Document:

Exhibit 4.3

 

CONTAINS
CHANGES TO BE APPROVED BY SHAREHOLDERS AT AGM IN FEBRUARY 2003 – USE
VERSION 4 UNTIL AMENDMENTS APPROVED AT AGM.

 

IMPERIAL TOBACCO GROUP PLC

 

RULES OF THE IMPERIAL
TOBACCO GROUP

SHARE MATCHING SCHEME

 

(Approved
by the Company on 14 August 1996 and amended by the Remuneration Committee
on 2 December 1996, on 31 January 2000, on 24 November 2000, on
23 November 2001 and on 22 November 2002. Amended at an AGM held on 4
February 2003. Amended by the Remuneration Committee on 14 November 2003.)

 

BAA/I210.00099

 

 

RULES OF THE IMPERIAL
TOBACCO GROUP

SHARE MATCHING SCHEME

 

1.                                           Definitions

 

Except where inconsistent with the subject
or context, words defined in the Trust Deed made between Imperial Tobacco Group
PLC (1) and Abacus (C.I.) Limited (the “Trustees”) (2) dated 1
October 1996 establishing the Imperial Tobacco Group PLC Employee Benefit
Trust (the “Trust”) shall have the same meanings when used in these rules.  In addition the following words and
expressions shall have the following meanings:-

 

	
  “Act”

  	
   

  	
  the
  Income and Corporation Taxes Act 1988;

  
	
   

  	
   

  	
   

  
	
  “Additional Share”

  	
   

  	
  a
  Share allocated pursuant to Rule 4;

  
	
   

  	
   

  	
   

  
	
  “Additional Share

  	
   

  	
   

  
	
  Award Certificate”

  	
   

  	
  in
  circumstances where Additional Shares will not vest unless and until a
  performance condition or performance conditions attaching to an award of
  Additional Shares has or have been fulfilled or waived, a certificate
  executed by the Company specifying the performance conditions attaching to an
  award of Additional Shares in the form, or substantially the form, as shown
  in Schedule 2 to these Rules;

  
	
   

  	
   

  	
   

  
	
  “Beneficiary”

  	
   

  	
  means
  and includes:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  any
  Employee;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  any
  former Employee; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  the
  wife husband widow widower and children and stepchildren (being in the case
  of children and stepchildren under 18 years of age) of any such Employee or
  former Employee;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  the
  personal representatives of any such Employee or former Employee provided
  that the terms of the deceased Employee’s or former Employee’s will or
  intestacy are such that the person or persons who will receive any benefit
  under this Settlement are only those within Section 86(1)(b) of the
  Inheritance Tax Act 1984 in relation to such deceased Employee or former
  Employee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROVIDED
  THAT (A) no person shall be a former Employee for the purposes of this
  definition unless he shall be at the date of execution of the Employee
  Benefit Trust or become after that date an Employee; AND (B) a Beneficiary
  shall not include any person who is for the time being resident for tax
  purposes in the Island of Jersey;

  
	
   

  	
   

  	
   

  
	
  “Board”

  	
   

  	
  the
  duly constituted Remuneration Committee of the Board of Directors of the
  Company;

  
	
   

  	
   

  	
   

  
	
  “Company”

  	
   

  	
  Imperial
  Tobacco Group PLC;

  
	
   

  	
   

  	
   

  
	
  “Control”

  	
   

  	
  as
  defined in Section 840 of the Act;

  

 

1

 

	
  “CREST”

  	
   

  	
  means
  the relevant system (as defined in the Uncertificated Securities Regulations
  1995 (SI 1995/3272)) in respect of which CRESTCo is the operator;

  
	
   

  	
   

  	
   

  
	
  “CRESTCo”

  	
   

  	
  means
  CRESTCo Limited;

  
	
   

  	
   

  	
   

  
	
  “CREST Account”

  	
   

  	
  means
  a designated CREST account held by a Participant with Salomon Smith Barney
  Inc (or such other sponsor as agreed by the Trustees in their absolute
  discretion);

  
	
   

  	
   

  	
   

  
	
  “Early Vesting Date”

  	
   

  	
  as
  defined at Rule 5.3;

  
	
   

  	
   

  	
   

  
	
  “Earnings”

  	
   

  	
  in
  respect of any Employee, the basic annual salary of that Employee;

  
	
   

  	
   

  	
   

  
	
  “Employee”

  	
   

  	
  any
  person for the time being in full, part-time or temporary employment of any
  Member of the Group;

  
	
   

  	
   

  	
   

  
	
  “Expected Vesting Date” as defined at Rule 5.1 and Rule 5.2;

  
	
   

  	
   

  	
   

  
	
  “Group”

  	
   

  	
  the
  Company and its Subsidiaries;

  
	
   

  	
   

  	
   

  
	
  “Lodged Share”

  	
   

  	
  a
  Share:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  acquired by
  the Trustees with monies provided by a Beneficiary or transferred to the
  Trustees and in each case held by the Trustees as bare nominee for such
  Beneficiary; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  in respect
  of which a share certificate(s) covering such Share has been deposited with
  the Trustees by a Beneficiary which shall be held by the Trustees (or such
  person or persons as may from time to time be nominated by the Trustees) on
  behalf of the Beneficiary; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  held by the
  Participant in a CREST Account with Salomon Smith Barney (or such other
  sponsor as agreed by the Trustees in their absolute discretion);

  
	
   

  	
   

  	
   

  
	
  “Member of the Group” the
  Company or any of its Subsidiaries;

  
	
   

  	
   

  	
   

  
	
  “Participant”

  	
   

  	
  a
  Beneficiary on whose behalf Lodged Shares are held by the Trustees or by the
  Beneficiary in a CREST Account, and who has not withdrawn them or who has
  deposited a share certificate(s) with the Trustees;

  
	
   

  	
   

  	
   

  
	
  “Rules”

  	
   

  	
  these
  Rules as from time to time amended in accordance with their provisions;

  
	
   

  	
   

  	
   

  
	
  “Scheme”

  	
   

  	
  the
  Imperial Tobacco Group Share Matching Scheme constituted by these Rules;

  
	
   

  	
   

  	
   

  
	
  “Share”

  	
   

  	
  an
  ordinary share in the capital of the Company;

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

  	
  a
  subsidiary or subsidiary undertaking of the Company within the meaning of the
  Companies Act 1985;

  
	
   

  	
   

  	
   

  
	
  “Vesting Date”

  	
   

  	
  the
  earlier of the Expected Vesting Date and Early Vesting Date;

  
						

 

2

 

	
  “Vested Share”

  	
   

  	
  an
  Additional Share which has been allocated to a Beneficiary and which becomes
  vested in the Beneficiary in accordance with the Rules.

  

 

2.                                           Invitations

 

2.1                                     The
Board may, from time to time, invite any Beneficiary to participate in the
Scheme.

 

2.2                                     Any
such invitation shall invite such Beneficiaries as the Board may in its
discretion determine:-

 

(a)                               to pay
monies to the Trustees and to authorise and require the Trustees to apply such
monies in the acquisition of Lodged Shares; and/or

 

(b)                              to
transfer Shares to the Trustees as Lodged Shares; and/or

 

(c)                               to
deliver a share certificate(s) in respect of the Lodged Shares to the Trustees
(or such other person or persons as may be nominated by the Trustees provided
the share certificate(s) are held to the Trustees’ order); and/or

 

(d)                              to open
a CREST Account and either (i) apply monies towards the purchase of Shares; or
(ii) transfer Shares by way of a completed CREST dematerialisation form to the
CREST Account such shares being Lodged Shares,

 

and shall advise such Beneficiaries of the
proposed allocation of Additional Shares.

 

2.3                                     The
Trustees shall allocate Additional Shares to Participants in respect of their
Lodged Shares on such basis as the Board may in its discretion determine based
on length of service with the Group, the Earnings of a Participant, the
financial performance of the Group or otherwise howsoever PROVIDED THAT the
maximum aggregate number of Additional Shares which may be allocated to a
Participant in respect of an invitation shall not exceed the total number of
Lodged Shares held by the Trustees on behalf of such Participant or held by the
Participant in a CREST Account in respect of such invitation.

 

2.4                                     No
invitation shall be made other than at a time at which dealings in Shares may
occur under the London Stock Exchange Model Code for securities dealings by
directors and other relevant employees.

