Document:

Exhibit 10.4

 

Severance Benefits Agreement

 

[Mr/Ms Name] 

[Address] 

[City, State ZIP]

 

Dear [Name]:

 

You
are or are about to become employed by Staples, Inc. and/or one of its
subsidiaries (“Staples”). Staples agrees to provide you with the severance benefits
set forth in this letter agreement (the “Agreement”) if your employment is
terminated under the circumstances described below:

 

1.                                      Term
of Agreement. The term of this Agreement shall begin on the date it is
signed and shall continue in full force and effect until such time as you or
Staples has delivered to the other 90-days advance written notice of your or
its election to terminate this Agreement. This Agreement is not a contract to
employ you for a definite time period, it being acknowledged that your
employment is “at will” and that either you or Staples may terminate the
employment relationship at any time.

 

2.                                      Notice of Termination and other Matters.
Any termination of your employment, whether by you or Staples, will be
communicated by written notice (“Notice of Termination”) to the other party.
The Notice of Termination will specify the provisions of this Agreement, if
any, upon which termination is based and its effective date, which in no case
will be more than 180 days after the Notice of Termination.  All notices and communications provided for in
this Agreement will be in writing and will be effective when delivered or
mailed by U.S. registered or certified mail, return receipt requested, postage
prepaid, addressed to the Chairman of Staples, 500 Staples Drive, Framingham,
MA 01702, and to you at the address shown above or to such other address as
either Staples or you may have furnished to the other in writing.

 

3.                                      Compensation
Upon Termination. Staples will provide you with the severance benefits
listed below in the event of a Qualified Termination. A “Qualified Termination”
means your employment is terminated for any reason other than because (i) you
die or become Disabled, (ii) Staples terminates you for “Cause,” or (iii) you
resign without “Good Reason.”

 

(a) 
Staples will pay you [6 months = certain executive officers; 12 months = other
executive officers] severance pay, in equal monthly installments. Your monthly
severance payments will equal the sum of (i) your monthly base salary rate
in effect immediately prior to the Qualified Termination (or any higher rate in
effect within the 90 days prior to the Notice of Termination) plus (ii) one-twelfth
of an amount equal to the average annual bonus paid to (or accrued for) you by
Staples during the three full fiscal years preceding such Qualified Termination.
Annual salary rates will be prorated where applicable and annual bonus averages
will be computed on years available if less than three years. Any partial year
bonus you have earned will be annualized.

 

1

 

(b) Staples
will provide you with [6
months = certain executive officers; 12 months = other executive officers]
of life, dental, accident and group health insurance benefits substantially
similar to those available to similarly situated officers (but not disability
insurance); provided, however, that Staples will not provide any such benefit
for any portion of this period that you receive an equivalent benefit from
another party.

 

(c) The
vesting schedule of any outstanding options to purchase shares of Staples’
Common Stock, shares of restricted Staples’ Common Stock and/or any other
equity-based awards will not be accelerated in the event of a Qualified
Termination, unless specifically provided to the contrary in the respective
option, restricted stock or other equity agreements.

 

(d) Staples
will provide you with 6 additional months of the benefits set forth in
paragraphs (a) and (b) above if such Qualified Termination is within
two years after a Change in Control.

 

You will not be entitled
to any of the compensation or benefits set forth in this Section 3 if
Staples determines, within 60 days after your termination, that your conduct
prior to your termination would have warranted a discharge for “Cause,” or if,
after your termination, you have violated the terms of any non-competition or
confidentiality provision contained in any employment, consulting, advisory,
non-disclosure, non-competition or other similar agreement between you and
Staples.

 

4.                                      Definitions.
For the purposes of this Agreement, the terms listed below are defined as
follows:

 

(a) Change in Control. A “Change in Control” will be deemed to
have occurred only if any of the following events occur:

 

(i) any
“person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than
Staples, any trustee or other fiduciary holding securities under an employee
benefit plan of Staples, or any corporation owned directly or indirectly by the
stockholders of Staples in substantially the same proportion as their ownership
of stock of Staples) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Staples
representing 30% or more of the combined voting power of Staples’ then
outstanding securities;

 

(ii) individuals
who constitute the Board (as of the date hereof, the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by Staples’ stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of Staples,

 

2

 

as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act) will be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or

 

(iii) the
stockholders of Staples approve a merger or consolidation of Staples with any
other corporation, other than (A) a merger or consolidation which would
result in the voting securities of Staples outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 75% of the
combined voting power of the voting securities of Staples or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of Staples (or
similar transaction) in which no “person” (as hereinabove defined) acquires
more than 50% of the combined voting power of Staples’ then outstanding
securities; or

 

(iv) the
stockholders of Staples approve a plan of complete liquidation of Staples or an
agreement for the sale or disposition by Staples of all or substantially all of
Staples’ assets.

 

(b) Disabled. You are “disabled” for the purposes of this
Agreement, if you have been absent from the full-time performance of your
duties with Staples for six (6) consecutive months because of incapacity
due to physical or mental illness, and, within thirty (30) days after being
sent a written Notice of Termination, you fail to resume performance of your
essential job duties, with or without reasonable accommodation.

 

(c) Cause. A termination for “Cause” by Staples will occur
whenever:

 

(i) you
willfully fail to substantially perform your duties with Staples (other
than any failure resulting from incapacity due to physical or mental illness);
provided, however, that Staples has given you a written demand for substantial
performance, which specifically identifies the areas in which your performance
is substandard, and you have not cured such failure within 30 days after delivery
of the demand. No act or failure to act on your part will be deemed “willful”
unless you acted or failed to act without a good faith or reasonable belief
that your conduct was in Staples’ best interest.

 

(ii) you
breach any of the terms of the Proprietary and Confidential Information
Agreement or Non-Competition Agreement (or other similar agreement) between you
and Staples, or

 

(iii) you
violate the Code of Ethics or attempt to secure any improper personal profit in
connection with the business of Staples, or

 

(iv) you
fail to devote your full
working time to the affairs of Staples except as may be authorized in
writing by the CEO or other authorized Company official, or

 

3

 

(v) you
engage in business other
than the business of Staples except as may be authorized in writing by the
CEO or other authorized Company official, or

 

(vi) you
engage in misconduct which is demonstrably and materially injurious to Staples;

 

provided that in each
case Staples has given you written notice of its intent to terminate your
employment under this Section 5(c) and an opportunity to present, in
person, to the Executive Vice President of Human Resources or any other
authorized Company official, any objections you may have to such termination.

 

(d) Good Reason. A termination by you for “Good Reason” will
occur whenever any of the following circumstances have taken place, without
your written consent within 90 days prior to your Notice of Termination:

 

(i) your
position, duties, responsibilities, power, title or office was significantly
diminished (a change in your reporting relationship, standing alone, shall not
be deemed significant);

 

(ii) your
annual base salary was reduced;

 

(iii) you
were not allowed to participate in a cash bonus program in a manner
substantially consistent with past practice in light of Staples’ financial
performance and attainment of your specified goals, your participation in any
other material compensation plan (other than any stock option or stock award program
which programs are within the full discretion of the Compensation Committee)
was substantially reduced, both in terms of the amount of benefits provided and
the level of participation relative to other participants; unless such
circumstances are fully corrected prior to the Date of Termination specified in
your Notice of Termination;

 

(iv) you
were not provided with paid vacation or other benefits substantially similar to
those enjoyed by you under any of Staples’ life insurance, medical, health and
accident, or disability plans in which you were participating, or Staples took
any action which would directly or indirectly materially reduce any of such
benefits or the number of your paid vacation days; unless such circumstances
are fully corrected prior to the Date of Termination specified in your Notice
of Termination;

 

(v) in
the event of a Change in Control, Staples or any person in control of Staples
requires you to perform your principal duties in a new location outside a
radius of 50 miles from your business location at the time of the Change in
Control; or

 

(vi) Staples
fails to obtain a satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 5.

 

Notwithstanding the
foregoing, any general reduction of salary or reduction (or elimination) of
other compensation, bonus and/or benefits for its officers which are

 

4

 

substantially comparable
for all such officers (but not occurring within
24 months after a Change of Control) will not be considered “Good
Reason.”

 

5.                                      Successors;
Binding Agreement. Staples will require any successor (whether direct,
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business or assets expressly to assume and agree to
perform this Agreement to the same extent that Staples would be required
to perform it if no such succession had taken place. Any failure to obtain
an assumption of this Agreement prior to the effectiveness of any succession
will be a breach of this Agreement and will entitle you to compensation in the
same amount and on the same terms as you would be entitled hereunder. As used
in this Agreement, “Staples” means Staples as defined above and any successor
to its business or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. This Agreement will inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or if there is no such designee, to
your estate.

 

6.                                      Arbitration.
The parties agree that any legal disputes (including but not limited to
claims arising under federal or state statute, contract, tort, or public
policy) that may occur between you and Staples, and that arise out of, or
are related in any way to, your employment with or termination of employment
from Staples or the termination of this Agreement, and which disputes cannot be
resolved informally, will be resolved exclusively though final and binding
arbitration. The parties will be precluded from raising in any other forum,
including, but not limited to, any federal or state court of law, or equity,
any claim which could be raised in arbitration; provided, however that nothing
in this Agreement precludes you from filing a charge or from participating in
an administrative investigation of a charge before an appropriate government
agency or Staples from initiating an arbitration over a matter covered by this
Agreement.

 

Each party may demand
arbitration, no later than three hundred (300) days after the date on which the
claim arose, by submitting to the other party a written demand which states: (i) the
claim asserted, (ii) the facts alleged, (iii) the applicable statute
or principal of law (e.g., breach of contract) upon which the demand is based,
and (iv) the remedy sought. Any response to such demand must be made, in
writing, within twenty (20) days after receiving the demand, and will
specifically admit or deny each factual allegation.

 

The arbitration will be
conducted in accordance with the Rules for Employment Arbitration of the
American Arbitration Association (AAA) and any arbitration will take place in Framingham,
Massachusetts. Each party will bear its own costs and attorney’s fees. The
arbitrator will have the power to award any types of legal or equitable relief
that would be available in a court of competent jurisdiction, including, but
not limited to, the costs of arbitration, attorney’s fees, emotional distress
damages, and punitive

 

5

 

damages for causes of
action when such damages are available under law. Any relief or recovery to
which you are entitled from any claims arising out of your employment,
termination, or any claim of unlawful discrimination will be limited to that
awarded by the arbitrator.

 

7.                                      Waiver
of Jury Trial. If any claim arising out of your employment or
termination is found not to be subject to final and binding arbitration, the
parties agree to waive any right to a jury trial if such claim is filed in
court.

 

8.                                      Miscellaneous.

 

(a)                                  The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
which will remain in full force and effect.

 

(b)                                 The
validity, interpretation, construction and performance of this Agreement will
be governed by the laws of the Commonwealth of Massachusetts.

 

(c)                                  No
waiver by you or Staples at any time of any breach of, or compliance with, any
provision of this Agreement to be performed by Staples or you, respectively, will
be deemed a waiver of that or any other provision at any subsequent time.

 

(d)                                 You
must execute a legally enforceable separation agreement and general release in
a form acceptable to Staples prior to the receipt of any payments or
benefits set forth above. Any payments made to you will be paid net of any
applicable withholding required under federal, state or local law.

 

(e)                                  This
Agreement is the exclusive agreement with respect to the severance benefits
payable to you in the event of a termination of your employment. All prior
negotiations and agreements are hereby merged into this Agreement.

 

If
this Agreement sets forth our agreement, kindly sign and return to Staples the
enclosed copy of this Agreement.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
  STAPLES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Executive Vice
  President,

  
	
   

  	
   

  	
  Human Resources

  

 

6

 

I have been advised of my
right to consult with counsel regarding this Agreement and have decided to sign
below knowingly, voluntarily, and free from duress or coercion.

 

Agreed to this         
day of                                 ,
2006

 

 

	
   

  	
   

  
	
  (Associate Signature)

  	
   

  

 

7Exhibit 4.3

 

 

Rules of the Imperial Tobacco Group

International Sharesave Plan

 

Imperial Tobacco Group PLC

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
  2.

  	
  COMMENCEMENT AND TITLE

  	
  4

  
	
  3.

  	
  GRANT OF OPTION

  	
  4

  
	
  4.

  	
  LIMITATIONS ON THE ISSUE OF SHARES

  	
  6

  
	
  5.

