Document:

Exhibit
4.4

 

 

IMPERIAL TOBACCO GROUP PLC

 

RULES OF THE IMPERIAL TOBACCO GROUP

 

LONG TERM INCENTIVE PLAN

 

Approved by the Company

on 14 August 1996

(and amended by the Remuneration Committee

on 9 October, 2 December 1996, 24 November 2000, 23
November 2001, 22 November 2002, 14 November 2003, 28 October 2005 and 26
October 2007.)

Amended by ordinary resolutions of the Company passed
on 1 February, 2005 and 31 January, 2006

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Operation
  of the Plan

  	
   

  	
  2

  
	
  2.

  	
  Terms of a Conditional Award

  	
   

  	
  2

  
	
  3.

  	
  Plan
  limit

  	
   

  	
  3

  
	
  4.

  	
  Grant of Conditional Awards

  	
   

  	
  3

  
	
  5.

  	
  Obligations of Employee

  	
   

  	
  4

  
	
  6.

  	
  Leaving Service or
  Reconstruction or Takeover during the Performance Period

  	
   

  	
  4

  
	
  7.

  	
  Determination of Options

  	
   

  	
  6

  
	
  8.

  	
  Options

  	
   

  	
  6

  
	
  9.

  	
  Exercise and lapse of Options

  	
   

  	
  7

  
	
  10.

  	
  Reconstruction or Takeover
  before the Release Date - Lapse of Options

  	
   

  	
  7

  
	
  11.

  	
  Capital reorganisation

  	
   

  	
  8

  
	
  12.

  	
  General

  	
   

  	
  8

  
	
  13.

  	
  Amendment and termination

  	
   

  	
  9

  
	
  14.

  	
  Governing
  Law

  	
   

  	
  9

  
	
   

  
	
  Schedule 1

  	
  International
  Rules

  	
   

  	
  10

  
	
  Appendix 1

  	
  Australia

  	
   

  	
  11

  
	
  Appendix 2

  	
  Belgium

  	
   

  	
  12

  
	
  Appendix 3

  	
  France

  	
   

  	
  14

  
	
  Appendix 4

  	
  Ireland

  	
   

  	
  16

  
	
  Appendix 5

  	
  Netherlands

  	
   

  	
  18

  
	
  Appendix 6

  	
  United
  States of America

  	
   

  	
  22

  
	
  Schedule 2

  	
  Performance
  condition for Conditional Awards granted after 28 October 2005

  	
   

  	
  21

  
	
  Schedule 3

  	
  Individual
  limits on participation

  	
   

  	
  23

  
					

 

 

Definitions

 

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

 

“Committee” means the Remuneration Committee of the
Board of Directors of the Company.

 

“Company”
means Imperial Tobacco Group PLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Market Value” in relation to a Share, means its
middle market quotation (as derived from the Daily Official List of the London
Stock Exchange) on the relevant date;

 

“Model Code” means the model code on directors’ and relevant
employees’ dealings in securities, as set out in the listing rules published by
the UK Listing Authority.

 

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

 

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

 

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

 

1

 

“Performance Condition” means the condition or
conditions determined by the Committee as required under Rule 2 and notified to
a Participant, which, until amended, will be as set out in Schedule 2 for any
Conditional Awards granted after 1 February 2005.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.                                           Operation of the Plan

 

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

 

2

 

2.                                           Terms of a Conditional Award

 

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

 

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

 

(2)          the
Performance Period;

 

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

 

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

 

3.                                           Plan Limit

 

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

 

(2)                            The number
of Shares available under the Plan on any date will be limited so that:

 

(i)                         the total number of Shares acquired or that may be acquired during
the period of ten years ending on that date under the Plan and all other
employees’ share schemes established by the Company cannot exceed 10% of the
issued ordinary share capital of the Company on that date; or

 

(ii)                      the total number of Shares acquired or that may be acquired during
the period of five years ending on that date under the Plan and all other
employees’ share schemes established by the Company cannot exceed 5% of the
issued ordinary share capital of the Company on that date; and

 

(iii)                   the total number of Shares acquired or that may be acquired during
the period of ten years ending on that date under the Plan and all other
employees’ share schemes established by the Company  cannot exceed 5% of the issued ordinary share
capital of the Company on that date, PROVIDED THAT there shall be excluded for
the purposes of this limit Shares acquired or that may be acquired under any
employees’ share scheme in circumstances where participation is offered or
extended to all or most employees of the participating companies under that
scheme.

