco Finance (2)PLC

  	
   

  	
  35

  
	
  Imperial
  Tobacco Group PLC

  	
   

  	
  36

  
	
  Taxation

  	
   

  	
  41

  
	
  Subscription
  and Sale

  	
   

  	
  42

  
	
  Form of Final
  Terms

  	
   

  	
  44

  
	
  General
  Information

  	
   

  	
  52

  



 


Documents Incorporated by Reference


 


This Prospectus should be read and
construed in conjunction with the audited consolidated annual financial
statements of Imperial Tobacco Finance PLC and the Guarantor for the financial
years ended 30th September 2005 and 30th September 2004 together in each case
with the audit report thereon, which have been previously published or are
published simultaneously with this Prospectus and which have been approved by
the Financial Services Authority or filed with it. Such documents shall be
incorporated in, and form part of this Prospectus, save that any statement
contained in a document which is incorporated by reference herein shall be deemed
to be modified or superseded for the purpose of this Prospectus to the extent
that a statement contained herein modifies or supersedes such earlier statement
(whether expressly, by implication or otherwise). Any statement so modified or
superseded shall not, except as so modified or superseded, constitute a part of
this Prospectus.


 


Copies of documents incorporated by
reference in this Prospectus may be obtained from the registered office of the
Issuers.


 


Supplemental Prospectus


 


If at any time the Issuers shall be
required to prepare a supplemental prospectus pursuant to Section 87G of the
Financial Services and Markets Act 2000 (the “FSMA”), the Issuers will prepare
and make available an appropriate amendment or supplement to this Prospectus or
a further prospectus which, in respect of any subsequent issue of Notes to be
listed on the Official List and admitted to trading on the Market, shall
constitute a supplemental prospectus as required by the UK Listing Authority
and Section 87G of the FSMA.


 


Each of the Issuers (in respect of
itself) and the Guarantor (in respect of itself and each Issuer) has given an
undertaking to the Dealers that if at any time during the duration of the
Programme there is a significant new factor, material mistake or inaccuracy relating
to information contained in this Prospectus which is capable of affecting the
assessment of any Notes and whose inclusion in this Prospectus or removal is
necessary for the purpose of allowing an investor to make an informed
assessment of the assets and liabilities, financial position, profits and
losses and prospects of the Issuers and the Guarantor, and the rights attaching
to the Notes, the Issuers shall prepare an amendment or supplement to this
Prospectus or publish a replacement Prospectus for use in connection with any
subsequent offering of the Notes and shall supply to each Dealer and the
Trustee such number of copies of such supplement hereto as such Dealer and the
Trustee may reasonably request.


 


3

















 


Overview of the Programme


 


The
following overview is qualified in its entirety by the remainder of this
Prospectus


 


	
  Issuer:

  	
   

  	
  Imperial Tobacco Finance
  PLC (“Imperial Finance”).

  
	
   

  	
   

  	
  Imperial Tobacco Finance
  (2)PLC (“Imperial Finance 2”).

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  Imperial Tobacco Group PLC
  (“Imperial Tobacco”).

  
	
   

  	
   

  	
   

  
	
  Description:

  	
   

  	
  Debt Issuance Programme.

  
	
   

  	
   

  	
   

  
	
  Size: 

  	
   

  	
  Up to €10,000,000,000 (or
  the equivalent in other currencies at the date of issue) aggregate nominal
  amount of Notes outstanding at any one time.

  
	
   

  	
   

  	
   

  
	
  Arranger:

  	
   

  	
  J.P. Morgan Securities Ltd.

  
	
   

  	
   

  	
   

  
	
  Dealers:

  	
   

  	
  ABN
  AMRO Bank N.V.

  
	
   

  	
   

  	
  Barclays Bank PLC

  
	
   

  	
   

  	
  Bayerische Landesbank

  
	
   

  	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  	
  Calyon

  
	
   

  	
   

  	
  Citigroup Global Markets
  Limited

  
	
   

  	
   

  	
  Commerzbank
  Aktiengesellschaft

  
	
   

  	
   

  	
  Deutsche
  Bank AG,London Branch

  
	
   

  	
   

  	
  HSBC Bank pIc

  
	
   

  	
   

  	
  ING Bank N.V.

  
	
   

  	
   

  	
  J.P. Morgan Securities Ltd.

  
	
   

  	
   

  	
  Morgan Stanley &Co.
  International Limited

  
	
   

  	
   

  	
  The Royal Bank of Scotland
  plc

  
	
   

  	
   

  	
  WestLB AG

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Issuers may from time
  to time terminate the appointment of any dealer under the Programme or
  appoint additional dealers either in respect of one or more Tranches or in respect
  of the whole Programme. References in this Prospectus to “Permanent Dealers”
  are to the persons listed above as Dealers and to such additional persons
  that are appointed as dealers in respect of the whole Programme (and whose
  appointment has not been terminated) and to “Dealers” are to all Permanent
  Dealers and all persons appointed as a dealer in respect of one or more
  Tranches.

  
	
   

  	
   

  	
   

  
	
  Trustee:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
   

  
	
  Issuing
  and Paying Agent:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
   

  
	
  Method of
  Issue: 

  	
   

  	
  The Notes will be issued on
  a syndicated or non-syndicated basis. The Notes will be issued in series
  (each a “Series”) having one or more issue dates and on terms otherwise
  identical (or identical other than in respect of the first payment of
  interest), the Notes of each Series being intended to be interchangeable with
  all other Notes of that Series. Each Series may be issued in tranches (each a
  “Tranche”) on the same or different issue dates. The specific terms of each
  Tranche (which will be completed, where necessary, with the relevant terms and
  conditions and, save in respect of the issue date, issue price, first payment
  of interest and nominal amount of the Tranche, will be identical to the terms
  of other Tranches of the same Series) will be completed in the final terms
  document (the “Final Terms”).

  
	
   

  	
   

  	
   

  
	
  Issue
  Price: 

  	
   

  	
  Notes may be issued at
  their nominal amount or at a discount or premium to their nominal amount.
  Notes may be issued, the issue price of which will be payable in two or more instalments
  (“Partly Paid Notes”).

  
	
   

  	
   

  	
   

  
	
  Redenomination,
  Renominalisation and/or Consolidation:

  	
   

  	
  Notes denominated in a
  currency of a country that subsequently participates in the third stage of
  European economic and monetary union may be subject to redenomination, renominalisation
  and/or consolidation with other Notes denominated in euro. The provisions applicable
  to any such redenomination, renominalisation and/or consolidation will be specified
  in the relevant Pricing Supplement.

  
	
   

  	
   

  	
   

  
	
  Form of
  Notes: 

  	
   

  	
  The Notes may be issued in
  bearer form only (“Bearer Notes”), in bearer form exchangeable for Registered
  Notes (“Exchangeable Bearer Notes”) or in registered form only (“Registered Notes”).
  Each Tranche of Bearer Notes and Exchangeable Bearer Notes will be
  represented on issue by a temporary Global Note if (i) definitive Notes are
  to be made available to Noteholders following the expiry of 40 days after
  their issue date or (ii) such Notes have an initial maturity of more than one
  year and are being issued in compliance with the D Rules

  



 


4

















 


	
   

  	
   

  	
  (as defined in “Overview of
  the Programme — Selling Restrictions”), otherwise such Tranche will be
  represented by a permanent Global Note. Registered Notes will be represented
  by Certificates, one Certificate being issued in respect of each Noteholder’s
  entire holding of Registered Notes of one Series. Certificates representing
  Registered Notes that are registered in the name of a nominee for one or more
  clearing systems are referred to as “Global Certificates”.

  
	
   

  	
   

  	
   

  
	
  Clearing
  Systems: 

  	
   

  	
  Clearstream, Luxembourg,
  Euroclear and, in relation to any Tranche, such other clearing system as may
  be agreed between the relevant Issuer, the Issuing and Paying Agent, the Trustee
  and the relevant Dealer.

  
	
   

  	
   

  	
   

  
	
  Initial
  Delivery of Notes: 

  	
   

  	
  On or before the issue date
  for each Tranche, the Global Note representing Bearer Notes or Exchangeable
  Bearer Notes or the Certificate representing Registered Notes may be deposited
  with a common depositary for Euroclear and Clearstream, Luxembourg. Global Notes
  or Certificates may also be deposited with any other clearing system or may
  be delivered outside any clearing system provided that the method of such
  delivery has been agreed in advance by the relevant Issuer, the Issuing and
  Paying Agent, the Trustee and the relevant Dealer. Registered Notes that are
  to be credited to one or more clearing systems on issue will be registered in
  the name of nominees or a common nominee for such clearing systems.

  
	
   

  	
   

  	
   

  
	
  Currencies:
  

  	
   

  	
  Subject to compliance with
  all relevant laws, regulations and directives, Notes may be issued in any
  currency agreed between the relevant Issuer, the Guarantor and the relevant
  Dealers.

  
	
   

  	
   

  	
   

  
	
  Maturities:
  

  	
   

  	
  Subject to compliance with
  all relevant laws, regulations and directives, any maturity as may be agreed
  between the relevant Issuer and the relevant Dealer(s) and as set out in the relevant
  Final Terms.

  
	
   

  	
   

  	
   

  
	
  Denomination:
  

  	
   

  	
  Definitive Notes will be in
  such denominations as may be specified in the relevant Final Terms, save that
  (i) in the case of any Notes which are to be admitted to trading on a regulated
  market within the European Economic Area or offered to the public in a Member
  State of the European Economic Area in circumstances which require the
  publication of a prospectus under the Prospectus Directive, the minimum
  denomination shall be €50,000 (or its equivalent in any other currency as at
  the date of issue of the Notes); and (ii) unless otherwise permitted by then
  current laws and regulations, Notes (including Notes denominated in sterling)
  which have a maturity of less than one year and in respect of which the issue
  proceeds are to be accepted by the Issuer in the United Kingdom or whose issue
  otherwise constitutes a contravention of Section 19 of the FSMA will have a
  minimum denomination of £100,000 (or its equivalent in other currencies).

  
	
   

  	
   

  	
   

  
	
  Fixed Rate
  Notes: 

  	
   

  	
  Fixed interest will be
  payable in arrear on the date or dates in each year specified in the relevant
  Final Terms.

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate Notes: 

  	
   

  	
  Floating Rate Notes will
  bear interest determined separately for each Series as follows: (i) on the
  same basis as the floating rate under a notional interest rate swap
  transaction in the relevant Specified Currency governed by an agreement
  incorporating the 2000 ISDA Definitions published by the International Swaps
  and Derivatives Association, Inc. or (ii) by reference to LIBOR, LIBlD,
  LIMEAN or EURIBOR (or such other benchmark as may be specified in the
  relevant Final Terms) as adjusted for any applicable margin. Interest periods
  will be specified in the relevant Final Terms.

  
	
   

  	
   

  	
   

  
	
  Zero
  Coupon Notes: 

  	
   

  	
  Zero Coupon Notes may be
  issued at their nominal amount or at a discount to it and will not bear
  interest.

  
	
   

  	
   

  	
   

  
	
  Dual
  Currency Notes: 

  	
   

  	
  Payments (whether in
  respect of principal or interest and whether at maturity or otherwise) in
  respect of Dual Currency Notes will be made in such currencies, and based on
  such rates of exchange, as may be specified in the relevant Final Terms.

  
	
   

  	
   

  	
   

  
	
  Index
  Linked Notes: 

  	
   

  	
  Payments of principal in
  respect of Index Linked Redemption Notes or of interest in respect of Index
  Linked Interest Notes will be calculated by reference to such index and/or
  formula as may be specified in the relevant Final Terms.

  
	
   

  	
   

  	
   

  
	
  Interest
  Periods and Interest Rates:

  	
   

  	
  The length of the interest
  periods for the Notes and the applicable interest rate or its method of
  calculation may differ from time to time or be constant for any Series. Notes
  may have a maximum interest rate, a minimum interest rate, or both. The use
  of interest accrual periods permits the Notes to bear interest at different
  rates in the same interest period. All such information will be set out in
  the relevant Final Terms.

  



 


5

















 


	
  Redemption:
  

  	
   

  	
  The relevant Final Terms
  will specify the basis for calculating the redemption amounts payable. Unless
  permitted by then current laws and regulations, Notes (including Notes denominated
  in sterling) which have a maturity of less than one year and in respect of which
  the issue proceeds are to be accepted by the Issuer in the United Kingdom or
  whose issue otherwise constitutes a contravention of Section 19 of the FSMA
  must have a minimum redemption value of £100,000 (or its equivalent in other
  currencies).

  
	
   

  	
   

  	
   

  
	
  Redemption
  by Instalments: 

  	
   

  	
  The Final Terms issued in
  respect of each issue of Notes that are redeemable in two or more instalments
  will set out the dates on which, and the amounts in which, such Notes may be redeemed.

  
	
   

  	
   

  	
   

  
	
  Other
  Notes: 

  	
   

  	
  Terms applicable to high
  interest Notes, low interest Notes, step-up Notes, step-down Notes, reverse
  dual currency Notes, optional dual currency Notes, Partly Paid Notes and any
  other type of Note that the relevant Issuer, the Trustee and any Dealer or
  Dealers may agree to issue under the Programme will be set out in the
  relevant Final Terms and Supplemental Prospectus.

  
	
   

  	
   

  	
   

  
	
  Optional
  Redemption: 

  	
   

  	
  The Final Terms issued in
  respect of each issue of Notes will state whether such Notes may be redeemed
  prior to their stated maturity at the option of the relevant Issuer (either
  in whole or in part) and/or the holders, and if so the terms applicable to
  such redemption. See “Terms and Conditions of the Notes — Redemption,
  Purchase and Options”.

  
	
   

  	
   

  	
   

  
	
  Status of
  Notes: 

  	
   

  	
  The Notes and the guarantee
  in respect of them will constitute unsubordinated and unsecured obligations
  of the relevant Issuer and the Guarantor, respectively, all as described in
  “Terms and Conditions of the Notes — Status”.

  
	
   

  	
   

  	
   

  
	
  Negative
  Pledge:

  	
   

  	
  See “Terms and Conditions
  of the Notes — Negative Pledge”.

  
	
   

  	
   

  	
   

  
	
  Cross
  Default:

  	
   

  	
  See “Terms and Conditions
  of the Notes — Events of Default”.

  
	
   

  	
   

  	
   

  
	
  Early
  Redemption: 

  	
   

  	
  Except as provided in
  “Optional Redemption” above, Notes will be redeemable at the option of the
  relevant Issuer prior to maturity only for tax reasons. See “Terms and Conditions
  of the Notes — Redemption, Purchase and Options”.

  
	
   

  	
   

  	
   

  
	
  Withholding
  Tax: 

  	
   

  	
  All payments of principal
  and interest in respect of the Notes will be made free and clear of withholding
  taxes of the United Kingdom subject to customary exceptions (including the ICMA
  Standard EU Exceptions), all as described in “Terms and Conditions of the
  Notes — Taxation”.

  
	
   

  	
   

  	
   

  
	
  Governing
  Law:

  	
   

  	
  English.

  
	
   

  	
   

  	
   

  
	
  Listing: 

  	
   

  	
  Application has been made
  to list Notes issued under the Programme on the Official List and to admit
  them to trading on the Market or such other stock exchange as specified in the
  relevant Final Terms. As specified in the relevant Final Terms, a Tranche or
  Series of Notes may be unlisted.

  
	
   

  	
   

  	
   

  
	
  Ratings: 

  	
   

  	
  Tranches of Notes may be
  rated or unrated. Where a Tranche of Notes is rated, the applicable rating(s)
  will be specified in the relevant Final Terms. A rating is not a recommendation
  to buy, sell or hold Notes and may be subject to suspension, reduction or withdrawal
  at any time by the assigning rating agency.

  
	
   

  	
   

  	
   

  
	
  Selling
  Restrictions: 

  	
   

  	
  United States, European
  Economic Area (in respect of Notes having a denomination of less than €50,000
  (or its equivalent in any other currency as at the date of issue of the
  Notes)), United Kingdom, Japan. See “Subscription and Sale”.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Guarantor and the
  Issuers are Category 2 for the purposes of Regulation S under the Securities
  Act.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Notes will be issued in
  compliance with U.S. Treas. Reg. §1.163-5(c)(2)(i)(D) (the “D Rules”) unless
  (i) the relevant Final Terms states that Notes are issued in compliance with U.S.
  Treas. Reg. §1.163-5(c)(2)(i)(C) (the “C Rules”) or (ii) the Notes are issued
  other than in compliance with the D Rules or the C Rules but in circumstances
  in which the Notes will not constitute “registration required obligations”
  under the United States Tax Equity and Fiscal Responsibility Act of 1982
  (“TEFRA”), which circumstances will be referred to in the relevant Final
  Terms as a transaction to which TEFRA is not applicable.

  



 


6

















 


Risk Factors


 


The Issuers
and the Guarantor believe that the following factors may affect their ability
to fulfil their obligations under Notes issued under the Programme. All of
these factors are contingencies which may or may not occur and the Issuers are
not in a position to express a view on the likelihood of any such contingency
occurring.


 


Factors
which the Issuers and the Guarantor believe may be material for the purpose of
assessing the market risks associated with Notes issued under the Programme are
also described below.


 


The Issuers
and the Guarantor believe that the factors described below represent the
principal risks inherent in investing in Notes issued under the Programme, but
the Issuers and the Guarantor may be unable to pay interest, principal or other
amounts on or in connection with any Notes for other reasons and neither Issuer
or the Guarantor represents that the statements below regarding the risks of
holding any Notes are exhaustive. Prospective investors should also read the
detailed information set out elsewhere in this Prospectus (including any
documents deemed to be incorporated by reference herein) and reach their own
views prior to making any investment decision.


 


Factors that may
affect each of the Issuers’ ability to fulfil its obligations under Notes
issued under the Programme


 


Imperial Tobacco may be adversely affected by the declining demand for
tobacco products in certain regions


 


In 2004, the most recent year for
which worldwide information is available, an estimated 5.4 trillion cigarettes
(2003: 5.3 trillion cigarettes) were sold throughout the world, including
approximately 0.6 trillion in Western Europe (2003: 0.6 trillion),
approximately 0.7 trillion in North and South America (2003: 0.7 trillion),
approximately 2.9 trillion in Asia Pacific (2003: 2.8 trillion), approximately
0.7 trillion in Eastern Europe (2003: 0.7 trillion), approximately 0.3 trillion
in the Middle East (2003: 0.3 trillion) and approximately 0.2 trillion in
Africa (2003: 0.2 trillion). Notwithstanding this general stability in the
worldwide demand for cigarettes in fiscal 2005, there have been declines within
certain markets in recent years.


 


Imperial Tobacco’s two most
significant markets are the domestic markets of the United Kingdom and Germany.


 


In the United Kingdom, sales of U.K.
duty-paid cigarettes were approximately 51 billion in fiscal 2005 (2004: 53
billion), placing it among the five largest markets by volume in Western
Europe. The total U.K. duty-paid cigarette consumer market between fiscal years
1998 and 2005 fell by an average of approximately 3.9% per annum. The underlying
historic adverse trend has been encouraged particularly by consistent and
substantial increases in excise duty on tobacco products, and also by
increasing governmental regulation and heightened public awareness of
smoking-related health concerns. The United Kingdom has one of the highest
levels of taxation on tobacco products in the world. Following the
manufacturer’s price increase in October 2005, approximately 77% of the
recommended retail price for premium-priced cigarettes in the United Kingdom market
consists of duties and taxes, compared with approximately 78% at March 2005.
Management believes that the United Kingdom duty structure has limited the
potential for deep price discounting, while the high level of taxation has
prompted consumers to switch from the higher premium-price sector to
lower-price sectors, has encouraged both legal and illegal cross-border trade
from countries with lower levels of duty, and has increased the incidence of
counterfeit products.


 


In Germany, the largest market in
Europe, total duty-paid sales of approximately 101 billion cigarettes were
recorded in fiscal 2005 (2004: 119 billion). Between fiscal years 1998 and
2005, market volume for cigarettes has fallen by an average of approximately 3.7%
per annum. However, within this period, between 1998 and 2001, market volume
grew at a compound rate of 0.6%, but since then, the duty-paid market has
declined by a compound rate of 8.4% per annum, following the impact of
significant excise duty increases as the German government introduced taxes to
fund anti-terrorism and health-care measures. These duty increases augmented
cigarette prices by one euro cent per cigarette in 2002 and January 2003, with
further increases of 1.2 euro cents per cigarette introduced on 1st March 2004,
1st December 2004, and 1st September 2005. During the period since 1998, the
market volume of other tobacco products has increased by an average of almost
11% per annum as consumers have switched from cigarettes in response to the tax
increases.


 


The advertising, sale and
consumption of tobacco products in Europe and elsewhere have also been subject
to regulatory influence from governments, health officials and anti-smoking
groups, principally due to claims that cigarette smoking and tobacco products are
harmful to health. This has resulted in substantial restrictions on the
manufacture, development, sale, distribution, marketing, advertising, product
design and consumption of cigarettes, introduced by regulation and voluntary
agreements. It has also resulted in the imposition of significant increases in
the level of taxation on tobacco products over recent years, and this may
continue to increase during fiscal 2006. In addition, anti-smoking groups are
seeking to diminish the social acceptability of smoking. 


 


Any future substantial decline in
the tobacco market, particularly in the United Kingdom and German markets,
could have a material adverse effect on Imperial Tobacco’s turnover, profit and
financial condition.


 


 


7

















 


Disparities in customs duties in different countries and territories
can affect the trading and regulatory environment in which Imperial Tobacco
operates


 


International disparities in rates
of excise duty charged on tobacco products have created an environment in which
cross-border trading and counterfeiting have proliferated, to the detriment of
individual government revenues. Within such an environment, there is a risk
that tobacco companies and their directors, executive officers and other employees
will be subject to investigations by customs or other authorities. Criminal and
civil sanctions, negative publicity and allegations of complicity in illegal
cross-border trading and money laundering activities may be made against
tobacco companies or their directors, executive officers or employees. Imperial
Tobacco, along with other responsible members of the tobacco industry, in
liaison with government and customs authorities, has adopted a number of
measures, including implementing pre-supply and post-supply checks on export
shipments and strengthening information exchanges with customs authorities, to
combat illegal cross-border trading and counterfeiting. However, because these
activities are illegal, the people conducting them generally try to conceal
them and accordingly their detection can be difficult.


 


In July 2003, following extensive
dialogue, Imperial Tobacco signed a Memorandum of Understanding with HM Customs
& Excise (now HM Revenue & Customs) in the United Kingdom. The
Memorandum of Understanding sets out a framework of co-operation between HM
Revenue & Customs and Imperial Tobacco in order to seek to limit the
smuggling of both contraband and counterfeit products into the United Kingdom,
while minimising obstacles to legitimate trade. Since July 2003 Imperial
Tobacco has agreed and signed eight further Memoranda of Understanding with
other customs authorities and discussions for similar agreements are at various
stages with a number of other countries.


 


Certain investigations were initiated
by German authorities in January 2003 into alleged foreign trading and related
violations by Reemtsma employees during a period prior to its acquisition by
the Imperial Tobacco group. A number of former and current employees have been
interviewed and the German authorities have sought assistance from several
other jurisdictions to obtain evidence. These investigations are continuing.
However, in May 2005, parts of the investigations into certain of the former Reemtsma
employees were terminated on terms agreed by the individuals with the
authorities and settlement was made of any duty payable as a result of certain
of the activities being investigated at no cost to the Group. No charges have
yet been brought against these individuals or Reemtsma in relation to the
continuing investigations, which could take several years to be concluded. A
board committee, established in 2003 under the chairmanship of Mr Anthony
Alexander, continues to monitor the progress and conduct of the investigation
on a regular basis and the Group’s responses on behalf of the board. The German
authorities’ investigations are based on alleged activities prior to the
Group’s acquisition of Reemtsma, and the committee remains satisfied that,
since the acquisition, the Group has not been involved in any activities of a
nature similar to those alleged by the German authorities.


 


Imperial Tobacco co-operates fully
with any investigations by customs or other authorities and intends to continue
to do so. However, there can be no assurances that such investigations will not
result in negative publicity or actions being brought against Imperial Tobacco
or its directors, executive officers or employees in the future, or that any
such publicity or actions will not have a material adverse effect on Imperial
Tobacco’s turnover, profit and financial condition. Although Imperial Tobacco
has implemented procedures to detect and combat illegal trading in tobacco
products, it cannot guarantee that all of its employees will follow these procedures,
or that those not in compliance will be discovered in a timely fashion.