  	
  EXERCISE PRICE

  	
  7

  
	
  6.

  	
  ALTERATIONS OF SHARE CAPITAL

  	
  7

  
	
  7.

  	
  EXERCISE OF OPTIONS

  	
  8

  
	
  8.

  	
  LAPSE OF OPTION

  	
  9

  
	
  9.

  	
  TAKEOVER AND LIQUIDATION

  	
  10

  
	
  10.

  	
  ALLOTMENT AND LISTING

  	
  11

  
	
  11.

  	
  EMPLOYMENT RIGHTS

  	
  11

  
	
  12.

  	
  ADMINISTRATION OF THE PLAN

  	
  12

  
	
  13.

  	
  TERMINATION OF THE PLAN

  	
  14

  
	
  14.

  	
  GENERAL

  	
  14

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  15

  
	
  Special International Rules

  	
  15

  
	
  Appendix 1

  	
  16

  
	
  Appendix 2

  	
  17

  
	
  Appendix 3

  	
  18

  
	
  Appendix 4

  	
  19

  
	
  Appendix 5

  	
  23

  
	
  Appendix 6

  	
  24

  
	
  Appendix 7

  	
  27

  
	
  Appendix 8

  	
  28

  
	
  Appendix 9

  	
  29

  
	
  SCHEDULE 2

  	
  33

  
	
  The Imperial Tobacco Group UK Sharesave Plan

  	
  33

  
	
  SCHEDULE 3

  	
  34

  
	
  The Imperial Tobacco Group Irish Sharesave Plan

  	
  34

  
	
  SCHEDULE 4

  	
  35

  
	
  Notional Awards

  	
  35

  
	
  Appendix 1

  	
  37

  
	
  Appendix 2

  	
  38

  

 

 

1.                                           DEFINITIONS

 

In these
Rules (unless the context otherwise requires) the following words and
expressions have the following meanings:

 

“Act” means the Income Tax (Earnings and Pensions) Act 2003;

 

“Adoption
Date” means the date on which the Plan is
adopted by the Company in general meeting;

 

“ADS” means the American Depositary Shares, each representing two 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;

 

“Application
Period” means such period as the Board may,
in its discretion, determine but being a period not more than 60 days from an
Invitation Date (and, for the avoidance of doubt, the Board may apply different
Application Periods to Eligible Employees of Participating Companies in
different jurisdictions);

 

“Associated
Company” means any company Controlling or
under the Control of the Company or which is Controlled by the same person or
persons as Control the Company;

 

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

 

“Board” means the Board of Directors for the time being of the Company (or
the directors present at a duly convened meeting of such Board), the
Remuneration Committee of the Board or any other duly authorised committee
thereof;

 

“Commencement
Date” means subject to the approval of the
Plan by shareholders in general meeting, such date as the Board shall, in its
discretion, determine;

 

“Companies
Act 1985” means the Companies Act 1985 of
England and Wales;

 

“Company” means Imperial Tobacco Group PLC;

 

“Continuous
Service” means the aggregate amount of
service with:

 

(a)                            any Participating Company (including service with such
company before it became a Participating Company); and

 

(b)                           any other company which is or was a Subsidiary (including
service with any such other company before it became a Subsidiary);

 

provided
that:

 

(i)                              all such service has been continuous; and

 

(ii)                           in the case of an employee who is absent from such
employment for any reason for a period during which such employee’s contract of
service subsists, or by reason of maternity leave, and who then returns to such
employment, any such period of absence shall be deemed to have formed part of
such employee’s continuous service;

 

1

 

“Control” means the power of a person to secure:

 

(a)                            by the holding of shares or possession of voting power in or
in relation to any company; or

 

(b)                           by virtue of any powers conferred by the articles of
association or other document regulating any company,

 

that the affairs of any company are conducted in
accordance with the wishes of that person;

 

“Date
of Grant” means the date on which the
Grantor passes a resolution to grant an Option under Rule 3.4 below;

 

“Eligible
Employee” means any employee (including a
director holding a salaried employment or office) of a Participating Company
who:

 

(a)                            on the relevant Date of Grant has achieved such
period of Continuous Service not exceeding five years as the Board shall in
each case on or before the Invitation Date determine;

 

(b)                           in the case only of a director holding a
salaried employment or office, usually works at least 25 hours per week
excluding time off permitted for meal breaks;

 

provided that:

 

(i)                              at the Invitation Date no notice of termination of such
employment has been served by either the employee concerned or his employing
Participating Company and the employee or director in question has not ceased
to hold office or employment with a Participating Company; and

 

(ii)                           the Board may also treat any other employee or director of a
Participating Company, or worker contracted to provide services on a temporary
basis to a Participating Company, who fails to fulfil the relevant criteria as
an Eligible Employee;

 

“Employees’
Share Scheme” has the meaning given to it in
section 743 of the Companies Act 1985;

 

“Exercise
Price” means the price per Share at which a
Participant may acquire Shares pursuant to the Plan (as determined in accordance
with Rule 5);

 

“Grantor” means either the Board or the Trustee;

 

“Group” means the Company and its Subsidiaries from time to time;

 

“Imperial
Tobacco Group Sharesave Scheme” means the Imperial
Tobacco Group Sharesave Scheme adopted on 14 August 1996, as amended from time
to time;

 

“Internal
Reorganisation” means a compromise or
arrangement or offer (including the circumstances set out in Rule 9.2) which,
in the reasonable opinion of the Board, having regard to the shareholdings in
the Company and any acquiring company before and after the compromise or
arrangement and/or the consideration given for the acquisition of the Shares
and/or any other matter which it considers relevant, is in the nature of an
internal reorganisation or reconstruction of the Company;

 

“Invitation
Date” means the date upon which invitations
to apply for Options are issued by the Board, being a date within 42 days after
the Commencement Date and thereafter within 28 days after the date of public
announcement of the annual or half-yearly results

 

2

 

of the
Group or at any other time at which the board resolves that it is appropriate
to grant options;

 

“Local
Currency Equivalent” means in relation to an
amount denominated in GB pounds sterling, the equivalent value in the local
currency of a Participant’s country of employment (or such other currency as
the Board may permit from time to time under the Savings Plan) at such exchange
rate as the Board shall in its discretion designate on or before the Invitation
Date;

 

“London
Stock Exchange” means the London Stock
Exchange plc or any successor company or body carrying on the business of the
London Stock Exchange plc;

 

“Normal
Repayment Date” means in relation to any
Participant the first day of the month following the date on which the
Participant makes, or should have made, the final specified contribution (as
defined in Rule 3.3) to the Savings Plan and for this purpose the starting date
of the Savings Plan shall be the first day of the month following that in which
the first such specified contribution is made to the Savings Plan;

 

“Option” means a right to acquire Shares, or ADSs, granted pursuant to the
Plan;

 

“Participant” means a person who holds a Subsisting Option or (where the context
admits) his personal representatives;

 

“Participating
Company” means any member of the Group which
the Board has designated as such for the time being;

 

“Plan” means the Imperial Tobacco Group International Sharesave Plan as
amended from time to time;

 

“Relevant
Multiple” means such number of monthly
contributions to a Savings Plan as the Board may, in its discretion, invite
Eligible Employees to make in connection with the grant of an Option under the
Plan, and, where the context admits or requires, the number of such
contributions to which a particular Participant shall have committed himself;

 

“Repayment” means in relation to a Savings Plan, the amount of the
contributions repayable and, where relevant, of any bonus and/or interest
payable under the Savings Plan;

 

“Rules” means these rules as from time to time amended in accordance with
their provisions by the Board or by the Company;

 

“Savings
Plan” means any savings plan or arrangement
which has been approved by the Board in its absolute discretion for the
purposes of the Plan;

 

“Schedule
3” means Schedule 3 to the Act;

 

“Share” means a fully paid ordinary share in the capital of the Company;

 

“Specified
Age” means 60;

 

“Subsidiary” means any company in relation to which the Company:

 

(a)                            holds a majority of the voting rights; or

 

(b)                           is a member and has the right to appoint or
remove a majority of its board of directors; or

 

(c)                            is a member and controls alone, pursuant to an
agreement with other shareholders or members, a majority of the voting rights
in it;

 

3

 

and
includes any other company which is a Subsidiary as defined above of a company
which is itself a Subsidiary of the Company;

 

“Subsisting
Option” means an Option to the extent that
it has neither lapsed nor been exercised;

 

“Trustee” means the trustee or trustees for the time being of any employee
trust established by the Company wholly or partly for the benefit of all or
most of the persons for the time being employed by or holding office with the
Group or any Participating Company or Companies which has been designated by
the Board as a trust out of which Options may be granted.

 

Where
the context so permits the singular shall include the plural and vice versa and
the masculine gender shall include the feminine. Any reference to a statutory
provision includes a reference to that provision as for the time being amended
or re-enacted and shall include any regulations or other subordinate
legislation made under it.

 

2.                                           COMMENCEMENT AND TITLE

 

The
Plan shall commence on the Commencement Date and shall be known as the Imperial
Tobacco Group International Sharesave Plan.

 

3.                                           GRANT OF OPTION

 

3.1                                     On or prior to an Invitation Date the Board in its absolute
discretion or the employer of any Eligible Employee with the consent of the
Board may decide to invite applications for the grant of Options. Such
invitations shall be issued in such form as the Board or, where the Board has
consented to invitations being made by the employer of an Eligible Employee, the
employer of an Eligible Employee with the consent of the Board may prescribe
from time to time including by way of electronic communication.

 

3.2                                     Where applications are invited, the Board shall determine
whether or not invitations shall be sent to all Eligible Employees (and, for
the avoidance of doubt, the Board may send or consent, in accordance with Rule
3.1, to the sending of invitations to Eligible Employees of Participating
Companies in one jurisdiction but not to Eligible Employees of Participating
Companies in other jurisdictions) and any such invitations must state:

 

(a)                            the Exercise Price or the method by which the Exercise Price
for the Shares will be notified to Eligible Employees; and

 

(b)                           the date being the last day of the Application Period by
which applications for the grant of Options must have been received by the
Board or such person as the Board may direct being not more than 60 days after
the Invitation Date; and

 

(c)                            the Relevant Multiple or Multiples.

 

3.3                                     Applications for Options under the Plan shall be in such
form as the Board may prescribe from time to time and each:

 

(a)                            must be accompanied by a duly completed application form to
enter into a Savings Plan under which the applicant will agree to make the
Relevant Multiple of such specified contributions being not less than £5 (or
its Local Currency Equivalent) per month or such other sum as the Board may in
its discretion determine nor (when aggregated with contributions made under any
other subsisting Savings Plan and/or under any other savings contract linked to
the Imperial Tobacco Group Sharesave Scheme) more than £250 (or its Local
Currency Equivalent) per month or such higher sum as may be permitted by
statute for UK Inland Revenue approved SAYE option schemes, from time to time at
the Invitation Date to secure on the Normal Repayment Date, as nearly as may
be, Repayments of an amount

 

4

 

equal to that for which Shares may be acquired
under his Option if exercised in full; and

 

(b)                           shall empower the Board or any person authorised by it:

 

(i)                              to amend the amount of the specified contribution referred
to in Rule 3.3(a) above to such lesser sum as shall secure on the Normal
Repayment Date, as nearly as may be, Repayments of an amount equal to that for
which Shares may be acquired by the Participant in the event that the number of
Shares for which an Eligible Employee applies for an Option has to be reduced
in accordance with Rule 3.4 below;

 

(ii)                           to deduct from the Participant’s pay such contribution as
shall be specified by the Participant pursuant to Rule 3.3(a) above or as may
be amended pursuant to Rule 3.3(b)(i) above and pay the same on behalf of the
Participant in discharge of the Participant’s obligations under the Savings
Plan provided that where such deductions are not permissible under the laws or
regulations of the country of employment of a Participant the Board may, in its
discretion, require the Participant to furnish to the Board such evidence in
such form and manner as may be acceptable to it of the payment of such
contributions in accordance with the Savings Plan as shall be specified by the
Participant pursuant to Rule 3.3(a) or as may be amended pursuant to Rule 3.3(b)(i)
above.