 

3.                                           Lodged
Shares

 

3.1                                     Lodged
Shares shall be registered either:

 

(a)                               in the
name of the Trustees (or such other person or persons as may be nominated by
the Board for the purpose) who shall hold such Shares as bare nominee for the
relevant Participant; and/or

 

(b)                              in the
Participant’s name and the share certificate(s) covering such Shares shall be
held by the Trustees (or such other person or persons as may be nominated by
the Trustees provided the share certificate(s) is held to the Trustees’ order);
or

 

(c)                               in the
Participant’s name and held in a designated CREST Account held with Salomon
Smith Barney (or such other sponsor as agreed with the Trustees in their
absolute discretion).

 

3.2                                     The
Trustees shall not exercise any rights attaching to Lodged Shares otherwise
than in accordance with any written wishes received from the relevant
Participant.  It shall be the
responsibility of each Participant to ensure that any voting wishes are
conveyed to the Trustees in sufficient time and with sufficient clarity to
allow the Trustees to carry out the same, and the Trustees shall not be liable
to any person for the consequences of any failure to exercise voting rights.

 

3

 

3.3                                     The
Trustees shall pay to the relevant Participant the amount of any dividends paid
by the Company on the Lodged Shares (other than those in respect of which a
share certificate(s) has or have been deposited with the Trustees), and unless
otherwise instructed by the relevant Participant shall credit the CREST Account
of the Participant (if the Participant holds his/her Lodged Shares in a CREST
Account) with the amount of any such dividends.

 

4.                                           Effect
of Allocation

 

4.1                                     Any
Additional Share which has been allocated to a Participant shall be held upon
trust absolutely for that Participant (such that the Trustees may exercise any
rights attaching to the Additional Shares and the relevant Participant shall
have no entitlement to any dividends paid by the Company on the Additional
Shares)

 

(a)                               if and
so long as that Participant shall, throughout the period commencing on the date
of allocation of such Additional Share and ending on the Vesting Date

 

(i)                               be and
have been employed continuously under a contract of employment with any Member
of the Group and is not then under notice of termination of such contract given
or received; and

 

(ii)                            not have
caused any of the Lodged Shares in respect of which the Additional Shares were
allocated to have been transferred or delivered in accordance with Rule 7; and

 

(b)                              any
performance condition(s) imposed by the Board pursuant to Rule 2.3 and which
shall be set out in the Additional Share Award Certificate has or have been
satisfied or waived in accordance with its terms.

 

4.2                                     No
Lodged Share may be assigned, charged or (subject to Rule 7) otherwise disposed
of by a Participant.

 

5.                                           Vesting
of Shares

 

5.1                                     Save
as otherwise provided, and provided that any performance condition(s) imposed
by the Board pursuant to Rule 2.3 has or have been satisfied or waived in
accordance with its terms, “Expected Vesting Date” in relation to any
Additional Shares means such anniversary of the date of allocation of the
Additional Shares as the Board shall, prior to such allocation determine, save
that if an event occurs as a result of which the Board determines that in
relation to all or any Additional Shares previously allocated the Expected
Vesting Date is no longer appropriate, the Board may in its discretion
substitute such other date as it may determine as the Expected Vesting Date;

 

5.2                                     “Expected
Vesting Date” in relation to any Additional Shares allocated pursuant to an
invitation made by the Board in December 2001 shall be 29
January 2005;

 

5.3                                     [Provided
that any performance condition(s) imposed by the Board pursuant to Rule 2.3 has
or have been satisfied or waived in accordance with its terms,] “Early Vesting
Date” in relation to any Additional Share means the date on which any of the
following events shall first occur prior to the Expected Vesting Date of such
Additional Share:-

 

(a)                               any
person acquiring Control of the Company (including for the avoidance of doubt
pursuant to an amalgamation or reconstruction, however effected, or a
compromise or a scheme of arrangement sanctioned by the Court under
Section 425 of the Companies Act 1985);

 

(b)                              notice
being duly given of a resolution for the voluntary winding-up of the Company;

 

4

 

(c)                               death
during service of the Participant; or,

 

(d)                              cessation
of the Participant’s employment by reason of:-

 

(i)                               ill
health, injury, disability or redundancy;

 

(ii)                            the
company employing the Participant ceasing to be a Member of the Group;

 

(iii)                         the business
or part of the business to which the Participant’s office or employment relates
being transferred to a person who is not a Member of the Group;

 

(iv)                        any other
circumstances.

 

(e)                               notice
being given that the Shares will cease to be listed on the London Stock
Exchange.

 

5.4                                     Any
Lodged Shares held upon bare trust for a Participant shall be transferred (in
such manner (whether in uncertificated form or otherwise) as the Trustees may
determine) to the relevant Participant on the Vesting Date and in relation to
any Lodged Shares in respect of which a share certificate(s) has or have been
deposited with the Trustees, the Trustees shall return or procure the return of
all such share certificates as soon as practicable following the Vesting Date.

 

5.5

(a)                               If the
Early Vesting Date has arisen under Rule 5.3(d)(iv), any award of Additional
Shares to that Participant shall lapse unless, within six months of that date,
the Trustee shall determine otherwise in which case there shall be transferred
to the relevant Participant such number of Additional Shares as may be
determined by the Trustees in their discretion but not exceeding the number of
Additional Shares which would have been transferred to the Participant had the
Early Vesting Date arisen otherwise than under Rule 5.3(d)(iv).

 

(b)                              If the
Early Vesting Date has arisen otherwise than under Rule 5.3(d)(iv), there shall
also be transferred to the relevant Participant (or to the Participant’s
estate) such number of Additional Shares as may be determined by the Trustee in
accordance with the basis of allocation originally laid down under Rule 2.3.

 

5.6                                     The
Additional Shares transferred to a Participant pursuant to Rule 5.5 above shall
rank pari passu with all Shares then in issue except that they will not rank
for any dividend or other distribution paid or made by reference to a record
date falling prior to the date that they are transferred.

 

5.7                                     For
the purposes of this Rule 5, where a Participant’s employment with any Member
of the Group is terminated without notice the Participant’s employment shall be
deemed to cease on the date on which the termination takes effect and where the
said employment is terminated with notice the Participant’s employment shall be
deemed to cease on the date on which that notice is given unless the Board in its
sole discretion shall agree to extend the date on which the employment is
deemed to cease to the date when the notice expires.

 

5.8                                     Notwithstanding
the provisions of this Rule 5, no Share may be issued under the Scheme on any
date if, as a result, any of the following limits would be exceeded:

 

(a)                               the
total number of Shares issued or committed to be issued during the period of
ten years ending on that date under the Scheme and all other employees’ share
schemes established by the Company would exceed 10% of the issued ordinary
share capital of the Company on that date;

 

5

 

(b)                              the
total number of Shares issued or committed to be issued during the period of
five years ending on that date under the Scheme and all other employees’ share
schemes established by the Company would exceed 5% of the issued ordinary share
capital of the Company on that date;

 

(c)                               the
total number of Shares issued or committed to be issued during the period of
ten years ending on that date under the Scheme and all other employees’ share
schemes established by the Company would exceed 5% of the issued ordinary share
capital of the Company on that date, PROVIDED THAT there shall be excluded for
the purposes of this limit Shares issued or committed to be issued under any
employees’ share scheme in circumstances where participation is offered or
extended to all or most employees of the participating companies under that
scheme.

 

6.                                           Capitalisation

 

6.1                                     If
and whenever new Shares are allotted to the Trustees by way of capitalisation
or other distribution of a capital nature, such new Shares shall accrue and be
added to and be held upon identical trusts to the Shares in respect of which
such new Shares shall have been allotted. 
The number and nominal value of Additional Shares and the basis of
further allocations of Additional Shares, may be adjusted in such a manner as
the Company’s Auditors, acting as experts and not as arbitrators, may confirm
in writing to be fair and reasonable. 
Participants shall be notified of any such adjustment.

 

6.2                                     If
and whenever the Company shall issue by way of rights or otherwise make any
offer or invitation to shareholders generally and shall issue to its members
nil paid letters of allotment or other documents (“Nil Paid Rights”)
representing negotiable Nil Paid Rights or entitlements relating to any
ordinary shares or other security or securities (or any mixture of the two) in
or of the Company, the Trustees shall be entitled to receive but shall be
obliged to sell such proportion of such Nil Paid Rights as are attributable to
Additional Shares as shall enable the Trustees to subscribe for the new shares
or securities which are the subject of the balance of the Nil Paid Rights and
the Trustees shall so apply the proceeds of disposal in that way.  The shares or securities so purchased shall
be added pro rata and be held upon identical trusts to the Additional Shares
held by the Trustees in respect of which such Nil Paid Rights shall have been
received by the Trustees.  Any cash
balance shall be held likewise.  If any
such Nil Paid Rights shall be issued by reference to a record date which falls
after the time at which the relevant Shares in respect of which such Nil Paid
Rights shall have been issued shall have become held absolutely for a
Participant, such Nil Paid Rights shall be held by the Trustees upon trust for
such Participant absolutely.