 

4.                                           Grant of Conditional Awards

 

(1)                            Subject to Rule 12(5), the Committee may grant a Conditional Award
at any time to any Employee(1). The Committee will, from time to time, specify
a limit that will apply to the maximum Market Value (determined at the date of
grant) of the Shares that may be made subject to a Conditional Award on an
annual basis to any Employee selected to participate. No Conditional Award will
be granted to an

 

(1)                                  Amended
by the Remuneration Committee on 3 September 2007 to ensure the LTIP complies
with the UK Age Discrimination Regulations

3

 

 

Eligible
Employee in excess of the specified limit without the approval of the Committee
which will normally only be in exceptional circumstances (such as on the
recruitment of a key employee). Unless and until amended by the Committee the
limits will be as set out in Schedule 3.

 

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

 

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

 

5.                                           Obligations of Employee

 

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

 

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

 

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

 

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

 

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

 

(d)                      as a condition
of that grant agree to the collection, processing, transfer (including to
countries outside the European Economic Area) and retention of the Participant’s
personal data for use in connection with the operation of the Plan by a Group
Company, the Trustee and/or any third party retained by the Committee to
administer the Plan.

 

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

 

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

 

4

 

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

 

•                                death;

 

•                                injury, ill-health, or disability;

 

•                                redundancy;

 

•                                (2);

 

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

 

•                                any other circumstances where the Committee so decides,

 

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

 

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

 

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

 

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

 

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

 

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

 

(3)                          If a Participant ceases to be an Employee before the expiry of the
Performance Period by reason of (3) redundancy the Committee may determine that
the formula shall not be applied either in whole or in part. However, the
number of Shares to be the subject on an Option granted under this Rule 6(3)
cannot exceed that number of Shares that would have been the subject of an
Option if the formula had been applied.

 

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

 

(2)           See footnote 1 above

(3)           See footnote 1 above

5

 

number of Shares to be the subject of Options in respect of Conditional
Awards will be equal to A, as determined under the formula set out in Rule 6
(2).

 

(5)                            If in
consequence of an offer to shareholders in the Company (or any of them) or any
scheme of reconstruction (however effected) before the expiry of the
Performance Period the Shares are to cease to be listed on the London Stock
Exchange, the Committee shall notify Participants and the Performance Period
shall be deemed to have ended on the date of such notification (which period
will be the Relevant Period) and the number of Shares to be the subject of Options
in respect of Conditional Awards will be equal to A, as determined under the
formula set out in Rule 6 (2).

 

7.                                           Determination of Options

 

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

 

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

 

8.                                           Options

 

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

 

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

 

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

 

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

 

6

 

(5)                            A
Participant to whom an Option is granted shall not assign, transfer or charge
such Option or any interest in it.(4)

 

9.                                           Exercise and Lapse of Options

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(4)           Amended by the Remuneration Committee
on 28 October 2005

 

7

 

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

 

11.                                     Capital Reorganisation

 

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

 

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

 

12.                                     General

 

(1)                            Any notice
or other document given to any Employee or Participant pursuant to the Plan
shall be delivered to him or sent by post to him at his home address according
to the records of his employing company or such other address as may appear to
the Committee to be appropriate. Notices or other documents sent by post shall
be deemed to have been received 2 days following the date of posting for
documents posted to addresses in the United Kingdom and 7 days for documents
posted to an overseas address. All documents sent to or by a Participant will
be sent entirely at the Participant’s risk.

 

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

 

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

 

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

 

(5)                          No Conditional Award shall be granted to an Employee or Option
granted to or exercised by a Participant on a day when the relevant individual
is prohibited from dealing (as defined in paragraph 1 of the Model Code) in
Shares by the Model Code. The grant or exercise, as appropriate, will be
deferred until the first day on which the relevant individual is not so
prohibited.

 

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

 

8

 

(7)                            Any
benefits received under the Plan are not pensionable.

 

13.                                     Amendment and termination

 

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

 

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

 

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

 

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

 

(2)                          Notwithstanding anything to the contrary contained herein, the
Committee may at any time and from time to time by resolution and without
further formality amend the Plan in such manner as the Committee may consider
necessary or desirable in order to comply with, take advantage of, or otherwise
in connection with any taxation, legal, regulatory or other rule, law,
guideline, regulation or other provision of or prevailing in any jurisdiction
in which this Plan is or is intended to be operated.

 

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

 

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

 

(5)                          The Committee shall have discretion to terminate the Plan at any
time which shall in any event terminate on 1 February 2015 but, in each case,
without prejudice to outstanding Conditional Awards or Options.