 

3.4                                     Within 60 days of the date pursuant to Rule 5.1(a) below by
reference to which the Exercise Price was determined (including the case where
the number of Shares over which an Option is to be granted is determined by
Rule 3.4(a) below) and subject to the limitations and conditions contained in
the Plan, Options shall by resolution of the Grantor be granted to each
Eligible Employee who has made a valid application in respect of that number of
Shares as would have an aggregate Exercise Price not exceeding the Relevant
Multiple of the sterling equivalent of the Eligible Employee’s proposed monthly
contributions to the Savings Plan as at the Invitation Date:

 

Save that:

 

(a)                            the Board may (but shall not be obliged to) make such
adjustments to the number of Shares placed under an Option as it may in its
absolute discretion determine to be appropriate taking into account the actual
and anticipated rate of interest applicable to the Eligible Employee’s Savings
Plan contributions and the actual and anticipated rate of exchange between the
savings currency and sterling (if savings are expected to be retained in a
currency other than sterling) over the period of the savings contract and such
other factor or factors, if any, as the Board may consider to be relevant; and

 

(b)                           where the Board in its discretion considers that it is
desirable to limit the number of Shares in respect of which Options are granted
in relation to any invitation the monthly savings contribution chosen by each
applicant under the Savings Plan shall be reduced in such manner as the Board
may, in its discretion, determine (provided that all Eligible Employees shall
be treated on a similar basis without regard to differences among Eligible
Employees in respect of remuneration, length of service or any other factor) to
the extent necessary so as to reduce the aggregate number of Shares applied for
to or as near to as shall be practicable without exceeding the said limitation.

 

3.5                                     No payment will be required from a Participant on the grant
of an Option. Each Participant will be issued with a certificate in the form
from time to time determined by the Board.

 

5

 

3.6                                     No Option shall be capable of being transferred by a
Participant.

 

3.7                                     No Option shall be granted more than ten years after the Adoption
Date.

 

3.8                                     The reference in Rule 3.4 above to the sterling equivalent
of any amount means the sterling equivalent determined by the Board by
reference to such published rate of exchange between GB pounds sterling and the
relevant currency as may be available to the Board on or about the Invitation
Date and which the Board determines in its discretion to be appropriate.

 

3.9                                     The Board may (but shall not be obliged to) invite those
Participants whose contributions to a Savings Plan are made in a local currency
to adjust the rate at which they contribute to the Savings Plan at any time and
from time to time during the life of that Savings Plan if the Board considers
that it may be in the interests of those Participants to do so in the light of
relative rates of exchange, interest rates or any other factor. No Participant
shall be obliged to adjust the rate of contribution should the opportunity to
do so be offered.

 

3.10                               Where an Eligible Employee does not receive an application
for Options and/or any other information connected with any such application as
a result of an accidental act or omission on the part of the Board or any
person authorised by it in relation to the issue and/or distribution of such
documents, that shall not affect the validity of any other matters pertaining
to the Plan.

 

3.11                               For the purposes of Rules 3.1 and 3.2 above, an invitation
shall be sufficiently given if delivered to an Eligible Employee personally or
sent to him at his place of work by electronic mail or facsimile transmission or
sent by prepaid post addressed to the Eligible Employee at his address last
known to the Company (including any address supplied by the relevant
Participating Company or any Subsidiary as being his address) or sent through
the Company’s internal postal service and such application made pursuant to an
invitation shall be sufficiently given if returned to the Company or its duly
appointed agent in person or sent by electronic mail or facsimile transmission to
the Company or its duly appointed agent or sent by prepaid post addressed to
the Company or returned to the Company through the Company’s internal postal
service duly completed by the Eligible Employee on or before such date as shall
be specified in the invitation but in any event no application shall be duly received
until the original signed application is actually received by the Company or
its duly appointed agent prior to the expiry of the Application Period (unless
the Company directs otherwise).

 

4.                                           LIMITATIONS ON THE ISSUE OF
SHARES

 

Subject
to Rule 6 below, no Option shall be granted on any Date of Grant or proposed
Date of Grant if, as a result:

 

(a)                            the aggregate number of Shares (including Shares represented
by ADSs) acquired or which may be acquired during the ten years preceding such
Date of Grant under the Plan and all other Employees’ Share Schemes established
by the Company would exceed ten per cent. of the issued ordinary share capital
of the Company on that Date of Grant; or

 

(b)                           the aggregate number of Shares (including Shares represented
by ADSs) acquired or which may be acquired during the preceding five years
under the Plan and all other Employees’ Share Schemes would exceed five per
cent. of the issued ordinary share capital of the Company on that Date of
Grant;

 

provided
that, for the avoidance of doubt, Shares (including Shares represented by ADSs)
which shall have been the subject of grants which lapse shall not be taken into
account for the purposes of this Rule 4.

 

6

 

5.                                           EXERCISE PRICE

 

5.1                                     Subject to Rule 6 below, the Exercise Price shall be such
amount expressed in GB pounds sterling (or in such other currency or currencies
as the Board shall specify) in the case of Options for Shares as the Board
shall determine being an amount not less than the greater of:

 

(a)                            subject to Rule 5.2 below, 80 per cent. of the middle market
quotation per Share as derived from the Daily Official List of the London Stock
Exchange for the dealing day immediately preceding the Invitation Date; and

 

(b)                           in the case only of an Option to subscribe for Shares, the
nominal value of a Share.

 

5.2                                     For the purposes of an Option granted at any time at which
there shall be no dealings in the Shares, the Exercise Price shall be not less
than 80 per cent. of such sum as may be determined by the Board to be the
market value of a Share at that time.

 

5.3                                     For the avoidance of doubt, the Board may set a different
Exercise Price for Eligible Employees of Participating Companies in one
jurisdiction from those of another jurisdiction notwithstanding that
invitations may be sent out to all such Eligible Employees on the same
Invitation Date, but any such Exercise Price must fulfil the requirements of
Rule 5.1 above.

 

6.                                           ALTERATIONS OF SHARE CAPITAL

 

In the
event of:

 

(a)                            any variation in the share capital of the Company whether by
way of capitalisation of profits or reserves or by way of rights or any
consolidation or sub-division or reduction of capital, or otherwise;

 

(b)                           the Company paying a capital dividend;

 

(c)                            a demerger of any company within, or business owned by, the
Group; or

 

(d)                           in any other circumstances similarly affecting Options
granted under the Plan;

 

then
the number of Shares subject to any Subsisting Option, the Exercise Price and,
where an Option has been exercised but, as at the date of the variation of
capital referred to above, no Shares have been allotted or transferred pursuant
to such exercise, the number of Shares which may be so allotted or transferred
and the price at which they may be acquired, may be adjusted by the Board in
such manner and with effect from such date as the Board may determine to be
appropriate provided always that:

 

(i)                               no such adjustment shall take effect until it has been
referred to the Auditors and the Auditors have certified in writing to the
Board that the adjustment is, in their opinion, fair and reasonable; and

 

(ii)                            the Exercise Price of an Option to subscribe for Shares
shall not be adjusted below the nominal value of a Share unless:

 

(A)                        the Board is authorised to capitalise from the reserves of
the Company a sum equal to the amount by which the nominal value of the Shares
subject to the Option exceeds the aggregate adjusted Exercise Price; and

 

(B)                          the Board shall resolve to capitalise and apply such sum on
exercise of that Option.

 

7

 

7.                                           EXERCISE OF OPTIONS

 

7.1                                     The extent to which an Option may be exercised shall be:

 

(a)                            where exercise takes place on or after the Normal Repayment
Date related to the Option, in full or at the Board’s discretion, in part; and

 

(b)                           where exercise takes place earlier than the Normal Repayment
Date related to the Option (the “Early Exercise Date”),
in respect of such number of shares as may be acquired with the number of
specified contributions (plus any interest accrued under the Savings Plan) which
shall have been made on or before such Early Exercise Date, subject to the
maximum number of Shares under Option.

 

7.2                                     An Option shall be exercisable during the period mentioned
in Rule 7.4 below in respect of all or some of the Shares over which it was
granted by the Participant delivering to the Secretary of the Company at its
registered office (or otherwise as may be notified to Participants from time to
time) a written notice in the form prescribed by the Board from time to time specifying
the number of Shares in respect of which the Option is exercised together with
a remittance for that number of Shares calculated by reference to the Exercise
Price. The date of exercise of the Option shall be the date of receipt by the
Company or the Trustee (acting as agent of the Company) of such notice and
payment.

 

7.3                                     It is a condition of the exercise of an Option under the
Plan that the Participant shall withdraw all sums due by way of Repayment under
the Savings Plan to which he has contributed in relation to the Option. If upon
the exercise of an Option the Repayment then due to a Participant under his
Savings Plan is less than the amount required to pay for all the Shares in
respect of which it may be exercised pursuant to Rule 7.1 above the Participant
may add to the Repayment up to a maximum of such sum as shall be necessary to
pay for all such Shares. If the Repayment shall exceed the amount required to
exercise the Option to the extent possible (or to the extent to which it is in
fact exercised, if lower) such excess shall be paid to the Participant provided
that if the excess is less than the Exercise Price per Share or such lower sum
as the Board may determine such excess may be donated to such charity or
charities as the Board may in its discretion determine.

 

7.4                                     Save as otherwise provided, an Option may not be exercised
until the Normal Repayment Date. Subject only to the provisions of Rule 7.7
below, no Option may be exercised later than six months after the Normal
Repayment Date.

 

7.5                                     An Option shall cease to be exercisable upon the Participant
ceasing to be an employee or director of any member of the Group (so as to hold
no such employment or office) except where his so ceasing is by reason of:

 

(a)                            his retirement on reaching the Specified Age or such other
age at which he is bound to retire in accordance with the terms of his
employment; or

 

(b)                           injury, disability or redundancy or his office or employment
either being in a company which ceases to be a Subsidiary or relating to a
business or part of a business which is transferred to a person who or which is
neither a Subsidiary nor a Group company; or

 

(c)                            his leaving service at any time other than at a time
specified in sub-paragraph (a) or (b) above, provided that such event occurs
not earlier than three years from the Date of Grant of the Option;

 

in any
of which circumstances the Option may be exercised at any time during the
period of six months from the date on which he so ceases to be an employee or
director of any member of the Group notwithstanding that the Normal Repayment
Date shall not have occurred.

 

8

 

7.6                                     For the purposes of Rule 7.5 above and Rule 9 below (but for
no other purpose):

 

(a)                            a Participant shall not be regarded as having ceased to hold
office or employment by reason of:

 

(i)                              his being or becoming employed by a company which ceases to
be or is not a Participating Company but is nevertheless an Associated Company
or is under the Control of the Company; or

 

(ii)                           his ceasing to be employed full-time but continuing to be
employed on a part-time basis; and

 

(b)                           a Participant shall be regarded as ceasing to hold office or
employment when he holds no employment with any of the Company, any Associated
Company and any company Controlled by the Company.

 

7.7                                     In the event of the death of a Participant prior to the
Normal Repayment Date the Option may be exercised by his personal
representatives at any time during the period of twelve months commencing on
the date of his death (but not later) and the personal representatives shall be
entitled to do so notwithstanding that the Normal Repayment Date has not
occurred and in the event of the death of a Participant within six months commencing
on the Normal Repayment Date his personal representatives may exercise the
Option at any time within twelve months commencing on the Normal Repayment
Date.

 

7.8                                     A Participant who reaches the Specified Age prior to the
Normal Repayment Date but continues to hold the office or employment by virtue
of which he is eligible to participate in the Plan may exercise the Option
within six months after the date of his reaching the Specified Age.

 

7.9                                     If an Option becomes exercisable under any provision of the
Plan before the Normal Repayment Date it shall be exercisable only to the
extent permitted by Rules 7.1 and 7.3 above. The Repayment made under the
Savings Plan entered into on the grant of an Option shall exclude any
contributions made direct by the Participant except to the extent that such are
made pursuant to any special arrangements relating to absence from employment
or to the extent permitted by the Board. For the avoidance of doubt, any
Repayment under the Savings Plan shall exclude the Repayment of any
contributions made in advance under the Savings Plan the due date for payment
of which falls or would have fallen more than one month after the date on which
Repayment is made.

 

7.10                               An Option shall be exhausted and automatically cancelled
immediately after it is first exercised notwithstanding that it shall not have
been exercised in respect of all of the Shares over which the Option was
granted.