 

6.3                                     If
under Rule 6.1 or 6.2 above any fraction of a Share arises the allocation
therein provided for shall be rounded up or down as the Trustees may in their
sole discretion think fit.

 

6.4                                     In
relation to any Lodged Share registered in the name of the Trustees (or another
person) pursuant to Rule 2.2 the Participant may instruct the Trustees to take
such action as the Participant may inform the Trustees in writing.  The Trustees shall be under no obligation to
take any action unless the Participant shall provide any necessary funds and
shall not be responsible for any failure to act in time or at all, irrespective
of the circumstances.

 

7.                                           Transfer
of Legal Title

 

The Trustees shall in respect of all (but not some
only) of the Lodged Shares:

 

(a)                               transfer
the legal title into the name of the relevant Participant and shall transfer
the same into such Participant’s name, or, if the Participant directs
otherwise, in such manner (whether in uncertificated form or otherwise) as the
Trustees may determine; and/or

 

6

 

(b)                              deliver
or procure the delivery of all the share certificate(s) to the relevant
Participant

 

as soon as reasonably practicable following the
receipt of any written instruction to this effect from such Participant.

 

8.                                           Stamp
Duty and Other Expenses

 

Any stamp duty or other expenses incurred in any
transfer of Additional Shares and/or Lodged Shares by the Trustees shall be
payable:-

 

(a)                               in the
case of either a transfer into the name or (at the direction) of the
Participant concerned or the acquisition by the Trust of Additional Shares, by
the Trustees; and

 

(b)                              in any
other case, by the Participant concerned (unless the Board shall determine
otherwise).

 

9.                                           Taxation

 

9.1                                     The
Company or the Trustees may make such provision for and take such action as may
be considered by either of them to be necessary or expedient for the withholding
or payment of any taxes or any other statutory deductions for which either of
them is properly accountable and wherever those taxes are imposed provided
those taxes arise in respect of any transfer of funds or assets or any payment
pursuant to the Trust and/or these Rules including (but not limited to) the
withholding of funds or property (or any portion thereof) from any payment
under the Trust and/or under these Rules until a Participant reimburses the
Company or the Trustees for the amounts of any such taxes for which either of
them is respectively and properly accountable.

 

9.2                                     For
the purposes of this Rule 9 the Trustees may rely on any information supplied
to them by the Company or by any tax adviser selected by the Company as to the
amount of any such tax liability.

 

10.                                     General

 

10.1                               Any
notice or other document given to any Employee pursuant to the Scheme shall be
delivered to him, sent by post to him at his home address according to the
records of his employing company or such other address as may appear to the
Board to be appropriate or sent to him by e-mail to his usual e-mail address
according to the records of his employing company or to such other e-mail
address that the Employee may have advised may be used.  Notices or other documents sent by post
shall be deemed to have been received 2 days following the date of posting.

 

10.2                               The
decision of the Board on any question of interpretation of the Rules or any
dispute relating to or connected with the Scheme shall be final and conclusive.

 

10.3                               The
costs of introducing, operating and administering the Scheme shall be borne by
the Company.

 

10.4                               The
Board shall have power from time to time to make regulations for the
administration and operation of the Scheme provided that they are not inconsistent
with these Rules.

 

10.5                               Nothing
in the Scheme shall form part of any Participant’s contract of employment. The
rights and obligations of a Participant under the terms and conditions of his
employment by any Member of the Group shall not be affected by his
participation in the Scheme.  The
Participant shall have no right to compensation or damages or any other sum or
benefit in respect of his ceasing to participate in the Scheme or in respect of
any loss or reduction of any rights or expectations under the Scheme in any
circumstances. An Employee who is not invited to participate in the Scheme
shall have no right to compensation or damages or any other sum or benefit in
respect of his non-participation.

 

7

 

11.                                     Amendment

 

11.1                               The
Scheme shall be administered under the direction of the Board who may at any
time and from time to time by resolution and without other formality amend or
augment the Rules or the Scheme in any respect provided that:-

 

(a)                               no
amendment shall operate to affect adversely in any way any rights already
acquired by a Participant;

 

(b)                              no
amendment may be made which would, if carried out, involve the Trustee in a new
or additional obligation or liability without the prior agreement of the
Trustee; and

 

(c)                               no
amendment may be made to the advantage of Participants except with the prior
approval of the shareholders of the Company in General Meeting except for minor
amendments to benefit the administration of the Scheme and amendments to obtain
or maintain favourable tax, exchange control or regulatory treatment for
Participants in the Scheme or for any Member of the Group.

 

11.2                               Notwithstanding
anything to the contrary contained herein, the Board may at any time and from
time to time by resolution and without further formality amend the Scheme in
such manner as the Board may consider necessary or desirable:

 

(a)                               in any
way to the extent necessary to render the Scheme capable of approval by the
Inland Revenue or any other governmental or other regulatory body pursuant to
any present or future United Kingdom legislation;  or

 

(b)                              in order
to comply with, take advantage of, or otherwise in connection with any
taxation, legal, regulatory or other rule, law, guideline, regulation or other
provision of or prevailing in any jurisdiction in which this Scheme is or is
intended to be operated.

 

11.3                               The
limits in Rule 5 may not be increased without the approval of the shareholders
of the Company in General Meeting.

 

11.4                               No
amendment shall take effect that would cause the Scheme to cease to be an
“employees’ share scheme” as defined in Section 743 of the Companies Act
1985.

 

12.                                     Termination

 

The Scheme may be terminated at any time by a
resolution of the Board, and shall in any event terminate on 15 August 2006,
but any termination shall not affect the outstanding rights of Participants.

 

13.                                     Governing
Law

 

This Scheme shall be governed by the laws of England.

 

8

 

SCHEDULE 1

 

INTERNATIONAL RULES

 

The Rules
of the Scheme apply in the jurisdictions specified below:

 

Belgium

Czech Republic

France

Germany

Greece

Hong Kong

Hungary

Kyrgyzstan

Poland

Russia

Singapore

Slovakia

Slovenia

Spain

Taiwan

United Arab Emirates

 

The
Rules of the Scheme apply with and subject to the following amendments and
provisions which have been adopted by the Board pursuant to rule 11.2 for the
purposes of the operation of the Scheme in the jurisdictions specified below:

 

The
Netherlands (Appendix 1)

Ireland (Appendix 2)

United States of America (Appendix 3)

Canada (Appendix 4)

Australia (Appendix 5)

New Zealand (Appendix 6)

 

9

 

APPENDIX 1

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

SHARE MATCHING SCHEME

 

The
purpose of this Appendix is to specify terms and conditions under which the
Scheme is to be modified in its application to any Lodged Shares or allocation
of Additional Shares made or to be made to a person resident for tax purposes
in The Netherlands.

 

Words
and phrases defined in the Scheme shall bear the same meaning in this Appendix
1 except as otherwise provided.

 

14.                                     In
Rule 2.1 the reference to “Beneficiary” shall be deleted and replaced by
“Employee”.

 

15.                                     In
rule 2.2 reference to “Beneficiaries” shall be deleted and replaced by references
to “Employees”.

 

10

 

APPENDIX 2

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

SHARE MATCHING SCHEME

 

The
purpose of this Appendix is to specify terms and conditions under which the
Scheme is to be modified in its application to any Lodged Shares or allocation
of Additional Shares made or to be made to a person resident for tax purposes
in Ireland.

 

Words
and phrases defined in the Scheme shall bear the same meaning in this Appendix
2 except as otherwise provided.

 

1.                                           Rule 5.4 shall be redesignated Rule 5.4(a) and a new rule shall be
added after Rule 5.4(a) and Rule 5 shall be re-numbered accordingly:

 

“5.4(b)
subject to Rule 5.5 the Additional Shares held on trust for a Participant shall
be transferred (in such manner (whether in uncertified form or otherwise) as
the Trustees may determine) to the relevant Participant on the Vesting Date.”

 

11

 

APPENDIX 3

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

SHARE MATCHING SCHEME

 

The
purpose of this Appendix is to specify terms and conditions under which the
Scheme is to be modified in its application to any Lodged Shares or allocation
of Additional Shares made or to be made to a person resident for tax purposes
in the United States.

 

Words
and phrases defined in the Scheme shall bear the same meaning in this Appendix
3 except as otherwise provided.