 

9

 

14.                                     Governing Law

 

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

 

10

 

SCHEDULE 1

 

INTERNATIONAL RULES

 

 

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

 

Germany

Greece

Hong Kong

Hungary

Poland

Russia

Singapore

Slovenia

Spain

Turkey

 

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

 

Australia (Appendix 1)

Belgium (Appendix 2)

France (Appendix 3)

Ireland (Appendix 4)

Netherlands (Appendix 5)

United States of America (Appendix 6)

 

11

 

APPENDIX 1

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                                           Rule 4 shall be amended as follows:

 

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

 

“4(1)                 Subject
to Rule 11(5), the Committee(5) may grant Options at any time to any Employee
over such number of Shares specified in Rule 2(1)(6). The Committee will, from
time to time, specify a limit that will apply to the maximum Market Value
(determined at the date of grant) of the Shares that may be made subject to Options
on an annual basis to any Employee selected to participate. No Options will be
granted to an Eligible Employee in excess of the specified limit without the
approval

 

(5)           Amended by the Remuneration Committee
on 28 October 2005

(6)           See footnote 1 above

 

12

 

of the
Committee which will normally only be in exceptional circumstances (such as on
the recruitment of a key employee). Unless and until amended by the Committee
the limits will be as set out in Schedule 3.”(7)

 

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

 

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

 

9.                                           Rule 7 shall be deleted.

 

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

 

11.                                     Rules 8(4), 8(5)(8), 9, 10, 11, 12, 13 and 14 and any references
thereto shall be re-numbered accordingly.

 

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

 

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

 

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

 

12.2                               after Rule 8(1) insert the following:

 

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

 

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

 

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

 

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

 

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

 

(7)           Amended by the
Remuneration Committee on 28 October, 2005

(8)           Amended by the
Remuneration Committee on 28 October 2005

 

13

 

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

 

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

 

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

 

14

 

APPENDIX 2

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

1.                                           The definitions of “Exercise Price”, “Option”, “Option Certificate”,
and “Release Date” shall be deleted.

 

2.                                           The words “or an Option” in the definition of “Participant” will be
deleted.

 

3.                                           Rule 6(2)(i) shall be amended:

 

3.1           by
replacing the words “number of Shares to be the subject of an Option in respect
of        the relevant Conditional Award shall be” with the words “relevant
Conditional Award shall        vest in respect of the number of Shares”; and

 

3.2           by
amending the definition of “A” to read “is the number of Shares in respect of  which the
Conditional Award shall vest”.

 

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

 

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

 

5.                                           Rule 6(3) shall be amended by replacing the words:

 

“to be
the subject on an Option granted under this Rule 6(3) cannot exceed that number
of Shares that would have been the subject of an Option if the formula had been
applied”

 

with
the words:

 

15

 

“in
respect of which a Conditional Award will vest under this Rule 6(3) cannot
exceed that number of Shares in respect of which a Conditional Award would have
vested if the formula had been applied.”

 

6.                                           Rules 6(4) and 6(5) shall be amended by replacing the words:

 

“to be the subject of Options in respect of
Conditional Awards”

 

where they appear in those rules with the words:

 

“in respect of which a Conditional Award will vest.”

 

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

 

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

 

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

 

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

 

7(3)                                                                         The Company, any relevant Group Company and/or the Trustee may in
their absolute discretion make any arrangements considered necessary or desirable
to meet any liability to Tax or other imposts in respect of a Conditional Award
and/or the transfer of Shares subject to a Conditional Award.

 

7(4)                                                                         Shares transferred pursuant to the Plan will pari passu in all
respects with Shares already in issue except that they will not rank for any
dividend or other distribution of the Company paid or made by reference to a
record date falling before the date on which the Shares are transferred.”

 

9.                                           Rules 8, 9 and 10 shall be deleted.

 

16

 

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

 

11.                                     The words “or an Option” in Rule 11(1) (to be renumbered Rule 8(1)
further to paragraph 10 above) will be deleted.

 

12.                                     Rule 12(5) (to be renumbered Rule 9(5) further to paragraph 10
above) shall be amended by replacing the words:

 

12.1                      “Option granted to or exercised by a participant” with the words “Shares
be transferred pursuant to the vesting of a Conditional Award”; and

 

12.2                      “grant or exercise” with the words “vesting or transfer”.

 

13.                                     The words “or Options” at the end of Rule 13(5) (to be renumbered
Rule 10(5) further to paragraph 10 above) will be deleted.