 


Imperial Tobacco may be adversely affected by challenges to the tax
status of other tobacco products


 


Imperial Tobacco is a leading
manufacturer of other tobacco products by volume and, as such, any
significantly unfavourable tax treatment of other tobacco products, if widely
adopted, may have a material adverse effect on its turnover, profit and
financial condition.


 


Following a challenge by the
European Commission of the German government’s application of E.U. tax
directives, whereby Singles tobacco products are taxed as fine cut tobacco as
opposed to cigarettes, the matter was referred to the European Court of Justice
for determination. On 10th November 2005 the European Court of Justice ruled
that Singles should be taxed at the same higher rate as cigarettes. As a
result, the German Ministry of Finance has informed Imperial Tobacco that
Singles will continue to be taxed as fine cut tobacco until 31st March 2006.
This particular case only affects the German market, and it remains extremely
difficult to quantify the effect of the ruling on the market due to the
unpredictability of consumer reaction to the increase in taxation. However, the
strength of Imperial Tobacco's broad product portfolio leaves it well placed to
capitalise on the anticipated consumer migration to other tobacco products and
low price cigarettes.


 


Imperial Tobacco could incur substantial damages and costs in
connection with litigation


 


Tobacco manufacturers, including Imperial
Tobacco, have been sued by parties seeking damages for alleged smoking-related
health effects. To date no judgment has been entered and, to management’s
knowledge, no action has been settled, in favour of a plaintiff in any such
action in the United Kingdom or Germany (Imperial Tobacco’s most important
markets). To management’s knowledge, only three tobacco-related health claims
have ever proceeded to trial in the United Kingdom. In one claim (which did not
involve Imperial Tobacco) judgment was entered for the defendants. In another
claim, a group action against Imperial Tobacco and another manufacturer was
abandoned following a preliminary hearing on the issue of limitation in which
judgment was made in Imperial Tobacco’s favour. In the third claim, which was
commenced by Alfred McTear against Imperial Tobacco in 1993, judgment was given
in Imperial Tobacco’s favour on all counts in May 2005. The impact of
litigation on Imperial Tobacco’s business is discussed in further detail in the
section headed “Imperial Tobacco Group PLC – Legal Environment”.


 


8

















 


Historically, Imperial
Tobacco did not sell tobacco products in the United States, the jurisdiction
with the greatest occurrence of smoking-related health litigation. However,
Reemtsma had sold relatively small quantities of cigarettes in the United
States between 1985 and 1999 and Imperial Tobacco continues to have limited
sales in the U.S. duty-free market. Imperial Tobacco is not a party to the 1998
Master Settlement Agreement that certain U.S. market participants have entered
into with, among others, the attorneys general of 46 U.S. states, to settle
healthcare reimbursement claims and other issues, and Imperial Tobacco cannot
provide assurance that it will not be subject to litigation in the United
States in the future.


 


Imperial Tobacco cannot
provide assurance that legal aid funding will continue to be denied to
plaintiffs in smoking-related health litigation in any jurisdiction in the
future, that favourable decisions will be achieved in the proceedings pending
against it, that additional proceedings by private, corporate or public sector
plaintiffs will not be commenced against it or that it will not incur damages
which, if incurred, may be material.


 


Although it is not possible
to predict the outcome of the pending smoking-related litigation, management
believes that Imperial Tobacco has meritorious defences to all pending actions
and that such actions will not have a material adverse effect upon Imperial
Tobacco’s turnover, profit or
financial condition. Regardless of the outcome of any litigation, Imperial
Tobacco will incur costs defending claims which it may not be able to recover
fully, irrespective of whether it is successful in defending such claims. Historically the costs of defending such
claims have not been material.


 


For additional information
about litigation in Imperial Tobacco’s main markets, see the section headed “Imperial
Tobacco Group-Legal Environment”.


 


Imperial Tobacco’s failure to manage growth could adversely affect its
business


 


Imperial Tobacco’s strategy
includes expansion of its business internationally, both through organic growth
and by tobacco and tobacco-related acquisitions.


 


Acquisitions require the
attention of management and the diversion of other resources away from organic
growth for example.  Imperial
Tobacco’s ability to effectively integrate and manage acquired businesses and
handle any future growth will depend upon a number of factors.


 


Failure to implement any of these
measures at a pace or to a degree consistent with the growth of Imperial
Tobacco’s business could adversely affect its turnover, profit and financial
condition.


 


Typically, when Imperial
Tobacco acquires a business, it acquires all of such business’ liabilities as
well as its assets. Although Imperial Tobacco tries to investigate each
business thoroughly prior to acquisition and to obtain appropriate
representations and warranties as to its assets and liabilities, there can be
no assurance that all actual or potential liabilities of a company will be
identified prior to its acquisition.


 


Imperial Tobacco may be adversely affected by its activities in
developing markets


 


Imperial Tobacco’s expansion
into both developing and emerging markets may present more challenging
operating environments where margins in general may be lower and in which
commercial practices may be of a lower standard than those in which it has
historically operated.


 


In addition, some of the
countries in which Imperial Tobacco operates, such as Iran and Syria, are
subject to certain international sanctions. Imperial Tobacco’s current
operations in these jurisdictions are not material to its turnover, profit and
financial condition. Imperial Tobacco seeks to comply fully with international
sanctions to the extent they are applicable to it. However, in doing so,
Imperial Tobacco may be restricted in the sources of products that it supplies
to these jurisdictions or by the nationality of the personnel that it involves
in these activities. Future changes in international sanctions may prevent
Imperial Tobacco from doing business in certain jurisdictions entirely.


 


Further, Imperial Tobacco may
suffer from adverse public reaction or reputational harm as a result of doing
business in countries that have been identified as state sponsors of terrorism
by the U.S. State Department or that are subject to international sanctions,
notwithstanding that these sanctions do not apply to Imperial Tobacco as a
U.K.-based group and regardless of the materiality of its operations in such
countries to its operations or financial condition. Any such reaction could
have a material adverse effect on Imperial Tobacco’s turnover, profit and
financial condition.


 


Imperial Tobacco may be unable to identify further acquisition
opportunities


 


Historically, Imperial
Tobacco has engaged in acquisitions, which have been complementary to the
organic growth of the Group. The continuation of this expansion strategy is
dependent on, among other things, identifying suitable acquisition or
investment opportunities and successfully consummating those transactions.
Antitrust or similar laws may make it difficult for Imperial Tobacco to make
additional acquisitions if regulators in countries where it and potential
acquisition targets operate believe that a proposed transaction will have an
adverse effect on competition in the relevant market. Even if Imperial Tobacco
is able to identify candidates for acquisition, it may be difficult to complete
transactions. Imperial Tobacco has historically faced competition for
acquisitions, and in the future this could limit its ability to grow by this
method or could raise the price of acquisitions and make them less attractive.
In addition, if Imperial Tobacco is unable to secure necessary financing, it
may not be able to grow its business through acquisitions.


 


9

















 


Imperial Tobacco may be adversely affected by its significant market
position in certain markets


 


Imperial Tobacco has
significant market shares in certain markets in which it operates, including
the United Kingdom and Germany.  As a result, Imperial Tobacco may be subject to investigation for abuse
of its position in these markets, which could result in adverse regulatory action by the authorities,
including monetary fines and negative publicity.


 


In fiscal 2003, Imperial
Tobacco received an enquiry from the Office of Fair Trading in the United
Kingdom (“OFT”) into an alleged  infringement of U.K. competition law. Information relating to operations
of the U.K. tobacco supply chain was supplied to the OFT in October 2003 and again during April 2005.
The OFT’s investigation is ongoing.


 


If the OFT were to decide
that there are grounds for an infringement decision against the Group, it would
issue a Statement of  Objections
setting out its preliminary findings and the basis for those findings. Imperial
Tobacco would then have an opportunity to respond to these preliminary findings. If the OFT were subsequently to
make an infringement finding, Imperial Tobacco would be able to appeal the OFT’s infringement decision
to the Competition Appeal Tribunal. As at the date of this Prospectus, the OFT
has not made any such
announcements.


 


In the event that the OFT
decides that a company has infringed U.K. competition law, it may impose a
fine. The amount of the fine  is calculated by reference to the turnover of the infringing company.
The rules regarding the maximum amount of such a penalty changed on 1st May 2004. Before that date, the
maximum amount of a fine was 10% of a company’s U.K. turnover for up to three years. In the three years to 30th
September 2003, Imperial Tobacco’s aggregate net U.K. turnover was £2,215
million. Under the revised rules,
a fine may not exceed 10% of a company’s world-wide turnover. However, the OFT’s
guidelines state that where an
infringement ended before 1st May 2004, the fine may not exceed the maximum
penalty under the old rules. In either case, the applicable turnover on which the amount of a fine is based expressly
excludes VAT and other taxes directly related to turnover, which Imperial Tobacco has been advised would
also exclude duty.


 


There can be no assurances
that any such investigations will not result in actions being brought against
Imperial Tobacco or that  any
such investigations or publicity will not have an adverse effect on its
turnover, profit or financial condition.


 


Imperial Tobacco is exposed to currency fluctuations


 


Imperial Tobacco is exposed
to the translation of the results of overseas subsidiaries into pounds sterling
as well as the impact of  trading
transactions in foreign currencies. For significant acquisitions of overseas
companies, borrowings are raised in the local currency to minimise the balance sheet translation risk.


 


In the 2003, 2004 and 2005
fiscal years, 60% (£6,844 million), 57% (£6,229 million) and 58% (£6,533
million) respectively of  Imperial
Tobacco’s turnover, and 64% (£729 million), 63% (£764 million) and 64% (£830
million) respectively of its operating profit excluding exceptional items and amortization, was generated in markets
outside the United Kingdom. The majority of sales in these markets are invoiced by Imperial Tobacco in
currencies other than Sterling, in particular, the euro. Imperial Tobacco’s
material foreign currency denominated
costs include the purchase of tobacco leaf, which is sourced from various
countries but purchased principally
in US dollars, and packaging materials, which are sourced from various
countries and purchased in a number of currencies.


 


Imperial Tobacco is exposed to tobacco leaf price fluctuations


 


Imperial Tobacco’s financial
results are exposed to fluctuations in the price of tobacco leaf. Other than
the cultivation of tobacco  leaf
principally for use by subsidiaries of Tobaccor S.A.S., Imperial Tobacco is not
directly involved in the cultivation of tobacco leaf. As with other agricultural commodities, the
price of tobacco leaf tends to be cyclical, as supply and demand considerations influence tobacco plantings in those
countries where tobacco is grown. Different regions may experience variations
in weather patterns that may
affect crop quality or supply and so lead to changes in price. In addition,
political situations, such as those in Zimbabwe, may result in a significantly reduced tobacco crop in any
affected country. This may also lead to increases in price that Imperial Tobacco may be unable to pass on to
customers. Imperial Tobacco seeks to reduce its exposure to individual markets
by sourcing tobacco leaf from a
number of different countries, including Brazil, China, Greece, Tanzania and
India.


 


Imperial Tobacco is exposed to interest rate fluctuations


 


Imperial Tobacco is exposed
to fluctuations in interest rates on its borrowings and surplus cash. As at
30th September 2005,  approximately
21% of its net debt was denominated in Sterling, 77% in euro and the remaining
2% in other currencies. This compares
with the position as at 30th September 2004, when approximately 19% of its net
debt, including deferred consideration, was denominated in pounds sterling, 80% in euro and the remaining 1% in
other currencies. Accordingly, Imperial Tobacco’s financial results are currently mainly exposed
to gains or losses arising from fluctuations in pounds sterling and euro
interest rates.


 


Imperial Tobacco operates in highly competitive markets


 


Imperial Tobacco’s principal
competitors are Philip Morris International Inc. (or Philip Morris), British
American Tobacco plc (or BAT),  Japan Tobacco International Inc. (or Japan Tobacco), Gallaher Group Plc
(or Gallaher), and Altadis S.A. (or Altadis). These companies, some of which have greater
financial resources than Imperial Tobacco, remain strong competitors in the
international markets in which
Imperial Tobacco operates. Any increase in competitive activity of these
companies and other local manufacturers could lead to further competition and pricing pressure on Imperial
Tobacco’s brands and reduce profit margins. Imperial Tobacco’s ability to compete with these companies may be
limited by the regulatory environment in which it operates, including
advertising restrictions, and
this may adversely impact efforts to strengthen Imperial Tobacco’s brand
portfolio. Actions from competitors may


 


10

















 


also have an unfavourable impact
on Imperial Tobacco’s ability to meet its strategy of growing the group
organically and through  acquisitions.


 


Factors
which are material for the purpose of assessing the market risks associated
with Notes issued  under the Programme


 


Notes may not be a suitable investment for all investors


 


Each potential investor in
any Notes must determine the suitability of that investment in light of its own
circumstances. In particular,  each potential investor should:


 


	
  (i)

  	
   

  	
  have sufficient knowledge
  and experience to make a meaningful evaluation of the relevant Notes, the
  merits and risks of  investing
  in the relevant Notes and the information contained or incorporated by
  reference in this Prospectus or any applicable supplement;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  have access to, and knowledge
  of, appropriate analytical tools to evaluate, in the context of its
  particular financial situation,  an investment in the relevant Notes and the impact such investment
  will have on its overall investment portfolio;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  have sufficient financial
  resources and liquidity to bear all of the risks of an investment in the
  relevant Notes, including where  principal or interest is payable in one or more currencies, or where
  the currency for principal or interest payments is different from the potential investor’s currency;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  understand thoroughly the
  terms of the relevant Notes and be familiar with the behaviour of any
  relevant indices and  financial
  markets; and

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  be able to evaluate (either
  alone or with the help of a financial adviser) possible scenarios for
  economic, interest rate and  other factors that may affect its investment and its ability to bear
  the applicable risks.

  



 


Some Notes are complex
financial instruments and such instruments may be purchased as a way to reduce
risk or enhance yield  with
an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in Notes which are complex financial instruments
unless it has the expertise (either alone or with the help of a financial
adviser) to evaluate how the
Notes will perform under changing conditions, the resulting effects on the
value of such Notes and the impact this
investment will have on the potential investor’s overall investment portfolio.


 


Risks related to the structure of a particular issue of Notes


 


A wide range of Notes may be
issued under the Programme. A number of these Notes may have features which
contain particular  risks
for potential investors. Set out below is a description of certain such
features:


 


Notes
subject to optional redemption by the Issuers


 


An optional redemption
feature is likely to limit the market value of Notes. During any period when
the Issuers may elect to redeem  Notes, the market value of those Notes generally will not rise
substantially above the price at which they can be redeemed. This also may be true prior to any redemption
period.


 


The Issuers may be expected
to redeem Notes when its cost of borrowing is lower than the interest rate on
the Notes. At those  times,
an investor generally would not be able to reinvest the redemption proceeds at
an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so
at a significantly lower rate. Potential investors should consider reinvestment risk in light of other
investments available at that time.


 


Index
Linked Notes and Dual Currency Notes


 


The Issuers may issue Notes
with principal or interest determined by reference to an index or formula, to
changes in the prices of  securities
or commodities, to movements in currency exchange rates or other factors (each,
a “Relevant Factor”). In addition, the Issuers may issue Notes with principal or interest payable in one or
more currencies which may be different from the currency in which the Notes are denominated. Potential
investors should be aware that:


 


	
  (i)

  	
   

  	
  the market price of such
  Notes may be volatile;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  they may receive no
  interest;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  payment of principal or
  interest may occur at a different time or in a different currency than expected;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  the amount of principal
  payable at redemption may be less than the nominal amount of such Notes or
  even zero;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  a Relevant Factor may be
  subject to significant fluctuations that may not correlate with changes in
  interest rates, currencies or  other indices;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  if a Relevant Factor is
  applied to Notes in conjunction with a multiplier greater than one or
  contains some other leverage  factor, the effect of changes in the Relevant Factor on principal or
  interest payable will likely be magnified; and

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  the timing of changes in a
  Relevant Factor may affect the actual yield to investors, even if the average
  level is consistent with  their
  expectations. In general, the earlier the change in the Relevant Factor, the
  greater the effect on yield.

  



 


11

















 


Partly-paid
Notes


 


The Issuers may issue Notes
where the issue price is payable in more than one instalment. Failure to pay
any subsequent instalment  could
result in an investor losing all of its investment.


 


Variable
rate Notes with a multiplier or other leverage factor


 


Notes with variable interest
rates can be volatile investments. If they are structured to include
multipliers or other leverage factors,  or caps or floors, or any combination of those features or other similar
related features, their market values may be even more volatile than those for securities that do not
include those features.


 


Fixed/Floating
Rate Notes


 


Fixed/Floating Rate Notes may
bear interest at a rate that the Issuers may elect to convert from a fixed rate
to a floating rate, or  from
a floating rate to a fixed rate. The Issuers’ ability to convert the interest
rate will affect the secondary market and the market value of such Notes since the Issuers may be
expected to convert the rate when it is likely to produce a lower overall cost
of borrowing. If the Issuers
convert from a fixed rate to a floating rate, the spread on the Fixed/Floating
Rate Notes may be less favourable
than then prevailing spreads on comparable Floating Rate Notes tied to the same
reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If
the Issuers convert from a floating rate to a fixed rate, the fixed rate may be lower than then prevailing
rates on their Notes.


 


Inverse
Floating Rate Notes


 


Inverse Floating Rate Notes
have an interest rate equal to a fixed rate minus a rate based upon a reference
rate such as LIBOR. The  market
values of those Notes typically are more volatile than market values of other
conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms).
Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only
decreases the interest rate of the Notes, but may also reflect an increase in
prevailing interest rates, which
further adversely affects the market value of these Notes.


 


Notes
issued at a substantial discount or premium


 


The market values of
securities issued at a substantial discount or premium to their nominal amount
tend to fluctuate more in  relation
to general changes in interest rates than do prices for conventional
interest-bearing securities. Generally, the longer the remaining term of the securities, the greater
the price volatility as compared to conventional interest-bearing securities
with comparable maturities.


 


Risks related to Notes generally


 


Set out below is a brief
description of certain risks relating to the Notes generally:


 


Modification,
waivers and substitution


 


The Terms and Conditions of
the Notes contain provisions for calling meetings of Noteholders to consider
matters affecting their  interests
generally. These provisions permit defined majorities to bind all Noteholders
including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner
contrary to the majority.


 


The Terms and Conditions of
the Notes also provide that the Trustee may, without the consent of
Noteholders, agree to (i) any  modification of, or to the waiver or authorisation of any breach or
proposed breach of, any of the provisions of Notes or (ii) determine without the consent of the
Noteholders that any Event of Default or potential Event of Default shall not
be treated as such or (iii) the
substitution of another company as principal debtor under any Notes in place of
the Issuers, in the circumstances described
in Condition 11 of the Terms and Conditions of the Notes.


 


European
Monetary Union


 


If the United Kingdom joins
the European Monetary Union prior to the maturity of the Notes, there is no
assurance that this would  not
adversely affect investors in the Notes. It is possible that prior to the
maturity of the Notes the United Kingdom may become a participating Member State and that the euro
may become the lawful currency of the United Kingdom. In that event (i) all
amounts payable in respect of any
Notes denominated in Sterling may become payable in euro (ii) the law may allow
or require such Notes to be
re-denominated into Euro and additional measures to be taken in respect of such
Notes; and (iii) there may no longer be available published or displayed rates for deposits in Sterling used to
determine the rates of interest on such Notes or changes in the way those rates are calculated, quoted and
published or displayed. The introduction of the euro could also be accompanied
by a volatile interest rate
environment, which could adversely affect investors in the Notes.


 


EU Savings
Directive


 


Under EC Council Directive
2003/48/EC on the taxation of savings income, each Member State is required to
provide to the tax  authorities
of another Member State details of payments of interest (or similar income)
paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a
transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect
otherwise) to operate a withholding system in relation to such payments (the
ending of such transitional
period being dependent upon the conclusion of certain other agreements relating
to information exchange with


 


12

















 


certain other countries). A
number of non-EU countries and territories including Switzerland have adopted
similar measures (a  withholding
system in the case of Switzerland) with effect from the same date.


 


If a payment were to be made
or collected through a Member State which has opted for a withholding system
and an amount of,  or in
respect of, tax were to be withheld from that payment, neither Issuer nor any
Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result
of the imposition of such withholding tax. If a withholding tax is imposed on payment made by a Paying
Agent, the Issuers will be required to maintain a Paying Agent, in a Member
State that will not be obliged to
withhold or deduct tax pursuant to the Directive.


 


Change of
law


 


The Terms and Conditions of
the Notes are based on English law in effect as at the date of issue of the
relevant Notes. No  assurance
can be given as to the impact of any possible judicial decision or change to
English law or administrative practice after the date of issue of the relevant Notes.


 


Integral
multiples of less than €50,000


 


Although Notes which are
admitted to trading on a regulated market within the European Economic Area or
offered to the public  in a
Member State of the European Economic Area in circumstances which require the
publication of a prospectus under the Prospectus Directive are required to have a minimum Specified
Denomination of €50,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes),
it is possible that the Notes may be traded in the clearing systems in amounts
in excess of €50,000 (or its
equivalent) that are not integral multiples of €50,000 (or its equivalent). In
such a case, should definitive Notes be required to be issued, they will be issued only in the Specified
Denominations and will in no circumstances be issued to Noteholders who hold Notes in the relevant
clearing system in amounts that are less than the Specified Denomination. In
such a case, Noteholders who hold
Notes in the relevant clearing system in amounts that are not integral
multiples of a Specified Denomination
may need to purchase or sell, on or before the relevant Exchange Date, a
principal amount of Notes such that their holding is an integral multiple of a Specified Denomination.


 


Risks related to the market generally


 


Set out below is a brief
description of certain market risks, including liquidity risk, exchange rate
risk, interest rate risk and credit  risk:


 


The
secondary market generally


 


Notes may have no established
trading market when issued, and one may never develop. If a market does
develop, it may not be  liquid.
Therefore, investors may not be able to sell their Notes easily or at prices
that will provide them with a yield comparable to similar investments that have a developed
secondary market. This is particularly the case for Notes that are especially
sensitive to interest rate,
currency or market risks, are designed for specific investment objectives or
strategies or have been structured to meet the investment requirements of limited categories of investors. These
types of Notes generally would have a more limited secondary market and more price volatility than
conventional debt securities. Illiquidity may have a severely adverse effect on
the market value of Notes.


 


Exchange
rate risks and exchange controls


 


The Issuers will pay
principal and interest on the Notes in the Specified Currency. This presents
certain risks relating to currency  conversions if an investor’s financial activities are denominated
principally in a currency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These
include the risk that exchange rates may significantly change (including
changes due to devaluation of the
Specified Currency or revaluation of the Investor’s Currency) and the risk that
authorities with jurisdiction over the
Investor’s Currency may impose or modify exchange controls. An appreciation in
the value of the Investor’s Currency relative to the Specified Currency would decrease (1) the Investor’s
Currency-equivalent yield on the Notes, (2) the Investor’s Currency equivalent value of the principal payable on
the Notes and (3) the Investor’s Currency equivalent market value of the Notes. Government and monetary authorities may
impose (as some have done in the past) exchange controls that could adversely
affect an applicable exchange
rate. As a result, investors may receive less interest or principal than
expected, or no interest or principal.


 


Interest
rate risks


 


Investment in Fixed Rate
Notes involves the risk that subsequent changes in market interest rates may
adversely affect the value of  Fixed Rate Notes.


 


Credit
ratings may not reflect all risks


 


One or more independent
credit rating agencies may assign credit ratings to an issue of Notes. The
ratings may not reflect the  potential
impact of all risks related to structure, market, additional factors discussed
above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell
or hold securities and may be revised or withdrawn by the rating agency at any time.


 


13

















 


Legal investment considerations may restrict certain investments


 


The investment activities of
certain investors are subject to legal investment laws and regulations, or
review or regulation by certain  authorities. Each potential investor should consult its legal advisers
to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as
collateral for various types of borrowing and (3) other restrictions apply to
its purchase or pledge of any
Notes. Financial institutions should consult their legal advisers or the
appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital
or similar rules.


 


Interests of the Dealers


 


Certain of the Dealers and
their affiliates have engaged, and may in the future engage, in investment
banking and/or commercial  banking
transactions with, and may perform services for, the Issuers, the Guarantor and
their affiliates in the ordinary course of business.