 

Rule 1

 

“ADS”                                                                                                               American Depositary Shares, evidenced by American Depositary
Receipts, which may be issued by Citibank, N.A., as depositary (“the
Depositary”) pursuant to the Amended and Restated Deposit Agreement, dated as
of November 2, 1998, among the Company, the Depositary and all holders and
beneficial owners of American Depositary Shares thereunder;

 

“Additional Share”                                             a Share, or ADS, if applicable, allocated pursuant to Rule 4;

 

“Lodged Share”                                                              a Share, or ADS, if applicable, acquired by the Trustees with monies
provided by a Beneficiary or transferred to the Trustees by a Beneficiary and
in each case held by the Trustees as bare nominees for such Beneficiary;

 

Rule
5.3 (e)                                    at the end of the sentence add the words “or, that the ADSs cease to
be listed on the New York Stock Exchange, Inc.

 

Rule
5.8                                                     insert the words “(including Shares represented by ADSs)” after the
word “Share” wherever it occurs.

 

12

 

APPENDIX 4

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

SHARE MATCHING SCHEME

 

The purpose of this Appendix is to specify
terms and conditions under which the Scheme is to be modified in its application
to any Lodged Shares or allocation of Additional Shares made or to be made to a
person resident for tax purposes in Canada.

 

Words and phrases defined in the Scheme
shall bear the same meaning in this Appendix 4 except as otherwise provided.

 

	
  Rule 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Vesting Date”

  	
   

  	
  the earlier of the Expected Vesting Date
  and Early Vesting Date provided that this date shall not be a date falling
  more than three years after the date of the allocation of the Additional
  Shares.

  
	
   

  	
   

  	
   

  
	
  Rule 5.7 shall be

  replaced with the

  following:

  	
   

  	
  “For the purposes of the Scheme, a
  Participant’s employment with any Member of the Group shall be considered to
  have terminated effective on the last day of the Participant’s actual and
  active employment with a Member of the Group whether such day is selected by
  agreement with the individual, unilaterally by such a Member of the Group and
  whether with or without advance notice to the Participant unless the Board in
  its sole discretion shall agree to extend the date on which the employment is
  deemed to cease to the date when the notice expires.  Except as may be authorised by the
  Board,  for the avoidance of doubt, no
  period of notice that is given or that ought to have been given under
  applicable law in respect of such termination of employment will be utilised
  in determining entitlement under the Rules of the Scheme.”

  

 

13

 

APPENDIX 5

 

IMPERIAL TOBACCO INTERNATIONAL

SHARE MATCHING SCHEME

 

The purpose of this Appendix is to specify
terms and conditions under which the Scheme is to be modified in its
application to any Lodged Shares or allocation of Additional Shares made or to
be made to a person resident in Australia.

 

Words and phrases defined in the Scheme
shall bear the same meaning in this Appendix 5 except as otherwise provided:

 

1.                                           A Beneficiary must, in order to participate in the Scheme, either

 

(a)                               deliver
share certificates in respect of the Lodged Shares owned by the Beneficiary to
the Trustees or,

 

(b)                              open a
CREST Account and either,

 

(i)                               apply
monies towards the purchase of Shares; or

(ii)                            transfer
Shares by way of a CREST dematerialisation to the CREST Account

 

and the definition of “Lodged Shares” and
Rule 2.2 of the Scheme shall be read and construed accordingly.

 

2.                                           The following new Rules 2.5 and 2.6 shall be inserted after Rule
2.4:

 

‘2.5                             The allocation of Additional Shares to any Participant shall be
deemed to be, and shall have effect as, the grant of an option by the Company
in favour of the Participant to require the Company to procure the transfer to
the Participant of the Additional Shares to which the Participant is entitled
under these Rules on the Vesting Date and:

 

(a)                               any
reference in these Rules to the loss, termination or lapsing of any award of
Additional Shares shall be deemed to be a reference to such option lapsing; and

 

(b)                              any
reference to Additional Shares shall be deemed to be a reference to such option
to call for a transfer of the relevant number of Additional Shares.

 

2.6                                  The option referred to in Rule 2.5 shall lapse and be of no further
effect unless the Participant shall, throughout the period commencing on the
date of the grant of that option and ending on the Vesting Date:

 

(c)                               be and
have been employed continuously under a contract of employment with any Member
of the Group and is not then under notice of termination of such contract given
or received; and

 

(d)                              not have
caused the certificate in respect of any of the Lodged Shares in respect of
which the option was granted to have been delivered in the same manner as if
Rule 7 applied to such transfer.’

 

3.                                           Rule 4.1 shall be deleted, and the following Rule 4.1 inserted in
its place:

 

‘4.1                             Notwithstanding any provision of these Rules or of the Trust, no
Participant shall have any right or interest, whether legal or equitable, in:

 

(a)                               any
Additional Shares allocated to that Participant until the Vesting Date;

 

14

 

(b)                              any Nil
Paid Rights issued by the Company under Rule 6.2 or, until the Vesting Date, in
any shares or securities acquired from exercising those Nil Paid Rights; or

 

(c)                               any
option to acquire any right or interest in any such Share.’

 

4.                                           Rule 6.2 shall be deleted and the following Rule 6.2 inserted in its
place:

 

‘If and
whenever the Company shall issue by way of rights or otherwise make any offer
or invitation to shareholders generally and shall issue to its members nil paid
letters of allotment or other documents (“Nil Paid Rights”) representing
negotiable Nil Paid Rights or entitlements relating to any ordinary shares or
other security or securities (or any mixture of the two) in or of the Company,
the Trustees shall be entitled to receive but shall be obliged to sell such
proportion of such Nil Paid Rights as are attributable to Additional Shares as
shall enable the Trustees to subscribe for the new shares or securities which
are the subject of the balance of the Nil Paid Rights and the Trustees shall so
apply the proceeds of disposal in that way. 
The shares or securities so purchased shall be added pro rata and be
held upon the
same terms as the Additional Shares held by the Trustees in respect
of which such Nil Paid Rights shall have been received by the Trustees.  Any cash balance shall be held
likewise.  If any such Nil Paid Rights
shall be issued by reference to a record date which falls after the time at
which the relevant Shares in respect of which such Nil Paid Rights shall have
been issued shall have become held absolutely for a Participant, such Nil Paid
Rights shall be held by the Trustees upon trust for such Participant
absolutely. No
Participant shall have any right or interest, whether legal or equitable in any
Nil Paid Rights or, until the Vesting Date, in any shares or securities
acquired from exercising those Nil Paid Rights. ‘

 

15

 

APPENDIX 6

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

SHARE MATCHING SCHEME

 

The
purpose of this Appendix is to specify terms and conditions under which the
Scheme is to be modified in its application to any Lodged Shares or allocation
of Additional Shares made or to be made to a person resident for tax purposes
in New Zealand.

 

Words
and phrases defined in the Scheme shall bear the same meaning in this Appendix
1 except as otherwise provided.

 

1.                                           Rule 4.1 shall be deleted, and the following Rule 4.1 inserted in
its place

 

‘4.1 Prior to the transfer of any Additional Shares to
a Participant pursuant to Rule 5.4 below, no Participant shall have any right
or interest, whether legal or equitable, in any Additional Share allocated to
that Participant (and for the avoidance of doubt shall have no entitlement to
any dividends paid by the Company on the Additional Shares). Any Additional
Share shall not be transferred to a Participant unless the Participant shall,
throughout the period commencing on the date of allocation of such Additional
Share and ending on the Vesting Date:

 

(a)                                be and be employed continuously under a contract of employment with
any Member of the Group and is not under notice of termination of such contract
given or received; and

 

(b)                               not have caused any of the Lodged Shares in respect of which
Additional Shares were allocated to have been transferred or delivered in
accordance with Rule 7. ‘

 

16

 

SCHEDULE 2

 

[Imperial Tobacco Group
PLC notepaper]

 

ADDITIONAL
SHARE AWARD CERTIFICATE

 

IMPERIAL
TOBACCO GROUP SHARE MATCHING SCHEME (the “Scheme”)

 

This is
to certify that
[                           ]
has been granted [                           ]
Additional Shares in accordance with the Scheme.

 

The
Additional Shares are subject to the rules of the Scheme and shall be held by
Abacus (C.I.) Limited as Trustees of the Scheme and of the Imperial Tobacco
Group Employee and Executive Benefit Trust [and the Imperial Tobacco Group PLC
2001 Employee Benefit Trust] until the Vesting Date.

 

The
Additional Shares shall be transferred to you as soon as practicable after the
Vesting Date provided that [insert details of  performance condition(s) imposed on the
award of Additional Shares including details of performance condition(s) if
early good leaver].