 

17

APPENDIX 3

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

1.              The
definitions of “Exercise Price”, “Option”, “Option Certificate”, and “Release
Date” shall be deleted.

 

2.              The
words “or an Option” in the definition of “Participant” will be deleted.

 

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

 

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

 

4.              Rule
6(2)(i) shall be amended:

 

4.1           by
replacing the words “number of Shares to be the subject of an Option in respect
of the relevant Conditional Award shall be” with the words “relevant
Conditional Award shall vest in respect of the number of Shares”; and

 

4.2           by
amending the definition of “A” to read “is the number of Shares in respect of
which the Conditional Award shall vest”.

 

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

 

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

 

18

 

6.              Rule
6(3) shall be amended by replacing the words:

 

“to be
the subject on an Option granted under this Rule 6(3) cannot exceed that number
of Shares that would have been the subject of an Option if the formula had been
applied”

 

with the words:

 

“in
respect of which a Conditional Award will vest under this Rule 6(3) cannot
exceed that number of Shares in respect of which a Conditional Award would have
vested if the formula had been applied.”

 

7.              Rules
6(4) and 6(5) shall be amended by replacing the words:

 

“to be the subject of Options in respect of
Conditional Awards”

 

where they appear in those rules with the words:

 

“in respect of which a Conditional Award will vest.”

 

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

 

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

 

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

 

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

 

7(3)                         The Company, any relevant Group Company and/or the Trustee may in their
absolute discretion make any arrangements considered necessary or desirable to
meet any liability to Tax or other imposts in respect of a Conditional Award
and/or the transfer of Shares subject to a Conditional Award.

 

7(4)                         Shares transferred pursuant to the Plan will pari passu in all
respects with Shares already in issue except that they will not rank for any
dividend or other distribution of the

 

19

 

Company paid or made by reference to a
record date falling before the date on which the Shares are transferred.”

 

10.            Rules
8, 9 and 10 shall be deleted.

 

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

 

12.            The
words “or an Option” in Rule 11(1) (to be renumbered Rule 8(1) further to
paragraph 11 above) will be deleted.

 

13.            Rule
12(5) (to be renumbered Rule 9(5) further to paragraph 11 above) shall be
amended by replacing the words:

 

13.1        “Option
granted to or exercised by a participant” with the words “Shares be transferred
pursuant to the vesting of a Conditional Award”; and

 

13.2        “grant or
exercise” with the words “vesting or transfer”.

 

14.            The
words “or Options” at the end of Rule 13(5) (to be renumbered Rule 10(5)
further to paragraph 11 above) will be deleted.

 

20

 

APPENDIX 4

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

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

 

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

 

21

 

APPENDIX 5

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

1.              The
definitions of “Exercise Price”, “Option”, “Option Certificate”, and “Release
Date” shall be deleted.

 

2.              The
words “or an Option” in the definition of “Participant” will be deleted.

 

3.              Rule
6(2)(i) shall be amended:

 

3.1         by replacing the words “number
of Shares to be the subject of an Option in respect of the relevant Conditional
Award shall be” with the words “relevant Conditional Award shall vest in
respect of the number of Shares”; and

 

3.2         by amending the definition of
“A” to read “is the number of Shares in respect of which the Conditional Award
shall vest”.

 

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

 

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

 

5.              Rule
6(3) shall be amended by replacing the words:

 

“to be
the subject on an Option granted under this Rule 6(3) cannot exceed that number
of Shares that would have been the subject of an Option if the formula had been
applied”

 

with
the words:

 

22

 

“in
respect of which a Conditional Award will vest under this Rule 6(3) cannot
exceed that number of Shares in respect of which a Conditional Award would have
vested if the formula had been applied.”

 

6.              Rules
6(4) and 6(5) shall be amended by replacing the words:

 

“to be
the subject of Options in respect of Conditional Awards”

 

where
they appear in those rules with the words:

 

“in
respect of which a Conditional Award will vest.”

 

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

 

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

 

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

 

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

 

7(3)                         The Company, any relevant Group Company and/or the Trustee may in
their absolute discretion make any arrangements considered necessary or
desirable to meet any liability to Tax or other imposts in respect of a
Conditional Award and/or the transfer of Shares subject to a Conditional Award.

 

7(4)                         Shares transferred pursuant to the Plan will pari passu in all
respects with Shares already in issue except that they will not rank for any
dividend or other distribution of the Company paid or made by reference to a
record date falling before the date on which the Shares are transferred.”

 

9.              Rules
8, 9 and 10 shall be deleted.

 

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

 

23

 

11.            The
words “or an Option” in Rule 11(1) (to be renumbered Rule 8(1) further to
paragraph 10 above) will be deleted.