 






(1)   Delete if the Issuer is Imperial Tobacco Finance (2) PLC


(2)   Delete if the Issuer is Imperial Tobacco Finance PLC


 


14
















Terms and
Conditions of the Notes


 


The
following is the text of the terms and conditions that, subject to amendment
and as supplemented or varied in accordance  with the provisions of Part
A of the relevant Final Terms, shall be applicable to the Notes in definitive
form (if any) issued in  exchange for the Global Note(s) representing each Series.
Either (i) the full text of these terms and conditions together with the
relevant provisions
of Part A of the Final Terms or (ii) these terms and conditions as so completed,
amended, supplemented or  varied (and subject to simplification by the deletion of
non-applicable provisions), shall be endorsed on such Bearer Notes or on the
Certificates
relating to such Registered Notes. All capitalised terms that are not defined
in these Conditions will have the meanings  given to them in Part A of
the relevant Final Terms. Those definitions will be endorsed on the definitive
Notes or Certificates, as the  case may be. References in the Conditions to “Notes”
are to the Notes of one Series only, not to all Notes that may be issued under the
Programme and references to the “Issuer” are to the issuer of such Notes.


 


The Notes are constituted by
a Trust Deed (as amended or supplemented as at the date of issue of the Notes
(the “Issue Date”),  the “Trust
Deed”) dated 13th January 2006 between Imperial Tobacco Finance PLC [(the “Issuer”)]1,
Imperial Tobacco Finance (2) PLC
[(the “Issuer”)]2, Imperial Tobacco Group PLC (the “Guarantor”)
and JPMorgan Chase Bank, N.A. (the “Trustee”, which expression shall include all persons for the
time being the trustee or trustees under the Trust Deed) as trustee for the
Noteholders (as defined below).
These terms and conditions include summaries of, and are subject to, the
detailed provisions of the Trust Deed, which includes the form of the Bearer Notes, Certificates, Receipts,
Coupons and Talons referred to below. An Agency Agreement (as amended or supplemented as at the Issue
Date, the “Agency Agreement”) dated 13th January 2006 has been entered into in relation to the Notes between [Imperial
Tobacco Finance PLC,]1 [Imperial Tobacco Finance (2) PLC]2 the
Guarantor, the Trustee, JPMorgan
Chase Bank, N.A. as initial issuing and paying agent and the other agents named
in it. The issuing and paying agent, the paying agents, the registrar, the transfer agents and the calculation
agent(s) for the time being (if any) are referred to below respectively as the “Issuing and Paying Agent”,
the “Paying Agents” (which expression shall include the Issuing and Paying Agent), the “Registrar”, the “Transfer Agents”
(which expression shall include the Registrar) and the “Calculation Agent(s)”.
Copies of the Trust Deed and the
Agency Agreement are available for inspection during usual business hours at
the principal office of the Trustee (presently at Trinity Tower, 

9 Thomas More Street, London E1W 1YT) and at the specified offices of the
Paying Agents and the Transfer
Agents.


 


The Noteholders, the holders
of the interest coupons (the “Coupons”) relating to interest bearing Notes in
bearer form and, where  applicable
in the case of such Notes, talons for further Coupons (the “Talons”) (the “Couponholders”)
and the holders of the receipts
for the payment of instalments of principal (the “Receipts”) relating to Notes
in bearer form of which the principal is payable in instalments are entitled to the benefit of, are bound by, and
are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of those
provisions applicable to them of the Agency Agreement.


 


1.              Form, Denomination and Title


 


The Notes are issued in
bearer form (“Bearer Notes”, which expression includes Notes that are specified
to be Exchangeable Bearer  Notes),
in registered form (“Registered Notes”) or in bearer form exchangeable for
Registered Notes (“Exchangeable Bearer Notes”) in each case in the Specified Denomination(s) shown hereon provided that
in the case of any Notes which are to be admitted to trading on a regulated market within the
European Economic Area or offered to the public in a Member State of the
European Economic Area in
circumstances which require the publication of a Prospectus under the
Prospectus Directive, the minimum Specified
Denomination shall be €50,000 (or its equivalent in any other currency as at
the date of issue of the relevant Notes).  


 


All Registered Notes shall
have the same Specified Denomination. Where Exchangeable Bearer Notes are
issued, the Registered  Notes
for which they are exchangeable shall have the same Specified Denomination as
the lowest denomination of Exchangeable Bearer Notes.


 


So long as
the Notes are represented by a temporary Global Note, permanent Global Note or
Global Certificate and the relevant  clearing system(s) so
permit, the Notes shall be tradeable only in principal amounts of at least the
Specified Denomination (or if  more than one Specified Denomination, the lowest
Specified Denomination) provided hereon and integral multiples of the
Tradeable Amount in
excess thereof provided in the relevant Final Terms.


 


This Note is a Fixed Rate
Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note,
an Index Linked  Redemption
Note, an Instalment Note, a Dual Currency Note or a Partly Paid Note, a
combination of any of the foregoing or any other kind of Note, depending upon the Interest and Redemption/Payment
Basis shown hereon.


 


Bearer Notes are serially
numbered and are issued with Coupons (and, where appropriate, a Talon)
attached, save in the case of  Zero Coupon Notes in which case references to interest (other than in
relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are not
applicable. Instalment Notes are issued with one or more Receipts attached.


 


Registered Notes are
represented by registered certificates (“Certificates”) and, save as provided
in Condition 2(c), each
Certificate  shall
represent the entire holding of Registered Notes by the same holder.


 


Title to the Bearer Notes and
the Receipts, Coupons and Talons shall pass by delivery. Title to the
Registered Notes shall pass by  registration in the register that the Issuer shall procure to be kept by
the Registrar in accordance with the provisions of the Agency Agreement (the “Register”). Except as ordered
by a court of competent jurisdiction or as required by law, the holder (as
defined below) of any Note,
Receipt, Coupon or Talon shall be deemed to be and may be treated as its
absolute owner for all purposes whether
or not it is overdue and regardless of any notice of ownership, trust or an
interest in it, any writing on it (or on the Certificate representing it) or its theft or loss (or that of the
related Certificate) and no person shall be liable for so treating the holder.


 


15

















 


In these Conditions, “Noteholder”
means the bearer of any Bearer Note and the Receipts relating to it or the
person in whose  name a
Registered Note is registered (as the case may be), “holder” (in relation to a
Note, Receipt, Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon or Talon or the person in
whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings
given to them hereon, the absence of any such meaning indicating that such term
is not applicable to the Notes.


 


2.              Exchanges of Exchangeable
Bearer Notes and Transfers of Registered Notes


 


(a)       Exchange of Exchangeable
Bearer Notes


 


Subject as provided in
Condition 2(f), Exchangeable
Bearer Notes may be exchanged for the same nominal amount of Registered  Notes at the request in writing of the
relevant Noteholder and upon surrender of each Exchangeable Bearer Note to be
exchanged, together with all
unmatured Receipts, Coupons and Talons relating to it, at the specified office
of any Transfer Agent; provided, however,
that where an Exchangeable Bearer Note is surrendered for exchange after the
Record Date (as defined in Condition 7(b)) for any payment of interest, the Coupon
in respect of that payment of interest need not be surrendered with it.
Registered Notes may not be
exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not
be exchanged for Bearer Notes of another
Specified Denomination. Bearer Notes that are not Exchangeable Bearer Notes may
not be exchanged for Registered Notes.


 


(b)       Transfer of Registered Notes


 


One or more Registered Notes
may be transferred upon the surrender (at the specified office of the Registrar
or any Transfer Agent)  of
the Certificate representing such Registered Notes to be transferred, together
with the form of transfer endorsed on such Certificate, (or another form of transfer substantially in the same form
and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer),
duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require. In the
case of a transfer of part only of a holding of Registered Notes represented by
one Certificate, a new
Certificate shall be issued to the transferee in respect of the part
transferred and a further new Certificate in respect of the balance of the holding not so transferred
shall be issued to the transferor. All transfers of Notes and entries on the
Register will be made subject to
the detailed regulations concerning transfers of Notes scheduled to the Agency
Agreement. The regulations may be
changed by the Issuer, with the prior written approval of the Registrar and the
Trustee. A copy of the current regulations will be made available by the Registrar to any
Noteholder upon request.


 


(c)        Exercise of Options or
Partial Redemption in Respect of Registered Notes


 


In the case of an exercise of
an Issuer’s or Noteholders’ option in respect of, or a partial redemption of, a
holding of Registered  Notes
represented by a single Certificate, a new Certificate shall be issued to the
holder to reflect the exercise of such option or in respect of the balance of the holding not
redeemed. In the case of a partial exercise of an option resulting in
Registered Notes of the same
holding having different terms, separate Certificates shall be issued in
respect of those Notes of that holding that have the same terms. New Certificates shall only be issued against surrender
of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered
Notes to a person who is already a holder of Registered Notes, a new
Certificate representing the
enlarged holding shall only be issued against surrender of the Certificate
representing the existing holding of Registered Notes.


 


(d)       Delivery of New Certificates


 


Each new Certificate to be
issued pursuant to Conditions 2(a),
(b) or (c) shall be available for delivery within
three business days of  receipt
of the request for exchange, form of transfer or Exercise Notice (as defined in
Condition 6(e)) or surrender of
the Certificate for exchange.
Delivery of the new Certificate(s) shall be made at the specified office of the
Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such request for exchange,
form of transfer, Exercise Notice or Certificate shall have been made or, at the option of the holder
making such delivery or surrender as aforesaid and as specified in the relevant
request for exchange, form of
transfer, Exercise Notice or otherwise in writing, be mailed by ordinary
uninsured post at the risk of the holder
entitled to the new Certificate to such address as may be so specified, unless
such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of
delivery and/or such insurance as it may specify. In this Condition (d), “business day” means a day,
other than a Saturday or Sunday, on which banks are open for business in the
place of the specified office of
the relevant Transfer Agent or the Registrar (as the case may be).


 


(e)        Exchange Free of Charge


 


Exchange and transfer of
Notes and Certificates on registration, transfer, exercise of an option or
partial redemption shall be  effected
without charge by or on behalf of the Issuer, the Registrar or the Transfer Agents,
but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the
giving of such indemnity as the Registrar or the relevant Transfer Agent may require).


 


(f)           Closed Periods


 


No Noteholder may require the
transfer of a Registered Note to be registered or an Exchangeable Bearer Note
to be exchanged for  one or
more Registered Note(s) (i) during the period of 15 days ending on the due date
for redemption of, or payment of any Instalment Amount in respect of, that Note, (ii) during the period of 15
days prior to any date on which Notes may be called for redemption by the Issuer at its option
pursuant to Condition 6(d), (iii)
after any such Note has been called for redemption or (iv) during the period of seven days ending on (and
including) any Record Date. An Exchangeable Bearer Note called for redemption
by  


 


16

















 


the Issuer may, however, be
exchanged for one or more Registered Note(s) in respect of which the
Certificate is simultaneously  surrendered not later than the relevant Record Date.


 


3.              Guarantee and Status


 


(a)       Guarantee


 


The Guarantor has
unconditionally and irrevocably guaranteed the due payment of all sums
expressed to be payable by the Issuer  under the Trust Deed, the Notes, Receipts and Coupons. The Guarantor’s
obligations in that respect (the “Guarantee”) are contained in the Trust Deed.


 


(b)       Status of Notes and
Guarantee


 


The Notes, and the Receipts
and Coupons relating to them, constitute (subject to Condition 4)
unsubordinated and unsecured  obligations of the Issuer and shall at all times rank pari passu and rateably without any
preference among themselves. The payment obligations of the Issuer under the Notes and the Receipts and Coupons
relating to them and of the Guarantor under the Guarantee shall, save for such exceptions as may be provided by
applicable legislation and subject to Condition 4, at all times rank at least equally with all other unsecured and
unsubordinated indebtedness and monetary obligations of the Issuer and the Guarantor respectively, present and
future.


 


4.              Negative Pledge


 


So long as any of the Notes,
Receipts or Coupons remains outstanding (as defined in the Trust Deed) each of
the Issuer and the  Guarantor
undertakes that it will not, and, in the case of the Guarantor, that it will
procure that no Subsidiary (as defined below) will, create or have outstanding any mortgage, charge, pledge, lien or
other form of encumbrance or security interest (each a “Security Interest”) upon the whole or any
part of its undertaking, assets or revenues (including any uncalled capital),
present or future, in order to
secure any Relevant Debt (as defined below) or to secure any guarantee of or
indemnity in respect of any Relevant
Debt unless, at the same time or prior thereto, the Issuer’s obligations under
the Notes, Receipts, Coupons and the Trust Deed or, as the case may be, the Guarantor’s obligations under the
Guarantee (A) are secured equally and rateably therewith to the satisfaction of the Trustee or (B) have the
benefit of such other security, guarantee, indemnity or other arrangement as
the Trustee in its absolute
discretion shall deem to be not materially less beneficial to the Noteholders
or as shall be approved by an Extraordinary
Resolution (as defined in the Trust Deed) of the Noteholders.


 


For the purposes of these
Conditions:


 


“Relevant Debt” means any
present or future indebtedness in the form of, or represented by, bonds, notes,
debentures, loan stock  or
other securities that are for the time being, or are capable of being, quoted,
listed or ordinarily dealt in on any stock exchange, automated trading system, over-the-counter or
other securities market.


 


“Subsidiary” means any entity
whose affairs are required by law or in accordance with generally accepted
accounting principles  applicable
in the United Kingdom to be consolidated in the consolidated accounts of the
Guarantor.


 


5.              Interest and other
Calculations


 


(a)       Interest on Fixed Rate Notes


 


Each Fixed Rate Note bears
interest on its outstanding nominal amount from the Interest Commencement Date
at the rate per  annum
(expressed as a percentage) equal to the Rate of Interest, such interest being
payable in arrear on each Interest Payment Date.


 


If a Fixed Coupon Amount or a
Broken Amount is specified hereon, the amount of interest payable on each
Interest Payment Date  will
amount to the Fixed Coupon Amount or, if applicable, the Broken Amount so
specified and in the case of the Broken Amount will be payable on the particular Interest Payment Date(s) specified
hereon.


 


(b)       Interest on Floating Rate
Notes and Index Linked Interest Notes


 


(i) Interest Payment Dates


 


Each Floating Rate Note and
Index Linked Interest Note bears interest on its outstanding nominal amount
from the Interest  Commencement
Date at the rate per annum (expressed as a percentage) equal to the Rate of
Interest, such interest being payable in arrear on each Interest Payment Date. Such Interest Payment Date(s)
is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment
Date(s) is/are shown hereon, Interest Payment Date shall mean each date which
falls the number of months or
other period shown hereon as the Specified Period after the preceding Interest
Payment Date or, in the case of
the first Interest Payment Date, after the Interest Commencement Date.


 


(ii) Business Day Convention


 


If any date referred to in
these Conditions that is specified to be subject to adjustment in accordance
with a Business Day  Convention
would otherwise fall on a day that is not a Business Day, then, if the Business
Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to
the next day that is a Business Day unless it would thereby fall into the next calendar month, in which
event (x) such date shall be brought forward to the immediately preceding
Business Day and (y) each
subsequent such date shall be the last Business Day of the month in which such
date would have fallen had it not been
subject to adjustment, (B) the Following Business Day Convention, such date
shall be postponed to the next day that is a


 


17

















 


Business Day, (C) the
Modified Following Business Day Convention, such date shall be postponed to the
next day that is a Business  Day
unless it would thereby fall into the next calendar month, in which event such
date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day
Convention, such date shall be brought forward to the immediately preceding Business Day.


 


(iii) Rate of Interest for
Floating Rate Notes


 


The Rate of Interest in
respect of Floating Rate Notes for each Interest Accrual Period shall be
determined in the manner specified  hereon and the provisions below relating to either ISDA Determination or
Screen Rate Determination shall apply, depending upon which is specified hereon.


 


(A)      ISDA Determination for
Floating Rate Notes


 


Where ISDA Determination is
specified hereon as the manner in which the Rate of Interest is to be
determined, the Rate of Interest  for each Interest Accrual Period shall be determined by the Calculation
Agent as a rate equal to the relevant ISDA Rate plus or minus (as indicated hereon) the Margin (if
any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest
Accrual Period means a rate equal
to the Floating Rate that would be determined by the Calculation Agent under a
Swap Transaction under the terms
of an agreement incorporating the ISDA Definitions and under which:


 


(x) the Floating Rate Option
is as specified hereon


 


(y) the Designated Maturity
is a period specified hereon and


 


(z) the relevant Reset Date
is the first day of that Interest Accrual Period unless otherwise specified
hereon.


 


For the purposes of this sub-paragraph
(A), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated
Maturity”,  “Reset Date”
and “Swap Transaction” have the meanings given to those terms in the ISDA
Definitions.


 


(B)      Screen Rate Determination
for Floating Rate Notes


 


(x) Where Screen Rate
Determination is specified hereon as the manner in which the Rate of Interest
is to be determined, the Rate  of Interest for each Interest Accrual Period will, subject as provided
below, be either:


 


(1) the offered quotation; or


 


(2) the arithmetic mean of
the offered quotations,


 


(expressed as a percentage
rate per annum) for the Reference Rate which appears or appear, as the case may
be, on the Relevant  Screen
Page as at either 11.00 a.m. (London time in the case of LIBOR or Brussels time
in the case of EURIBOR) on the Interest Determination Date in question as determined by the Calculation Agent.
If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if
there is more than one such highest quotation, one only of such quotations) and
the lowest (or, if there is more
than one such lowest quotation, one only of such quotations) shall be
disregarded by the Calculation Agent
for the purpose of determining the arithmetic mean of such offered quotations.


 


If the Reference Rate from
time to time in respect of Floating Rate Notes is specified in the applicable
Final Terms as being other  than
LIBOR or EURIBOR, the Rate of Interest in respect of such Notes will be
determined as provided in the applicable Final Terms.


 


(y) if the Relevant Screen
Page is not available or if sub-paragraph (x)(1) above applies and no such
offered quotation appears on  the Relevant Screen Page or if sub-paragraph (x)(2) above applies and
fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the
time specified above, subject as provided below, the Calculation Agent shall
request, if the Reference Rate is
LIBOR, the principal London office of each of the Reference Banks or, if the
Reference Rate is EURIBOR, the principal
Euro-zone office of each of the Reference Banks, to provide the Calculation
Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference
Rate is LIBOR, at approximately 11.00 a.m. (London time), or if the Reference Rate is EURIBOR, at
approximately 11.00 a.m. (Brussels time) on the Interest Determination Date in
question. If two or more of the
Reference Banks provide the Calculation Agent with such offered quotations, the
Rate of Interest for such Interest Period
shall be the arithmetic mean of such offered quotations as determined by the
Calculation Agent; and


 


(z) if paragraph (y) above
applies and the Calculation Agent determines that fewer than two Reference
Banks are providing offered  quotations,
subject as provided below, the Rate of Interest shall be the arithmetic, mean
of the rates per annum (expressed as a percentage) as communicated to (and at the request of) the Calculation
Agent by the Reference Banks or any two or more of them, at which such banks were offered, if the
Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at
approximately 11.00 a.m. (Brussels time) on the relevant Interest Determination
Date, deposits in the Specified
Currency for a period equal to that which would have been used for the
Reference Rate by leading banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if the
Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be, or, if fewer than two of the
Reference Banks provide the Calculation Agent with such offered rates, the
offered rate for deposits in the
Specified Currency for a period equal to that which would have been used for
the Reference Rate, or the arithmetic
mean of the offered rates for deposits in the Specified Currency for a period
equal to that which would have been used for the Reference Rate, at which, if the Reference Rate is LIBOR, at
approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m.
(Brussels time), on the relevant Interest Determination Date, any one or more
banks (which bank or banks is or
are in the opinion of the Trustee and the Issuers suitable for such purpose)
informs the Calculation Agent it
is quoting to leading banks in, if the Reference Rate is LIBOR, the London
inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be, provided
that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of
this paragraph, the Rate of Interest shall be determined as at the last
preceding Interest


 


18

















 


Determination Date (though
substituting, where a different Margin or Maximum or Minimum Rate of Interest
is to be applied to  the
relevant Interest Accrual Period from that which applied to the last preceding
Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual
Period, in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding
Interest Accrual Period).


 


(iv) Rate of Interest for
Index Linked Interest Notes


 


The Rate of Interest in
respect of Index Linked Interest Notes for each Interest Accrual Period shall
be determined in the manner  specified
hereon and interest will accrue by reference to an Index or Formula as
specified hereon.


 


(c)        Zero Coupon Notes


 


Where a Note the Interest
Basis of which is specified to be Zero Coupon is repayable prior to the
Maturity Date and is not paid  when due, the amount due and payable prior to the Maturity Date shall be
the Early Redemption Amount of such Note. As from the Maturity Date, the Rate of Interest for
any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation
Yield (as described in Condition 6(b)(i)).


 


(d)       Dual Currency Notes


 


In the case of Dual Currency
Notes, if the rate or amount of interest falls to be determined by reference to
a Rate of Exchange or a  method
of calculating Rate of Exchange, the rate or amount of interest payable shall
be determined in the manner specified hereon.


 


(e)        Partly Paid Notes


 


In the case of Partly Paid
Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will
accrue as aforesaid on the  paid-up
nominal amount of such Notes and otherwise as specified hereon.


 


(f)           Accrual of Interest


 


Interest shall cease to
accrue on each Note on the due (late for redemption unless, upon due
presentation, payment is improperly  withheld or refused, in which event interest shall continue to accrue
(as well after as before judgment) at the Rate of Interest in the manner provided in this Condition 5 to the
Relevant Date (as defined in Condition 8).


 


(g)       Margin, Maximum/Minimum
Rates of Interest, Instalment Amounts and Redemption Amounts and Rounding:


 


(i) If any Margin is
specified hereon (either (x) generally, or (y) in relation to one or more
Interest Accrual Periods), an adjustment  shall be made to all Rates of Interest, in the case of (x), or the Rates
of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with
Condition 5(b) above by adding
(if a positive number) or subtracting the absolute value (if a negative number) of such Margin, subject
always to the next paragraph.


 


(ii) If any Maximum or
Minimum Rate of Interest, Instalment Amount or Redemption Amount is specified
hereon, then any Rate of  Interest,
Instalment Amount or Redemption Amount shall be subject to such maximum or
minimum, as the case may be.


 


(iii) For the purposes of any
calculations required pursuant to these Conditions (unless otherwise
specified), (x) all percentages  resulting from such calculations shall be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all figures
shall be rounded to seven significant figures (with halves being rounded up)
and (z) all currency amounts that
fall due and payable shall be rounded to the nearest unit of such currency
(with halves being rounded up), save
in the case of yen, which shall be rounded down to the nearest yen. For these
purposes “unit” means the lowest amount of such currency that is available as legal tender in the country of such
currency and, in the case of euro, means one cent.


 


(h)       Calculations


 


The amount of interest
payable in respect of any Note for any period shall be calculated by
multiplying the product of the Rate of  Interest and the outstanding nominal amount of such Note by the Day
Count Fraction, unless an Interest Amount (or a formula for its calculation) is specified in respect of
such period, in which case the amount of interest payable in respect of such
Note for such period shall equal
such Interest Amount (or be calculated in accordance with such formula). Where
any Interest Period comprises two
or more Interest Accrual Periods, the amount of interest payable in respect of
such Interest Period shall be the sum of the amounts of interest payable in respect of each of those Interest Accrual
Periods.


 


19

















 


	
  (i)

  	
   

  	
  Determination and Publication of Rates of Interest,
  Interest Amounts, Final Redemption Amounts, Early  Redemption Amounts, Optional Redemption Amounts and
  Instalment Amounts

  



 


The Calculation Agent shall
as soon as practicable on each Interest Determination Date or such other time
on such date as the  Calculation
Agent may be required to calculate any rate or amount, obtain any quotation or make
any determination or calculation, it
shall determine such rate and calculate the Interest Amounts in respect of each
Specified Denomination of the Notes for the relevant Interest Accrual Period, calculate the Final Redemption Amount,
Early Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such quotation or
make such determination or calculation, as the case may be, and cause the Rate
of Interest and the Interest
Amounts for each Interest Period and the relevant Interest Payment Date and, if
required to be calculated, the
Final Redemption Amount, Early Redemption Amount, Optional Redemption Amount or
any Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Noteholders,
any other Calculation Agent appointed in respect of the Notes that is to make a further calculation
upon receipt of such information and, if the Notes are listed on a stock
exchange and the rules of such
exchange so require, such exchange as soon as possible after their determination
but in no event later than (1) the commencement
of the relevant Interest Period, if determined prior to such time, in the case
of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the
fourth Business Day after such determination in accordance with Condition 16. Where any Interest Payment Date
or Interest Period Date is subject to adjustment pursuant to Condition 5(b)(ii), the Interest Amounts and the Interest Payment Date so published may
subsequently be amended (or appropriate alternative arrangements made with the consent of the
Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If
the Notes become due and payable under Condition 10, the accrued interest and
the Rate of Interest payable in
respect of the Notes shall nevertheless continue to be calculated as previously
in accordance with this Condition but
no publication of the Rate of Interest or the Interest Amount so calculated
need be made unless the Trustee otherwise requires. The determination of any rate or amount, the
obtaining of each quotation and the making of each determination or calculation
by the Calculation Agent(s) shall
(in the absence of manifest error) be final and binding upon all parties.