 

Until
the Vesting Date:

 

•                  You cannot sell, assign, transfer, pledge, encumber or otherwise
dispose of your interest in the Additional Shares;

•                  You will not receive any dividends in respect of the Additional
Shares; and

•                  You cannot exercise voting rights attached to the Additional Shares.

 

 

	
  For
  and on behalf of IMPERIAL TOBACCO GROUP PLC

  
	
   

  
	
   

  
	
  Authorised signatory

  	
   

  	
   

  

 

17Exhibit 4.4

 

IMPERIAL TOBACCO GROUP PLC

 

 

RULES OF THE IMPERIAL
TOBACCO GROUP

 

LONG TERM INCENTIVE PLAN

 

Approved
by the Company

on 14 August 1996

(and amended by the Remuneration Committee

on 9 October, 2 December 1996, 24 November 2000, 23
November 2001, 22 November 2002, and 14

November 2003.)

 

 

ASHURST
MORRIS CRISP

Broadwalk House

5 Appold Street

London  EC2A 2HA

 

Tel:  0207-638-1111

 

Fax:  0207-638 1112

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Operation of the Plan

  	
   

  
	
  2.

  	
  Terms of a Conditional
  Award

  	
   

  
	
  3.

  	
  Plan
  Limit

  	
   

  
	
  4.

  	
  Grant of Conditional Awards

  	
   

  
	
  5.

  	
  Obligations of Employee

  	
   

  
	
  6.

  	
  Leaving
  Service or Reconstruction or Takeover during the Performance Period

  	
   

  
	
  7.

  	
  Determination of Options

  	
   

  
	
  8.

  	
  Options

  	
   

  
	
  9.

  	
  Exercise and Lapse of
  Options

  	
   

  
	
  10.

  	
  Reconstruction
  or Takeover before the Release Date - Lapse of Options

  	
   

  
	
  11.

  	
  Capital Reorganisation

  	
   

  
	
  12.

  	
  General

  	
   

  
	
  13.

  	
  Amendment and termination

  	
   

  
	
  14.

  	
  Governing Law

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  
	
  APPENDIX
  1

  	
   

  
	
  APPENDIX
  2

  	
   

  
	
  APPENDIX
  3

  	
   

  
	
  APPENDIX
  4

  	
   

  
	
  APPENDIX
  5

  	
   

  

 

 

Definitions

 

“Certificate of Participation” means a
certificate of participation issued pursuant to Rule 4(2).

 

“Committee”
means the Remuneration Committee of the Board of Directors of Imperial Tobacco
Group PLC.

 

“Company” means Imperial Tobacco Group PLC.

 

“Conditional
Award” means a conditional award to an Employee of Shares, in accordance with
the Rules.

 

“Control” has the same meaning as in
Section 840 of the Income and Corporation Taxes Act 1988.

 

“Employee” means any employee for the time being in
full or part time employment of any Group Company and any director of any Group
Company who is required to devote substantially the whole of his working time
to his employment or office.

 

“Exercise
Price” means the nominal price payable on the exercise of an Option to be
determined by the Trustee.

 

“Group
Company” means the Company and any company that is under the Control of the
Company and is designated by the Committee as a participating company for the
purposes of the Plan.

 

“London Stock Exchange” means the London
Stock Exchange Limited.

 

“Normal Retirement Age” means age 65.

 

“Option”
means the right to acquire at the Exercise Price that number of Shares
determined under Rule 7 (and which right shall be capable of being exercised at
any time prior to the seventh anniversary of its grant).

 

“Option Certificate” means a certificate
issued pursuant to Rule 8(2).

 

“Participant”
means an Employee who has a Conditional Award or an Option (and includes his
personal representatives where appropriate).

 

“Performance
Condition” means the condition or conditions determined by the Committee and
notified to a Participant.

 

“Performance Period” means the period specified in a
Certificate of Participation in respect of which a Performance Condition may be
satisfied.

 

1

 

“Plan” means the Imperial Tobacco Group Long Term
Incentive Plan constituted by this document as may be amended from time to time
in accordance with the Rules.

 

“Reconstruction
or Takeover” means any takeover, merger, amalgamation or reconstruction,
however effected, including a reverse takeover, partial offer, reorganisation
or scheme of arrangement sanctioned by the court as a result of which there is
a change in Control of the Company or any compromise or arrangement sanctioned
by the Court under Section 425 of the Companies Act 1985.

 

“Release Date” means the seventh (7th) anniversary of
the date on which an Option is granted, being the latest date on or by which
such Option may be exercised by a Participant.

 

“Rules” means these rules as amended from
time to time.

 

“Shares” means fully paid ordinary shares
in the capital of the Company.

 

“Tax” means any tax, duty, impost, levy charge or
royalty in the nature of tax, whether domestic or foreign, and whether or not
chargeable directly against the person concerned or any other person, and any
fine, penalty or interest connected therewith.

 

“Trustee” means the trustees of any trust established
by the Company or any other Group Company for the benefit of Employees.

 

Where
the context so admits the singular shall include the plural and vice versa and
the masculine gender shall include the feminine.  Any reference to a statutory provision is to be construed as a
reference to that provision as for the time being amended or re-enacted.

 

1.                                           Operation of the Plan

 

The Plan shall be operated by the Committee
at any time and at its discretion.

 

2.                                           Terms of a Conditional Award

 

On or before granting a Conditional Award
the Committee shall determine the following in relation to such Conditional
Award:-

 

(1)                             the maximum number of Shares the subject of such Conditional Award;

 

(2)                             the Performance Period;

 

(3)                             the Performance Conditions to be satisfied in respect of the
Performance Period; and

 

(4)                             subject to Rules 6 and 7, the date that the Shares, the subject of
such Conditional Award shall be capable of vesting.

 

2

 

3.                                           Plan Limit

 

(1)                             The Committee shall consider whether the Company, subject to any
applicable statutory or regulatory restrictions, should issue Shares to the
Trustee or whether the Trustee should be requested to purchase Shares in
respect of Conditional Awards.

 

(2)                             No Share may be issued under the Plan on any date if, as a result,
any of the following limits were to be exceeded:

 

(i)                              the
total number of Shares issued or committed to be issued during the period of
ten years ending on that date under the Plan and all other employees’ share
schemes established by the Company would exceed 10% of the issued ordinary
share capital of the Company on that date;

 

(ii)                           the total
number of Shares issued or committed to be issued during the period of five
years ending on that date under the Plan and all other employees’ share schemes
established by the Company would exceed 5% of the issued ordinary share capital
of the Company on that date; or

 

(iii)                        the total
number of Shares issued or committed to be issued during the period of ten
years ending on that date under the Plan and all other discretionary share
schemes established by the Company would exceed 5% of the issued ordinary share
capital of the Company on that date and when determining whether a share scheme
established by the Company is a discretionary one for the purpose of this Rule
3(2)(iii) any savings related share option scheme or any other share scheme
participation in which is offered to all Employees shall be disregarded.

 

4.                                           Grant of Conditional Awards

 

(1)                             The Committee may grant a Conditional Award at any time to any
Employee (provided that he will not reach Normal Retirement Age before the end
of the Performance Period relating to such Conditional Award).

 

(2)                             A Participant who is granted a Conditional Award shall receive a
Certificate of Participation (to take effect as a deed executed by the Company)
as soon as reasonably practicable following the date of grant.  The Certificate of Participation shall set
out the terms of the Participant’s Conditional Award as specified Rule 2.

 

(3)                             If at any time after the grant of a Conditional Award the Committee
considers that circumstances have arisen which would prevent the terms of the
Conditional Award (as regards the operation of the Plan generally or in respect
of any Participant) from operating fairly in accordance with the spirit of the
Plan, the Committee may vary any of those terms and specify any other terms
applicable to the operation of the Plan PROVIDED THAT any amendments made to
the Performance Condition shall, in the opinion of the Committee, ensure that
the revised Performance Condition is neither easier nor more difficult to
achieve than the original Performance Condition when first set.  The Committee shall notify Participants of
the details of any such variation which affects a Participant.

 

5.                                           Obligations of Employee

 

(1)                             An Employee who receives a Conditional Award may renounce the
Conditional Award within thirty days of the date on which it is made, in which
event such Conditional Award shall be deemed for all purposes never to have
been made.

 

3

 

(2)                             A Participant to whom a Conditional Award is granted (and who does
not renounce such Conditional Award) shall:

 

(a)                                be
bound by the terms of the Plan;

 

(b)                               not
assign, transfer or charge such Conditional Award or any interest in it; and

 

(c)                                indemnify
the Company, all Group Companies and the Trustee against any liability any of
them may have to make a payment of Tax in connection with his participation in
the Plan.