 

12.            Rule
12(5) (to be renumbered Rule 9(5) further to paragraph 10 above) shall be
amended by replacing the words:

 

12.1        “Option
granted to or exercised by a participant” with the words “Shares be transferred
pursuant to the vesting of a Conditional Award”; and

 

12.2        “grant or
exercise” with the words “vesting or transfer”.

 

13.            The
words “or Options” at the end of Rule 13(5) (to be renumbered Rule 10(5)
further to paragraph 10 above) will be deleted.

 

24

 

APPENDIX 6

 

IMPERIAL TOBACCO GROUP INTERNATIONAL

LONG TERM INCENTIVE PLAN

 

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

 

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

 

1.              A definition
of “ADSs” will be included as follows:

 

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

 

2.              The
definitions of “Exercise Price”, “Option”, “Option Certificate”, and “Release
Date” shall be deleted.

 

3.              The
words “or an Option” in the definition of “Participant” will be deleted.

 

4.              The
definition of “Shares” will be amended by inserting at the end of that
definition the words

 

“(including, where appropriate, ordinary
shares represented by ADSs)”.

 

5.              Rule
6(2)(i) shall be amended:

 

5.1         by replacing the words “number
of Shares to be the subject of an Option in respect of the relevant Conditional
Award shall be” with the words “relevant Conditional Award shall vest in
respect of the number of Shares”; and

 

5.2         by amending the definition of
“A” to read “is the number of Shares in respect of which the Conditional Award
shall vest”.

 

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

 

“an Option shall be granted to the personal representatives of the
Participant in respect of the number of Shares determined by the formula set
out in this Rule 6(2) but may only be exercised by the same on the production
of an Office Copy Grant of Probate or Letters of Administration”

 

25

 

with the words:

 

“ the number of Shares determined by the formula set
out in this Rule 6(2) shall only be transferred to the personal representatives
of the Participant on the production of an Office Copy Grant of Probate or
Letters of Administration.”

 

7.              Rule
6(3) shall be amended by replacing the words:

 

“to be
the subject on an Option granted under this Rule 6(3) cannot exceed that number
of Shares that would have been the subject of an Option if the formula had been
applied”

 

with
the words:

 

“in
respect of which a Conditional Award will vest under this Rule 6(3) cannot
exceed that number of Shares in respect of which a Conditional Award would have
vested if the formula had been applied.”

 

8.                                           Rules 6(4) and 6(5) shall be amended by replacing the words:

 

“to be
the subject of Options in respect of Conditional Awards”

 

where
they appear in those rules with the words:

 

“in
respect of which a Conditional Award will vest.”

 

9.                Rule
7 shall be re-titled “Transfer of Shares”
and Rules 7(1) and (2) shall be deleted and replaced with the following:

 

“7(1)                       after the date determined by the Committee for the purposes of Rule
2(4) (or, but only in the circumstances set out in Rule 6(2), 6(3), 6(4) or
6(5), as soon as reasonably practicable after the deemed end of the Performance
Period) the number of Shares the subject of the relevant Conditional Award as is
determined by the application of the Performance Condition and, but only where
required in accordance with the terms of Rule 6(2) or 6(3), the formula, will
vest and be transferred to the Participant as soon as reasonably practicable,
and in any event within 35 days of the relevant vesting date.

 

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

 

7(3)                         The Company, any relevant Group Company and/or the Trustee may in
their absolute discretion make any arrangements considered necessary or desirable
to meet any liability to Tax or other imposts in respect of a Conditional

 

26

 

Award and/or the transfer of Shares subject
to a Conditional Award.

 

7(4)                         Shares transferred pursuant to the Plan will pari passu in all
respects with Shares already in issue except that they will not rank for any
dividend or other distribution of the Company paid or made by reference to a
record date falling before the date on which the Shares are transferred.”

 

10.            Rules
8, 9 and 10 shall be deleted.

 

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

 

12.            The
words “or an Option” in Rule 11(1) (to be renumbered Rule 8(1) further to
paragraph 11 above) will be deleted.

 

13.            Rule
12(5) (to be renumbered Rule 9(5) further to paragraph 11 above) shall be
amended by replacing the words:

 

13.1                        “Option granted to or exercised by a participant” with the words “Shares
be transferred pursuant to the vesting of a Conditional Award”; and

 

13.2                        “grant or exercise” with the words “vesting or transfer”.

 

14.            The
words “or Options” at the end of Rule 13(5) (to be renumbered Rule 10(5)
further to paragraph 11 above) will be deleted.