 


(j)           Determination or Calculation
by Trustee


 


If the Calculation Agent does
not at any time for any reason determine or calculate the Rate of Interest for
an Interest Period or any  Interest
Amount, Instalment Amount, Final Redemption Amount, Early Redemption Amount or
Optional Redemption Amount, the Trustee
shall do so (or shall appoint an agent on its behalf to do so) and such
determination or calculation shall be deemed to have been made by the Calculation Agent. In doing
so, the Trustee shall apply the foregoing provisions of this Condition, with
any necessary consequential
amendments, to the extent that, in its opinion, it can do so, and, in all other
respects it shall do so in such manner
as it shall deem fair and reasonable in all the circumstances.


 


(k)       Definitions


 


In these Conditions, unless
the context otherwise requires, the following defined terms shall have the
meanings set out below:


 


“Business Day” means:


 


(i) in the case of a currency
other than euro, a day (other than a Saturday or Sunday) on which commercial
banks and foreign  exchange
markets settle payments in the Principal financial centre for such currency
and/or


 


(ii) in the case of euro, a
day on which the TARGET system is operating (a “TARGET Business Day”) and/or


 


(iii) in the case of a
currency and/or one or more Additional Business Centres a day (other than a
Saturday or a Sunday) on which  commercial banks and foreign exchange markets settle payments in such
currency in the Additional Business Centre(s) or, if no currency is indicated, generally in each of
the Additional Business Centres.


 


“Day Count Fraction” means,
in respect of the calculation of an amount of interest on any Note for any
period of time (from and  including
the first day of such period to but excluding the last) (whether or not
constituting an Interest Period, the “Calculation Period”):


 


(i) if “Actual/365” or “Actual/Actual
— ISDA” is specified hereon, the actual number of days in the Calculation
Period divided by  365 (or,
if any portion of that Calculation Period falls in a leap year, the sum of (a)
the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (b) the
actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365)


 


(ii) if “Actual/365 (Fixed)”
is specified hereon, the actual number of days in the Calculation Period
divided by 365


 


(iii) if “Actual/360” is
specified hereon, the actual number of days in the Calculation Period divided
by 360


 


(iv) if “30/360”, “360/360”
or “Bond Basis” is specified hereon, the number of days in the Calculation
Period divided by 360 (the  number
of days to be calculated on the basis of a year of 360 days with 12 30-day
months (unless (a) the last day of the Calculation Period is the 31st day of a month but the first day of the
Calculation Period is a day other than the 30th or 31st day of a month, in which case the month that includes
that last day shall not be considered to be shortened to a 30-day month, or (b)
the last day of the Calculation
Period is the last day of the month of February, in which case the month of
February shall not be considered
to be lengthened to a 30-day month)


 


(v) if “30E/360” or “Eurobond
Basis” is specified hereon, the number of days in the Calculation Period
divided by 360 (the number  of
days to be calculated on the basis of a year of 360 days with 12 30-day months,
without regard to the date of the first day or last day of the Calculation Period unless, in the case of a Calculation
Period ending on the Maturity Date, the Maturity Date is the


 


20

















 


last day of the month of
February, in which case the month of February shall not be considered to be
lengthened to a 30-day  month)
and


 


(vi) if “Actual/Actual-ICMA”
is specified hereon:


 


(a) if the Calculation Period
is equal to or shorter than the Determination Period during which it falls, the
number of days in the  Calculation
Period divided by the product of (x) the number of days in such Determination
Period and (y) the number of Determination
Periods normally ending in such Determination Period and (z) the number of
Determination Periods normally ending in any year and


 


(b) if the Calculation Period
is longer than one Determination Period, the sum of:


 


(x) the number of days in
such Calculation Period falling in the Determination Period in which it begins
divided by the product of (1)  the number of days in such Determination Period and (2) the number of
Determination Periods normally ending in any year and


 


(y) the number of days in
such Calculation Period falling in the next Determination Period divided by the
product of (1) the number  of
days in such Determination Period and (2) the number of Determination Periods
normally ending in any year,


 


where:


 


“Determination Period” means
the period from and including a Determination Date in any year to but excluding
the next  Determination
Date and


 


“Determination Date” means
the date specified as such hereon or, if none is so specified, the Interest
Payment Date.


 


“euro” means the currency of
the member states of the European Union that adopt the single currency in
accordance with the  Treaty
establishing the European Community as amended (the “Treaty”).


 


“Euro-zone” means the region
comprised of member states of the European Union that adopt the single currency
in accordance  with the
Treaty.


 


“Interest Accrual Period”
means the period beginning on (and including) the Interest Commencement Date
and ending on (but  excluding)
the first Interest Period Date and each successive period beginning on (and
including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.


 


“Interest Amount” means the
amount of interest payable, and in the case of Fixed Rate Notes, means the Fixed
Coupon Amount  or Broken
Amount, as the case may be.


 


“Interest Commencement Date”
means the Issue Date or such other date as may be specified hereon.


 


“Interest Determination Date”
means, with respect to a Rate of Interest and Interest Accrual Period, the date
specified as such  hereon
or, if none is so specified, (i) the first day of such Interest Accrual Period
if the Specified Currency is sterling or (ii) the day falling two Business Days in London for the
Specified Currency prior to the first day of such Interest Accrual Period if
the Specified Currency is neither
sterling nor euro or (iii) the day falling two TARGET Business Days prior to
the first day of such Interest Accrual Period if the Specified Currency is euro.


 


“Interest Period” means the
period beginning on (and including) the Interest Commencement Date and ending
on (but excluding)  the
first Interest Payment Date and each successive period beginning on (and
including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest
Payment Date.


 


“Interest Period Date” means
each Interest Payment Date unless otherwise specified hereon.


 


“ISDA Definitions” means the
2000 ISDA Definitions published by the International Swaps and Derivatives
Association, Inc., unless  otherwise
specified hereon.


 


“Rate of Interest” means the
rate of interest payable from time to time in respect of this Note and that is
either specified or  calculated
in accordance with the provisions hereon.


 


“Reference Banks” means, in
the case of a determination of LIBOR, the principal London office of four major
banks in the London  inter-bank
market and, in the case of a determination of EURIBOR, the principal Euro-zone
office of four major banks in the Eurozone inter-bank market, in each case selected by the Calculation Agent or as
specified hereon.


 


“Reference Rate” means the
rate specified as such hereon.


 


“Relevant Screen Page” means
such page, section, caption, column or other part of a particular information
service as may be  specified
hereon.


 


“Specified Currency” means
the currency specified as such hereon or, if none is specified, the currency in
which the Notes are  denominated.


 


“TARGET System” means the
Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET)
System or any  successor thereto.


 


21

















 


(l)          Calculation Agent


 


The Issuer shall procure that
there shall at all times be one or more Calculation Agents if provision is made
for them hereon and for  so
long as any Note is outstanding (as defined in the Trust Deed). Where more than
one Calculation Agent is appointed in respect of the Notes, references in these Conditions to the Calculation Agent
shall be construed as each Calculation Agent performing its respective duties under the Conditions. If the
Calculation Agent is unable or unwilling to act as such or if the Calculation
Agent fails duly to establish the
Rate of Interest for an Interest Period or Interest Accrual Period or to
calculate any Interest Amount, Instalment
Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption
Amount, as the case may be, or to
comply with any other requirement, the Issuer shall (with the prior approval of
the Trustee) appoint a leading bank or investment banking firm engaged in the interbank market
(or, if appropriate, money, swap or over-the-counter index options market) that
is most closely connected with
the calculation or determination to be made by the Calculation Agent (acting
through its principal London
office or any other office actively involved in such market) to act as such in
its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid.


 


6.              Redemption, Purchase and
Options


 


(a)       Redemption by Instalments
and Final Redemption


 


(i) Unless previously
redeemed, purchased and cancelled as provided in this Condition 6 or the
relevant Instalment Date (being one  of the dates so specified hereon) is extended pursuant to any Issuer’s
or Noteholder’s option in accordance with Condition 6(d) or 6(e), each Note that
provides for Instalment Dates and Instalment Amounts shall be partially
redeemed on each Instalment Date at the related Instalment Amount specified hereon. The outstanding nominal
amount of each such Note shall be reduced by the Instalment Amount (or, if such Instalment Amount is calculated by
reference to a proportion of the nominal amount of such Note, such proportion) for all purposes with effect
from the related Instalment Date, unless payment of the Instalment Amount is improperly withheld or refused on
presentation of the related Receipt, in which case, such amount shall remain
outstanding until the Relevant
Date relating to such Instalment Amount.


 


(ii) Unless previously
redeemed, purchased and cancelled as provided below or its maturity is extended
pursuant to any Issuer’s or  Noteholder’s
option in accordance with Condition 6(d)
or 6(e), each Note shall be
finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which, unless otherwise provided
hereon, is its nominal amount) or, in the case of a Note falling within paragraph (i) above, its final
Instalment Amount.


 


(b)       Early Redemption:


 


(i) Zero Coupon Notes


 


(A) The Early Redemption
Amount payable in respect of any Zero Coupon Note, the Early Redemption Amount
of which is not  linked to
an index and/or a formula, upon redemption of such Note pursuant to Condition
6(c) or upon it becoming due and payable as provided in Condition 10
shall be the Amortised Face Amount (calculated as provided below) of such Note
unless otherwise specified
hereon.


 


(B) Subject to the provisions
of sub-paragraph (C) below, the Amortised Face Amount of any such Note shall be
the scheduled Final  Redemption
Amount of such Note on the Maturity Date discounted at a rate per annum
(expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon, shall be such rate
as would produce an Amortised Face Amount equal to the issue price of the Notes if they were
discounted back to their issue price on the Issue Date) compounded annually.



 


(C) If the Early Redemption
Amount payable in respect of any such Note upon its redemption pursuant to
Condition 6(c) or upon it  becoming due and payable as provided in
Condition 10 is not paid when due, the Early Redemption Amount due and payable
in respect of such Note shall be
the Amortised Face Amount of such Note as defined in sub-paragraph (B) above,
except that such sub-paragraph
shall have effect as though the date on which the Note becomes due and payable
were the Relevant Date. The calculation
of the Amortised Face Amount in accordance with this sub-paragraph shall
continue to be made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or
after the Maturity Date, in which case the amount due and payable shall be the scheduled Final
Redemption Amount of such Note on the Maturity Date together with any interest
that may accrue in accordance
with Condition 5(c).


 


Where such calculation is to
be made for a period of less than one year, it shall be made on the basis of
the Day Count Fraction  shown
hereon.


 


(ii) Other Notes


 


The Early Redemption Amount
payable in respect of any Note (other than Notes described in (i) above), upon
redemption of such  Note
pursuant to Condition 6(c) or
upon it becoming due and payable as provided in Condition 10, shall be the
Final Redemption Amount unless
otherwise specified hereon.


 


(c)        Redemption for Taxation
Reasons


 


The Notes may be redeemed at
the option of the Issuer in whole, but not in part, on any Interest Payment
Date (if this Note is  either
a Floating Rate Note or an Index Linked Note) or, at any time (if this Note is
neither a Floating Rate Note nor an Index Linked Note), on giving not less than 30 nor more than 60 days’ notice to the
Noteholders (which notice shall be irrevocable) at their Early Redemption Amount (as described in Condition
6(b) above) (together with
interest accrued to the date fixed for redemption), if (i) the Issuer (or, if the Guarantee were called,
the Guarantor) satisfies the Trustee immediately before the giving of such
notice that it has or will become
obliged to pay additional amounts as described under Condition 8 as a result of
any change in, or amendment


 


22

















 


to, the laws or regulations
of the United Kingdom or any political subdivision or any authority thereof or
therein having power to  tax,
or any change in the application or official interpretation of such laws or
regulations, which change or amendment becomes effective on or after the Trade Date, and (ii) such obligation cannot be
avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it,
provided that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on
which the Issuer (or the Guarantor, as the case may be) would be obliged to pay
such additional amounts were a
payment in respect of the Notes (or the Guarantee, as the case may be) then
due. Before the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the
Trustee a certificate signed by two Directors of the Issuer (or the Guarantor, as the case may be) stating
that the obligation referred to in (i) above cannot be avoided by the Issuer
(or the Guarantor, as the case
may be) taking reasonable measures available to it and a legal opinion of legal
advisers of recognised standing
to the effect that such circumstances prevail and the Trustee shall be entitled
to accept such certificate and legal opinion as sufficient evidence of the satisfaction of the condition precedent
set out in (ii) above in which event it shall be conclusive and binding on Noteholders and Couponholders.


 


(d)       Redemption at the Option of
the Issuer


 


If Call Option is specified
hereon, the Issuer may, on giving not less than 15 nor more than 30 days’
irrevocable notice to the  Noteholders
(or such other notice period as may be specified hereon) redeem, in relation
to, all or, if so provided, some of the Notes on any Optional Redemption Date. Any such redemption of Notes
shall be at their Optional Redemption Amount together with interest accrued to the date fixed for
redemption. Any such redemption or exercise must relate to Notes of a nominal
amount at least equal to the
Minimum Redemption Amount to be redeemed specified hereon and no greater than
the Maximum Nominal Amount to be
redeemed specified hereon.


 


All Notes in respect of which
any such notice is given shall be redeemed on the date specified in such notice
in accordance with  this
Condition.


 


In the case of a partial
redemption or the notice to Noteholders shall also contain the certificate
numbers of the Notes to be  redeemed,
which shall have been drawn in such place as the Trustee may approve and in
such manner as it deems appropriate, subject to compliance with any applicable laws and stock exchange
requirements.


 


(e)        Redemption at the Option of
Noteholders


 


If Put Option is specified
hereon, the Issuer shall, at the option of the holder of any such Note, upon the
holder of such Note giving  not
less than 15 nor more than 30 days’ notice to the Issuer (or such other notice
period as may be specified hereon) redeem such Note on the Optional Redemption Date(s) at its Optional Redemption
Amount together with interest accrued to the date fixed for redemption.


 


To exercise such option the
holder must deposit (in the case of Bearer Notes) such Note (together with all
unmatured Receipts and  Coupons
and unexchanged Talons) with any Paying Agent or (in the case of Registered
Notes) the Certificate representing such Note(s) with the Registrar
or any Transfer Agent at its specified office, together with a duly completed
option exercise notice (“Exercise
Notice”) in the form obtainable from any Paying Agent, the Registrar or any
Transfer Agent (as applicable) within the notice period. No Note or Certificate so deposited and option exercised
may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the
Issuer.


 


(f)           Partly Paid Notes


 


Partly Paid Notes will be
redeemed, whether at maturity, early redemption or otherwise, in accordance
with the provisions of this  Condition
and the provisions specified hereon.


 


(g)       Purchases


 


The Issuer, the Guarantor and
any Subsidiaries may at any time purchase Notes (provided that all unmatured
Receipts and Coupons  and
unexchanged Talons relating thereto are attached thereto or surrendered
therewith) in the open market or otherwise at any price.


 


(h)       Cancellation


 


All Notes purchased by or on
behalf of the Issuer, the Guarantor or any Subsidiaries may be surrendered for
cancellation, in the  case
of Bearer Notes, by surrendering each such Note together with all unmatured
Receipts and Coupons and all unexchanged Talons to the Issuing and Paying Agent and, in the case of Registered
Notes, by surrendering the Certificate representing such Notes to the Registrar and, in each case, if so
surrendered, shall, together with all Notes redeemed by the Issuer, be
cancelled forthwith (together
with all unmatured Receipts and Coupons and unexchanged Talons attached thereto
or surrendered therewith). Any Notes
so surrendered for cancellation may not be reissued or resold and the
obligations of the Issuer and the Guarantor in respect of any such Notes shall be discharged.


 


7.              Payments and Talons


 


(a)       Bearer Notes


 


Payments of principal and
interest in respect of Bearer Notes shall, subject as mentioned below, be made
against presentation and  surrender
of the relevant Receipts (in the case of payments of Instalment Amounts other
than on the due date for redemption and provided that the Receipt is presented for payment together with its
relative Note), Notes (in the case of all other payments of


 


23

















 


principal and, in the case of
interest, as specified in Condition 7(f)(vi))
or Coupons (in the case of interest, save as specified in  Condition 7(f)(ii)),
as the case may be, at the specified office of any Paying Agent outside the
United States and its possessions by a cheque payable in the relevant currency drawn on, or, at the option of
the holder, by transfer to an account denominated in such currency with, a bank in the principal
financial centre for such currency or, in the case of payment in euro, at the
option of the holder, by transfer
to or cheque drawn on a euro account (or any other account to which euro may be
transferred) specified by the holder.


 


(b)       Registered Notes


 


(i) Payments of principal
(which for the purposes of this Condition 7(b)
shall include final Instalment Amounts but not other  Instalment Amounts) in respect of Registered
Notes shall be made against presentation and surrender of the relevant
Certificates at the specified
office of any of the Transfer Agents or of the Registrar and in the manner
Provided in paragraph (ii) below.


 


(ii) Interest (which for the
purpose of this Condition 7(b)
shall include all Instalment Amounts other than final Instalment Amounts)
on Registered Notes shall be paid
to the person shown on the Register at the close of business on the fifteenth day
before the due date for payment
thereof (the “Record Date”). Payments of interest on each Registered Note shall
be made in the relevant currency by
cheque drawn on a bank and mailed to the holder (or to the first named of joint
holders) of such Note at its address appearing in the Register. Upon application by the holder to the specified office
of the Registrar or any Transfer Agent before the Record Date, and subject as provided in paragraph (a) above, such payment of interest may be
made by transfer to an account in the relevant currency maintained by the payee with a bank in the principal financial
centre of the country of such currency.


 


(c)        Payments in the United
States


 


Notwithstanding the
foregoing, if any Bearer Notes are denominated in US dollars, payments in
respect thereof may be made at the  specified office of any Paying Agent in New York City in the same manner
as aforesaid if (i) the Issuer shall have appointed Paying Agents with specified offices outside the
United States and its possessions with the reasonable expectation that such
Paying Agents would be able to
make payment of the amounts on the Notes in the manner provided above when due,
(ii) payment in full of such amounts
at all such offices is illegal or effectively precluded by exchange controls or
other similar restrictions on payment or receipt of such amounts and (iii) such payment is then permitted by United
States law, without involving, in the opinion of the Issuer, any adverse tax consequence to the Issuer.


 


(d)       Payments subject to Laws


 


All payments are subject in
all cases to any applicable laws, regulations and directives, in the place of
payment, but without  prejudice
to the provisions of Condition 8. No commission or expenses shall be charged to
the Noteholders or Couponholders in respect of such payments.


 


(e)        Appointment of Agents


 


The Issuing and Paying Agent,
the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent
initially appointed by  the
Issuer and the Guarantor and their respective specified offices are listed
below. The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act
solely as agents of the Issuer and the Guarantor (and, in certain limited circumstances set out in the
Trust Deed, as agents of the Trustee) and do not assume any obligation or
relationship of agency or trust
for or with any Noteholder or Couponholder. The Issuer and the Guarantor
reserve the right at any time with the approval of the Trustee to vary or terminate the appointment of the
Issuing and Paying Agent, any other Paying Agent, the Registrar, any Transfer Agent or the
Calculation Agent(s) and to appoint additional or other Paying Agents or
Transfer Agents, provided that
the Issuer shall at all times maintain (i) an Issuing and Paying Agent, (ii) a
Registrar in relation to Registered Notes, (iii) a Transfer Agent in relation to Registered Notes, (iv) one or more
Calculation Agent(s) where the Conditions so require, (v) Paying Agents having specified offices in at least
two major European cities (including London so long as the Notes are admitted
to the Official List of the
Financial Services Authority in its capacity as competent authority under the
Financial Services and Markets Act 2000
and admitted to trading on the London Stock Exchange’s EEA Regulated Market,
(vi) such other agents as may be required by any other stock exchange on which the Notes may be listed in each case,
as approved by the Trustee and (vii) a Paying Agent with a specified office in a European Union Member
State that will not be obliged to withhold or deduct tax pursuant to European Council Directive (2003/48/EC) on the
taxation of savings income or any law implementing or complying with, or
introduced in order to conform
to, such Directive.


 


In addition, the Issuer and
the Guarantor shall forthwith appoint a Paying Agent in New York City in
respect of any Bearer Notes  denominated
in US dollars in the circumstances described in paragraph (c) above.


 


Notice of any such change or
any change of any specified office shall promptly be given to the Noteholders
in accordance with  Condition
16.


 


(f)           Unmatured Coupons and
Receipts and unexchanged Talons


 


(i) Upon the due date for
redemption of Bearer Notes which comprise Fixed Rate Notes (other than Dual Currency
Notes or Index  Linked
Notes) should be surrendered for Payment together with all unmatured Coupons
(if any) relating thereto, failing which an amount equal to the face value of each missing unmatured Coupon(s) (or,
in the case of payment not being made in full, that proportion of the amount of such missing
unmatured Coupon(s) that the sum of principal so paid bears to the total
principal due) shall be deducted
from the Final Redemption Amount, Early Redemption Amount or Optional
Redemption Amount, as the case


 


24

















 


may be, due for payment. Any
amount so deducted shall be paid in the manner mentioned above against
surrender of such  missing
Coupon within a period of 10 years from the Relevant Date for the payment of
such principal (whether or not such Coupon has become void pursuant to Condition 9).


 


(ii) Upon the due date for
redemption of any Bearer Note comprising a Floating Rate Note, Dual Currency
Interest Note or Index  Linked
Note, unmatured Coupons relating to such Note (whether or not attached) shall
become void and no payment shall be made in respect of them.


 


(iii) Upon the due date for
redemption of any Bearer Note, any unexchanged Talon relating to such Note
(whether or not attached)  shall
become void and no Coupon shall be delivered in respect of such Talon.


 


(iv) Upon the due date for
redemption of any Bearer Note that is redeemable in instalments, all Receipts
relating to such Note  having
an Instalment Date falling on or after such due date (whether or not attached)
shall become void and no payment shall be made in respect of them.


 


(v) Where any Bearer Note
that provides that the relative unmatured Coupons are to become void upon the
due date for  redemption of
those Notes is presented for redemption without all unmatured Coupons, and
where any Bearer Note is presented for
redemption without any unexchanged Talon relating to it, redemption shall be
made only against the provision of such indemnity as the Issuer may require.


 


(vi) If the due date for
redemption of any Note is not a due date for payment of interest, interest
accrued from the preceding due  date for payment of interest or the Interest Commencement Date, as the
case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant
Bearer Note or Certificate representing it, as the case may be. Interest
accrued on a Note that only bears
interest after its Maturity Date shall be payable on redemption of such Note
against presentation of the relevant
Note or Certificate representing it, as the case may be.


 


(g)       Talons


 


On or after the Interest
Payment Date for the final Coupon forming part of a Coupon sheet issued in
respect of any Bearer Note,  the
Talon forming part of such Coupon sheet may be surrendered at the specified
office of the Issuing and Paying Agent in exchange for a further Coupon sheet (and if necessary another Talon for
a further Coupon sheet) (but excluding any Coupons that may have become void pursuant to Condition 9).


 


(h)       Non-Business Days


 


If any date for payment in
respect of any Note, Receipt or Coupon is not a business day, the holder shall
not be entitled to payment  until
the next following business day nor to any interest or other sum in respect of
such postponed payment. In this paragraph, “business day” means a day (other than a Saturday or a Sunday) on which
banks and foreign exchange markets are open for business in the relevant place of presentation, in such jurisdictions as
shall be specified as “Additional Financial Centres” hereon and:


 


(i) (in the case of a payment
in a currency other than euro) where payment is to be made by transfer to an
account maintained with  a
bank in the relevant currency, on which foreign exchange transactions may be
carried on in the relevant currency in the principal financial centre of the country of such
currency or


 


(ii) (in the case of a
payment in euro) which is a TARGET Business Day.