 

6.                                           Leaving Service or Reconstruction or
Takeover during the Performance Period

 

	
   

  	
  (1)                                  Subject to Rules 6(2) and 6(3), if a Participant ceases to be an
  Employee before the expiry of the Performance Period, his Conditional Award
  shall immediately lapse.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
  (i)

  	
  If a Participant ceases to be an Employee
  before the expiry of the Performance Period by reason of

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  death

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  injury,
  ill-health, or disability

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  redundancy

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  retirement
  on or after contractual retirement age

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  early
  retirement with the agreement of his Employing Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  the
  Group Company or business in which the Participant is employed ceasing to be
  under the Control of the Company, or to be owned by a Group Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •

  	
  any
  other circumstances where the Committee so decides

  

 

the Performance Period shall be deemed to
have ended as at the date on which the Participant ceases to be an Employee
(which period shall be referred to as “the Relevant Period”) and the number of
Shares to be the subject of an Option in respect of the relevant Conditional
Award shall be equal to A where A = x/yPA (the “formula”) where:-

 

A is the number of Shares to be the subject
of such Option;

 

PA is the number of Shares determined by
the application of the Performance Condition to the Relevant Period;

 

x is the number of days comprised in the
Relevant Period; and,

 

y is the total number of days which would
have been comprised in the Performance Period had the Participant not ceased to
be an Employee.

 

(ii)                            In the
case of death an Option shall be granted to the personal representatives of the
Participant in respect of the number of Shares determined by the formula set
out in this

 

4

 

Rule
6(2) but may only be exercised by the same on the production of an Office Copy
Grant of Probate or Letters of Administration.

 

(3)                             If a Participant ceases to be an Employee before the expiry of the
Performance Period by reason of

 

•                                early
retirement with the agreement of his Employing Company; or

 

•                                redundancy

 

the Committee may determine that the
formula shall not be applied either in whole or in part.

 

(4)                             If there is a Reconstruction or Takeover before the expiry of the
Performance Period, the Performance Period shall be deemed to have ended on the
date on which the change of Control takes effect.

 

(5)                             If in consequence of an offer to shareholders in the Company (or any
of them) or any scheme of reconstruction (however effected) before expiry of
the Performance Period the Shares are to cease to be listed on the London Stock
Exchange, the Committee shall notify Participants and the Performance Period
shall be deemed to have ended on the date of such notification.

 

7.                                           Determination of Options

 

(1)                             As soon as reasonably practicable after, but in any event within 35
days of, the date determined by the Committee for the purposes of Rule 2(4)
(or, but only in the circumstances set out in Rule 6(2), 6(3), 6(4) or 6(5), as
soon as reasonably practicable after, but in any event within 35 days of, the
deemed end of the Performance Period) an Option shall be granted to a
Participant by either the Company or the Trustee over such number of Shares the
subject of the relevant Conditional Award as is determined by the application
of the Performance Condition and, but only where required in accordance with
the terms of Rule 6(2) or 6(3), the formula.

 

(2)                             The Participant shall have no further rights in respect of any
Shares subject to a Conditional Award which are not made the subject of the
corresponding Option.

 

8.                                           Options

 

(1)                             If Options are to be granted by the Trustee the Company shall advise
the Trustee of the number of Shares to be comprised in the Options to be
granted and the Release Date applicable to such Options and the Trustee shall
be requested to grant Options on the basis advised to it.

 

(2)                             If Options are to be granted by the Company, rule 8(1) shall not
apply and the Company will decide upon the number of Shares to be comprised in
the Options it is to grant and the Release Date applicable to such Options and
shall grant such Options on this basis.

 

(3)                             An Option Certificate executed under seal or otherwise to take
effect as a deed specifying the number of Shares the subject of the Option, the
Exercise Price and the Release Date shall be issued to the Participant.

 

(4)                             The Company, any relevant Group Company and/or the Trustee may in
their absolute discretion make such arrangements as it or they consider
necessary or desirable to meet any liability to Tax or other imposts in respect
of Options granted under the Plan.

 

5

 

9.                                           Exercise and Lapse of Options

 

(1)                             Save as otherwise provided in these Rules, an Option may be
exercised in whole or in part at any time after an Option is granted pursuant
to Rule 8 and until the Release Date.

 

(2)                             An Option shall be exercised by the Participant lodging with the
Trustee at its registered office (or such other address as may be notified to
Participants from time to time) a notice in such form as the Trustee may from
time to time prescribe and payment (in such manner as the Trustee shall direct)
of the Exercise Price; the date of exercise shall be the date of such notice.

 

(3)                             Following any exercise of an Option in part (other than an exercise
which exhausts the Option), the Participant shall be sent a new Option Certificate
in respect of the balance of Shares the subject of such Option.

 

(4)                             Shares shall be transferred to a Participant as soon as reasonably
practicable after the Option is exercised.

 

(5)                             Shares transferred pursuant to the Plan will rank pari passu in all respects
with Shares then already in issue except that they will not rank for any
dividend or other distribution of the Company paid or made by reference to a
record date falling prior to the date of exercise of the relevant Option.

 

10.                                     Reconstruction or Takeover before the
Release Date - Lapse of Options

 

(1)                             If there is a Reconstruction or Takeover Participants shall be
notified and outstanding Options must be exercised in whole or in part not
later than the earliest of:

 

(a)                                      the expiry of the period of six months commencing on the date there
is a change of Control of the Company;

 

(b)                                     the expiry of the period of three months commencing on the date on
which the Court sanctions a compromise or arrangement under Section 425 of
the Companies Act 1985;

 

(c)                                      the expiry of the period during which any person becomes bound or
entitled to acquire Shares under Sections 428 to 430F of the Companies Act
1985.

 

(2)                             If the Shares are to cease being listed on the London Stock Exchange
Participants shall be notified and outstanding Options must be exercised in
whole or in part prior to or within six months from the date of such cessation.

 

(3)                             An Option shall lapse and be of no further effect if, or to the
extent that, it shall not have been exercised by the expiry of any time limit
for exercise set out in this Rule 10, whichever shall expire first and in such
circumstances the Participant otherwise entitled thereto shall have no further
claim or right resulting from its lapse.

 

11.                                     Capital Reorganisation

 

(1)                             If there is any capital reorganisation of the Company including a
capitalisation issue, rights issue or rights offer, consolidation or
sub-division or any other variation of share capital, or any special dividend,
reconstruction or demerger, a Conditional Award or an Option shall be adjusted
in such manner as the Company’s auditors, acting as experts and not as
arbitrators, may confirm in writing to be fair and reasonable.

 

(2)                             Participants shall be notified of any such adjustment.

 

6

 

12.                                     General

 

(1)                             Any notice or other document given to any Employee or Participant
pursuant to the Plan shall be delivered to him or sent by post to him at his
home address according to the records of his employing company or such other
address as may appear to the Committee to be appropriate. Notices or other
documents sent by post shall be deemed to have been received 2 days following
the date of posting.

 

(2)                             The decision of the Committee on any question of interpretation of
the Rules or any dispute relating to or connected with the Plan shall be final
and conclusive.

 

(3)                             The costs of introducing, operating and administering the Plan shall
be borne by the Company.

 

(4)                             The Committee shall have power from time to time to make regulations
for the administration and operation of the Plan provided that they are not
inconsistent with these Rules.

 

(5)                             No Conditional Award shall be made or Option granted or exercised on
a day on which any dealing in Shares would be prohibited by the London Stock Exchange
Model Code for Transactions in Securities by Directors (a “Prohibited Day”) and
any Conditional Award or grant or exercise of an Option shall be deferred until
the first day following the Prohibited Day on which the prohibition on Dealings
shall be lifted.  This Rule 12(5) shall
apply to any Conditional Awards made and Options granted or exercised whether
or not the Employee concerned is subject generally to the said Model Code.

 

(6)                             Nothing in the Plan shall form part of a Participant’s contract of
employment. The rights and obligations of a Participant under the terms and
conditions of his employment by any Group Company shall not be affected by his
participation in the Plan. The Participant shall have no right to compensation
or damages or any other sum or benefit in respect of his ceasing to participate
in the Plan or in respect of any loss or reduction of any rights or
expectations under the Plan in any circumstances. An Employee who is not
invited to participate in the Plan shall have no right to compensation or
damages or any other sum or benefit in respect of his non participation.