 

27

 

SCHEDULE 2

 

PERFORMANCE CONDITION

 

This Schedule 2 contains the
performance conditions to which Conditional Awards granted under the Plan after
28 October 2005(9) will be subject, unless and until the Committee decides
otherwise.

 

1.             Definitions

 

Words and expressions
defined in the rules of the Plan will have the same meaning in this Schedule 2,
unless otherwise stated.  The following
definitions will apply in this Schedule 2:

 

Comparator Group means:

 

Altadis S.A.

Altria Group Inc

BAT PLC

Carlsberg A/S

Diageo PLC

Gallaher Group PLC

Imperial Tobacco
Group PLC

Interbrew SA

Pernod Ricard S.A.

Reynolds American Inc

SABMiller PLC

Scottish &
Newcastle PLC

 

FTSE 100
Index means
the index of the share prices of the UK’s 100 largest companies (by market
capitalisation) calculated and maintained by FTSE International Limited.

 

Real
Earnings Per Share (“EPS”) Growth is the average annual growth in the Company’s
basic EPS over the Performance Period, as adjusted over the Performance Period
on a basis, confirmed as appropriate by the auditors of the Company, for
amortisation, exceptional and extraordinary items and inflation.

 

TSR means the total shareholder return of
a company and will be calculated for any company:

 

(i)         using
the Company’s published share prices averaged over a three month period to
determine initial and closing prices rather than those ruling on a single day;
and

 

(ii)        on
the assumption that the cash flow of dividend payments is recognised on the
date the shares are declared “ex dividend”.

 

(9)           Amended
by the Committee on 28 October 2005 to substitute Pernod Ricard S.A. for Allied
Domecq PLC in the Comparator Group

 

28

 

The TSR calculation
for any company will be performed by an independent consultant appointed by the
Remuneration Committee and then approved by the Remuneration Committee.

 

2.             Performance Condition

 

The Performance
Condition is split into three elements, as follows: -

 

2.1           First element -

 

50 per cent. of the
Shares subject to a Conditional Award will be subject to a performance
condition based on the Company’s Real EPS Growth.

 

12.5 per cent. of the
Shares subject to the first element will vest if the Real EPS Growth equals
three (3) per cent.

 

All of the Shares
subject to the first element will vest if the Real EPS Growth is equal to or
exceeds ten (10) per cent.

 

Between these two
points the Shares subject to the first element will vest on a straight-line
basis.

 

2.2           Second element —

 

25 per cent. of the
Shares subject to a Conditional Award will be subject to a performance
condition based on the Company’s TSR relative to the TSRs of each of the
companies comprised in the FTSE 100 Index at the start of the Performance
Period over the Performance Period.

 

None of the Shares
subject to the second element will vest unless the Company’s TSR exceeds the
TSR of 50 per cent. of the companies comprised in the FTSE 100 Index.

 

30 per cent. of the
Shares subject to the second element will vest if the Company’s TSR would rank
it as the 50th Company by reference to TSR performance in the FTSE
100 Index.

 

All of the shares
subject to the second element will vest if the Company’s TSR exceeds the TSR of
75 per cent. of the companies in the FTSE 100 Index.

 

Between these
thresholds the Shares subject to the second element will vest on a
straight-line basis.

 

2.3           Third element-

 

25 per cent. of the
Shares subject to a Conditional Award will be subject to a performance
condition based on the Company’s TSR relative to TSRs of each of the companies
comprised in the Comparator Group over the Performance Period.

 

29

 

None of the Shares
subject to the third element will vest unless the Company’s TSR exceeds the TSR
of the bottom six companies in the Comparator Group.

 

30 per cent of the
Shares subject to the third element will vest if the Company’s TSR would rank
sixth in the Comparator Group.

 

All of the Shares
subject to the third element will vest if the Company’s TSR ranks the Company
in the top three of the Comparator Group.

 

Between these
thresholds the Shares subject to the third element will vest on a straight-line
basis.

 

3.             No re-testing

 

There will be no re-testing of any of the
performance conditions if they are not achieved at the end of the Performance
Period.

 

4.             Elements
separate

 

Each element of the performance condition
will operate independently of the others and will be capable of vesting
regardless of the Company’s performance in respect of the other elements.

 

5.             Adjustments

 

The Committee may make any adjustments to
maintain the performance test applicable to any Conditional Award that it
considers appropriate to take account of any change to the determination of a
company’s TSR, the constituent companies in the Comparator Group or the FTSE
100 Index over the Performance Period or any other factor it considers
relevant.