 

8.                                           LAPSE OF OPTION

 

A
Participant’s Option shall lapse and cease to be exercisable:

 

(a)                            upon the expiry of any of the periods for exercise under the
provisions of Rule 7 above and Rule 9 below, whichever shall first occur;

 

(b)                           if the Participant omits seven or more times to make a
monthly payment due under his Savings Plan or gives notice under the Savings Plan
requiring Repayment before the Normal Repayment Date unless such non-payment or
notice is in consequence of his ceasing to be an Eligible Employee by virtue of
one of the causes mentioned in Rules 7.5 or 7.7 above or in the circumstances
of Rules 7.8 above or Rule 9 below; or

 

9

 

(c)                            if the Participant makes payments to a bank account under
his own control and fails to provide evidence as specified by the Board that
all contributions have been made to, and no withdrawals have been made from,
the account.

 

9.                                           TAKEOVER AND LIQUIDATION

 

9.1                                     If any person obtains Control of the Company as a result of
making:

 

(a)                            a general offer to acquire the whole of the issued share
capital of the Company (not otherwise held or contracted to be acquired by the
offeror) which is made on a condition such that if it is satisfied the person
making the offer will have Control of the Company; or

 

(b)                           a general offer to acquire all the shares in the Company
which are of the same class as the Shares (including the Shares represented by
ADSs);

 

then
any Subsisting Option may be exercised within six months of the time when the
person making the offer has obtained Control of the Company and any condition
subject to which the offer is made has been satisfied.

 

9.2                                     If under section 425 of the Companies Act 1985 the Court
sanctions a compromise or arrangement scheme which leads to a third party
obtaining the ultimate control of the Company, any Subsisting Option may be
exercised within six months of the Court sanctioning the compromise or
arrangement provided that this Rule 9.2 shall not apply in the circumstances of
an Internal Reorganisation, unless the Acquiring Company fails to make an offer
to Participants to release Subsisting Options in accordance with Rule 9.4 below
within one week of the Court’s sanction under this Rule and in which case this
Rule shall apply as if the Court had sanctioned the scheme on the day following
the end of the period of one week mentioned above.

 

9.3                                     If any person becomes bound or entitled to acquire shares in
the Company under sections 428 to 430 of the Companies Act 1985 any Subsisting
Option may be exercised at any time when that person remains so bound or
entitled.

 

9.4                                     If as a result of the events specified in Rules 9.1 or 9.2
above a company has obtained Control of the Company, or if a company has become
bound or entitled as mentioned in Rule 9.3 above, any Participant may by
agreement with that other company (the “Acquiring Company”)
within the Appropriate Period as defined in paragraph 38(3) of Schedule 3
release any Subsisting Option of his in consideration of the grant of a new
Option (the “New Option”) which satisfies the
following conditions:

 

(a)                            the New Option shall be over shares in the Acquiring Company
or another company which satisfies paragraph (b) or (c) of paragraph 18 of Schedule
3 in relation to the Acquiring Company and shall satisfy the conditions
specified in paragraphs 18 to 22 inclusive of Schedule 3;

 

(b)                           the New Option shall be a right to acquire such number of
such shares in the Acquiring Company (or such other company) as shall have on
the grant of the New Option an aggregate market value equal to the aggregate
market value of the Shares subject to the Option immediately before its release
and for this purpose market value shall be ascertained by the application of
Rule 5.1(a) above as at the date of release of the Option and grant of the New
Option;

 

(c)                            the New Option shall have an Exercise Price such that the
aggregate price payable on complete exercise equals the aggregate price which
would have been payable on complete exercise of the Option; and

 

(d)                           the New Option shall be otherwise identical in terms to the
Option

 

10

 

AND the
New Option shall, for all other purposes of this Plan, be treated as having
been acquired at the same time as the Option in consideration of the release of
which it is granted. With effect from the release of any Option pursuant to
Rules 6, 7.1, 7.2 and 7.3, this Rule 9 and Rule 10 of this Plan shall in
relation to the New Option be construed as if references therein to “the
Company” were references to the Acquiring Company or, as the case may be, such
other company and all the Rules (other than Rules 3 to 5 inclusive) shall in
relation to the New Option be construed as if references therein to Shares were
references to shares in the Acquiring Company or, as the case may be, such
other company in respect of whose shares the New Option is granted.

 

9.5                                     If the Company passes a resolution for voluntary winding up,
any Subsisting Option may be exercised within six months of the passing of the
resolution.

 

9.6                                     For the purposes of this Rule 9 a person shall be deemed to
have obtained Control of a Company if he and others acting in concert with him
have together obtained Control of it.

 

9.7                                     The exercise of an Option pursuant to the preceding
provisions of this Rule 9 shall be subject to the provisions of Rule 7 above.

 

9.8                                     Any Option shall lapse if:

 

(a)                            it shall not have been exercised by the expiry of any time
limit for exercise set out in this Rule 9, whichever shall expire first; and

 

(b)                           no agreement for the release of the Option shall have been
entered into by the expiry of the first Appropriate Period to commence pursuant
to Rule 9.4 above.

 

10.                                     ALLOTMENT AND LISTING

 

10.1                               Subject to receipt of the appropriate remittance and notice
of exercise, Shares to be acquired pursuant to the exercise of an Option will
be allotted or transferred not later than 45 days after the exercise of the
Option and will rank pari passu in all respects with the Shares in issue on the
date of exercise save that they will not rank for any dividend or other
distribution paid or made by reference to the date (known as the record date)
on which entitlement to the dividend or distribution is fixed by reference to
the Company’s register of members if that date falls prior to the date of
exercise of the Option.

 

10.2                               If the Shares are listed on the London Stock Exchange at the
date of allotment of any Shares pursuant to the Plan the Company will apply to
the London Stock Exchange for permission for such Shares so allotted to be
admitted to the Official List. An application may be postponed at the
discretion of the Board until application can be made in respect of such number
of Shares as the Board consider appropriate.

 

11.                                     EMPLOYMENT RIGHTS

 

11.1                               This Plan shall not form part of any contract of employment
between any member of the Group and any employee of any such company and the
rights and obligations of any individual under the terms of his office or
employment with any member of the Group shall not be affected by his
participation in the Plan or any right which he may have to participate
therein.

 

11.2                               Participation in the Plan shall be on the express condition
that:

 

(a)                            neither it nor cessation of participation shall afford any
individual under the terms of his office or employment with any member of the
Group any additional or other rights to compensation or damages;

 

(b)                           no damages or compensation shall be payable in consequence
of the termination of such office or employment (whether or not in
circumstances giving rise to a claim

 

11

 

for wrongful or unfair dismissal) or for any
other reason whatsoever to compensate him for the loss of any rights the
Participant would otherwise have had (actual or prospective) under the Plan
howsoever arising but for such termination; and

 

(c)                            the Participant shall be deemed irrevocably to have waived
any such rights to which he may otherwise have been entitled.

 

11.3                               No individual shall have any claim against a member of the
Group arising out of his not being admitted to participation in the Plan which
(for the avoidance of all if any doubt) is governed entirely by the Rules of
the Plan.

 

11.4                               No Participant shall be entitled to claim compensation from
any member of the Group in respect of any sums paid by him pursuant to the Plan
or for any diminution or extinction of his rights or benefits (actual or
otherwise) under any Option held by him consequent upon the lapse for any
reason of any Option held by him or otherwise in connection with the Plan and
each member of the Group shall be entirely free to conduct its affairs as it
sees fit without regard to any consequences under, upon or in relation to the
Plan or any Option or Participant.

 

11.5                               By accepting the grant of an Option under the Plan, the
Eligible Employee shall authorise and consent to the collection, processing,
transfer (including to countries outside the European Economic Area) and
retention of his personal data for use in connection with the operation and
implementation of the Plan by the Company, any Member of the Group, the Trustee
and/or any third party as may be retained by the Board from time to time to
administer the Plan.

 

12.                                     ADMINISTRATION OF THE PLAN

 

12.1                               The Board may make and vary such regulations (not being
inconsistent with the Plan) as it thinks fit for the administration and
implementation of the Plan. The Board’s decision on any matter concerning the
Plan or its interpretation (including the rectification of errors or mistakes
of procedure or otherwise) (other than a matter to be certified by the
Auditors) shall be final and binding. In any matter in which they are required
to act hereunder, the Auditors shall be deemed to be acting as experts and not
as arbitrators and their decision shall be binding and final.

 

12.2                               The Board shall be entitled by resolution to amend all or
any of the provisions of the Plan as the Board thinks fit except that no
alteration shall be made:

 

(a)                            to the advantage of Participants to any of the provisions of
the Plan relating to:

 

(i)                              eligibility;

 

(ii)                           the limitations on the number or amount of Shares, cash or
other benefits subject to the Plan;

 

(iii)                        the maximum entitlement of any one Participant;

 

(iv)                       the basis for determining a Participant’s entitlement to,
and the terms of, Shares, cash or other benefits to be provided under the Plan and
for the adjustment thereof (if any) in the event of a capitalisation issue,
rights issue or open offer, sub-division or consolidation of Shares or
reduction of capital or any other variation of capital;

 

without the
prior sanction of an ordinary resolution 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 member of the Group; or

 

12

 

(b)                           to any rights already accrued to any Participant which would
be to the disadvantage of such Participant, without the prior consent of the
majority of the affected Participants first having been obtained.

 

12.3                               Written notice of any alteration made in accordance with
Rule 12.2 above shall be given to all Participants.

 

12.4                               The Company shall keep available sufficient issued and/or
unissued Shares (including Shares to be represented by ADSs) in the capital of
the Company to satisfy the exercise in full of all Options for the time being
remaining capable of being exercised.

 

12.5                               Participants shall be sent copies of any document having a
material effect on their rights at the same time as such document is sent to
holders of Shares.

 

12.6                               Unless otherwise provided in these Rules, any notice or
other communication under or in connection with the Plan may be given:

 

(a)                            by the Company to an Eligible Employee or Participant either
personally or sent to him at his place of work by electronic mail or by post
addressed to the address last known to the Company (including any address
supplied by the relevant Participating Company or any Subsidiary) or sent
through the Company’s internal postal service; and

 

(b)                           to the Company either personally or by post to the Company
Secretary (or its duly appointed agent).

 

Items
sent by post shall be pre-paid and shall be entirely at the Eligible Employee’s
risk. Any notice or other communication to the Company shall not be deemed to
have been duly received until it is actually received by the Company or its
duly appointed agent (unless the Company directs otherwise).

 

12.7                               The Company shall bear the costs of setting up and
administering the Plan. However, the Company may require any Participating
Company to reimburse the Company for any costs borne by the Company directly or
indirectly in respect of such Participating Company’s officers or employees.

 

12.8                               The Company shall maintain all necessary books of account
and records relating to the Scheme.

 

12.9                               The Board shall be entitled to authorise any person to
execute on behalf of a Participant, at the request of the Participant, any
document relating to the Plan, in so far as such document is required to be
executed pursuant hereto.

 

12.10                         If any Option certificate shall be worn out, defaced or
lost, it may be replaced on such evidence being provided as the Board may
require.

 

12.11                         The provisions of the Company’s Articles of Association for
the time being in force with regard to the service of notices upon members of
the Company shall apply mutatis mutandis to any notice to be given by the
Company to Participants.

 

12.12                         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 Plan in such manner as the Board 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 provided that no such
amendment shall be made to the advantage of Participants save as specified in
Rule 12.2(a) above without the prior approval of the Company in general
meeting.

 

13

 

13.                                     TERMINATION OF THE PLAN

 

The
Plan may be terminated at any time by the Board or by the Company in general
meeting but in any event shall terminate on the tenth anniversary of the Adoption
Date and on such termination no further Options shall be granted, but the
subsisting rights of Participants shall not be affected by such termination.

 

14.                                     GENERAL

 

14.1                               Any Participating Company may provide money to the Trustee
or any other person authorised by the Board to enable them or him to acquire
Shares to be held for the purposes of the Plan, or enter into any guarantee or
indemnity for those purposes, to the extent not prohibited by section 151 of
the Companies Act 1985.

 

14.2                               The Plan shall be subject to, governed and construed in
accordance with English law and for the avoidance of doubt, notwithstanding any
translation of the Plan rules, the English version of the Plan rules shall
prevail at all times.

 

14.3                               The Company, the Trustee or any person which is or was a
Participant’s employer may withhold any amount and make any arrangements it
considers necessary to meet any liability of the Participant to taxation or
social security contributions in connection with the benefits delivered under
the Plan. These arrangements may include the sale on behalf of the Participant
of any Shares acquired by a Participant under the Plan. It is a condition of
the exercise of any Option that the Participant agrees to any withholding or
other arrangement (including, for the avoidance of doubt, any sale of Shares on
behalf of the Participant) in accordance with this Rule 14.3.