 

13.                                     Amendment and termination

 

(1)                             The Scheme shall be administered under the direction of the
Committee who may at any time and from time to time by resolution and without
other formality amend or augment the Rules or the Scheme in any respect
provided that:-

 

(i)                              no
amendment shall operate to affect adversely in any way any rights already
acquired by a Participant under the Plan;

 

(ii)                           no
amendment may be made which would, if carried out, involve the Trustee in a new
or additional obligation or liability without the prior agreement of the
Trustee; and

 

(iii)                        no amendment
may be made to the advantage of Participants except with the prior approval of
the shareholders of the Company in General Meeting except for minor amendments
to benefit the administration of the Plan and amendments to obtain or maintain
favourable tax, exchange control or regulatory treatment for Participants in
the Plan or for any Group Company.

 

(2)                             Notwithstanding anything to the contrary contained herein, the
Committee may at any time and from time to time by resolution and without
further formality amend the Plan in such manner as the

 

7

 

Committee may consider necessary or
desirable in order to comply with, take advantage of, or otherwise in
connection with any taxation, legal, regulatory or other rule, law, guideline,
regulation or other provision of or prevailing in any jurisdiction in which this
Plan is or is intended to be operated.

 

(3)                             The limits in Rule 3(2) may not be increased without the approval of
the shareholders of the Company in General Meeting.

 

(4)                             No amendment shall take effect that would cause the Plan to cease to
be an “employees’ share scheme” as defined in Section 743 of the Companies
Act 1985.

 

(5)                             The Committee shall have discretion to terminate the Plan at any
time which shall in any event terminate on 15 August 2006 but, in each
case, without prejudice to outstanding Conditional Awards or Options.

 

14.                                     Governing Law

 

The Plan is governed by English law and if
there is any conflict of laws, English law shall prevail.  All Group Companies and Participants shall
submit to the non-exclusive jurisdiction of the English Courts as regards any
matter arising under the Plan.

 

8

 

SCHEDULE 1

 

INTERNATIONAL RULES

 

The
Rules of the Plan apply in the jurisdiction specified below:

 

Germany

Greece

Hong Kong

Hungary

Poland

Russia

Singapore

Slovenia

Spain

 

The
Rules of the Plan apply with and subject to the following amendments and
provisions which have been adopted by the Board pursuant to rule 13.2 for the
purposes of the operation of the Plan in the jurisdiction specified below:

 

Ireland
(Appendix 1)

The Netherlands (Appendix 2)

Belgium (Appendix 3)

France (Appendix 4)

Australia (Appendix 5)

 

9

APPENDIX 1

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

The
purpose of this Appendix is to specify terms and conditions under which the
Plan is to be modified in its application to any conditional award or option
granted or to be granted to a person resident for tax purposes in Ireland.

 

Words
and phrases defined in the Plan shall bear the same meaning in this Appendix I
except as otherwise provided.

 

1.                                           In the definition of “Option” the word “seventh” shall be deleted
and replaced by “fourth”.

 

2.                                           In the definition of “Release Date” the words “seventh (7th) shall
be deleted and replaced by “fourth (4th)”.

 

10

 

APPENDIX 2

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

The
purpose of this Appendix is to specify terms and conditions under which the
Plan is to be modified in its application to any Conditional Award or Option
granted or to be granted to a person resident for tax purposes in the
Netherlands.

 

Words
and phrases defined in the Plan shall bear the same meaning in this Appendix 2
except as otherwise provided.

 

1.                                           Rule 6(2)(i) shall be amended and the words:

 

1.1                            in the 14th line “to be the subject of an Option in respect of”
shall be deleted and replaced with “the subject of”;

 

1.2                            in the 16th line “to be the subject of such Option” shall be deleted
and replaced with “the number of Shares the subject of the relevant Conditional
Award”;

 

2.                                           Rule 6(2)(ii) shall be amended and the words:

 

“In the case of death an Option shall be
granted to the personal representatives of the Participant in respect of the
number of Shares determined by the formula set out in this Rule 6(2)(ii) but
may only be exercised by the same on the production of an Office Copy Grant of
Probate or Letters of Administration” shall be deleted and replaced with the
words “In the case of death the number of Shares determined by the formula set
out in this Rule 6(2) shall be transferred to the personal representatives of
the Participant on the production of an Office Copy Grant of Probate or Letters
of Administration.”

 

3.                                           Rule 7 shall be re-titled “Transfer of Shares”.

 

4.                                           Rules 7(1) and (2) shall be deleted and replaced with the following:

 

“7(1)                                                                    After the date determined by the Committee for the purposes of Rule
2(4) (or, but only in the circumstances set out in Rule 6(2), 6(3), 6(4) or
6(5), as soon as reasonably practicable after the deemed end of the Performance
Period) such number of Shares the subject of the relevant Conditional Award, as
is determined by the application of the Performance Condition and, but only
where required in accordance with the terms of Rule 6(2) or 6(3), the formula,
shall vest in the Participant and such Shares shall be transferred as soon as
practicable to the relevant Participant.

 

7(2)                                                                          The Participant shall have no further rights in respect of any
Shares subject to a Conditional Award which do not vest in accordance with Rule
7(1).”

 

11

 

5.                                           Rules 8(1), (2) and (3) shall be deleted.

 

6.                                           In Rule 8 (4) the words “Options granted” shall be deleted and
replaced with “the vesting of the Conditional Award and/ or the Shares
transferred” and the Rule shall be re-numbered a new Rule 7(3).

 

7.                                           Rules 9(1) to (4) inclusive shall be deleted.

 

8.                                           Rule 9(5) shall be re-numbered a new Rule 7(4) and the wording
“exercise of the relevant Option” shall be deleted and replaced with the
wording “transfer of the Shares”.

 

9.                                           Rule 10 shall be deleted.

 

10.                                     Rules
11, 12, 13, and 14 re-numbered accordingly.

 

11.                                     The
renumbered Rule 9(5) shall be amended and the words:

 

9.1                              in the
first line “Option granted or exercised” shall be deleted and replaced with
“shall vest or Shares be transferred”;

 

9.2                              in the
fourth line “grant or exercise of an Option” shall be deleted and replaced with
“the vesting of a Conditional Award or transfer of Shares”;

 

9.3                              in the
penultimate line “Options granted or exercised” shall be deleted and replaced
with “any vesting of Conditional Awards or any transfer of Shares”.

 

12

 

APPENDIX 3

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

The
purpose of this Appendix is to specify terms and conditions under which the
Plan is to be modified in its application to any Conditional Award or Option
granted or to be granted to a person resident for tax purposes in Belgium.

 

Words
and phrases defined in the Plan shall bear the same meaning in this Appendix 3
except as otherwise provided.

 

1.                                           Rule 6(2)(i) shall be amended and the words:

 

1.1                            in the 14th line “to be the subject of an Option in respect of”
shall be deleted and replaced with “the subject of”;

 

1.2                            in the 16th line “to be the subject of such Option” shall be deleted
and replaced with “the number of Shares the subject of the relevant Conditional
Award”;

 

2.                                           Rule 6(2)(ii) shall be amended and the words:

 

1.3                            “in the case of death an Option shall be granted to the personal
representatives of the Participant in respect of the number of Shares
determined by the formula set out in this Rule 6(2)(ii) but may only be
exercised by the same on the production of an Office Copy Grant of Probate or
Letters of Administration” shall be deleted and replaced with the words “In the
case of death the number of Shares determined by the formula set out in this
Rule 6(2) shall be transferred to the personal representatives of the
Participant on the production of an Office Copy Grant of Probate or Letters of
Administration.”

 

3.                                           Rule 7 shall be re-titled “Transfer of Shares”.

 

4.                                           Rules 7(1) and (2) shall be deleted and replaced with the following:

 

“7(1)                                                                    After the date determined by the Committee for the purposes of Rule
2(4) (or, but only in the circumstances set out in Rule 6(2), 6(3), 6(4) or
6(5), as soon as reasonably practicable after the deemed end of the Performance
Period) such number of Shares the subject of the relevant Conditional Award, as
is determined by the application of the Performance Condition and, but only
where required in accordance with the terms of Rule 6(2) or 6(3), the formula,
shall vest in the Participant and such Shares shall be transferred as soon as
practicable to the relevant Participant.

 

7(2)                                                                          The Participant shall have no further rights in respect of any
Shares subject to a Conditional Award which do not vest in accordance with Rule
7(1).”

 

5.                                           Rules 8(1), (2) and (3) shall be deleted.

 

13

 

6.                                           In Rule 8(4) the words “Options granted” shall be deleted and
replaced with “the vesting of the Conditional Award and/ or the Shares
transferred” and the Rule shall be re-numbered a new Rule 7(3).