 


(i)          Redenomination


 


Notes denominated in a
currency that may be converted into euro may be subject to redenomination,
renominalisation and/or  consolidation
with other Notes then denominated in euro as specified in the Pricing
Supplement.


 


8.              Taxation


 


All payments of principal and
interest by or on behalf of the Issuer or the Guarantor in respect of the
Notes, the Receipts and the  Coupons,
shall be made free and clear of, and without withholding or deduction for, any
taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld or assessed by
or within the United Kingdom or any authority therein or thereof having power to tax, unless such
withholding or deduction is required by law. In that event, the Issuer or, as the case may be, the Guarantor shall
pay such additional amounts as shall result in receipt by the Noteholders and Couponholders of such amounts as would
have been received by them had no such withholding or deduction been required, except that no such additional amounts
shall be payable with respect to any Note, Receipt or Coupon:


 


(a) Other connection: to, or to a third party
on behalf of, a holder who is liable to such taxes, duties, assessments or
governmental  charges in
respect of such Note, Receipt or Coupon by reason of his having some connection
with the United Kingdom other than the
mere holding of the Note, Receipt or Coupon or


 


(b) Presentation more than 30 days after the Relevant
Date: presented (or in respect of which the Certificate representing
it is  presented) for
payment more than 30 days after the Relevant Date except to the extent that the
holder of it would have been entitled
to such additional amounts on presenting it for payment on the thirtieth day or


 


(c) Payment to individuals: where such
withholding or deduction is imposed on a payment to an individual and is
required to be made  pursuant
to European Council Directive (2003/48/EC) on the taxation of savings income or
any law implementing or complying with, or introduced in order to conform to, such Directive or


 


25

















 


(d) Payment by another Paying Agent: (except
in the case of Registered Notes) presented for payment by or on behalf of a
holder  who would have been
able to avoid such withholding or deduction by presenting the relevant Note,
Receipt or Coupon to another Paying
Agent in a Member State of the European Union.


 


As used in these Conditions, “Relevant
Date” in respect of any Note, Receipt or Coupon means the date on which payment
in  respect of it first
becomes due or (if any amount of the money payable is improperly withheld or
refused) the date on which payment
in full of the amount outstanding is made or (if earlier) the date seven days
after that on which notice is duly given to the Noteholders that, upon further presentation of the Note (or relative
Certificate), Receipt or Coupon being made in accordance with the Conditions, such payment will be made,
provided that payment is in fact made upon such presentation. References in
these Conditions to:


 


(i) “principal” shall be
deemed to include any premium payable in respect of the Notes, all Instalment
Amounts, Final Redemption  Amounts,
Early Redemption Amounts, Optional Redemption Amounts, Amortised Face Amounts
and all other amounts in the nature
of principal payable pursuant to Condition 6 or any amendment or supplement to
it,


 


(ii) “interest” shall be
deemed to include all Interest Amounts and all other amounts payable pursuant
to Condition 5 or any  amendment
or supplement to it and


 


(iii) “principal” and/or “interest”
shall be deemed to include any additional amounts that may be payable under this
Condition or  any
undertaking given in addition to or in substitution for it under the Trust
Deed.


 


9.              Prescription


 


Claims against the Issuer
and/or the Guarantor for payment in respect of the Notes, Receipts and Coupons
(which, for this purpose,  shall
not include Talons) shall be prescribed and become void unless made within 10
years (in the case of principal) or five years (in the case of interest) from the appropriate
Relevant Date in respect of them.


 


10.       Events of Default


 


If any of the following events
(“Events of Default”) occurs, the Trustee at its discretion may, and if so
requested by holders of at  least
one-fifth in nominal amount of the Notes then outstanding or if so directed by
an Extraordinary Resolution shall (subject, in each case, to being indemnified to its satisfaction) give notice to the
Issuer that the Notes are, and they shall immediately become, due and payable at their Early Redemption
Amount together with accrued interest:


 


(i) Non-Payment of Principal: default is made
for a period of more than seven days in the payment on the due date of
principal in  respect of
any of the Notes or


 


(ii) Non-Payment of Interest: default is made
for a period of more than 14 days in the payment on the due date of interest in
respect of any of the Notes or


 


(iii) Breach of Other Obligations: the Issuer or
the Guarantor does not perform or comply with any one or more of its other
obligations in the Notes or the
Trust Deed which default is incapable of remedy or, if in the opinion of the
Trustee capable of remedy, is not
in the opinion of the Trustee remedied within 30 days after notice of such
default shall have been given to the Issuer or the Guarantor by the Trustee or


 


(iv) Cross-Default: (A) any other present or
future indebtedness of the Issuer or the Guarantor or any Principal Subsidiary
for or in  respect of
moneys borrowed or raised becomes due and payable prior to its stated maturity
by reason of any actual or potential default, event of default or the like (howsoever described), or (B) any
such indebtedness is not paid when due or, as the case may be, within any applicable grace period, or (C)
the Issuer or the Guarantor or any Principal Subsidiary fails to pay when due
any amount payable by it under
any present or future guarantee for, or indemnity in respect of, any moneys
borrowed or raised provided that
the aggregate amount of the relevant indebtedness, guarantees and indemnities
in respect of which one or more of the
events mentioned above in this paragraph (iv) have occurred equals or exceeds
€35,000,000 or its equivalent (as reasonably determined by the Trustee) or


 


(v) Enforcement Proceedings: a distress,
attachment, execution or other legal process is levied, enforced or sued out on
or against  any substantial
part of the property, assets or revenues of the Issuer or the Guarantor or any
Principal Subsidiary and is not discharged
or stayed within 60 days thereof or


 


(vi) Insolvency: any of the Issuer or the
Guarantor or any Principal Subsidiary is (or is, or could be, deemed by law or
a court to be)  insolvent
or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or
suspend payment of all or a material part of its debts, proposes or makes a general assignment or an arrangement
or composition with or for the benefit of the relevant creditors in respect of any of such debts or a
moratorium is agreed, declared or comes into effect in respect of or affecting
all or any part of (or of a
particular type of) the debts of the Issuer, the Guarantor or any Principal
Subsidiary or


 


(vii) Winding-up: an administrator is appointed,
an order is made or an effective resolution passed for the winding-up or
dissolution  or
administration of the Issuer or the Guarantor or any Principal Subsidiary, or
the Issuer or the Guarantor or any Principal Subsidiary shall apply or petition for a winding-up or administration
order in respect of itself or cease or through an official action of its board of directors threaten to cease to
carry on all or the substantial part of its business or operations, in each
case except for


 


26

















 


the purpose of and followed
by a reconstruction, amalgamation, reorganisation, merger or consolidation (i)
on terms approved by  the
Trustee or by an Extraordinary Resolution (as defined in the Trust Deed) of the
Noteholders or (ii) in the case of a Principal Subsidiary, whereby the undertaking and assets of the Principal
Subsidiary are transferred to or otherwise vested in the Issuer or the Guarantor (as the case may be) or another Principal
Subsidiary and except that neither the Issuer, the Guarantor nor any Principal Subsidiary shall be treated as having
threatened to cease or having ceased to carry on all or the substantial part of
its business or operations by
reason of any announcement of any disposal or by reason of any disposal on an
arms length basis or


 


(viii) Ownership of the Issuer: the Issuer ceases
to be directly or indirectly wholly-owned by the Guarantor or


 


(ix) Guarantee: the Guarantee is not (or is
claimed by the Guarantor not to be) in full force and effect or


 


(x) Deed of Guarantee: the guarantee provided
under a deed dated 13th January 2005 by Imperial Tobacco Limited is not (or is
claimed by Imperial Tobacco
Limited not to be) in full force or effect prior to its termination in
accordance with its terms


 


provided that, in relation to
paragraphs (v), (vi) and (vii), in respect of any Principal Subsidiary, the
Trustee shall have certified that in  its opinion such event is materially prejudicial to the interests of the
Noteholders.


 


“Principal Subsidiary” means:


 


(a) any Subsidiary of the
Guarantor which is an active trading company and whose unconsolidated net
assets or pre-tax profit equal  or exceed 10% of the consolidated net assets or adjusted consolidated
pre-tax profit of the Group (as defined in the Trust Deed), and for the purposes of the above:


 


(i) the consolidated net
assets of the Group shall be ascertained by reference to the latest audited
published consolidated accounts  of the Group


 


(ii) the adjusted consolidated
pre-tax profit of the Group shall be the aggregate of:


 


(A) the consolidated pre-tax
profit of the Group ascertained by reference to the latest audited published
consolidated accounts of  the
Group; and


 


(B) the consolidated pre-tax
profit (the pre-acquisition profit) of any Subsidiary which became a member of
the Group during the  period
for which the latest audited published consolidated accounts of the Group were
prepared (an acquired Subsidiary) for the part of that period which falls before the effective date of that
acquisition, calculated in accordance with approved accounting standards in the U.K. and used in the
preparation of the latest audited published accounts of the Group.


 


(iii) the net assets of any
Subsidiary shall be the net assets of that Subsidiary calculated in accordance
with approved accounting  standards
in the U.K. and used in the preparation of the latest audited published
accounts of the Group; and


 


(iv) the pre-tax profit of
any Subsidiary shall be the pre-tax profit of that Subsidiary calculated in
accordance with approved  accounting
standards in the U.K. and used in the preparation of the latest audited
published accounts of the Group plus, in the case of any acquired subsidiary, an amount equal to any pre-acquisition,
pre-tax profit.  


 


For the purposes of the
above, “net assets” in respect of the Group or any such Subsidiary means the
fixed assets and current  assets
of the Group or that trading Subsidiary (as the case may be) but excluding
investments in any Subsidiary and intra group balances or


 


(b) a Subsidiary of the
Guarantor to which has been transferred (whether by one transaction or a series
of transactions, related or  not)
the whole or substantially the whole of the assets of a Subsidiary which
immediately prior to those transactions was a Principal Subsidiary.


 


A certificate signed by two
directors of the Guarantor whether or not addressed to the Trustee that, in
their opinion, a Subsidiary of  the Guarantor is or is not or was or was not at any particular time or
throughout any specified period, a Principal Subsidiary (accompanied by a report by the Auditors (as
defined in the Trust Deed) confirming the same) shall, in the absence of
manifest error, be conclusive and
binding on the Issuer, the Guarantor and the Noteholders, all as further
provided in the Trust Deed.


 


11.       Meetings of Noteholders,
Modification, Waiver and Substitution


 


(a)       Meetings of Noteholders


 


The Trust Deed contains
provisions for convening meetings of Noteholders to consider any matter
affecting their interests, including  the sanctioning by Extraordinary Resolution (as defined in the Trust
Deed) of a modification of any of these Conditions or any provisions of the Trust Deed. Such a meeting
may be convened by Noteholders holding not less than 10% in nominal amount of the Notes for the time being
outstanding. The quorum for any meeting convened to consider an Extraordinary
Resolution shall be two or more
persons holding or representing a clear majority in nominal amount of the Notes
for the time being outstanding, or at any adjourned meeting two or more persons being or representing
Noteholders whatever the nominal amount of the Notes held or represented, unless the business of such
meeting includes consideration of proposals, inter alia, (i) to amend the dates
of maturity or redemption of the
Notes, any Instalment Date or any date for payment of interest or Interest
Amounts on the Notes, (ii) to reduce
or cancel the nominal amount of, or any Instalment Amount of, or any premium
payable on redemption of, the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes or to
vary the method or basis of calculating the rate or rates or amount of interest or the basis for
calculating any Interest Amount in respect of the Notes, (iv) if a Minimum
and/or a Maximum Rate of
Interest, Instalment Amount or Redemption Amount is shown hereon, to reduce any
such Minimum and/or Maximum, (v)


 


27

















 


to vary any method of, or
basis for, calculating the Final Redemption Amount, the Early Redemption Amount
or the Optional  Redemption
Amount, including the method of calculating the Amortised Face Amount, (vi) to
vary the currency or currencies of payment
or denomination of the Notes (save to the extent that such variation arises
pursuant to redenomination provisions contained in the Final Terms), (vii) to modify the provisions concerning
the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary
Resolution, or (viii) to modify or cancel the Guarantee, in which case the
necessary quorum shall be two or
more persons holding or representing not less than 75%, or at any adjourned
meeting not less than 25%, in
nominal amount of the Notes for the time being outstanding. Any Extraordinary
Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which
such resolution was passed) and on all Couponholders.


 


(b)       Modification of the Trust
Deed


 


The Trustee may agree,
without the consent of the Noteholders or Couponholders, to (i) any
modification of any of the provisions  of the Trust Deed that is of a formal, minor or technical nature or is
made to correct a manifest error, and (ii) any other modification (except as mentioned in the Trust Deed), and
any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed that is in
the opinion of the Trustee not materially prejudicial to the interests of the
Noteholders. Any such
modification, authorisation or waiver shall be binding on the Noteholders and
the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon
as practicable in accordance with Condition 16.


 


(c)        Substitution


 


The Trust Deed contains provisions
permitting the Trustee to agree, subject to such amendment of the Trust Deed
and such other  conditions
as the Trustee may require, but without the consent of the Noteholders or the
Couponholders, to the substitution of an Issuer’s successor in business or any subsidiary of such Issuer or its
successor in business in place of the Issuer and to the substitution of the Guarantor’s successor in
business in place of the Guarantor, or of any previous substituted company, as
principal debtor or Guarantor under
the Trust Deed and the Notes. In the case of such a substitution the Trustee
may agree, without the consent of
the Noteholders or the Couponholders, to a change of the law governing the
Notes, the Receipts, the Coupons, the Talons and/or the Trust Deed provided that such change would not in the
opinion of the Trustee be materially prejudicial to the interests of the Noteholders.


 


(d)       Entitlement of the Trustee


 


In connection with the
exercise of its functions (including but not limited to those referred to in
this Condition) the Trustee shall  have regard to the interests of the Noteholders as a class and shall not
have regard to the consequences of such exercise for individual Noteholders or Couponholders and
the Trustee shall not be entitled to require, nor shall any Noteholder or
Couponholder be entitled to
claim, from the Issuer or the Guarantor any indemnification or payment in
respect of any tax in consequence of any such exercise upon individual Noteholders or Couponholders.


 


12.       Enforcement


 


At any time after the Notes
become due and payable, the Trustee may, at its discretion and without further
notice, institute such  proceedings
against the Issuer and/or the Guarantor as it may think fit to enforce the
terms of the Trust Deed, the Notes, the Receipts and the Coupons, but it need not take any such proceedings
unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by
Noteholders holding at least one-fifth in nominal amount of the Notes
outstanding, and (b) it shall
have been indemnified to its satisfaction. No Noteholder, Receiptholder or
Couponholder may proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound so to
proceed, fails to do so within a reasonable time and such failure is continuing.


 


13.       Indemnification of the
Trustee


 


The Trust Deed contains
provisions for the indemnification of the Trustee and for its relief from
responsibility. The Trustee is entitled  to enter into business transactions with the Issuer, the Guarantor and
any entity related to the Issuer or the Guarantor without accounting for any profit.


 


14.       Replacement of Notes,
Certificates, Receipts, Coupons and Talons


 


If a Note, Certificate,
Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it
may be replaced, subject to  applicable
laws, regulations and stock exchange regulations, at the specified office of
the Issuing and Paying Agent in London (in the case of Bearer Notes, Receipts, Coupons or Talons) and of the
Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent, as the case may be, as may
from time to time be designated by the Issuer for the purpose and notice of
whose designation is given to
Noteholders, in each case on payment by the claimant of the fees and costs
incurred in connection therewith
and on such terms as to evidence, security and indemnity (which may provide,
inter alia, that if the allegedly lost, stolen or destroyed Note, Certificate, Receipt, Coupon or Talon is subsequently
presented for payment or, as the case may be, for exchange for further Coupons, there shall be
paid to the Issuer on demand the amount payable by the Issuer in respect of
such Notes, Certificates,
Receipts, Coupons or further Coupons) and otherwise as the Issuer may require.
Mutilated or defaced Notes, Certificates,
Receipts, Coupons or Talons must be surrendered before replacements will be
issued.


 


15.       Further Issues


 


The Issuer may from time to
time without the consent of the Noteholders or Couponholders create and issue
further securities  either
having the same terms and conditions as the Notes in all respects (or in all
respects except for the first payment of interest on


 


28

















 


them) and so that such
further issue shall be consolidated and form a single series with the
outstanding securities of any series  (including the Notes) or upon such terms as the Issuer may determine at
the time of their issue. References in these Conditions to the Notes include (unless the context requires
otherwise) any other securities issued pursuant to this Condition and forming a
single series with the Notes. Any
further securities forming a single series with the outstanding securities of
any series (including the Notes)
constituted by the Trust Deed or any deed supplemental to it shall, and any
other securities may (with the consent of the Trustee), be constituted by the Trust Deed. The Trust Deed contains
provisions for convening a single meeting of the Noteholders and the holders of securities of other series
where the Trustee so decides.


 


16.       Notices


 


Notices to the holders of
Registered Notes shall be mailed to them at their respective addresses in the
Register and deemed to have  been
given on the fourth weekday (being a day other than a Saturday or a Sunday)
after the date of mailing. Notices to the holders of Bearer Notes shall be valid if published in
a daily newspaper having general circulation in London (which is expected to be
the  Financial
Times). If in the opinion of
the Trustee any such publication is not practicable, notice shall be validly
given if published in another
leading daily English language newspaper with general circulation in the United
Kingdom. Any such notice shall be deemed
to have been given on the date of such publication or, if published more than
once or on different dates, on the first date on which publication is made, as provided above.


 


Couponholders shall be deemed
for all purposes to have notice of the contents of any notice given to the
holders of Bearer Notes  in
accordance with this Condition.


 


17.       Contracts (Rights of Third
Parties) Act 1999


 


No person shall have any
right to enforce any term or condition of the Notes under the Contracts (Rights
of Third Parties) Act 1999.


 


18.       Governing Law


 


The Trust Deed, the Notes,
the Receipts, the Coupons and the Talons are governed by, and shall be
construed in accordance with,  English law.


 


29

















 


Use of Proceeds


 


The net proceeds of each
issue of Notes by Imperial Finance will be applied by Imperial Finance for its
general corporate purposes  (including
the funding of loans to other subsidiaries of Imperial Tobacco) and the net
proceeds of each issue of Notes by Imperial Finance 2 will be applied by Imperial Finance 2 for its general
corporate purposes (including the funding of loans to other subsidiaries of Imperial Tobacco).


 


30
















 


Summary of Provisions Relating to the Notes While in
Global Form


 


Initial
Issue of Notes


 


Upon the initial deposit of a
Global Note with a common depositary for Euroclear and Clearstream, Luxembourg
(the “Common  Depositary”)
or registration of Registered Notes in the name of any nominee for Euroclear
and Clearstream, Luxembourg and delivery
of the relative Global Certificate to the Common Depositary, Euroclear or
Clearstream, Luxembourg will credit each subscriber with a nominal amount of Notes equal to the nominal amount
thereof for which it has subscribed and paid.


 


Notes that are initially
deposited with the Common Depositary may also be credited to the accounts of
subscribers with (if indicated  in the relevant Final Terms) other clearing systems through direct or
indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearing systems.
Conversely, Notes that are initially deposited with any other clearing system
may similarly be credited to the
accounts of subscribers with Euroclear, Clearstream, Luxembourg or other
clearing systems.


 


Relationship
of Accountholders with Clearing Systems


 


Each of the persons shown in
the records of Euroclear, Clearstream, Luxembourg or any other clearing system
as the holder of a  Note
represented by a Global Note or a Global Certificate must look solely to
Euroclear, Clearstream, Luxembourg or such other clearing system (as the case may be) for his share of each payment made
by the Issuer to the bearer of such Global Note or the holder of the underlying Registered Notes, as
the case may be, and in relation to all other rights arising under the Global
Notes or Global Certificates,
subject to and in accordance with the respective rules and procedures of
Euroclear, Clearstream, Luxembourg or such clearing system (as the case may be). Such persons shall have no
claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are
represented by such Global Note or Global Certificate and such obligations of
the Issuer will be discharged by
payment to the bearer of such Global Note or the holder of the underlying
Registered Notes, as the case may be,
in respect of each amount so paid.


 


So long as the Notes are
represented by a temporary Global Note, permanent Global Note or Global
Certificate and the relevant  clearing system(s) so permit, the Notes shall be tradeable only in
principal amounts of at least the Specified Denomination (or if more than one Specified Denomination, the
lowest Specified Denomination) and integral multiples of the Tradeable Amount
in excess thereof specified in
the relevant Final Terms.


 


Exchange


 


1.     Temporary Global Notes


 


Each temporary Global Note
will be exchangeable, free of charge to the holder, on or after its Exchange
Date:


 


1.1 if the relevant Final
Terms indicate that such Global Note is issued in compliance with the C Rules
or in a transaction to which  TEFRA is not applicable (as to which, see “Overview of the Programme -
Selling Restrictions”), in whole, but not in part, for the Definitive Notes defined and described below
and


 


1.2 otherwise, in whole or in
part upon certification as to non-U.S. beneficial ownership in the form set out
in Schedule 3 of the  Agency
Agreement for interests in a permanent Global Note or, if so provided in the
relevant Final Terms, for Definitive Notes.  


 


Each temporary Global Note
that is also an Exchangeable Bearer Note will be exchangeable for Registered
Notes in accordance with  the
Conditions in addition to any permanent Global Note or Definitive Notes for
which it may be exchangeable and, before its Exchange Date, will also be exchangeable in whole or in part for
Registered Notes only.


 


2.     Permanent Global Notes


 


Each permanent Global Note
will be exchangeable, free of charge to the holder, on or after its Exchange
Date in whole but not,  except
as provided under “Partial Exchange of Permanent Global Notes”, in part for
Definitive Notes or, in the case of 2.3 below, Registered Notes:


 


2.1 by the Issuer giving
notice to the Noteholders, the Issuing and Paying Agent and the Trustee of its
intention to effect such  exchange


 


2.2 if the relevant Final
Terms provide that such Global Note is exchangeable at the request of the
holder, by the holder giving  notice to the Issuing and Paying Agent of its election for such exchange
and


 


2.3 if the permanent Global
Note is an Exchangeable Bearer Note, by the holder giving notice to the Issuing
and Paying Agent of its  election
to exchange the whole or a part of such Global Note for Registered Notes and


 


2.4 otherwise, (1) if the permanent
Global Note is held on behalf of Euroclear or Clearstream, Luxembourg or any
other clearing  system (an “Alternative
Clearing System”) and any such clearing system is closed for business for a
continuous period of 14 days (other
than by reason of holidays, statutory or otherwise) or announces an intention
permanently to cease business or in fact does so or (2) if principal in respect of any Notes is not paid when due, by
the holder giving notice to the Issuing and Paying Agent of its election for such exchange.


 


31

















 


In the event that a Global
Note is exchanged for Definitive Notes, such Definitive Notes shall be issued
in Specified Denomination(s)  and will in no circumstances be issued to Noteholders who hold Notes in
the relevant clearing system in amounts that are less than a Specified Denomination.


 


3.     Permanent Global Certificates


 


If the Final Terms state that
the Notes are to be represented by a permanent Global Certificate on issue, the
following will apply in  respect
of transfers of Notes held in Euroclear or Clearstream, Luxembourg or an
Alternative Clearing System. These provisions will not prevent the trading of interests in the
Notes within a clearing system whilst they are held on behalf of such clearing
system, but will limit the
circumstances in which the Notes may be withdrawn from the relevant clearing
system.


 


Transfers of the holding of
Notes represented by any Global Certificate pursuant to Condition 2(b) may only be made in part:


 


3.1 if the relevant clearing
system is closed for business for a continuous period of 14 days (other than by
reason of holidays,  statutory
or otherwise) or announces an intention permanently to cease business or does
in fact do so or


 


3.2 with the consent of the
Issuer  


 


provided that, in the case of
the first transfer of part of a holding pursuant to 3.1 or 3.2 above, the
Registered Holder has given the  Registrar not less than 30 days’ notice at its specified office of the
Registered Holder’s intention to effect such transfer.