 

6.             Committee
discretion

 

Following testing of the performance
conditions the Committee may vary, but not increase, the extent to which a Conditional
Award has vested to ensure that vesting will only occur and at an appropriate
level if there has been an improvement in the underlying financial performance
of the Company, including the maintenance of long-term return on capital
employed.

 

30

 

SCHEDULE 3

 

INDIVIDUAL LIMITS ON PARTICIPATION

 

	
  Grade

  	
   

  	
  Maximum Value of Award

  (% of base salary)

  	
   

  
	
  Chief Executive

  	
   

  	
  200

  	
   

  
	
  Finance Director

  	
   

  	
  150

  	
   

  
	
  Board Member

  	
   

  	
  100

  	
   

  
	
  Chief Executives Committee

  	
   

  	
  100

  	
  (10)

  
	
  Senior Management

  	
   

  	
  100

  	
  (11)

  

 

(10)         Amended by the Committee on
28 October 2005 from 50 to 100.

(11)         Amended by the Committee on
28 October 2005 from 50 to 100.

 

31Exhibit 4.5

 

 

Imperial
Tobacco Group plc

 

The
Imperial Tobacco Group UK

Sharesave Plan

 

Adopted
by the Company on 1st February 2005 and approved by HMRC on 1st
March 2005

under reference number SRS2944/EJM

 

Amended
by the Remuneration Committee on 27 April 2007

such amendment approved by HMRC on 10 May 2007.

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  2.

  	
   

  	
  COMMENCEMENT AND TITLE

  	
   

  	
  3

  
	
  3.

  	
   

  	
  GRANT
  OF OPTIONS

  	
   

  	
  3

  
	
  4.

  	
   

  	
  LIMITATIONS ON THE ISSUE OF
  SHARES

  	
   

  	
  5

  
	
  5.

  	
   

  	
  EXERCISE
  PRICE

  	
   

  	
  6

  
	
  6.

  	
   

  	
  ADJUSTMENT OF OPTIONS

  	
   

  	
  6

  
	
  7.

  	
   

  	
  EXERCISE OF OPTIONS

  	
   

  	
  7

  
	
  8.

  	
   

  	
  LAPSE
  OF OPTIONS

  	
   

  	
  9

  
	
  9.

  	
   

  	
  TAKEOVER AND LIQUIDATION

  	
   

  	
  9

  
	
  10.

  	
   

  	
  ALLOTMENT AND LISTING

  	
   

  	
  11

  
	
  11.

  	
   

  	
  EMPLOYMENT
  RIGHTS

  	
   

  	
  11

  
	
  12.

  	
   

  	
  ADMINISTRATION OF THE PLAN

  	
   

  	
  12

  
	
  13.

  	
   

  	
  TERMINATION OF THE PLAN

  	
   

  	
  14

  

 

 

RULES OF THE IMPERIAL
TOBACCO GROUP UK SHARESAVE PLAN

 

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 Imperial Tobacco Group International Sharesave Plan is
adopted by the Company in general meeting;

 

“Application Period” means
such period as the Board may determine but being a period not less than 14 days
and not more than 21 days from an Invitation Date;

 

“Associated Company” has
the same meaning given to it in paragraph 47 of Schedule 3 to the Act except
for the purposes of Rule 7.6 where it has the meaning given to it by paragraph
35(4) of Schedule 3 to the Act;

 

“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;

 

“Bonus Date” means

 

(a)                                  where
Repayment under the relevant Savings Contract is taken as including the maximum
bonus, the earliest date on which the maximum bonus is payable; and

 

(b)                                 in
any other case the earliest date on which a bonus is payable under the Savings
Contract;

 

“Commencement Date” means
the date on which the Plan is approved by the Board of Inland Revenue under
Schedule 3 to the Act;

 

“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” has
the same meaning as in Section 719 of the Act;

 

“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:

 

(a)                                  who
on the relevant Date of Grant has achieved such period of Continuous Service not
exceeding five years as the Board shall on or before the Invitation Date 7
determine;

 

(b)                                 whose
earnings from his office or employment are (or would be if there were any)
general earnings to which section 15 to 21 of the Act applies;

 

(c)                                  who
is not ineligible to participate in the Plan by virtue of any of the provisions
of the Act including in particular paragraph 11 of Schedule 3 to the Act; and

 

(d)                                 who
in the case only of a director holding a salaried employment or office, usually
works at least twenty-five 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 treat any employee or director of a member of the Group who meets
requirement (c) above 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;