 

7.                                           Rules 9(1) to (4) inclusive shall be deleted.

 

8.                                           Rule 9(5) shall be re-numbered a new Rule 7(4) and the wording
“exercise of the relevant Option” shall be deleted and replaced with the
wording “transfer of the Shares”.

 

9.                                           Rule 10 shall be deleted.

 

10.                                     Rules
11, 12, 13, and 14 re-numbered accordingly.

 

11.                                     The
renumbered Rule 9(5) shall be amended and the words:

 

9.1                              in the
first line “Option granted or exercised” shall be deleted and replaced with
“shall vest or Shares be transferred”;

 

9.2                              in the
fourth line “grant or exercise of an Option” shall be deleted and replaced with
“the vesting of a Conditional Award or transfer of Shares”;

 

9.3                              in the
penultimate line “Options granted or exercised” shall be deleted and replaced
with “any vesting of Conditional Awards or any transfer of Shares”.

 

14

 

APPENDIX 4

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

The
purpose of this Appendix is to specify terms and conditions under which the
Plan is to be modified in its application to any Conditional Award or Option
granted or to be granted to a person resident for tax purposes in France.

 

Words
and phrases defined in the Plan shall bear the same meaning in this Appendix 4
except as otherwise provided.

 

1.                                           Rule 5(2)(c) shall be amended and the words :

 

“a payment of Tax in connection with his
participation in the Plan” shall be deleted and replaced by “a payment of Tax
by way of withholding in connection with his participation in the Plan”.

 

2.                                           Rule 6(2)(i) shall be amended and the words:

 

1.1                            in the 14th line “to be the subject of an Option in respect of”
shall be deleted and replaced with “the subject of”;

 

1.2                            in the 16th line “to be the subject of such Option” shall be deleted
and replaced with “the number of Shares the subject of the relevant Conditional
Award”;

 

3.                                           Rule 6(2)(ii) shall be amended and the words:

 

1.3                            “in the case of death an Option shall be granted to the personal
representatives of the Participant in respect of the number of Shares
determined by the formula set out in this Rule 6(2)(ii) but may only be
exercised by the same on the production of an Office Copy Grant of Probate or
Letters of Administration” shall be deleted and replaced with the words “In the
case of death the number of Shares determined by the formula set out in this
Rule 6(2) shall be transferred to the personal representatives of the
Participant on the production of an Office Copy Grant of Probate or Letters of
Administration.”

 

4.                                           Rule 7 shall be re-titled “Transfer of Shares”.

 

5.                                           Rules 7(1) and (2) shall be deleted and replaced with the following:

 

“7(1)                                                                    After the date determined by the Committee for the purposes of Rule
2(4) (or, but only in the circumstances set out in Rule 6(2), 6(3), 6(4) or
6(5), as soon as reasonably practicable after the deemed end of the Performance
Period) such number of Shares the subject of the relevant Conditional Award, as
is determined by the application of the Performance Condition and, but only
where required in accordance with the terms of Rule 6(2) or 6(3), the formula,
shall vest in the Participant and such Shares shall be transferred as soon as
practicable to the relevant Participant.

 

15

 

7(2)                                                                          The Participant shall have no further rights in respect of any
Shares subject to a Conditional Award which do not vest in accordance with Rule
7(1).”

 

6.                                           Rules 8(1), (2) and (3) shall be deleted.

 

7.                                           In Rule 8(4) the words “Options granted” shall be deleted and
replaced with “the vesting of the Conditional Award and/ or the Shares
transferred” and the Rule shall be re-numbered a new Rule 7(3).

 

8.                                           Rules 9(1) to (4) inclusive shall be deleted.

 

9.                                           Rule 9(5) shall be re-numbered a new Rule 7(4) and the wording
“exercise of the relevant Option” shall be deleted and replaced with the
wording “transfer of the Shares”.

 

10.                                     Rule
10 shall be deleted.

 

11.                                     Rules
11, 12, 13, and 14 re-numbered accordingly.

 

12.                                     The
renumbered Rule 9(5) shall be amended and the words:

 

9.1                                                                       in the first line “Option granted or exercised” shall be deleted and
replaced with “shall vest or Shares be transferred”;

 

9.2                                                                       in the fourth line “grant or exercise of an Option” shall be deleted
and replaced with “the vesting of a Conditional Award or transfer of Shares”;

 

9.3                                                                       in the penultimate line “Options granted or exercised” shall be
deleted and replaced with “any vesting of Conditional Awards or any transfer of
Shares”.

 

16

 

APPENDIX 5

 

IMPERIAL TOBACCO GROUP
INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

The
purpose of this Appendix is to specify the terms and conditions under which the
Plan is to be modified in its application to any rights granted or to be
granted under the Plan to a person resident for tax purposes in Australia.

 

Words
and phrases defined in the Plan shall bear the same meaning in this Appendix 5
except as otherwise provided.

 

1.                                           In the definition of “Conditional Award” the words “a conditional
award to an Employee of Shares” shall be deleted and replaced with the words
“an Option granted”.

 

2.                                           The definition of “Option” shall be deleted and replaced with the
following:

 

‘“Option” means the right to acquire at the
Exercise Price one Share (and “Options” means a number of rights equal to the
number of Shares specified in the Certificate of Participation, each of which
is a right to acquire one Share) (and which right shall be capable of being
exercised at any time from the date specified in the Certificate of
Participation until the tenth anniversary of its grant)’;

 

3.                                           The definition of “Option Certificate” shall be deleted.

 

4.                                           In the definition of “Participant” the words “or an Option” shall be
deleted.

 

5.                                           In the definition of “Release Date” the words “seventh (7th)” shall
be deleted and replaced with the words “tenth (10th)”.

 

6.                                           Rule 2(4) shall be deleted and replaced with the following:

 

“(4)                        Subject to Rule 6, the date from which the Options shall be capable
of being exercised by the Participant.”

 

7.                                           Rule 4 shall be amended as follows:

 

7.1                                     Rule
4(1) shall be deleted and replaced with the following:

 

“4(1)                  The Company may grant Options at any time to any Employee over such
number of Shares specified in Rule 2(1) (provided that he will not reach the
age (if any) indicated by him as his expected date of retirement before the end
of the Performance Period relating to such Options).”

 

7.2                                     in
the last line of Rule 4(2) insert the words “together with the Exercise Price
and the Release Date applicable to such Options.”

 

8.                                           In the penultimate and final lines of the paragraph following the
bullet points in Rule 6(2)(i) the words “to be the subject of an Option in
respect of the relevant Conditional Award” shall be deleted and replaced with
the words “the subject of the Options”;

 

17

 

9.                                           Rule 7 shall be deleted.

 

10.                                     Rule
8(1), 8(2) and 8(3) shall be deleted.

 

11.                                     Rules
8(4), 9, 10, 11, 12, 13 and 14 and any references thereto shall be re-numbered
accordingly.

 

12.                                     The
re-numbered Rule 8 (Exercise and Lapse of Options) shall be amended as follows:

 

12.1                               Rule
8(1) shall be deleted and replaced with the following:

 

“8(1)                                                                  Save as otherwise provided in these Rules, Options may be exercised
over such number of Shares the subject of such of the Options as have not
lapsed following the application of the Performance Condition and, but only
where required in accordance with the terms of Rule 6(2) or 6(3), the formula
set out in such Rule, at any time after the Performance Period and until the
Release Date.”

 

12.2                               after
Rule 8(1) insert the following:

 

“8(2)                                                                  If and to the extent that the application of the Performance
Condition and, but only where required in accordance with the terms of Rule
6(2) or 6(3), the formula set out in such Rule results in any Options becoming
incapable of being exercised, those Options shall lapse.

 

8(3)                                                                        Following any exercise or lapse of Options, the Participant shall
receive a new Certificate of Participation stating the remaining number of
Options held by the Participant.”

 

12.3                               Rules
8(2) to (5) and any references thereto shall be re-numbered accordingly.

 

12.4                               Re-numbered
Rule 8(5) shall be deleted.

 

12.5                               in the
first line of re-numbered Rule 8(6) the word “the” shall be deleted and
replaced with the word “an”.

 

13.                                     Re-numbered
Rule 11(5) (General) shall be amended as follows:

 

13.1                               in the
first line the words “granted or” shall be deleted and replaced with the words
“may be”.

 

13.2                               in the
fourth and sixth lines the words “or grant” and “granted or” shall be deleted
respectively.

 

14.                                     In
the last line of re-numbered Rule 12(5) (Amendment and Termination) the words
“Conditional Award or” shall be deleted.

 

18

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