 

14

 

SCHEDULE 1

 

Special International Rules

 

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 12.7 for the purposes of the operation of the Plan in the
jurisdictions specified below:

 

Australia
(Appendix 1)

 

Bosnia
(Appendix 2)

 

Czech
Republic (Appendix 3)

 

France
(Appendix 4)

 

Germany
(Appendix 5)

 

Italy (Appendix
6)

 

Netherlands
(Appendix 7)

 

New Zealand
(Appendix 8)

 

United States
(Appendix 9)

 

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

 

Greece

 

Hong Kong

 

Hungary

 

Kyrgyz
Republic

 

Russia

 

Singapore

 

Slovakia

 

Slovenia

 

Spain

 

Taiwan

 

Turkey

 

United Arab
Emirates

 

15

 

Appendix 1

 

IMPERIAL
TOBACCO GROUP INTERNATIONAL SHARESAVE PLAN

 

APPENDIX
FOR AUSTRALIA

 

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 Option granted or to be
granted to a person resident for tax purposes in Australia.

 

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

 

Rule 1

 

	
  “Specified Age”

  	
   

  	
  in Rule 1 shall be deleted.

  
	
   

  	
   

  	
   

  
	
  Rule 7.5(a)

  	
   

  	
  delete the words “on reaching Specified Age or such other
  age at which he is bound to retire in accordance with the terms of his
  employment”.

  
	
   

  	
   

  	
   

  
	
  Rule 7.8

  	
   

  	
  shall be deleted and Rules 7.9 and 7.10 and any references
  thereto shall be re-numbered accordingly.

  

 

Any
grant made pursuant to Rule 3 of the Plan shall, notwithstanding anything to
the contrary contained in the Plan, be a grant of that number of Options, each
being an option to acquire one Share, as may be determined by the Board and any
reference in the Plan to ‘an Option’ shall, where the context requires, be
deemed to be a reference to such Options and so that:

 

(a)                            the number of such Options shall, for the purposes of Rule
3.4, be that number as would have an aggregate Exercise Price not exceeding the
Relevant Multiples of the sterling equivalent of the Eligible Employee’s
proposed monthly contributions to the Savings Plan as at the invitation date;

 

(b)                           if any adjustment is to be made by the Board pursuant to
Rule 6 of the Plan, the Board may, in its discretion, cancel any subsisting
Options granted to any relevant employee (whereupon any such Options shall
lapse), may amend the price at which any Subsisting Option may be exercised or
may arrange for the grant to any Participant of additional Options on such
terms as to maturity and exercise price as the Board shall determine, subject
always to the proviso in Rule 6;

 

(c)                            for the purposes of Rule 7.2 of the Plan, all or some of the
Options may be exercised by the Participant on the terms set out in that Rule
7.2;

 

(d)                           Rule 7.10 of the Plan shall be deleted and replaced with the
following:

 

“7.10                         An Option shall be exhausted and automatically
cancelled immediately after any of the Options are first exercised
notwithstanding that all Options granted shall not have been exercised.”; and

 

(e)                            subject always to the conditions in Rule 9.4, any grant of a
New Option for the purposes of Rule 9.4 of the Plan shall also be deemed to be
a grant of such number of New Options as shall give the employees a right to
acquire the total number of shares in the Acquiring Company calculated in
accordance with paragraph (b) of that Rule. Any references to a new Option in
that Rule 9.4 shall be deemed to be a reference to the New Options.

 

16

 

Appendix 2

 

IMPERIAL
TOBACCO GROUP INTERNATIONAL SHARESAVE PLAN

 

APPENDIX
FOR BOSNIA

 

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 Option granted or to be
granted to a person resident for tax purposes in Bosnia.

 

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

 

Rule
1

 

	
  “Specified Age”

  	
   

  	
  shall
  be amended by deleting “60” and replacing it with “65 years and 20 years of
  paying social security and pension contributions (the “insurance
  record”) or 40 years of insurance record regardless of the age,
  unless otherwise agreed between the Participant and his employer;”

  

 

17

 

Appendix 3

 

IMPERIAL
TOBACCO GROUP INTERNATIONAL SHARESAVE PLAN

 

APPENDIX
FOR CZECH REPUBLIC

 

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 Option granted or to be
granted to a person resident for tax purposes in the Czech Republic.

 

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

 

	
  Rule 3.3(b)

  	
   

  	
  this rule shall be deleted and replaced with

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “shall
  include an undertaking of the Participant to execute an agreement with
  his/her employer on deductions from such Participant’s salary (“Agreement on Deductions”) subject to the confirmation of
  the eligibility of the Participant by the employer. The Agreement on
  Deductions shall further include a joint obligation of the contracting
  parties to conclude an amendment to the Agreement on Deductions in the event
  of any of the circumstances specified in Rule 3.4. In particular, in the
  event that the number of Shares for which an Eligible Employee applies for an
  Option has to be reduced in accordance with Rule 3.4, the parties shall be
  required under this provision to conclude an amendment regarding reduction of
  the amount of regular monthly deductions from salary without undue delay of
  their notification in writing by the Company that such reduction has been
  approved by the Board.”

  

 

18

 

Appendix 4

 

IMPERIAL
TOBACCO GROUP INTERNATIONAL SHARESAVE PLAN

 

APPENDIX
FOR FRANCE

 

The
purpose of this appendix is to specify the terms and conditions under which the
Plan is to be modified so as to conform with articles L225-177 to L225-186 of
the French Code de Commerce as amended (the “Code”)
and an administrative regulation (the “Instruction”)
dated 6 May 1988, reference N-3-88 and various articles of the French Tax Code,
to the extent required under French law in order to: (i) ensure that Options
may be granted to Eligible Employees who are French residents for tax purposes
(“French Eligible Employees”) under the
Plan; and (ii) obtain the most favourable tax and social security treatment of
the Plan available under French law from the perspective of the Group and any
French Eligible Employee.

 

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

 

Rule
1

 

	
  “Eligible Employee”

  	
   

  	
  Sub-paragraph (ii) shall be deleted and replaced with the
  following:

   

  “and the
  employee does not own on the relevant Date of Grant more than ten per cent.
  of the share capital of the Company”;

  
	
   

  	
   

  	
   

  
	
  “Participant”

  	
   

  	
  shall be amended by deleting the words “personal
  representatives” and replacing them with the words “héritiers (heirs)”;

  
	
   

  	
   

  	
   

  
	
  “Specified Age”

  	
   

  	
  shall be deleted;

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

  	
  the following paragraph shall be added to this definition;

   

  “Furthermore,
  a French company will only be deemed to be a subsidiary if, in addition to
  the conditions set out above, it is a company in which the Company holds
  directly or indirectly, at least ten per cent. of the share capital and/or
  voting rights”;

  
	
   

  	
   

  	
   

  
	
  Rule 3.4

  	
   

  	
  shall be amended by deleting the words “60 days of the
  date pursuant to Rule 5.1(a) below by reference to which the Exercise Price
  was determined” and replacing them with the words “Within 60 days of the
  dealing day immediately preceding the Invitation Date”;

  
	
   

  	
   

  	
   

  
	
  Rule 3.7

  	
   

  	
  shall be amended to read:

   

  “No Option
  will be granted more than 38 months after the Adoption Date. No Option will
  be granted (i) during the period of 20 dealing days on the London Stock
  Exchange immediately following the payment of any cash dividend or stock
  dividend or the record date for any such dividend, (ii) during the ten
  dealing days on the London Stock Exchange both preceding and following the
  date on which the consolidated accounts of the Company (or if consolidated
  accounts are not drawn up, the annual accounts) are made public, and (iii)
  during the period elapsing between the date on which the corporate bodies of
  the Company are made aware of information which, if made public, could have a
  significant impact on the market price of the shares of the Company, and the
  date which is ten dealing days after the date on which such information is
  made public.”;

  

 

19

 

	
  Rule 5.1(a)

  	
   

  	
  shall be deleted and replaced with the following wording:

   

  “subject to
  Rule 5.2, 80 per cent. of the average middle market quotation per Share as
  derived from the Daily Official List of the London Stock Exchange for the 20
  dealing days immediately preceding the Date of Grant.”; and

  
	
   

  	
   

  	
   

  
	
  Rule 5.2

  	
   

  	
  shall be deleted and replaced with the following wording:

   

  “For the
  purposes of an Option granted at any time at which there shall be no dealings
  in the Shares, the Exercise Price shall be not less than such sum as may be
  determined by the Board, in accordance with the valuation rules set forth in
  article L225-177 of the Code, to be the market value of a Share on the Date
  of Grant.”;

  
	
   

  	
   

  	
   

  
	
  Rule 6

  	
   

  	
  shall be deleted and replaced with the following wording:

   

  “In
  principle the Exercise Price shall not be modified during the life of the
  Option. However, in the event of any alteration in the issued share capital
  of the Company (whether by way of capitalisation of profits or reserves or
  any sub-division or reduction of capital, or any other operation envisaged by
  article L225-181 of the Code), then the number of Shares subject to any
  Subsisting Option and the Exercise Price may be adjusted by the Board in such
  manner and with effect from such date as the Board may deem appropriate in
  order to comply with article L225-181.”;

  
	
   

  	
   

  	
   

  
	
  Rule 7.5

  	
   

  	
  shall be deleted and replaced with the following:

   

  “An Option
  shall cease to be exercisable upon the Participant ceasing to be an employee
  or director of any member of the Group (so as to hold no such employment or
  office) except where his so ceasing is by reason of any of the following
  circumstances:

   

  (a)   redundancy
  (licenciement pour motif économique);

   

  (b)   his
  being required by his employer to take retirement (mise à la retraite), or
  his taking retirement, in both cases, in circumstances where he is entitled
  to a full pension (retraite à taux plein) and has reached an age at which he
  is entitled to exercise his pension rights (l’âge d’ouverture des droits à la
  retraite);

   

  (c)   invalidity
  corresponding to the second or third category specified in article L341-4 of
  the Code de la Sécurité Sociale;

   

  (d)   his
  office or employment being either in a company which ceases to be a
  Subsidiary or relating to a business or part of a business which is
  transferred to a person who or which is neither a Subsidiary nor a Group
  company;

   

  (e)   his
  leaving service for any reason other than specified in sub-paragraph (a) to
  (d), at a time not earlier than three years from the Date of Grant.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In cases of (a), (b), (c), (d) and (e), the Option may be
  exercised at any time during the period of six months from the date on which
  the Participant ceases to be an employee or director of any member of the
  Group notwithstanding that the Normal Repayment

  

 

20

 

	
   

  	
   

  	
  Date shall not have occurred.

  
	
   

  	
   

  	
   

  
	
  Rule 7.7

  	
   

  	
  shall be amended to read as follows:

   

  “In the event of the death of a Participant, the Option
  may be exercised by his heirs (héritiers) at any time during the period of
  six months commencing on the date of his death (but not later) and the
  relevant héritiers (heirs) shall be entitled to do so notwithstanding that
  the Normal Repayment Date has not occurred. For the avoidance of doubt, in
  the event of the death of the Participant prior to the Normal Repayment Date
  the provisions of Rule 7.1(b) above shall apply”;

  
	
   

  	
   

  	
   

  
	
  Rule 7.8

  	
   

  	
  shall be deleted in its entirety;

  
	
   

  	
   

  	
   

  
	
  Rule 8(b)

  	
   

  	
  shall be amended by deleting the reference to “Rule 7.8
  above” in the final line;

  
	
   

  	
   

  	
   

  
	
  Rule 9

  	
   

  	
  shall be deleted in its entirety and replaced with the
  following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “9. Takeover and
  Liquidation

   

  9.1   In
  the event of:

   

  (a)   a
  change of Control of the Company in accordance with Rule 9.2;

   

  (b)   the
  Court sanctioning a compromise or arrangement, scheme under section 425
  Companies Act 1985;

   

  (c)   a
  person becoming bound or entitled to acquire Shares pursuant to sections
  428-430 of the Companies Act 1985;

   

  (d)   the
  passing of a resolution for the voluntary winding up of the Company;

   

  (e)   an
  appropriate offer or proposal shall be made to the French resident
  Participants in respect of any Subsisting Options.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.2   A
  person obtains control of the Company as a result of making:

   

  (a)   a
  general offer to acquire the whole of the issued share capital of the Company
  (not otherwise held or contracted to be acquired by the offeror) which is
  made on the condition such that if it is satisfied the person making the
  offer will have the Control of the Company; or

   

  (b)   a
  general offer to acquire all the shares in the Company which are of the same
  class as the Shares (including the Shares represented by the ADS).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.3   For
  the purposes of this Rule 9 a person shall be deemed to have obtained Control
  of a Company if he and others acting in concert with him have together
  obtained Control of it.”;

  

 

21

 

	
  Rule 12

  	
   

  	
  Rule 12.2(b) shall be amended to read as follows:

   

  “to any rights already accrued to any Participant which
  would be to the disadvantage of such Participant, without prior consent of
  such Participant.”