 


4.     Partial Exchange of Permanent Global Notes


 


For so long as a permanent
Global Note is held on behalf of a clearing system and the rules of that
clearing system permit, such  permanent Global Note will be exchangeable in part on one or more
occasions (1) for Registered Notes if the permanent Global Note is an Exchangeable Bearer Note and the
part submitted for exchange is to be exchanged for Registered Notes, or (2) for Definitive Notes (i) if principal in
respect of any Notes is not paid when due or (ii) if so provided in, and in
accordance with, the Conditions
(which will be set out in the relevant Final Terms) relating to Partly Paid
Notes.


 


5.     Delivery of Notes


 


On or after any due date for
exchange the holder of a Global Note may, in the case of an exchange in whole,
surrender such  Global Note
or, in the case of a partial exchange, present it for endorsement to or to the
order of the Issuing and Paying Agent. In exchange for any Global Note, or the part thereof to be exchanged, the
Issuer will (i) in the case of a temporary Global Note exchangeable for a permanent Global Note,
deliver, or procure the delivery of, a permanent Global Note in an aggregate
nominal amount equal to that of
the whole or that part of a temporary Global Note that is being exchanged or,
in the case of a subsequent exchange,
endorse, or procure the endorsement of, a permanent Global Note to reflect such
exchange or (ii) in the case of a Global Note exchangeable for Definitive Notes or Registered Notes, deliver, or
procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated Definitive
Notes and/or Certificates, as the case may be. Global Notes and Definitive
Notes will be delivered outside
the United States and its possessions. In this Prospectus, “Definitive Notes”
means, in relation to any Global Note,
the definitive Bearer Notes for which such Global Note may he exchanged (if
appropriate, having attached to them all Coupons and Receipts in respect of interest or Instalment Amounts that
have not already been paid on the Global Note and a Talon). Definitive Notes will be security
printed and Certificates will be printed in accordance with any applicable
legal and stock exchange
requirements in or substantially in the form set out in the Schedules to the
Trust Deed. On exchange in full of each permanent Global Note, the Issuer will, if the holder so requests,
procure that it is cancelled and returned to the holder together with the relevant Definitive Notes.


 


6.     Exchange Date


 


“Exchange Date” means, in
relation to a temporary Global Note, the day falling after the expiry of 40
days after its issue date and,  in relation to a permanent Global Note, a day falling not less than 60
days, or in the case of an exchange for Registered Notes five days, or in the case of failure to pay
principal in respect of any Notes when due 30 days, after that on which the
notice requiring exchange is
given and on which banks are open for business in the city in which the
specified office of the Issuing and Paying Agent is located and in the city in which the relevant clearing system
is located.


 


Amendment
to Conditions


 


The temporary Global Notes,
permanent Global Notes and Global Certificates contain provisions that apply to
the Notes that they  represent,
some of which modify the effect of the terms and conditions of the Notes set
out in this Prospectus. The following is a summary of certain of those provisions:


 


1.     Payments


 


No payment falling due after
the Exchange Date will be made on any Global Note unless exchange for an
interest in a permanent  Global
Note or for Definitive Notes or Registered Notes is improperly withheld or
refused. Payments on any temporary Global Note issued in compliance with the D Rules before the Exchange Date will only
be made against presentation of certification as to non- U.S. beneficial ownership in the form set out
in the Agency Agreement. All payments in respect of Notes represented by a
Global Note will be made against
presentation for endorsement and, if no further payment falls to be made in
respect of the Notes, surrender
of that Global Note to or to the order of the Issuing and Paying Agent or such
other Paying Agent as shall have been notified to the Noteholders for such purpose. A record of each payment
so made will be endorsed on each Global Note, which  


 


32

















 


endorsement will be prima
facie evidence that such payment has been made in respect of the Notes.
Condition 7(e)(vii) and  Condition 8(e) will apply to the Definitive
Notes only.


 


2.     Prescription


 


Claims against the Issuer in
respect of Notes that are represented by a permanent Global Note will become
void unless it is  presented
for payment within a period of 10 years (in the case of principal) and five
years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 8).


 


3.     Meetings


 


For the purposes of any
quorum requirements of a meeting of Noteholders and, at any such meeting, the
holder of a permanent  Global
Note shall be treated as having one vote in respect of each integral currency
unit of the Specified Currency of the Notes. (All holders of Registered Notes are entitled to
one vote in respect of each Note comprising such Noteholder’s holding, whether
or not represented by a Global
Certificate.)


 


4.     Cancellation


 


Cancellation of any Note
represented by a permanent Global Note that is required by the Conditions to be
cancelled (other than  upon
its redemption) will be effected by reduction in the nominal amount of the
relevant permanent Global Note or its presentation to or to the order of the Issuing and Paying Agent for
endorsement in the relevant schedule of such permanent Global Note, whereupon the principal amount thereof
shall be reduced for all purposes by the amount so cancelled and endorsed.


 


5.     Purchase


 


Notes represented by a
permanent Global Note may only be purchased by the Issuer, the Guarantor or any
Subsidiaries if they are  purchased
together with the rights to receive all future payments of interest and
Instalment Amounts (if any) thereon.


 


6.     Issuer’s Option


 


Any option of the Issuer
provided for in the Conditions of any Notes while such Notes are represented by
a permanent Global Note  shall
be exercised by the Issuer giving notice to the Noteholders within the time
limits set out in and containing the information required by the Conditions, except that the notice shall not be required
to contain the serial numbers of Notes drawn in the case of a partial exercise of an option and
accordingly no drawing of Notes shall be required. In the event that any option
of the Issuer is exercised in
respect of some but not all of the Notes of any Series, the rights of
accountholders with a clearing system in respect of the Notes will be governed by the standard
procedures of such clearing system (as the case may be).


 


7.     Noteholders’ Options


 


Any option of the Noteholders
provided for in the Conditions of any Notes while such Notes are represented by
a permanent  Global Note
may be exercised by the holder of the permanent Global Note giving notice to
the Issuing and Paying Agent within the time limits relating to the deposit of Notes with a Paying Agent set out
in the Conditions substantially in the form of the notice available from any Paying Agent, except that
the notice shall not be required to contain the serial numbers of the Notes in
respect of which the option has
been exercised, and stating the nominal amount of Notes in respect of which the
option is exercised and at the
same time presenting the permanent Global Note to the Issuing and Paying Agent,
or to a Paying Agent acting on behalf of the Issuing and Paying Agent, for notation.


 


8.     Trustee’s Powers


 


In considering the interests
of Noteholders while any Global Note is held on behalf of, or Registered Notes
are registered in the  name
of any nominee for, a clearing system, the Trustee may have regard to any
information provided to it by such clearing system or its operator as to the identity (either
individually or by category) of its accountholders with entitlements to such
Global Note or Registered Notes
and may consider such interests as if such accountholders were the holders of
the Notes represented by such Global
Note or Global Certificate.


 


9.     Notices


 


So long as any Notes are
represented by a Global Note and such Global Note is held on behalf of a
clearing system, notices to the  holders of Notes of that Series may be given by delivery of the relevant
notice to that clearing system for communication by it to entitled accountholders in substitution for
publication as required by the Conditions or by delivery of the relevant notice
to the holder of the Global Note.


 


10.  Partly Paid Notes


 


The provisions relating to
Partly Paid Notes are not set out in this Prospectus, but will be contained in
the relevant Pricing  Supplement
and thereby in the Global Notes. While any instalments of the subscription
moneys due from the holder of Partly Paid Notes are overdue, no interest in a Global Note representing such Notes
may be exchanged for an interest in a permanent Global Note or for Definitive Notes (as the case may
be). If any Noteholder fails to pay any instalment due on any Partly Paid Notes
within the time specified, the
Issuer may forfeit such Notes and shall have no further obligation to their
holder in respect of them.


 


33

















 


Imperial Tobacco Finance PLC


 


Imperial Tobacco Finance PLC
(“Imperial Finance”) was incorporated as a private company with limited
liability under the laws of  England
and Wales on 14th June 1996. It was re-registered on 21st October 1997 as a
public company limited by shares within the meaning of the Companies Act 1985 following a special resolution of its
members on 20th October 1997. Its registered office is at P.O. Box 244, Upton Road, Bristol BS99 7UJ,
England (telephone number: +44 (0) 117 963 6636). It is registered with the
Registrar of Companies in England
and Wales with company number 3214426.


 


Imperial Finance is an
indirect wholly-owned subsidiary of Imperial Tobacco. It has issued share
capital of £100,000,000 comprising  100,000,000 ordinary shares of £1 each.


 


Imperial Finance is a finance
subsidiary of Imperial Tobacco with no business operations of its own, other
than advancing funds to,  receiving
funds from, and providing treasury services for Imperial Tobacco and its
subsidiaries. Imperial Finance has no subsidiaries of its own.


 


The Directors and Secretary
of Imperial Finance are as follows:


 


	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  G Davis

  	
   

  	
  Director

  
	
  R Dyrbus

  	
   

  	
  Director

  
	
  J M Jones

  	
   

  	
  Director

  
	
  M R Phillips

  	
   

  	
  Secretary

  



 


The business address of the
Directors is P.O. Box 244, Upton Road, Bristol BS99 7UJ, England. None of the
current Directors holds  external
positions outside Imperial Tobacco with the exception of G. Davis who is a
director of The Confederation of European Community Cigarette Manufacturers Limited and a non-executive director
of Wolseley PLC.


 


There are no existing or
potential conflicts of interest between any duties to Imperial Finance of the
Directors and/or their private  interests and other duties.


 


34

















 


Imperial Tobacco Finance (2) PLC


 


Imperial Tobacco Finance (2)
PLC (“Imperial Finance 2”) was incorporated under the laws of England and Wales
as a public company  limited
by shares within the meaning of the Companies Act 1985 on 5th January 2006. Its
registered office is at P.O. Box 244, Upton Road, Bristol BS99 7UJ, England (telephone number: +44 (0) 117 963
6636). It is registered with the Registrar of Companies in England and Wales with company number
05667337.


 


Imperial Finance 2 is an
indirect wholly-owned subsidiary of Imperial Tobacco. It has authorised share
capital of £100,000,000  comprising
100,000,000 ordinary shares of £1 each, of which 50,000 have been issued.


 


Imperial Finance 2 is a
finance subsidiary of Imperial Tobacco with no business operations of its own,
other than its intended  operations
of advancing funds to, receiving funds from, and providing treasury services
for Imperial Tobacco and its subsidiaries. Imperial Finance 2 has no subsidiaries of its own.


 


Imperial Finance 2 has not
yet commenced operations and has not yet produced any financial statements.


 


The Directors and Secretary
of Imperial Finance 2 are as follows:


 


	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  G Davis

  	
   

  	
  Director

  
	
  J M Jones

  	
   

  	
  Director

  
	
  C Deft

  	
   

  	
  Secretary

  



 


The business address of the
Directors is P.O. Box 244, Upton Road, Bristol BS99 7UJ, England. None of the
current Directors holds  external
positions outside Imperial Tobacco with the exception of G. Davis who is a
director of The Confederation of European Community Cigarette Manufacturers Limited and a non-executive director
of Wolseley PLC.


 


There are no existing or
potential conflicts of interest between any duties to Imperial Finance 2 of the
Directors and/or their private  interests and other duties.


 


35

















 


Imperial Tobacco Group PLC


 


General


 


Imperial Tobacco Group PLC
was incorporated on 6th August 1996 as a public limited company under the
Companies Act 1985 for  an
unlimited duration with company number 3236483. The registered and head office
of Imperial Tobacco is at P.O. Box 244, Upton Road, Bristol BS99 7UJ, England (telephone number: +44 (0)117
9636636). Imperial Tobacco did not trade until 1st October 1996, when the tobacco business of Hanson PLC
(“Hanson”) was transferred to Imperial Tobacco in consideration for the issue
of £52 million of shares in
Imperial Tobacco to Hanson shareholders. The ordinary shares of Imperial
Tobacco were admitted to the Official
List of the London Stock Exchange on 1st October 1996.


 


History and
Development


 


The tobacco business of
Imperial Tobacco has a long established history. Imperial Tobacco Company (of
Great Britain and Ireland)  Limited
(“Imperial Tobacco Company”) was formed in 1901 by the merger of 13 independent
British tobacco companies which joined
forces in the face of competition from American Tobacco Company. In 1902, a
price war between Imperial Tobacco Company
and American Tobacco Company was concluded with the formation of
British-American Tobacco Company Limited (“BAT”) to which the export and duty-free businesses of both companies
were transferred. As a result, the primary focus of Imperial Tobacco’s business has historically been the
UK and Irish markets, although the acquisitions (see below) since demerger from Hanson on 1st October 1996 and export
sales from the UK have changed the focus of the company more to overseas
markets.


 


Imperial Tobacco has
developed a strategy of tobacco-related expansion while continuing to pursue
productivity improvements. In  furtherance of its strategy of international expansion, it acquired
Rizla International B.V. (“Rizla”) in January 1997, the world’s largest producer of cigarette papers. In July 1998 it
acquired Van Nelle Tabak, a leading international manufacturer and distributor
of roll-your-own and pipe
tobaccos including Drum, Van Nelle,
Brandaris and Winner roll-your-own
tobacco and Amphora pipe tobacco,
and in September 1999 it acquired
a portfolio of cigarette, roll-your-own tobacco and cigarette papers brands in
Australia and New Zealand.


 


In September 2000 it acquired
the Baelen group, a Belgian manufacturer of roll-your-own tobacco, closely
followed in early  October
by completion of the acquisition of the EFKA group, a rolling papers and tubes
manufacturer with manufacturing facilities in Germany and Canada. UK operations were also enhanced by the
acquisition of Mayfair Vending in December 2000 increasing distribution capability in the vending market.


 


At the end of March 2001,
Imperial Tobacco acquired a 75% interest in Tobaccor S.A., the second largest
cigarette manufacturer  and
distributor in sub-Saharan Africa, with further interests in Vietnam.


 


On the 15th May 2002,
Imperial Tobacco acquired 90.01% of the issued share capital of Reemtsma
Cigarettenfabriken GmbH, a  leading
German manufacturer of cigarettes and other tobacco products, with a well
recognised portfolio of cigarette brands, including West, Davidoff and R1.


 


On the 23rd September 2002
Tobaccor purchased from Bolloré, by way of a share buy-back, a further 12.5%
interest in Tobaccor S.A.


 


On the 6th October 2003,
Tobaccor purchased from Bolloré, by way of a share buy-back, their remaining
interest in Tobaccor S.A.


 


On the 17th October 2003,
Imperial Tobacco acquired the remaining shares in CINTA.


 


On the 13th January 2004,
Imperial Tobacco acquired a further 9.19% of the issued share capital of
Reemtsma Cigarettenfabriken  GmbH
from Tchibo Holding A.G. On 20th April 2004 Imperial Tobacco acquired a further
0.38% from the remaining minority shareholders,
bringing its total holding to 99.58%.


 


On the 26th May 2004 Imperial
Tobacco announced the acquisition of the business and assets of the filter
tubes manufacturer CTC  Tube
Company of Canada.


 


On the 14th July 2004,
Imperial Tobacco acquired the remaining 0.42% of the issued share capital of
Reemtsma Cigarettenfabriken  GmbH,
bringing its total holding to 100%.


 


On the 14th September 2005,
Imperial Tobacco acquired 43.13% of the issued share capital of Skruf Snus AB,
a Swedish snus company.


 


Trading
Activities


 


Imperial Tobacco is an
international tobacco company which manufactures and markets a comprehensive
range of high quality  tobacco
and tobacco-related products, including Embassy,
Regal, Superkings, John Player Special, Lambert & Butler, Richmond,
West, R1, Davidoff,
Fusion, Horizon, Prima and Cabinet and The Imperial cigarettes;
Drum, Golden Virginia and Van
Nelle roll-your-own tobacco;
Classic cigars, Amphora and St. Bruno pipe tobacco; and Rizla
rolling papers.


 


Imperial Tobacco currently
sells tobacco and tobacco-related products in over 130 countries and to
duty-free markets, with  particular
strengths in the United Kingdom, Germany, The Netherlands, Belgium, the
Republic of Ireland, France, the Ukraine, Russia, Poland, Slovenia, Hungary, Slovakia, Taiwan, Australia,
Kyrgystan, New Zealand, and sub-Saharan Africa.


 


36

















 


Key
Subsidiaries


 


The principal wholly owned
subsidiaries which are unlisted are shown below:


 


	
  Registered in England and Wales

  	
   

  	
   

  
	
  Name

  	
   

  	
  Principal
  activity

  
	
   

  	
   

  	
   

  
	
  Imperial Tobacco Limited

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in the United Kingdom

  
	
  Imperial Tobacco Finance
  PLC

  	
   

  	
  Finance company

  
	
  Imperial Tobacco Holdings
  Limited

  	
   

  	
  Holding investments in
  subsidiary companies

  
	
  Imperial Tobacco
  International Limited

  	
   

  	
  Export and marketing of
  tobacco products

  
	
  Rizla UK Limited

  	
   

  	
  Manufacture of rolling
  papers in the United Kingdom

  



 


	
  Incorporated overseas

  	
   

  	
   

  
	
  Name and country of incorporation

  	
   

  	
  Principal
  activity

  
	
   

  	
   

  	
   

  
	
  Badische Tabakmanufacktur
  Roth-Händle GmbH, Germany

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in Germany

  
	
  Dunkerquoises
  des Blends S.A.S., France

  	
   

  	
  Tobacco processing

  
	
  Ets. L. Lacroix Fils N.V.
  (Rizla Belgium N.V.), Belgium

  	
   

  	
  Manufacture of rolling
  papers and accessories and marketing and sale of tobacco products in Belgium

  
	
  Imperial Tobacco (Asia)
  Pte. Ltd., Singapore

  	
   

  	
  Marketing and sale of
  tobacco products in South East Asia

  
	
  Imperial Tobacco Australia
  Limited, Australia

  	
   

  	
  Marketing and sale of
  tobacco products in Australia

  
	
  Imperial Tobacco New
  Zealand Limited, New Zealand

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in New Zealand

  
	
  Imperial Tobacco Overseas
  B.V., The Netherlands

  	
   

  	
  Finance company

  
	
  Imperial Tobacco Slovakia
  A.S., Slovakia

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in the Slovak Republic

  
	
  John Player & Sons
  Limited, Republic of Ireland

  	
   

  	
  Marketing and sale of
  tobacco products in the Republic of Ireland

  
	
  Imperial Tobacco
  Magyarország Dohanyforgalmazo Kft, Hungary

  	
   

  	
  Marketing and sale of
  tobacco products in Hungary

  
	
  John Player S.A., Spain

  	
   

  	
  Marketing and sale of
  tobacco products in Spain

  
	
  Reemtsma Cigarettenfabriken
  GmbH, Germany

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in Germany and export of tobacco products

  
	
  Reemtsma International Asia
  Services Limited, China

  	
   

  	
  Marketing of tobacco
  products in China

  
	
  Imperial Tobacco CR s.r.o.,
  Czech Republic

  	
   

  	
  Marketing and sale of
  tobacco products in the Czech Republic

  
	
  Reemtsma Kiev Tyutyunova
  Fabrika, Ukraine

  	
   

  	
  Manufacture of cigarettes
  in the Ukraine

  
	
  Reemtsma Ukraine, Ukraine

  	
   

  	
  Marketing and sale of
  tobacco products in the Ukraine

  
	
  OOO Reemtsma Volga
  Tabakfabrik, Russia

  	
   

  	
  Manufacture of tobacco
  products in Russia

  
	
  OOO Reemtsma, Russia

  	
   

  	
  Marketing and sale of
  tobacco products in Russia

  
	
  Tobaccor S.A.S., France

  	
   

  	
  Holdings investments in
  subsidiary companies

  
	
  Van
  Nelle Tabak Nederland B.V., The Netherlands

  	
   

  	
  Manufacture of
  roll-your-own and pipe tobaccos and marketing and sale of tobacco products in
  The Netherlands

  
	
  Van Nelle Tobacco
  International Holdings B.V., The Netherlands

  	
   

  	
  Sale of roll-your-own and
  pipe tobaccos

  



 


The
principal partly owned subsidiaries of the Group, held throughout the year are
shown below. All are unlisted unless otherwise indicated.


 


	
  Incorporated overseas

  Name and country of incorporation

  	
   

  	
  Principal
  activity

  	
   

  	
  %
  owned(2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reemtsma Kyrgyzstan OJSC,
  Kyrgyzstan

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in Kyrgyzstan

  	
   

  	
  98.7

  
	
  Imperial Tobacco Polska
  S.A., Poland

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in Poland

  	
   

  	
  96.5

  
	
  Societe Ivoirienne des
  Tabacs S.A.(1), Cote d'Ivoire

  	
   

  	
  Manufacture, marketing and
  sale of tobacco products in the Ivory Coast

  	
   

  	
  74.1

  
	
  Tobacna Ljubljana d.o.o, Slovenia

  	
   

  	
  Marketing and sale of
  tobacco products in Slovenia

  	
   

  	
  76.5

  



 






(1) Listed on the Cote d’Ivoire
Stock Exchange.


 


(2) The percentage of issued share capital held by immediate parent and
the effective voting rights of the Group are the same, with the exception of
Tobacna Ljubljana d.o.o in which the Group holds 99% of the voting rights.


 


37

















 


In addition the Group also
wholly owns the following partnerships:


 


	
  Name and country

  	
   

  	
  Principal activity

  
	
  Imperial Tobacco (EFKA)
  GmbH & Co. KG,

  	
   

  	
  Manufacture of tubes in
  Germany

  
	
  Germany

  	
   

  	
   

  
	
  Principal place of
  business:

  	
   

  	
   

  
	
  Industriestrasse 6,
  Postfach 1257,

  	
   

  	
   

  
	
  D-78636 Trossingen, Germany

  	
   

  	
   

  



 


The consolidated Group
financial statements include all the subsidiary undertakings and entities shown
above. With the exception  of
Imperial Tobacco Holdings Limited, which is wholly owned by Imperial Tobacco,
none of the shares in the subsidiaries are held by Imperial Tobacco. A full list of subsidiaries
is attached to the Annual Return of Imperial Tobacco.


 


Management


 


The board of directors of
Imperial Tobacco has ultimate responsibility for the administration of its
day-to-day affairs. The Directors  and Secretary of Imperial Tobacco are as follows:


 


	
  Name

  	
   

  	
  Title

  	
   

  	
  Other
  Directorships outside the Imperial Tobacco Group

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D C Bonham

  	
   

  	
  Non-executive Chairman

  	
   

  	
  None

  
	
  A G L Alexander

  	
   

  	
  Non-executive Joint Vice
  Chairman

  	
   

  	
  Misys Plc; Platinum
  Investment Trust Plc

  
	
  I J G Napier

  	
   

  	
  Non-executive Joint Vice
  Chairman

  	
   

  	
  Taylor Woodrow Developments
  Limited; Taylor Woodrow Plc; Taylor Woodrow Inc.

  
	
  G Davis

  	
   

  	
  Chief Executive

  	
   

  	
  The Confederation of EC
  Cigarette Manufacturers Ltd; Wolseley Plc

  
	
  R Dyrbus

  	
   

  	
  Finance Director

  	
   

  	
  None

  
	
  D Cresswell

  	
   

  	
  Manufacturing Director

  	
   

  	
  None

  
	
  F A Rogerson

  	
   

  	
  Corporate Affairs Director

  	
   

  	
  None

  
	
  G L Blashill

  	
   

  	
  Sales and Marketing
  Director

  	
   

  	
  None

  
	
  S P Duffy

  	
   

  	
  Non-executive Director

  	
   

  	
  NTL Incorporated

  
	
  S Huismans

  	
   

  	
  Non-executive Director

  	
   

  	
  None

  
	
  P H Jungels

  	
   

  	
  Non-executive Director

  	
   

  	
  Offshore Logistics Inc.,
  Woodside Petroleum Limited; Rockhopper Exploration PLC

  
	
  S E Murray

  	
   

  	
  Non-executive Director

  	
   

  	
  The Advertising Standards
  Authority Limited; Enterprise Inns PLC; SSL International PLC; WM Morrison
  Supermarkets PLC

  
	
  C R Day

  	
   

  	
  Non-executive Director

  	
   

  	
  Reckitt Benckiser PLC and
  certain of its subsidiaries; WPP Group PLC

  
	
  M R Phillips

  	
   

  	
  Secretary

  	
   

  	
  None

  



 


The business address of each
of the Directors is P.O. Box 244, Upton Road, Bristol BS99 7UJ.


 


There are no existing or
potential conflicts of interest between any duties to Imperial Tobacco of the
Directors and/or their private  interests and other duties.