   

  The following wording shall be added to the end of this
  Rule:

   

  “12.13In order to ensure the most favourable treatment for
  the Group (as a first priority) and for the French Eligible Employees (as a
  second priority) in terms of taxes, social security charges and all similar
  duties whatsoever, under French law from time to time in force, the Board
  may, in accordance with article L225-177 of the Code, impose an interdiction
  de revente immédiate (“Compulsory Holding Period”) during which the Shares
  acquired on exercise of any Option may not be sold by the French Eligible
  Employee (except in circumstances where such sale will not undermine a
  favourable regime otherwise applying, including for example those
  circumstances specified in article 91 ter of Annexe II of the Tax Code). The
  Compulsory Holding Period may in no circumstances exceed three years from the
  date of exercise of the relevant Option.

   

  Furthermore,
  the Board may require the French Eligible Employees to expressly undertake to
  respect a Compulsory Holding Period, and, in the event of breach of this
  undertaking, to indemnify their French employing company and any member of the
  Imperial Tobacco Group in respect of all charges, expenses or liability of
  any nature whatsoever incurred by such entities as a result of such breach.”

  
	
   

  	
   

  	
   

  
	
  Rule 13

  	
   

  	
  The following words shall be added to this Rule:

   

  “Furthermore,
  no further Options will be granted by the Board more than 38 months after the
  Adoption Date unless authorisation is given by the Company in general meeting
  for the Board to do so. Such authorisation may be granted for a further
  period of up to 38 months.”;

  
	
   

  	
   

  	
   

  
	
  Rule 14.2

  	
   

  	
  The following wording shall be added to this Rule:

   

  “, although
  for the purposes of Options granted to French Eligible Employees, the terms
  and conditions of the Plan shall be interpreted in accordance with French
  law, where necessary in order to ensure compliance with the Code, the
  Instruction and the relevant articles of the Tax Code, to the extent required
  under French law in order to ensure the most favourable tax treatment of the
  Plan from the perspective of the Group, as a first priority, and the French Eligible
  Employees, as a second priority.”

  

 

22

 

Appendix 5

 

IMPERIAL
TOBACCO GROUP INTERNATIONAL SHARESAVE PLAN

 

APPENDIX
FOR GERMANY

 

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 Option granted or to be
granted to a person resident for tax purposes in Germany.

 

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

 

Rule
1

 

	
  “Specified Age”

  	
   

  	
  shall be deleted.

  
	
   

  	
   

  	
   

  
	
  Rule 7.5(a)

  	
   

  	
  delete the words “on reaching Specified Age or such other
  age at which he is bound to retire in accordance with the terms of his
  employment”.

  
	
   

  	
   

  	
   

  
	
  Rule 7.8

  	
   

  	
  shall be deleted and Rules 7.9 and 7.10 and any references
  thereto shall be re-numbered accordingly.

  

 

23

 

Appendix
6

 

IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN

 

APPENDIX FOR ITALY

 

The purpose of this appendix is to specify the
terms and conditions under which the Plan is to be modified as to conform with
the provisions of the Italian Civil Code and to various provisions of the
Presidential Decree 22 December 1986, no. 917 (the Italian
Consolidated Tax Act “ICTA”) in
order to obtain the most favourable tax treatment of the Plan available under
Italian law from the perspective of the Group and any Italian Eligible Employee

 

Words or phrases defined in the Plan shall bear
the same meaning in this Appendix 6 except as otherwise provided.

 

Rule 1

 

	
  “Eligible Employee”

  	
  shall be amended to read:

   

  “any
  employee of a Participating Company which has a salaried employment on a
  permanent basis and any “collaboratore
  coordinato e continuativo” (including a director) of a
  Participating Company at the Invitation Date PROVIDED HOWEVER THAT at the
  Invitation Date no notice of termination of such employment has been served
  by either the employee concerned or his employing Participating Company. Such
  rule would also apply in respect of any “collaboratore
  coordinato e continuativo” (including a director) of a
  Participating Company”;

  
	
   

  	
   

  
	
  “Participant”

  	
  shall be amended by deleting the words “personal
  representatives” and replacing them with the words “eredi (heirs)”;

  
	
   

  	
   

  
	
  “Specified Age”

  	
  shall be deleted;

  
	
   

  	
   

  
	
  “Subsidiary”

  	
  shall be replaced as follows:

   

  “means any company in relation to which the Company:

   

  (a) holds a majority of the voting rights in the
  ordinary shareholders’ meeting; or

  (b) has sufficient voting rights in the
  ordinary shareholders’ meeting to exercise a prevailing influence therein; or

   

  (c) exercises a prevailing influence on
  the company by virtue of specific negotiable agreements;

  in accordance with the requirements of Article 2359
  of the Italian Civil Code. Such definition also includes any other company
  which is a subsidiary as defined above of a company which is itself a
  subsidiary of the Company”.

  
	
   

  	
   

  
	
  Rule 6

  	
  shall be deleted and replaced with the
  following wording:

   

  “In principle the Exercise Price shall not be modified
  during the life of the Option. However, in the event of any alteration in the
  issued share capital of the Company (by way of one of the operations
  envisaged by the Italian Civil Code) then the Exercise Price may be
  adjusted by the Board in such manner and with effect from such

  

 

24

 

	
   

  	
  date as the Board may deem appropriate in order to
  comply with the provisions of the Italian Civil Code”

  
	
   

  	
   

  
	
  Rule 7.5

  	
  shall be deleted and replaced with:

   

  “7.5                  An Option shall cease to be exercisable upon
  the Participant ceasing to be an employee or a “collaboratore coordinato e
  continuativo” of any member of the Group (so as to hold no such employment or
  office) except where his so ceasing is by reason of any of the following
  circumstances:

   

  (a)                           redundancy; or

   

  (b)                          his being required by his employer to take
  retirement or his taking retirement, in both cases, in circumstances where he
  is entitled to a full pension and has reached an age at which he is entitled
  to exercise his pension rights; or

   

  (c)                           invalidity; or

   

  (d)                          his office or employment being either in a
  company which ceases to be a Subsidiary or relating to a business or part of
  a business which is transferred to a person who or which is neither a
  Subsidiary nor a Group company; or

   

  (e)                           his leaving service at any time other than
  that specified in sub-paragraph (a) to (d) above, provided that
  such event occurs not earlier than three years from the Date of Grant;

   

  in any of which circumstances the Option may be
  exercised at any time during the period of six months from the date on which
  he so ceases to be an employee or a “collaboratore
  coordinato e continuativo” of any member of the Group
  notwithstanding that the Normal Repayment Date shall not have occurred.

  
	
   

  	
   

  
	
  Rule 7.6(a) 

  	
  shall be replaced with the following wording:

   

  “7.6                  For the purposes of Rule 7.5 above and Rule 9
  below (but for no other purpose):

   

  (a)                           a Participant shall not be regarded as having
  ceased to hold office or employment by reason of:

   

  (i)                               his being or becoming employed or a “collaboratore coordinato e continuativo” by a company
  which ceases to be or is not a Participating Company but is nevertheless an
  Associated Company or is under the Control of the Company; and

   

  (b)                          a Participant shall be regarded as ceasing to
  hold office or employment when he holds no employment or no agreement of “collaboratore coordinato e continuativo” with any of the
  Company, any Associated Company and any company controlled by

  

 

25

 

	
   

  	
  the Company.”

  
	
   

  	
   

  
	
  Rule 7.7 

  	
  shall be amended by deleting the words “personal
  representatives” and replacing them with the words “eredi (heirs)”;

  
	
   

  	
   

  
	
  Rule 7.8 

  	
  shall be deleted in its entirety;

  
	
   

  	
   

  
	
  Rule 8(b) 

  	
  shall be amended by deleting the wording “or
  in the circumstances of Rule 7.8 above” in the final line;

  
	
   

  	
   

  
	
  Rule 9 

  	
  the following words shall be added to this
  Rule:

   

  “(b)                  any other operation envisaged by the Italian
  Civil Code for the acquisition of control”;

  

 

26

 

Appendix 7

 

IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN

 

APPENDIX FOR NETHERLANDS

 

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 option granted or to be granted to a person resident for tax purposes in
the Netherlands.

 

Words or phrases defined in the Plan shall bear
the same meaning in this Appendix 7 except as otherwise provided.

 

	
  Rule 1

  	
   

  
	
   

  	
   

  
	
  “Eligible Employee”

  	
  delete the words “in the case only of a
  director holding a salaried employment or office, usually works at least 25
  hours per week excluding time off permitted for meal breaks”;

  
	
   

  	
   

  
	
  “Specified Age”

  	
  shall be deleted;

  
	
   

  	
   

  
	
  Rule 7.5(a)

  	
  delete the words “on reaching specified age or
  such other age at which he is bound to retire in accordance with the terms of
  his employment”;

  
	
   

  	
   

  
	
  Rule 7.8

  	
  shall be deleted and Rules 7.9 and 7.10
  and any references thereto shall be re-numbered accordingly;

  

 

27

 

Appendix 8

 

IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN

 

APPENDIX FOR NEW ZEALAND

 

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 Option granted or to be granted to a person resident for tax purposes in
New Zealand.

 

Words or phrases defined in the Plan shall bear
the same meaning in this Appendix 8 except as otherwise provided.

 

Rule 1

 

	
  “Specified Age” 

  	
  shall be deleted.

  
	
   

  	
   

  
	
  Rule 7.5(a)

  	
  delete the words “on reaching Specified Age or such other
  age at which he is bound to retire in accordance with the terms of his
  employment”.

  
	
   

  	
   

  
	
  Rule 7.8

  	
  shall be deleted and Rules 7.9 and 7.10 and any
  references thereto shall be re-numbered accordingly.

  

 

28

 

Appendix 9

 

IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN

 

APPENDIX FOR THE UNITED STATES OF AMERICA

 

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 Option granted or to be granted to a person resident for tax purposes in
the United States of America.

 

Words or phrases defined in the Plan shall bear
the same meaning in this Appendix 9 except as otherwise provided.

 

Rule 1

 

	
  “Exercise Price”

  	
  the price per Share or price per ADS at which a
  participant may acquire Shares or ADSs pursuant to the Plan (as
  determined in accordance with Rule 5).

  
	
   

  	
   

  
	
  “Option” 

  	
  a right to acquire Shares, or ADSs, granted pursuant to
  the Plan.

  
	
   

  	
   

  
	
  Rule 3.2(a)

  	
  insert “or the ADSs, if applicable,” after the words “Exercise
  Price for the Shares”.

  
	
   

  	
   

  
	
  Rule 3.2(b)

  	
  insert as a new Rule 3.2(b) the
  following and re-number Rule 3.2(b) and 3.2(c) as 3.2(c) and
  3.2(d) respectively.

   

  “(b)                           whether the Shares to be issued upon the
  exercise of Options may be delivered in the form of ADSs;  and”

  
	
   

  	
   

  
	
  Rule 3.3(a)

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”
  in the penultimate line.

  
	
   

  	
   

  
	
  Rule 3.3(b)(i)

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”
  in lines 4 and 5.

  
	
   

  	
   

  
	
  Rule 3.4

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”
  in line 2.

  
	
   

  	
   

  
	
  Rule 3.4(a)

  	
  insert the following words after “Invitation Date” in the
  final line:

   

  “and, if permitted by the relevant invitations, Options
  shall be granted to the Eligible Employee in respect of that number of ADSs
  as would have an aggregate Exercise Price not exceeding the Relevant Multiple
  of the Eligible Employee’s proposed monthly dollar contributions to the
  Savings Plan as at the Date of Grant;”

  
	
   

  	
   

  
	
  Rule 3.4(i) and (ii)

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”
  wherever that word occurs.

  
	
   

  	
   

  
	
  Rule 5.1

  	
  in line 3 insert the words “or expressed in dollars in the
  case of Options for ADSs” after the words “in the case of Options for Shares”

  
	
   

  	
   

  
	
  Rule 5.1(a)

  	
  insert after the words “Invitation Date” in the final
  line, the words “or eighty per cent. of the closing price per ADS as derived
  from the New York Stock Exchange Consolidated Tape on the trading day
  immediately preceding the Invitation Date in the case of Options for ADS;”

  

 

29

 

	
  Rule 5.1(b) 

  	
  insert at the end of this rule “or the nominal value
  of the Shares represented by ADS in the case of Options for ADSs”.

  
	
   

  	
   

  
	
  Rule 5.2 

  	
  insert after the word “Shares” in line 2 “or ADSs, if
  applicable” and after the words “market value of a Share” in the last line “or
  ADS, respectively”.

  
	
   

  	
   

  
	
  Rule 6 

  	
  insert in the first line in the paragraph after “(d)” the
  words “or ADSs, if applicable,” after the words “the number of Shares”.

  
	
   

  	
   

  
	
  Rule 6(ii) 

  	
  insert after the words “nominal value of a Share”, in line
  2 “and the Exercise price of an Option to subscribe for ADS shall not be
  adjusted below the aggregate nominal value of the Shares represented by such
  ADSs”.

  
	
   

  	
   

  
	
  Rule 7.2

  	
  shall be deleted and
  replaced with the following:

   

  “An Option shall be exercisable during the
  period mentioned in Rule 7.4 below in respect of all of the Shares or
  ADSs, if applicable, over which it was granted by the Participant delivering
  to the Secretary of the Company at its registered office (or otherwise as may be
  notified to Participants from time to time) a remittance for that number of
  Shares or ADSs, if applicable, calculated by reference to the Exercise Price.
  The date of exercise of the Option shall be the date the Company or the
  Trustee (acting as agent of the Company) is deemed to have received such
  payment.”

  
	
   

  	
   

  
	
  Rule 7.3

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”
  wherever that word occurs.

  
	
   

  	
   

  
	
  Rule 7.4

  	
  delete the last sentence of Rule 7.4.

  
	
   

  	
   

  
	
  Rule 7.5

  	
  replace the words “may be exercised at any time
  during the period of six months from the date on which he ceases to be an
  employee or director of any member of the Group notwithstanding that the
  Normal Repayment Date shall not have occurred” with the words “will be
  exercised or lapse in accordance with the provisions of Appendix 9 of the Plan.
  The Participant’s ceasing to be an employee or director of any member of the
  Group by reasons set out in Rule 7.5(i), (ii) or (iii) shall
  be an Early Exercise Date. This provision shall be administered in accordance
  with Section 409A of the United States Internal Revenue Code and any
  guidance issued thereunder.” 

  
	
   

  	
   

  
	
  Rule 7.7

  	
  shall be replaced with the following:

   

  “The date of the death of the Participant will be
  considered an Early Exercise Date and any Options will be exercised or lapse
  in accordance with Appendix 9 of the Plan.”

  
	
   

  	
   

  
	
  Rule 7.8

  	
  shall not be applicable.

  
	
   

  	
   

  
	
  Rule 7.10 

  	
  insert the words “or ADSs, if applicable,” after the word “Shares”.

  
	
   

  	
   

  
	
  Rule 9.1

  	
  replace the words “may be exercised within six months
  of the time when the person making the offer has obtained Control of the
  Company and any condition subject to which the offer is made has been
  satisfied” with the words “will be exercised or lapse in accordance with the
  provisions of Appendix 9 of the Plan. The date when the person making the
  offer has obtained Control of the Company and any

  

 

30

 

	
   

  	
  condition subject to which the offer is made has been
  satisfied will be considered an Early Exercise Date, but only if it
  constitutes a change in ownership or effective control of the Company under Section 409A
  of the United States Internal Revenue Code and any guidance issued
  thereunder.” 

  
	
   

  	
   

  
	
  Rule 9.2

  	
  replace the words “may be exercised within six months
  of the Court sanctioning the compromise or arrangement” with the words “will
  be exercised or lapse in accordance with Appendix 9 of the Plan, and the
  effective date of the compromise or arrangement will be considered an Early
  Exercise Date, but only if it constitutes a change in ownership or effective control
  of the Company under Section 409A of the United States Internal Revenue
  Code and any guidance issued thereunder.”  

  
	
   

  	
   

  
	
  Rule 9.3

  	
  insert the words “, but only if it constitutes a change in
  ownership or effective control of the Company under Section 409A of the
  United States Internal Revenue Code and any guidance issued thereunder”
  immediately following the word “entitled.”

  
	
   

  	
   

  
	
  Rule 9.4(b)

  	
  insert the words “or ADSs, if applicable,” after the words
  “Shares” in line 4.

  
	
   

  	
   

  
	
  Rule 9.5

  	
  replace the words “may be exercised within six months
  of the passing of the resolution” with the words “will be exercised or lapse
  in accordance with Appendix 9 of the Plan, and the date which constitutes a
  change in ownership or effective control of the Company under Section 409A
  of the United States Internal Revenue Code and any guidance issued thereunder
  will be considered an Early Exercise Date.” 

  
	
   

  	
   

  
	
  Rule 10.2

  	
  insert a new Rule 10.2 as set out below after Rule 10.1
  and re-designate Rule 10.2 as Rule 10.3:

   

  “10.2                     Subject to receipt of the appropriate
  remittance, in the event ADSs are to be acquired pursuant to the exercise of
  an Option, ADSs will be transferred not later than 45 days after the exercise
  of the Option and will rank pari passu in all respects with the ADSs in issue
  on the date of exercise save that they will not rank for any dividend or
  other distribution paid or made by reference to the date (known as the ADS
  record date) on which entitlement to the dividend or distribution is fixed by
  the Depositary if that date falls prior to the date of exercise of the
  Option.”

  
	
   

  	
   

  
	
  Rule 10.4

  	
  insert a new Rule 10.4 as set out below:

   

  “10.4                     If the ADSs are listed on the New York Stock
  Exchange, Inc. at the date of transfer of ADSs pursuant to the Plan the
  Company will, if required, apply to the New York Stock Exchange, Inc.
  for permission for such ADSs so transferred to be listed on the New York
  Stock Exchange, Inc.”.

  
	
   

  	
   

  
	
  Rule 14.1 

  	
  insert the words “or ADSs, if applicable” after the word “Shares”
  in line 2.

  

 

Notwithstanding any provision to the contrary, the exercise
date for an Option granted to a Participant covered under this Appendix 9 shall
be a date certain following the Participant’s Normal Repayment Date (or Early
Exercise Date, where applicable) (collectively referred to herein as “Determination
Date”), and any Option payable with an Exercise Price less than Fair Market
Value

 

31

 

on the date certain shall be automatically exercised. Any
Option payable with an Exercise Price greater than Fair Market Value on the
date certain shall automatically lapse. No Participant covered by this Appendix
9 shall make any election or exercise discretion with respect to the exercise
or lapse of any applicable Option. Unless otherwise provided in the invitation
issued for the Option in accordance with Rules 3.1 or 3.2 of the Plan, the
date certain shall be the date 30 days following the Participant’s
Determination Date. For purposes of this paragraph, “Fair Market Value” means
the closing price per ADS as derived from the New York Stock Exchange
Consolidated Tape on the trading day immediately preceding the date certain.

 

Any Participant’s contributions held under a Savings Plan
attributable to a Participant’s Option which lapse in accordance with the
preceding paragraph shall automatically be paid to the Participant in
accordance with the terms of the Plan.

 

32

 

SCHEDULE 2

 

The Imperial Tobacco Group UK Sharesave Plan

 

33

 

SCHEDULE 3

 

The Imperial Tobacco Group Irish Sharesave Plan

 

34

 

SCHEDULE 4

 

Notional Awards

 

The rules governing Notional Awards (the “Phantom Plan”) shall be constituted by the rules of
the Plan save as the same (including the definitions used) are modified by the
terms of this schedule 4, as set out below.

 

In relation to any invitation made under the
Plan, the terms of this schedule 4 shall, unless otherwise determined by
the Board, apply in respect of Eligible Employees resident in each of the
jurisdictions (“Relevant Employees”) specified in Appendix 1 to this schedule 4:

 

1.                                           In this Phantom Plan the following terms shall
have the following meanings:

 

“Award” the sum paid or to be paid to a Relevant Employee by way of
remuneration in accordance with this Plan on the exercise of a Notional Award
being the difference between the Exit Price and the Notional Exercise Price for
each Share in respect of which the Notional Award is exercised;

 

“Exit Price” the middle market price of a Share as derived from the
London Stock Exchange Daily Official List for the dealing day immediately
preceding that on which a Notional Award is exercised;

 

“Notional Award” the notional right to acquire at the Notional
Exercise Price Shares in accordance with the terms of the Plan;

 

“Notional Gain” the sum paid or to be paid to a Relevant
Employee by way of remuneration in accordance with this Plan on the exercise of
a Notional Award being the difference between the Exit Price and the Notional
Exercise Price for each Share in respect of which the Notional Award is
exercised, but only if the Exit Price is higher than the Notional Exercise
Price;

 

“Notional Exercise Price” the price per Share at which a Participant may acquire
Shares the subject of a Notional Award calculated in accordance with Rule 5
of the Plan;

 

“Subsisting Notional Award” a Notional Award to the extent that it has
neither lapsed nor been exercised;

 

2.                                           In Rules 3, 8, 9, 11, 12 and 13 of the Plan
references to Option, Exercise Price, and Eligible Employee shall be replaced
by references to Notional Award, Notional Exercise Price, and Relevant Employee
respectively.

 

3.                                           In respect of each grant of Notional Awards, the
Board shall identify those Relevant Employees to whom Notional Awards shall be
granted and shall grant the Notional Award(s) in the same manner as provided in
Rule 3.4 of the Plan. For the avoidance of doubt, Rule 3.4(c) of
the Plan shall apply to the grant of Notional Awards as it does for the grant
of Options under the Plan. The Relevant Employee will be given a certificate
stating the Notional Exercise Price and the number of Shares subject to the
Notional Award.

 

4.                                           In Rule 4, for the purposes of calculating
the limits contained therein, the aggregate number of Shares shall include the
number of Shares the subject of Notional Awards.

 

5.                                           The Notional Award shall be capable of being
exercised in all respects in the same manner as an Option in accordance with Rule 7
of the Plan save that no payment or remittance is due as provided in Rules 7.1
and 7.2 and provided that the Notional Award may only be exercised in full
where exercise occurs on or after Normal Repayment Date.

 

6.                                           Rule 7.3 shall be deleted and replaced with
the following:

 

35

 

“7.3                    The exercise of a Notional Award under the Phantom
Plan shall be subject to the following conditions (a) that the Participant
shall withdraw all sums due by way of Repayment under the Savings Plan to which
he has contributed in relation to the Notional Award and (b) that the
Participant provides the Company with evidence in such form as it may require,
of his Savings Plan and the Repayments due to him under the Savings Plan.

 

7.                                           Rule 9.4 and 10 of the Plan shall not apply
in relation to the Notional Awards.

 

8.                                           Within 30 days of receipt of the appropriate
notice in accordance with Rule 7 the Board shall procure payment to the
Relevant Employee of the Notional Gain attributable to the Shares in respect of
which the Notional Award has been exercised.

 

9.                                           There shall be made from any payment under Rule 8
of the Phantom Plan such deductions (on account of tax, national insurance
contributions, social security contributions or similar liabilities) as may be
required by law or as the Company may reasonably consider to be necessary
or desirable.

 

10.                                     If there is an adjustment to Options pursuant to
Rule 6 of the Plan, an adjustment confirmed by the Auditors in writing to
be in their opinion an equivalent adjustment shall be made to Notional Awards.

 

11.                                     Payments under Rule 8 of the Phantom Plan will
not be pensionable.

 

36

 

Appendix 1

 

THE IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN – NOTIONAL AWARDS

 

Belgium

 

Canada

 

Kazakhstan

 

Macedonia

 

Poland

 

Serbia

 

Ukraine

 

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 12.7 for the purposes of the operation of the Plan in the
jurisdiction specified below:

 

Canada (Appendix 2)

 

37

 

Appendix 2

 

IMPERIAL TOBACCO GROUP INTERNATIONAL
SHARESAVE PLAN – NOTIONAL AWARDS

 

APPENDIX FOR CANADA

 

The purpose of this appendix is to specify the
terms and conditions under which the Phantom Plan is to be modified in its
application to any Notional Award granted or to be granted to a person resident
for tax purposes in Canada.