 


Legal
Environment


 


Tobacco manufacturers
including Imperial Tobacco have been sued by parties seeking damages for
alleged smoking-related health  effects. Other than as provided below, Imperial Tobacco is not a party
to any litigation which, in its opinion, could reasonably be expected to have a significant effect on its
financial position. To date, no judgment has been entered against Imperial
Tobacco and no action has been
settled by Imperial Tobacco in favour of a claimant in any such action.


 


United
Kingdom


 


Imperial Tobacco is not
currently involved in any litigation in England, Wales or Northern Ireland.


 


In Scotland, Imperial Tobacco
is involved in 10 separate legal actions. Each pursuer (plaintiff) alleges
damage to their health  resulting
from cigarette smoking. Following the judgment in McTear (see below), legal representatives for 9 of these 10
cases confirmed that they do not
intend to continue with their actions. In the tenth case, Traynor -v- Imperial Tobacco Limited, the pursuer lodged his Record (particulars
of claim) at court outside the time limit. The case will not now proceed until
either the pursuer or Imperial
Tobacco apply to allow the late Record. One other action, Dougan –v- Imperial Tobacco Limited, was
formally discontinued on 18th
August 2005. Only one action, McTear -v- Imperial
Tobacco Limited, actively progressed in court. On 31st May 2005, Lord Nimmo-Smith dismissed the claim
in its entirety, finding that Mrs McTear’s case failed on every issue on which
his Lordship would have needed to
find in her favour in order to hold Imperial Tobacco liable in damages. Mrs
McTear has not appealed the
decision and is now out of time to do so.


 


Republic of
Ireland


 


In the Republic of Ireland,
337 plaintiffs sought damages against Imperial Tobacco’s Irish subsidiary (“Players”)
for alleged smoking-related  health
effects. Only 13 of the original 337 plaintiffs continue to seek damages
against Players (10 of which are legally represented by Beauchamps, 2 by Guilfoyles and 1 by John Devane
Solicitors, as detailed below). All 13 individuals have served originating summonses and statements of claim
have also been served in all of these claims. In 8 of the claims Players are


 


38

















 


co-defendants with Gallahers and/or Carrolls. No
trial dates have been fixed in respect of any claim against Players. The
defendants have issued motions to
dismiss on the grounds of procedural and inherent delay in all ten of the
Beauchamps actions. These motions
are likely to be heard in the first quarter of 2006. The two Guilfoyles claims
currently stand dismissed but appeals against these dismissals are expected to be heard in 2006. Guilfoyles have
issued motions to come off record in these two cases, which will be heard at the same time as the appeals.
John Devane Solicitors, who represent the final plaintiff, served a statement
of claim on 20th May 2004. The
statement of claim was returned as it was served out of time. Although this
claim remains technically “alive”,
the plaintiff would have to obtain an extension of time from the court to
re-serve the statement of claim out of time before being entitled to proceed any further.


 


The
Netherlands


 


In the Netherlands, Imperial
Tobacco’s Dutch subsidiary has received letters before action from or on behalf
of 44 individuals  seeking
damages for alleged smoking-related health effects, but 15 of the individuals
have now withdrawn their claims. Of the remaining 29 individuals, 25 are currently represented by one firm of
lawyers, Sap Advocaten. Management is aware of four other non-represented individuals who may bring
claims against Imperial Tobacco’s Dutch subsidiary. Claim letters have also
been received in The Netherlands
by at least three other tobacco companies, and on 6th June 2005 proceedings
were commenced by one of the claimants
against one of these tobacco companies. No proceedings have been commenced
against Imperial Tobacco’s Dutch
subsidiary. Imperial Tobacco’s Dutch subsidiary and/or the other tobacco
companies have taken direct evidence from 23 of the 29 current claimants in total and testimony given by five of those
individuals indicates that they may not have smoked brands manufactured by Imperial Tobacco’s Dutch
subsidiary. Information provided by Sap Advocaten indicates that a further six individuals may not have smoked brands
manufactured by Imperial Tobacco’s Dutch subsidiary. Sap Advocaten have taken
evidence from current or former
employees of two of the tobacco companies but no applications have been made to
take evidence from current or
former employees of Imperial Tobacco’s Dutch subsidiary. Besides these
threatened individual claims, there have been media reports of threatened class action. Management is unaware of any
information other than that reported in the press.


 


Germany


 


In Germany, the Hamburg Public
Prosecutor confirmed that on 16th March 2005 a professor at the Institute for
Economic Law of  the
University of Hamburg submitted a criminal complaint against the management of
all companies manufacturing cigarettes in Germany alleging fraudulent conspiracy and the sale to the public of
substances which are poisoned or which contain substances harmful to health. The Public Prosecutor is in
the process of determining whether there is sufficient evidence to warrant the commencement of an official investigation.
Imperial Tobacco’s German subsidiary, Reemtsma CigarettenfabrikenGmbH, has not however been specifically named in the
complaint.


 


Poland


 


In Poland, Imperial Tobacco
Polska S.A. is a defendant in a claim that commenced on 18th June 2001 in the
Regional Court in  Pozna by
an individual claimant, Zbigniew Czarnecki. Mr Czarnecki is seeking PLN 75,000
(approximately £11,600) for loss of earnings and compensatory costs for medical treatment and suffering
caused by his laryngeal cancer, diagnosed in 1994, which he alleges was caused by smoking cigarettes
manufactured by Wytwórnia Wyrobów Tytoniowych S.A., a company acquired by
Imperial Tobacco Polska S.A in
1996. Judgment is expected during the course of 2006.


 


In a separate matter, on 3rd
December 2004 Imperial Tobacco Polska S.A. received a letter from the Polish
Association of Health  Promotion
and Health Education in Labor Environment (the “Association”) seeking (a)
funding for itself for an informational campaign and (b) compensation on behalf of Polish smokers on the basis
that Imperial Tobacco Polska S.A. failed to warn of/concealed the dangers resulting from alleged addiction to nicotine.
The letter threatened to bring a class action against Imperial Tobacco Polska S.A. if the company did not
enter into negotiations for the compensation of Polish smokers. Press reports
indicated that thousands of
people had joined the action and advertisements for potential claimants
appeared in the Polish press. Imperial Tobacco Polska S.A. responded to the letter on 7th January 2005 denying
the claim. On 4th February 2005 the Association filed statements of claim on its own behalf and on
behalf of unnamed individuals against a number of tobacco companies, including Imperial Tobacco Polska S.A. The
Association has by subsequent court decisions been prevented from proceeding
with the claim brought on behalf
of individuals. The Association is continuing with its own claim and a hearing
has been scheduled for 18th January
2006.


 


In a further separate matter
in Poland, a statement of claim dated 24th August 2005 has been filed by
another individual claimant,  Helena Bierówka, in the District Court in Bochnia. The statement of
claim has not yet been served on Imperial Tobacco Polska S.A. The claimant alleges that she is addicted to
Route 66 cigarettes, that cigarette packets did not carry warnings about the
risks associated with smoking and
that she suffers from bronchial asthma and other health complaints. She claims
damages of PLN 50,000
(approximately £8,700). The claimant has been ordered to pay a court
registration fee in excess of PLN 100. The claimant is entitled to appeal this decision but has not
yet done so. If the claimant does not appeal the decision, she will be
requested by the court to pay the
court registration fee of PLN 100, and if she does so the case will be assigned
to a judge, who may then order that the claimant’s statement of claim be served on Imperial Tobacco Polska
S.A.


 


Australia


 


In Australia, Imperial
Tobacco’s subsidiary, ITA, is a defendant in a claim brought by an individual
against several tobacco  companies.
A statement of claim was served in June 2002. The damages sought have not been
quantified. On 1st August 2003 the
court refused ITA’s application to have the claim against ITA dismissed. On 26th
August 2005 the court ruled that the plaintiff  


 


39

















 


was not entitled to bring
proceedings on behalf of other unidentified people nor to claim against
overseas companies related to the  defendants. The proceedings are presently focused on interlocutory
disputes about the statement of claim in both the Supreme Court and in the Court of Appeal. The next
hearing is scheduled for 9th February 2006.


 


Summary


 


Imperial Tobacco is currently
involved in a number of legal cases in which the claimants are seeking damages
for alleged smoking-related  health
effects. Having taken advice, Imperial Tobacco believes it has meritorious
defences to these actions, all of which are being vigorously contested. Although it is not possible to predict the
outcome of the litigation, management believes that the pending actions will not have a material
adverse effect upon the results of the operations, cash flow or financial
condition of Imperial Tobacco.


 


In addition to the above
proceedings, there have been other claims of a similar kind threatened against
Imperial Tobacco and its  subsidiaries
from time to time. However, other than as reported above, no further
proceedings have been issued and until further details of such threatened claims are forthcoming, management cannot
comment other than to say that if future claims are of a similar type to the claims already made, then
management anticipates that its position will remain the same.


 


Regardless of the outcome of
any litigation, the costs of defending claims will be substantial and may not
be fully recoverable by  Imperial
Tobacco, irrespective of whether Imperial Tobacco is successful in defending
such actions.


 


Contingent
Liabilities


 


Imperial Tobacco has
guaranteed various borrowings and liabilities of certain UK and overseas
subsidiary undertakings, including its  Dutch and Irish subsidiaries. At 30th September 2005, the contingent
liability totalled £3,783 million.


 


The guarantees include the
Dutch subsidiaries which, in accordance with Book 2, Article 403 of The
Netherlands Civil Code, do not  file separate accounts with the Chamber of Commerce. Under the same
article, Imperial Tobacco has issued declarations to assume any and all liability for any and all debts of
the Dutch subsidiaries.


 


The guarantees also cover the
Irish subsidiaries, all of which are included in the consolidated balance sheet
as at 30th September  2005.
The Irish companies, namely John Player & Sons Limited, John Player
Distributors Limited and Van Nelle (Ireland) have therefore availed themselves of the exemption
provided by section 17 of the Irish Companies (Amendment) Act 1986 in respect
of documents required to be
attached to the annual returns for such companies.


 


40

















 


Taxation


 


United
Kingdom Taxation


 


The
comments below are of a general nature based on current United Kingdom law and
United Kingdom HM Revenue and  Customs (“HMRC”) practice relating to the deduction of
tax from interest. They do not necessarily apply where the income is
deemed for tax
purposes to be the income of any person other than the holder of the Note or
Coupon. They relate only to the  position of persons who are the absolute beneficial
owners of the Notes and Coupons and may not apply to certain classes of
persons such as
dealers or certain professional investors. Prospective Noteholders should be
aware that the particular terms of issue  of any series of Notes may affect the tax treatment.
The following is a general guide. It is not intended to be exhaustive and
should  be
treated with appropriate caution. Any Noteholders who are in doubt as to their
personal tax position should consult their  professional advisers.


 


Interest on
the Notes


 


While the Notes which are
issued by Imperial Finance or Imperial Finance 2 are and continue to be listed
on a recognised stock  exchange
within the meaning of Section 841 of the Income and Corporation Taxes Act 1988
(the “Taxes Act”) (which includes the London Stock Exchange), payments of interest may be made without
withholding or deduction for or on account of United Kingdom income tax.


 


If the Notes carry a right to
interest and have a maturity date less than one year from the date of issue
(and are not issued with a  maturity
date pursuant to any arrangement, the effect of which is to render such Notes
part of a borrowing for a total term of one year or more), payments of interest may be made without withholding or
deduction for or on account of United Kingdom income tax irrespective of whether or not the Notes are
listed.


 


In all other cases interest
will generally be paid under deduction of income tax at the lower rate subject
to the availability of other  reliefs or to any direction to the contrary from the HMRC in respect of
such relief as may be available pursuant to the provisions of any applicable double taxation treaty.


 


Persons in the United Kingdom
(i) paying interest to or receiving interest on behalf of another person who is
an individual, or (ii)  paying
amounts due on redemption of any Notes which constitute deeply discounted
securities as defined in Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 to or receiving such
amounts on behalf of another person who is an individual, may be required to provide certain information to the HMRC
regarding the identity of the payee or person entitled to the interest and, in certain circumstances,
such information may be exchanged with tax authorities of other countries.
However, in relation to amounts
payable on the redemption of such Notes HMRC published practice indicates that
HMRC will not exercise its power
to obtain information where such amounts are paid or received on or before 5th
April 2006.


 


EU
Directive on the Taxation of Savings Income


 


The EU has adopted a
directive on the taxation of savings income. The Directive requires Member
States to provide to the tax  authorities of other Member States details of payments of interest and
other similar income paid by a person to an individual in another Member State, except that, Belgium,
Luxembourg and Austria will instead operate a withholding system for a
transitional period.


 


41

















 


Subscription and Sale


 


Summary of
Programme Agreement


 


Subject to the terms and on
the conditions contained in an amended and restated programme agreement dated
13th January 2006  (the “Programme
Agreement”) between the Issuers, the Guarantor, the Dealers and the Arranger,
the Notes will be offered on a continuous
basis by each Issuer to the Dealers. The Notes may be resold at prevailing
market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Notes
may also be sold by each Issuer through the Dealers, acting as agents of such Issuer. The Programme
Agreement also provides for Notes to be issued in syndicated Tranches that are jointly and severally underwritten by
two or more Dealers.


 


The relevant Issuer will pay
each relevant Dealer a commission as agreed between them in respect of Notes
subscribed by it. The  Issuers
agreed to reimburse the Arranger for its expenses incurred in connection with
the establishment of the Programme and the Dealers for certain of their activities in connection with the
Programme. The commissions in respect of an issue of Notes on a syndicated basis will be stated in the
relevant Final Terms.


 


The Issuers have agreed to
indemnify the Dealers against certain liabilities in connection with the offer
and sale of the Notes. The  Programme
Agreement entitles the Dealers to terminate any agreement that they make to
subscribe Notes in certain circumstances prior to payment for such Notes being made to the relevant Issuer.


 


Selling
Restrictions


 


United
States


 


The Notes have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United  States
or to, or for the account or benefit of, U.S. persons except in certain
transactions exempt from the registration requirements of the Securities Act. Terms used in this
paragraph have the meanings given to them by Regulation S under the Securities
Act.


 


Notes in bearer form having a
maturity of more than one year are subject to U.S. tax law requirements and may
not be offered,  sold or
delivered within the United States or its possessions or to a United States
person, except in certain transactions permitted by U.S. tax regulations. Terms used in this
paragraph have the meanings given to them by the U.S. Internal Revenue Code and regulations thereunder.


 


Each Dealer has agreed that,
except as permitted by the Programme Agreement, it will not offer, sell or
deliver the Notes of any  identifiable
Tranche, (i) as part of their distribution at any time or (ii) otherwise until
40 days after completion of the distribution of such Tranche as determined, and certified to the Issuer, by the Issuing
and Paying Agent, or in the case of Notes issued on a syndicated basis, the Lead Manager, within the
United States or to, or for the account or benefit of, U.S. persons, and it
will have sent to each dealer to
which it sells Notes during the distribution compliance period a confirmation
or other notice setting forth the restrictions
on offers and sales of the Notes within the United States or to, or for the
account or benefit of, U.S. persons.


 


In addition, until 40 days
after the commencement of the offering, an offer or sale of Notes within the
United States by any dealer  (whether
or not participating in the offering) may violate the registration requirements
of the Securities Act.


 


European
Economic Area


 


In relation to each Member State
of the European Economic Area which has implemented the Prospectus Directive
(each, a  “Relevant Member
State”), each Dealer has represented, warranted and undertaken that with effect
from and including the date on
which the Prospectus Directive is implemented in that Relevant Member State
(the “Relevant Implementation Date”) it has not made and will not make an offer of Notes to the public (where the Notes
have a denomination of less than €50,000 (or its equivalent in any other currency as at the date of issue of the Notes))
in that Relevant Member State except that it may, with effect from and including the Relevant Implementation
Date, make an offer of Notes to the public in that Relevant Member State:


 


(i)    in (or in Germany, where the offer starts within) the period beginning
on the date of publication of a prospectus in relation to those Notes which has been approved by the
competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant Member State,
all in accordance with the
Prospectus Directive and ending on the date which is 12 months after the date
of such publication;


 


(ii)   at any time to legal entities which are authorised or regulated to
operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely
to invest in securities;


 


(iii)  at any time to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated
accounts; or


 


(iv)  at any time in any other circumstances which do not require the publication
by the Issuers of a prospectus pursuant to Article 3 of the Prospectus Directive.


 


For the purposes of this
provision, the expression an “offer of Notes to the public” in relation to any
Notes in any Relevant Member  State means the communication in any form and by any means of sufficient
information on the terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, as the same may be varied in that
Member  


 


42

















 


State by any measure
implementing the Prospectus Directive in that Member State and the expression
Prospectus Directive means  Directive
2003/71/EC and includes any relevant implementing measure in each Relevant
Member State.


 


United
Kingdom


 


Each Dealer has represented,
warranted and agreed that:


 


(i)    in relation to any Notes which have a maturity of less than one year,
(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of its business and (ii)
it has not offered or sold and
will not offer or sell any Notes other than to persons whose ordinary
activities involve them in acquiring,
holding, managing or disposing of investments (as principal or as agent) for
the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of
investments (as principal or agent) for the purposes of their businesses where the issue of the Notes
would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”)
by the relevant Issuer;


 


(ii)   it has only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes
in circumstances in which Section 21(1) of the FSMA does not apply to the relevant Issuer or the Guarantor; and


 


(iii)  it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the
United Kingdom.


 


Japan


 


The Notes have not been and
will not be registered under the Securities and Exchange Law of Japan (the “Securities
and Exchange  Law”).
Accordingly each of the Dealers has represented, warranted and agreed that it
has not, directly or indirectly, offered or sold and shall not, directly or indirectly, offer or sell Notes in Japan or
to, or for the benefit of, any resident of Japan, or to others for re-offering or re-sale, directly or indirectly, in
Japan or to, or for the benefit of, any resident of Japan except pursuant to an
exemption from the registration requirements
of, and otherwise in compliance with, the Securities and Exchange Law and other
relevant laws and regulations of
Japan. As used in this paragraph, “resident of Japan” means any person resident
in Japan, including any corporation
or other entity organised under the laws of Japan.


 


General


 


Each Dealer has acknowledged
that no representation is made by the Issuers, the Guarantor or any Dealer that
any action has been  or
will be taken in any jurisdiction by the Issuers, the Guarantor or any Dealer that
would permit a public offering of the Notes, or possession or distribution of the Prospectus or any other offering
material, in any country or jurisdiction where action for that purpose is required. Each Dealer will comply
with all applicable securities laws and regulations (to the best of its
knowledge after due and careful
enquiry) in each jurisdiction in which it purchases, offers, sells or delivers
Notes or has in its possession or distributes
the Prospectus or any other offering material, in all cases at its own expense.


 


43
















 


Form of
Final Terms


 


[IMPERIAL TOBACCO FINANCE PLC]


[IMPERIAL TOBACCO FINANCE (2) PLC]


issue
of [Aggregate Nominal Amount of Tranche] [Title of Notes]


 


Guaranteed
by Imperial Tobacco Group PLC


 


under
the €10,000,000,000 Debt Issuance Programme


 


PART A – CONTRACTUAL TERMS


 


Terms used herein shall be
deemed to be defined as such for the purposes of the Conditions set forth in
the Prospectus dated [   ]  [and the supplemental Prospectus dated [   ] which
[together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus
Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4
of the Prospectus Directive and must be read in conjunction with such
Prospectus [as so supplemented].
Full information on the Issuer and the offer of the Notes is only available on
the basis of the combination of these Final Terms and the Prospectus. The Prospectus [and the supplemental
Prospectus] [is] [are] available for viewing at the Document Viewing Facility, 25 the North Colonnade,
Canary Wharf, London E14 5HS and www.londonstockexchange.com/engb/ pricesnews/marketnews/ and copies may be
obtained from JPMorgan Chase Bank, London Branch, Trinity Tower, 9 Thomas More Street, London E1W 1YT.]


 


The
following alternative language applies if the first tranche of an issue which
is being increased was issued under a Prospectus  with an earlier date.


 


Terms used herein shall be
deemed to be defined as such for the purposes of the Conditions (the “Conditions”)
set forth in the  Prospectus
dated [original date] [and the supplemental Prospectus dated [   ].
This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus
Directive (Directive 2003/71/EC) (the “Prospectus Directive”) and must be read in conjunction
with the Prospectus dated [current date] [and the supplemental Prospectus dated
[   ], which
[together] constitute[s] a base prospectus for the purposes of the Prospectus
Directive, save in respect of the Conditions which are extracted from the Prospectus dated [original date] [and the
supplemental Prospectus dated [   ] and are attached hereto. Full information on the Issuer and the
offer of the Notes is only available on the basis of the combination of these
Final Terms and the Prospectuses
dated [original date] and [current date] [and the supplemental Prospectuses
dated [   ] and [   ]. [The Prospectuses [and the supplemental Prospectuses] are
available for viewing at the Document Viewing Facility, 25 the North Colonnade,
Canary Wharf, London E14 5HS and
www.londonstockexchange.com/en-gb/pricesnews/marketnews/ and copies may be
obtained from JPMorgan Chase
Bank, London Branch, Trinity tower, 9 Thomas More Street, London E1W 1YT.]


 


[Include
whichever of the following apply or specify as “Not Applicable” (N/A). Note
that the numbering should remain as set out  below, even if “Not
Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics
denote guidance for completing the  Final Terms.]


 


[When
completing final terms or adding any other final terms or information
consideration should be given as to whether such  terms or information
constitute “significant new factors” and consequently trigger the need for a
supplement to the Prospectus  under Article 16 of the Prospectus Directive.]


 


	
  1.

  	
  (i)

  	
  Issuer:

  	
   

  	
  [Imperial Tobacco Finance
  PLC][Imperial Tobacco Finance (2) PLC]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Guarantor:

  	
   

  	
  Imperial Tobacco Group PLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  [(i)]

  	
  Series Number:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(ii)

  	
  Tranche Number:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (If fungible with an
  existing Series, details of that Series, including the date on which the
  Notes become fungible).]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Specified Currency or
  Currencies:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Aggregate Nominal Amount of
  Notes admitted to trading:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(i)]

  	
  Series:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(ii)

  	
  Tranche:

  	
   

  	
  [   ]]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Issue Price:

  	
   

  	
  [   ]% of
  the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Specified Denominations:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
  [   ]

  



 


44

















 


	
  7.

  	
  [(i)]

  	
  Issue Date:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(ii)]

  	
  Interest Commencement Date:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Maturity Date:

  	
   

  	
  [specify date or (for Floating Rate Notes) Interest Payment Date falling
  in or nearest to the relevant month and year]

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Interest Basis:

  	
   

  	
  [   ]% Fixed
  Rate]

  [[specify reference rate] +/– [   ]%
  Floating Rate]

  [Zero Coupon]

  [Index Linked Interest]

  [Other (specify)]

  (further particulars specified below)

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Redemption/Payment Basis:

  	
   

  	
  [Redemption at par]

  
	
   

  	
   

  	
   

  	
  [Index Linked Redemption]

  
	
   

  	
   

  	
   

  	
  [Dual Currency]

  
	
   

  	
   

  	
   

  	
  [Partly Paid]

  
	
   

  	
   

  	
   

  	
  [Instalment]

  
	
   

  	
   

  	
   

  	
  [Other (specify)]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [(N.B. If the Final Redemption Amount is less than 100% of the nominal
  value or the principal is linked to any index, the Notes will constitute
  derivative securities for the purposes of the Prospectus Directive and the
  requirements of Annex XII to the Prospectus Directive Regulation No.809/2004
  will apply and the Issuer will prepare and publish a supplemental prospectus pursuant
  to section 87(G) of the Financial Services and Markets Act 2000.)]

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Change of Interest or
  Redemption/Payment Basis:

  	
   

  	
  [Specify details of any provision for convertibility of Notes into another
  interest or redemption/payment basis]

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Put/Call Options:

  	
   

  	
  [Investor Put]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Issuer Call]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [(further particulars
  specified below)]

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  [(i)]

  	
  Status of the Notes:

  	
  [Senior/[Dated/Perpetual]/Subordinated]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(ii)]

  	
  Status of the Guarantee:

  	
  [Senior/[Dated/Perpetual]/Subordinated]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(iii)]

  	
  [Date [Board] approval for
  issuance of Notes [and Guarantee] obtained:

  	
   

  	
  [   ] [and [   ],
  respectively]

  (N.B Only relevant where Board (or
  similar) authorisation is required for the particular tranche of Notes or
  related Guarantee)]

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Method of distribution:

  	
   

  	
  [Syndicated/Non-syndicated]

  
	
   

  	
   

  	
   

  	
   

  
	
  PROVISIONS
  RELATING TO INTEREST (IF ANY) PAYABLE

  
	
  15.