 

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

 

Section 1

 

	
  “Award” 

  	
  delete the word “remuneration” after the words
  “to be paid to a Relevant Employee by way of” and replace with the phrase “a
  bonus or similar payment in respect of services rendered by the Relevant
  Employee”, and add the phrase “, but only if the Exit Price is higher than
  the Notional Exercise Price” after the words “in respect of which the
  Notional Award is exercised”.

  
	
   

  	
   

  
	
  “Notional Gain”

  	
  delete the word “remuneration” after the words
  “to be paid to a Relevant Employee by way of” and replace with the phrase “a
  bonus or similar payment in respect of services rendered by the Relevant
  Employee”.

  
	
   

  	
   

  
	
  Section 5

  	
  is deleted and replaced with the following:

  

 

5.                                       (a)                                  The Notional Award shall be capable of being
exercised in all respects in the same manner as an Option in accordance with Rule 7
of the Plan save that no payment or remittance is due as provided in Rules 7.1
and 7.2, and provided that, notwithstanding any other provision of the Plan or
the Phantom Plan, no amount in respect of an Award or a Notional Gain shall be
paid to a Relevant Employee later than the end of the calendar year which is
the third calendar year immediately following the end of the calendar year of
the Date of Grant.

 

(b)                                 Rule 7.4 shall be deleted and replaced with
the following:

 

“7.4                    Save as otherwise provided, an Award may not
be exercised until the Normal Repayment date. No Award (including for greater
certainty a Subsisting Award) may be exercised later than 6 months after
the Normal Repayment Date or November 15th in the calendar year of the
Normal Repayment Date, whichever is earlier, and all Awards in respect of which
the Exit Price is higher than the Notional Exercise Price which are not already
exercised shall be deemed to be exercised on November 15th in the calendar
year of the Normal Repayment date, and for this purpose the Participant must
elect to add to the Repayment for the purposes of Rule 7.3 by November 30th
of the calendar year of the Normal Repayment Date. [NTD: The
dates within this Appendix may be changed at Imperial’s discretion as long
as all cash awards are distributed to employees in Canada by December 31
in the third calendar following date of grant (e.g. if grant made in 2004,
award must be paid by December 31 2007.) We have tried to ensure that
there is sufficient time between the Normal Repayment Date, the exercise and
the distribution of the award]. For greater certainty, all Awards (including
Subsisting Awards) in respect of which the Exit Price is equal to or less than
the Notional Exercise Price shall not be deemed to be exercised pursuant to
this Rule 7.4.

 

38

 

(c)                                Rule 7.5 shall be amended by adding the
phrase “or by November 15th in the calendar year of the Normal Repayment
Date (except to the extent that such Award is deemed to be exercised in
accordance with Rule 7.4), whichever is earlier” after the words “notwithstanding
that the Normal Repayment Date shall not have occurred”.

 

(d)                               Rule 7.7 shall be amended by adding the
phrase “, but in any event the personal representatives shall not be entitled
to exercise the Award (except to the extent that such Award is deemed to be
exercised in accordance with Rule 7.4) later than November 15th in
the calendar year of the Normal Repayment Date” after the words “within twelve
months commencing on the Normal Repayment Date”.

 

(e)                                Rule 7.8 shall be amended by adding the
phrase “or by November 15th in the calendar year of the Normal Repayment
Date (except to the extent that such Award is deemed to be exercised in
accordance with Rule 7.4), whichever is earlier” after the words “within
six months after the date of his reaching the Specified Age”.

 

(f)                                  Rule 8(b) shall be amended by adding “provided
that in no event shall the Normal Payment Date occur later than November 1
of the calendar year which is the third calendar year immediately following the
end of the calendar year of the Date of Grant”, to be added after the words “above
or Rule 9 below”.

 

(g)                               Rule 9.1 shall be amended by adding the
phrase “, but in any event not later than November 15th of the calendar
year of the Normal Repayment Date (except to the extent that such Award is
deemed to be exercised in accordance with Rule 7.4)” after the words “is
made had been satisfied”.

 

(h)                               Rule 9.3 shall be amended by adding the
phrase “, but in any event not later than November 15th of the calendar
year of the Normal Repayment Date (except to the extent that such Award is
deemed to be exercised in accordance with Rule 7.4)” after the words “of
the Court sanctioning the compromise or arrangement”.

 

(i)                                   Rule 9.4 shall be amended by adding the
phrase “, but in any event not later than November 15th of the calendar
year of the Normal Repayment Date (except to the extent that such Award is
deemed to be exercised in accordance with Rule 7.4)” after the words “that
person remains so bound or entitled”.

 

(j)                                   Rule 9.4 shall be amended by adding the
phrase “, but in any event not later than November 15th of the calendar
year of the Normal Repayment Date, “ after the words “as defined in paragraph 38(3) of
Schedule 3”.

 

(k)                                  Rule 9.5 shall be deleted and replaced with
the following:

 

“9.5                    If the Company passes a resolution for voluntary
winding up, any Subsisting Award may be exercised at any time within six
months of the passing of the resolution or by November 15th of the
calendar year of the Normal Repayment Date in respect of such Subsisting Award (except
to the extent that such Subsisting Award is deemed to be exercised in
accordance with Rule 7(D)), whichever is earlier.

 

39

 

SPECIMEN

 

THE IMPERIAL TOBACCO GROUP

 

INTERNATIONAL SHARESAVE PLAN (the “Plan”)

 

 

INVITATION

 

(on Company headed notepaper)

 

 

Dear Colleague,

 

The Directors of Imperial Tobacco Group PLC
invite you to apply for an option to acquire ordinary shares in Imperial
Tobacco Group PLC (the “Company”) under the Rules of the above Plan.

 

Enclosed are:

 

1.                                           a booklet which explains how the Plan works;

 

2.                                           an application for a share option;

 

3.                                           [[an application to open a savings account with
[              ]];

 

You should read these documents carefully before
deciding to commit yourself to participating. If you are in any doubt about any
feature of the Plan, please contact •.

 

Under the Rules you are entitled to take
out a savings contract, with a monthly contribution of up to £250 or its
equivalent in your local or other agreed currency. If you wish, however, you
can take out a contract, depending upon the frequency of your salary payments,
for any amount up to the maximum, subject to a minimum contribution of £5 per
month (or the equivalent sum at the Date of Grant in the currency of your
country of employment).

 

If you would like to join the Plan you should complete
and sign the attached Share Option Application [and savings account application
forms]. THESE MUST BE RETURNED TO • NOT LATER THAN [   PM] ON [           ].
IT WILL NOT BE POSSIBLE TO CONSIDER APPLICATIONS RECEIVED AFTER THAT DATE.

 

Yours sincerely

 

 

[Company Secretary]

 

40

 

SPECIMEN

 

THE IMPERIAL TOBACCO GROUP PLC

 

INTERNATIONAL SHARESAVE PLAN

 

 

SHARE OPTION APPLICATION

 

To:                              The Plan Administrator

 

PLEASE USE BLOCK CAPITALS

 

 

 

	
  SURNAME                                                                    MR/MRS/MISS/MS                                                   

  
	
   

  
	
  FIRST NAMES

  
	
   

  
	
  HOME ADDRESS

  
	
   

  
	
                                                                                          POSTCODE                                                              

  
	
   

  
	
  PLACE OF EMPLOYMENT

  

 

I wish to save [£     ]
per month (between £5 and £250) for 36 months (or the equivalent sums at the
Date of Grant in the currency of my country of employment)

 

NOTES:                                                     (1)           Contributions must be not less than £5 per month
and the aggregate contributions to be made in any month under this contract and
any other contract(s) linked to this Plan into which you have previously
entered must not be more than £250. For weekly paid employees, a quarter of the
monthly amount will be deducted weekly until the equivalent of [36/60] monthly
payments have been made, (or the equivalent sums at the Date of Grant in the
currency of your country of employment).

 

(2)           The Normal Repayment Date may be postponed if you miss
any contributions.

 

PLEASE READ AND SIGN

 

•                                        I hereby apply for an option over ordinary
shares in the capital of Imperial Tobacco Group PLC, the cost of which will be
met from repayments and any additional sums under the savings contract for
which a proposal form is attached.

 

•                                        I hereby declare that I am applying for an
option on my own behalf and not as a trustee or nominee for any other
person(s).

 

•                                        I hereby authorise the Company to submit my
savings application to [             ]
on my behalf and to make the corresponding deductions from my pay.

 

•                                        I authorise the Company Secretary to make such
adjustments to the amount to be saved by me under the savings contract referred
to above as may be necessary if my application is scaled down in
accordance with the Rules of the Plan and the number of shares allotted to
me is less than the number of shares which I have

 

41

 

applied for, further I authorise the Company to submit such
amended savings application to [          ].

 

•                                        I understand that if I am granted an option it
will be subject to the Rules of the Plan, by which I agree to be bound. A
copy of the Rules of the Plan is available for inspection at [               ].

 

Unless the context otherwise requires terms defined in the Rules of
the Plan shall have the same meaning herein.

 

	
  SIGNATURE

  	
   

  	
   

  	
  DATE

  	
   

  

 

42

 

SPECIMEN

 

THE IMPERIAL TOBACCO GROUP

 

INTERNATIONAL SHARESAVE PLAN

 

 

OPTION CERTIFICATE

 

	
  Name of Option Holder

  
	
   

  
	
  Address of Option Holder

  
	
   

  
	
   

  
	
   

  
	
                                                                                                                                                                        Post
  Code                           

  
	
   

  
	
  Option Certificate Number 

  
	
   

  
	
  Number of shares granted under this option 

  
	
   

  
	
  Date of grant 

  

 

This is to certify that the above named person
was on the above date granted an option as specified for ordinary shares of
[  ]p each in the capital of Imperial
Tobacco Group PLC (the “Company”) at an exercise price of [     ]p per share upon and subject to the terms
of The Imperial Tobacco Group International Sharesave Plan.

 

Signed on behalf of

 

	
   

  	
   

  	
  Director

  	
   

  	
   

  	
  Secretary

  	
   

  

 

 

	
  NOTES:

  	
   

  	
  (1)                                  The option cannot be assigned or transferred.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)                                  In order to exercise your option complete the Form of
  Exercise printed overleaf and send it together with a cheque for the relevant
  exercise price of the shares and evidence of the amount repaid under your
  savings contract to the Company Secretary of the Company.

  

 

THIS DOCUMENT MUST BE RETAINED. PLEASE KEEP IT
IN A SAFE PLACE. This certificate is issued as a matter of record only and is
not a document of title.

 

43

 

SPECIMEN

 

[Reverse of Certificate]

 

THE IMPERIAL TOBACCO GROUP

 

INTERNATIONAL SHARESAVE PLAN

 

 

FORM OF EXERCISE OF OPTION

 

 

	
  To:

  	
  The Company Secretary

  
	
   

  	
  Imperial Tobacco Group PLC

  

 

(In order to exercise your option you should
complete, sign and return this document to the Company Secretary at the above
address.)

 

1.                                           I wish to exercise the option referred to on the
reverse Option Certificate in respect of [           ] ordinary shares. (Insert the
number of shares in respect of which the option is exercised. If you do not
wish to exercise the option for all the shares shown on the attached
certificate you may exercise options for a lesser number.

 

2.                                           I enclose a cheque for £              in
favour of Imperial Tobacco Group PLC being the total exercise price payable
under this option for the above specified number of ordinary shares together
with evidence of the amount repaid to me under my savings contract.

 

Personal Details

 

	
  SURNAME                                                                                                
  MR/MRS/MISS/MS                           

  
	
   

  
	
  FIRST
  NAMES                                                                                         

  
	
   

  
	
  HOME
  ADDRESS                                                                                    

  
	
   

  
	
   

  	
                                                                                       

  	
  POST CODE

  
	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
   

  	
  DATE

  	
   

  	
   

  
									

 

NOTE:                                                          This option may be exercised only by the
person to whom it was granted or their personal representative(s).

 

IF YOU ARE IN ANY DOUBT, PLEASE CONTACT YOUR/THE
PLAN ADMINISTRATOR

 

44

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