  	
  Fixed Rate
  Note Provisions

  	
   

  	
  [Applicable/Not Applicable]

  
	
   

  	
   

  	
   

  	
  (If not
  applicable, delete the remaining sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Rate[(s)] of Interest:

  	
  [   ]% per
  annum [payable [annually/semi-annually/quarterly/monthly] in arrear]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Interest Payment Date(s):

  	
  [   ] in
  each year

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Fixed Coupon Amount[(s)]:

  	
  [   ] per [   ]
  in Nominal Amount

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Broken Amount(s):

  	
  [Insert particulars of any initial or final broken interest amounts
  which do not correspond with the Fixed Coupon Amount[(s)]]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Day Count Fraction:

  	
  [30/360/Actual/Actual
  ([ICMA]/ISDA)/other]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  Determination Dates:

  	
  [   ] in
  each year (insert regular interest payment
  dates, ignoring issue date or maturity date in the case of a long or short
  first or last coupon. N.B. only relevant where Day Count Fraction is
  Actual/Actual ([ICMA]))

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  Other terms relating to the
  method of calculating interest for Fixed Rate Notes:

  	
   

  	
  [Not Applicable/give details]

  
								



 


45

















 


	
  16.

  	
  Floating
  Rate Note Provisions

  	
   

  	
  [Applicable/Not Applicable]

  
	
   

  	
   

  	
   

  	
  (If not applicable, delete the remaining sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Interest Period(s):

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Specified Interest Payment
  Dates:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Business Day Convention:

  	
  [Floating Rate
  Convention/Following Business Day Convention/Modified Following Business Day
  Convention/Preceding Business Day Convention/other (give details)]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Business Centre(s):

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Manner in which the Rate(s)
  of Interest is/are to be determined:

  	
   

  	
  [Screen Rate

  Determination/ISDA

  Determination/other (give details)]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  Party responsible for
  calculating the Rate(s) of Interest and Interest Amount(s) (if not the
  [Agent]):

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  Screen Rate Determination:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Reference Rate:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Interest Determination
  Date(s):

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Relevant Screen Page:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
  ISDA Determination:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Floating Rate Option:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Designated Maturity:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  – Reset Date:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
  Margin(s):

  	
  [+/-][   ]%
  per annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  Minimum Rate of Interest:

  	
  [   ]% per
  annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
  Maximum Rate of Interest:

  	
  [   ]% per
  annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
  Day Count Fraction:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xiii)

  	
  Fall back provisions,
  rounding provisions, denominator and any other terms relating to the method
  of calculating interest on Floating Rate Notes, if different from those set
  out in the Conditions:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Zero
  Coupon Note Provisions

  	
   

  	
  [Applicable/Not Applicable]

  
	
   

  	
   

  	
   

  	
  (If not applicable, delete the remaining sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Amortisation Yield:

  	
  [   ]% per
  annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Any other formula/basis of
  determining amount payable:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Index
  Linked Interest Note/other variable-linked interest Note Provisions

  	
   

  	
  [Applicable/Not Applicable]

  (If not applicable, delete the remaining
  sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Index/Formula/other
  variable:

  	
   

  	
  [give or annex details]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Calculation Agent
  responsible for calculating the interest due:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Provisions for determining
  Coupon where calculated by reference to Index and/or Formula and/or other
  variable:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Interest Determination
  Date(s):

  	
   

  	
  [   ]

  



 


46

















 


	
   

  	
  (v)

  	
  Provisions for determining
  Coupon where calculation by reference to Index and/or Formula and/or other
  variable is impossible or impracticable or otherwise disrupted:

  	
   

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  Interest Period(s):

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  Specified Interest Payment
  Dates:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
  Business Day Convention:

  	
  [Floating Rate
  Convention/Following Business Day Convention/Modified Following Business Day
  Convention/Preceding Business Day Convention/other (give details)]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
  Business Centre(s):

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  Minimum Rate of Interest:

  	
  [   ]% per
  annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
  Maximum Rate of Interest:

  	
  [   ]% per
  annum

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
  Day Count Fraction:

  	
  [   ]

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Dual
  Currency Note Provisions

  	
   

  	
  [Applicable/Not Applicable]

  (If not applicable, delete the remaining
  sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Rate of Exchange/method of
  calculating Rate of Exchange:

  	
   

  	
  [give details]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Calculation Agent, if any,
  responsible for calculating the principal and/or interest due:

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Provisions applicable where
  calculation by reference to Rate of Exchange impossible or impracticable:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Person at whose option
  Specified Currency(ies) is/are payable:

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PROVISIONS
  RELATING TO REDEMPTION

  
	
  20.

  	
  Call
  Option

  	
  [Applicable/Not Applicable]

  (If not applicable, delete the remaining
  sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Optional Redemption Date(s):

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Optional Redemption
  Amount(s) of each Note and method, if any, of calculation of such amount(s):

  	
   

  	
  [   ] per
  Note of [   ] specified denomination

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  If redeemable in part:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) Minimum Redemption
  Amount:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) Maximum Redemption
  Amount:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Notice period

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  Put Option

  	
  [Applicable/Not Applicable]

  (If not applicable, delete the remaining
  sub-paragraphs of this paragraph)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Optional Redemption
  Date(s):

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Optional Redemption
  Amount(s) of each Note and method, if any, of calculation of such amount(s):

  	
  [   ] per
  Note of [   ] specified denomination

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Notice period

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  Final
  Redemption Amount of each Note

  	
   

  	
  [[   ] per
  Note of [   ] specified denomination/other/see Appendix]

  
	
   

  	
  In cases where the Final
  Redemption Amount is Index Linked or other variable-linked:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Index/Formula/variable:

  	
  [give or annex details]

  
									



 


47

















 


	
   

  	
  (ii)

  	
  Calculation Agent
  responsible for calculating the Final Redemption Amount:

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Provisions for determining
  Final Redemption Amount where calculated by reference to Index and/or Formula
  and/or other variable:

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Determination Date(s):

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Provisions for determining
  Final Redemption Amount where calculation by reference to Index and/or
  Formula and/or other variable is impossible or impracticable or otherwise disrupted:

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  Payment Date:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  Minimum Final Redemption
  Amount:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
  Maximum Final Redemption
  Amount:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  Early
  Redemption Amount

  	
   

  	
   

  	
   

  
	
   

  	
  Early Redemption Amount(s)
  of each Note payable on redemption for taxation reasons or on event of default
  or other early redemption and/or the method of calculating the same (if
  required or if different from that set out in the Conditions):

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GENERAL
  PROVISIONS APPLICABLE TO THE NOTES

  
	
  24.

  	
  Form of
  Notes:

  	
  Bearer
  Notes:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Temporary Global Note
  exchangeable for a Permanent Global Note which is exchangeable for Definitive
  Notes on [   ] days’ notice/at any time/in the limited
  circumstances specified in the Permanent Global Note]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Temporary Global Note
  exchangeable for Definitive Notes on [   ] days’ notice]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Permanent Global Note
  exchangeable for Definitive Notes on [   ] days’ notice/at any
  time/in the limited circumstances specified in the Permanent Global Note]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Registered Notes]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  Financial Centre(s) or
  other special provisions relating to payment dates:

  	
   

  	
  [Not Applicable/give details. Note that this paragraph relates to
  the date and place of payment, and not interest period end dates, to which
  sub-paragraphs 16(iv) and 18(ix) relate]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  Talons for future Coupons
  or Receipts to be attached to Definitive Notes (and dates on which such
  Talons mature):

  	
   

  	
  [Yes/No. If yes, give details]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  Details relating to Partly
  Paid Notes: amount of each payment comprising the Issue Price and date on which
  each payment is to be made and consequences (if any) of failure to pay,
  including any right of the Issuer to forfeit the Notes and interest due on
  late payment:

  	
   

  	
  [Not Applicable/give details]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
  Details relating to
  Instalment Notes: amount of each instalment, date on which each payment is to
  be made:

  	
   

  	
  [Not Applicable/give details]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  Redenomination,
  renominalisation and reconventioning provisions:

  	
   

  	
  [Not Applicable/The
  provisions [in Condition [   ] apply]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  Consolidation provisions:

  	
   

  	
  [Not Applicable/The
  provisions [in Condition [   ] apply]

  
								



 


48

















 


	
  31.

  	
  Other final terms:

  	
   

  	
  [Not Applicable/give details]

  
	
   

  	
   

  	
   

  	
  (When adding any other final terms consideration should be given as to
  whether such terms constitute a “significant new factor” and consequently
  trigger the need for a supplement to the Prospectus under Article 16 of the
  Prospectus Directive.)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DISTRIBUTION

  	
   

  	
   

  	
   

  
	
  32.

  	
  (i) If syndicated, names of
  Managers:

  	
   

  	
  [Not Applicable/give names]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii) Stabilising Manager(s)
  (if any):

  	
   

  	
  [Not Applicable/give name]

  
	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
  If non-syndicated, name of
  Dealer:

  	
   

  	
  [Not Applicable/give name]

  
	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
  Additional selling
  restrictions:

  	
   

  	
  [Not Applicable/give details]

  
							



 


[LISTING
AND ADMISSION TO TRADING APPLICATION


 


These
Final Terms comprise the final terms required to list and have admitted to
trading the issue of Notes described herein pursuant to the €10,000,000,000
Debt Issuance Programme of Imperial Tobacco Finance PLC and Imperial Tobacco
Finance (2) PLC irrevocably and unconditionally guaranteed Imperial Tobacco
Group PLC.]


 


RESPONSIBILITY


 


The
Issuer and the Guarantor accept responsibility for the information contained in
these Final Terms. [   ] has been extracted from [   ].
[Each of the Issuer and the Guarantor confirms that such information has been
accurately reproduced and that, so far as it is aware, and is able to ascertain
from information published by [   ], no facts have been omitted
which would render the reproduced information inaccurate or misleading.]


 


Signed
on behalf of the Issuer:


 


	
  By:

  	
   

  	
   

  
	
   

  
	
  Duly authorised

  
	
   

  
	
  Signed on behalf of the
  Guarantor:

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Duly authorised

  



 


49

















 


PART B – OTHER
INFORMATION


 


	
  1.

  	
  LISTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Listing:

  	
  [London/other (specify)/None]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Admission to trading:

  	
  [Application has been made
  for the Notes to be admitted to trading on the London Stock Exchange’s Gilt
  Edged and Fixed Interest Market with effect from [   ].] [Not
  Applicable.]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Estimate of total expenses
  related to admission to trading:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  RATINGS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Ratings:

  	
  The Notes to be issued have
  been rated:

  
	
   

  	
   

  	
   

  	
  [S & P: [   ]]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Moody’s: [   ]]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Fitch: [   ]]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [[Other]: [   ]]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (The above disclosure should reflect the rating allocated to Notes of
  the type being issued under the Programme generally or, where the issue has
  been specifically rated, that rating.)

  



 


3.     [NOTIFICATION


 


The
Financial Services Authority [has been requested to provide/has provided –
include first alternative for an issue which is contemporaneous with the
establishment or update of the Programme and the second alternative for
subsequent issues] the [include names of competent
authorities of host Member States] with a certificate of approval
attesting that the Prospectus has been drawn up in accordance with the
Prospectus Directive.]


 


4.     [INTERESTS OF NATURAL AND
LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER]


 


Need
to include a description of any interest, including conflicting ones, that is
material to the issue/offer, detailing the persons involved and the nature of
the interest. May be satisfied by the inclusion of the following statement:


 


“Save
as discussed in “Subscription and Sale”, so far as the Issuer is aware, no
person involved in the offer of the Notes has an interest material to the
offer.”


 


	
  [5.

  	
  REASONS
  FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(i)

  	
  Reasons for the offer

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (See “Use of Proceeds” wording in Prospectus – if reasons for offer different
  from making profit and/or hedging certain risks will need to include those
  reasons here.)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(ii)]

  	
  Estimated net proceeds:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (If proceeds are intended for more than one use will need to split out
  and present in order of priority. If proceeds insufficient to fund all proposed
  uses state amount and sources of other funding.)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [(iii)]

  	
  Estimated total expenses:

  	
  [   ] [Include breakdown of expenses.]

  
	
   

  	
   

  	
   

  	
  (Only necessary to include disclosure of net proceeds and total expenses
  at (ii) and (iii) above where disclosure is included at (i) above.)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  [Fixed Rate Notes only – YIELD

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Indication of yield:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The yield is calculated at
  the Issue Date on the basis of the Issue Price. It is not an indication of
  future yield. ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  OPERATIONAL
  INFORMATION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ISIN Code:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Common Code:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Any clearing system(s)
  other than Euroclear Bank S.A./N.V. as operator of the Euroclear System and Clearstream
  Banking, société anonyme and the relevant identification number(s):

  	
   

  	
  [Not Applicable/give name(s) and number(s) [and address(es)]]

  
							



 


50

















 


	
   

  	
  Delivery:

  	
  Delivery [against/free of]
  payment

  
	
   

  	
   

  	
   

  
	
   

  	
  Names and addresses of
  additional Paying Agent(s) (if any):

  	
   

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  General

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tradeable Amount:

  	
  [   ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  So long as the Notes are
  represented by a temporary Global Note or permanent Global Note, the Notes
  will be tradeable only in principal amounts of at least the Specified
  Denomination and integral multiples of the Tradeable Amount in excess
  thereof. For the avoidance of doubt, in the case of a holding of Notes in an
  integral multiple of the Tradeable Amount in excess of the Specified
  Denomination, such holding will be redeemed as its principal amount.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Applicable TEFRA exemption:

  	
  [C Rules/D Rules/Not
  Applicable]

  
							



 


51

















 


General Information


 


1.       The listing of the Notes on the Official List
will be expressed as a percentage of their nominal amount (exclusive of accrued interest). It is expected that listing
of the Programme on the Official List and admission of the Notes to trading on
the Market will be granted on or
around 16th January 2006. It is further expected that each Tranche of Notes
which is to be admitted to the
Official List and to trading on the Market will be admitted separately, subject
only to the issue of a temporary or permanent Global Note (or one or more Certificates) in respect of each
Tranche. Prior to official listing and admission to trading, however, dealings will be permitted
by the London Stock Exchange in accordance with its rules. Transactions on the London Stock Exchange will normally be
effected for delivery on the third working day after the day of the
transaction. Unlisted Notes,
however, may be issued pursuant to the Programme.


 


2.       Each of the Issuers and the Guarantor has
obtained all necessary consents, approvals and authorisations in the United Kingdom in connection with the issue and
performance of the Notes and the guarantee relating to Notes issued under the Programme. The giving of the guarantee
relating to Notes issued under the Programme by the Guarantor and the update of the Programme was authorised by a
resolution of the Board of Directors of the Guarantor passed on 28th October
2005 and by a resolution of a
Committee of the Board of Directors of the Guarantor passed on 10th January
2006. The update of the Programme
was authorised by a resolution of the Board of Directors of Imperial Finance
passed on 10th January 2006 and by a
resolution of the Board of Directors of Imperial Finance 2 passed on 10th
January 2006.


 


3.       There has been no significant change in the financial
or trading position of Imperial Finance or the Guarantor since 30th September 2005 and of Imperial Finance 2 since
5th January 2006 and no material adverse change in the prospects of Imperial Finance or the Guarantor since 30th
September 2005 and of Imperial Finance 2 since 5th January 2006.


 


4.       Except as disclosed in this Prospectus (see
pages 38 to 40 “Imperial Tobacco Group PLC – Legal Environment”), neither the Issuers nor the Guarantor nor any of the
Guarantor’s subsidiaries is or has been involved in any governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Issuers or the Guarantor are aware) during the 12
months preceding the date of this Prospectus which may have or have had in the
recent past significant effects
on the financial position or profitability of the Issuers and the Group.


 


5.       Each Bearer Note having a maturity of more
than one year, Receipt, Coupon and Talon will bear the following legend: “Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations
provided in Sections 165(j)) and 1287(a) of the Internal Revenue Code”.


 


6.       Notes
have been accepted for clearance through the Euroclear and Clearstream,
Luxembourg systems. The Common Code, the International Securities
Identification Number (ISIN) and (where applicable) the identification number
for any other relevant clearing system for each Series of Notes will be set out
in the relevant Final Terms.


 


7.       The address of Euroclear is 1 Boulevard du Roi
Albert II, B-1210 Brussels, Belgium and the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy L-1855
Luxembourg. The address of any alternative clearing system will be specified in the applicable Final Terms.


 


8.       The issue price and the amount of the relevant
Notes will be determined, before filing of the relevant Final Terms of each Tranche, based on then prevailing market
conditions. The Issuers and the Guarantor do not intend to provide any
postissuance information in
relation to any issues of Notes.


 


9.       All Notes issued under the Programme will be
irrevocably and unconditionally guaranteed by way of an amended and restated deed of guarantee dated 13th January
2006 by Imperial Tobacco Limited, the Guarantor’s main UK operating subsidiary. The guarantee is an unsecured,
unsubordinated obligation of Imperial Tobacco Limited, guaranteeing all monies due under the Notes. The deed of
guarantee may be terminated at the option of Imperial Tobacco Limited if each
credit rating agency which
ascribes a solicited long-term credit rating to Notes issued under the
Programme confirms in writing to the
Trustee that such Notes will carry the same credit rating as the long-term
corporate credit rating ascribed to the Group, without the benefit of any guarantee, indemnity or similar arrangement
from Imperial Tobacco Limited or any other entity other than the Guarantor.


 


10.     For so long as Notes may be issued pursuant to
this Prospectus, the following documents will be available, during usual business hours on any weekday
(Saturdays, Sundays and public holidays excepted), for inspection at the office
of JPMorgan Chase Bank, N.A.,
Trinity Tower, 9 Thomas More Street, London E1W 1YT:


 


10.1   the Trust Deed (which includes the form of the
Global Notes, the definitive Bearer Notes, the Certificates, the Coupons, the Receipts and the Talons)


 


10.2   the Programme Agreement


 


10.3   the Memorandum and Articles of Association of
Imperial Finance, Imperial Finance 2 and the Guarantor


 


10.4   the published annual report and audited
accounts of Imperial Finance for the two financial years most recently ended,
the audited consolidated annual
accounts of the Guarantor for the two years most recently ended and any subsequent
interim financial statements of
the Guarantor


 


52

















 


10.5   each Final Terms (save that Final Terms
relating to a Note which is neither admitted to trading on a regulated market
within the European Economic Area
nor offered in the European Economic Area in circumstances where a prospectus
is required to be published under
the Prospectus Directive will only be available for inspection by a holder of
such Note and such holder must
produce evidence satisfactory to the Issuers and the Issuing and Paying Agent
as to its holding of Notes and identity)


 


10.6   a copy of this Prospectus together with any
Supplement to this Prospectus or further Prospectus


 


10.7   a copy of the subscription agreement for Notes
issued on a syndicated basis that are listed on the Official List and admitted to trading on the Market and


 


10.8   a copy of the amended and restated guarantee
dated 13th January 2006 by Imperial Tobacco Limited, the Guarantor’s main UK operating subsidiary.


 


In addition, this Prospectus
is also available at the website of the Regulatory News Service operated by the
London Stock  Exchange at
www.londonstockexchange.com/en-gb/pricesnews/marketnews/.


 


11.     Copies of the latest annual report and
accounts of Imperial Finance and the Guarantor and the latest interim
consolidated accounts of the
Guarantor may be obtained, and copies of the Trust Deed (including the
Guarantee) will be available for inspection,
at the specified offices of each of the Paying Agents during normal business
hours, so long as any of the Notes is outstanding.


 


12.     PricewaterhouseCoopers LLP, Registered
Auditors and Chartered Accountants (a member of the Institute of Chartered Accountants in England and Wales) (“PricewaterhouseCoopers
LLP”) of 31 Great George Street, Bristol BS1 5QD, have audited, and rendered unqualified audit
reports on:


 


(i)    the consolidated financial statements of
Imperial Finance for the two years ended 30th September 2005; and


 


(ii)   the consolidated financial statements of the
Guarantor for the two years ended 30th September 2005.


 


PricewaterhouseCoopers LLP
have been appointed as auditors to Imperial Finance 2. As at the date of this
Prospectus,  Imperial
Finance 2 has not published any audited accounts and has not yet commenced operations.


 


13.     The total expenses related to the update of
the Programme are expected to be less than €200,000.


 


53

















 


Registered Office of


Imperial Finance, Imperial Finance 2,


Imperial Tobacco and Imperial Tobacco Limited


P.O.Box
244


Upton
Road


Bristol
BS99 7UJ


 


	
   

  	
  DEALERS

  	
   

  
	
   

  	
   

  	
   

  
	
  ABN AMRO Bank N.V.

  	
   

  	
  Barclays Bank PLC

  
	
  250
  Bishopsgate

  	
   

  	
  5
  The North Colonnade

  
	
  London
  EC2M 4AA

  	
   

  	
  Canary
  Wharf

  
	
   

  	
   

  	
  London
  E14 4BB

  
	
   

  	
   

  	
   

  
	
  Bayerische Landesbank

  	
   

  	
  BNP PARIBAS

  
	
  Brienner
  Strasse 18

  	
   

  	
  10
  Harewood Avenue

  
	
  D
  – 80333 Munich

  	
   

  	
  London
  NW1 6AA

  
	
   

  	
   

  	
   

  
	
  Calyon

  	
   

  	
  Citigroup Global Markets Limited

  
	
  9,
  Quai du President Paul Doumer

  	
   

  	
  Citigroup
  Centre

  
	
  92920
  Paris La Défense Cédex

  	
   

  	
  Canada
  Square

  
	
   

  	
   

  	
  Canary
  Wharf

  
	
   

  	
   

  	
  London
  E14 5LB

  
	
   

  	
   

  	
   

  
	
  Commerzbank Aktiengesellschaft

  	
   

  	
  Deutsche Bank AG, London Branch

  
	
  60
  Gracechurch Street

  	
   

  	
  Winchester
  House

  
	
  London
  EC3V 0HR

  	
   

  	
  1
  Great Winchester Street

  
	
   

  	
   

  	
  London
  EC2N 2DB

  
	
   

  	
   

  	
   

  
	
  HSBC Bank plc

  	
   

  	
  ING Bank N.V.

  
	
  8
  Canada Square

  	
   

  	
  Financial
  Markets

  
	
  London
  E14 5HQ

  	
   

  	
  Foppingadreef
  7

  
	
   

  	
   

  	
  1102
  BD AMSTERDAM-ZUIDOOST

  
	
   

  	
   

  	
   

  
	
  J.P. Morgan Securities Ltd.

  	
   

  	
  Morgan Stanley & Co. International Limited

  
	
  125
  London Wall

  	
   

  	
  25
  Cabot Square

  
	
  London
  EC2Y 5AJ

  	
   

  	
  Canary
  Wharf

  
	
   

  	
   

  	
  London
  E14 4QA

  
	
   

  	
   

  	
   

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  WestLBAG

  
	
  135
  Bishopsgate

  	
   

  	
  Herzogstrasse
  15

  
	
  London
  EC2M 3UR

  	
   

  	
  40217
  Düsseldorf

  



 


ISSUING AND PAYING AGENT, TRANSFER AND CALCULATION AGENT AND
REGISTRAR


 


JPMorgan Chase Bank, N.A.


Trinity
Tower


9
Thomas More Street


London
E1W 1YT


 


PAYING AND TRANSFER AGENT


 


J.P. Morgan Bank Luxembourg S.A.


6,
route de Trèves


L-2633
Senningerberg


Luxembourg


 


TRUSTEE


 


JPMorgan Chase Bank, N.A.


Trinity
Tower


9
Thomas More Street


London
E1W 1YT


 


ARRANGER


 


J.P. Morgan Securities Ltd.


125
London Wall


London
EC2Y 5AJ


 


54

















 


AUDITORS


 


To Imperial Finance, Imperial Finance 2, Imperial Tobacco and
Imperial Tobacco Limited


 


PricewaterhouseCoopers LLP


31
Great George Street


Bristol
BS1 5QD


 


LEGAL ADVISERS


 


To the Issuers and the Guarantor


 


as to English law


 


Allen & Overy LLP


One
New Change


London
EC4M 9QQ


 


To the Dealers


 


as to English law


 


Linklaters


One
Silk Street


London
EC2Y 8HQ


 


55