 

“HMRC”
means Her Majesty’s Revenue & Customs;

 

“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 of the Group;

 

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

 

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

 

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

 

2

 

“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 UK Sharesave Plan as amended from time to time;

 

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

 

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

 

“Savings Contract” means
a certified contractual savings scheme within the meaning of Section 326 of the
Income and Corporation Taxes Act 1988 and which has been approved by the Inland
Revenue for the purposes of Schedule 3 to the Act;

 

“Schedule 3” means
Schedule 3 to the Act;

 

“Scheme-Related Employment” means
the office or employment by virtue of which a Participant is eligible to
participate in the Plan;

 

“Share” means
a fully paid ordinary share in the capital of the Company which satisfies
paragraphs 18 to 22 of Schedule 3;

 

“Specified Age” means
60;

 

“Subsidiary” means
a subsidiary of the Company as defined in Section 736 of the Companies Act 1985
over which the Company has Control;

 

“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 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 UK Sharesave Plan.

 

3.                                       GRANT OF OPTIONS

 

3.1                                 On
or prior to an Invitation Date, the Grantor in its absolute discretion may
decide:-

 

(a)                                  whether
to invite applications for the grant of Options. Such invitations shall be
issued in such form as the Board may prescribe from time to time including by
way of electronic communication; and

 

3

 

(b)                                 whether
to invite applications for three year Options or five year Options (or whether
to offer Eligible Employees a choice); and

 

(c)                                  whether
the Repayment shall be taken as including a bonus.

 

3.2                                 Where
applications are invited, such invitations shall be sent to all Eligible
Employees and shall 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 less than 14 nor more than 21 days after the
Invitation Date except in exceptional circumstances as determined by the Board;
and

 

(c)                                  whether
application may be made for three year Options or five year Options.

 

PROVIDED THAT any accidental failure or omission to deliver an
invitation to an Eligible Employee shall not invalidate the grant of an Option
to any other Eligible Employee.

 

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
Contract under which the applicant agrees to make in multiples of £5 per month
such specified contributions being not less than £5 per month nor (when
aggregated with contributions made under any other savings contract linked to a
savings-related share option scheme approved under Schedule 3) more than £250
per month (or such other amounts as may from time to time be permitted under
the Savings Contract) as shall secure on the Bonus Date, as nearly as may be,
Repayments of an amount equal to that for which Shares may be acquired under
his Option if exercised in full; and

 

(b)                                 shall
empower the Grantor 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 Bonus 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; and

 

(ii)                                 to
deduct from the Participant’s pay such contribution 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 and pay the same on behalf of the Participant in discharge of the
Participant’s obligations under the Savings Contract; and

 

(iii)                              [to
state whether the application is for a three year Option or a five year
Option.]

 

4

 

3.4                                 Within
30 days or, in exceptional circumstances, such longer period as may have been agreed
previously in writing with HMRC of the date pursuant to Rule 5.1(a) by
reference to which the Exercise Price was determined or in a case where the
number of shares over which Options are to be granted is determined by Rule 3.4(a)(i)
below, within [42] days of such date and subject to the limitations and
conditions contained in the Plan, Options shall by resolution of the Grantor be
granted to the Eligible Employees who have applied for them in accordance with
the following provisions:-

 

(a)                                  Options
shall be granted to the Eligible Employees in respect of all the Shares applied
for by them, save that :

 

(i)                                    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
and applications are received which would, if met in full, exceed that limit,
then the following steps shall be carried out successively to the extent
necessary to eliminate the excess over the limit imposed;

 

(A)                             the
excess over £5 of the monthly savings contribution chosen by each applicant
shall be reduced pro rata to the extent necessary;

 

(B)                               applications
will be selected by lot, each based on a monthly savings contributions of £5
and the inclusion of no bonus in the Repayment under the Savings Contract,

 

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
agreed with HMRC.

 

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
number of Shares over which an Option is granted to any Eligible Employee must
be so limited that the aggregate of the Exercise Price for those Shares does
not exceed the Repayment under the Savings Contract entered into on the grant
of such Option.

 

3.9                                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 in person or its agent or sent by
electronic mail or facsimile transmission to the Company or its 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

 

4.1                                 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
total number of Shares acquired or which may be acquired during the ten years
preceding such Date of Grant under this Plan and under all other Employees’
Share

 

5

 

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
total number of Shares acquired or which may be acquired during the preceding
five years under the Plan and under all other Employees’ Share Schemes
established by the Company 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 which shall have been
the subject of grants which lapse shall not be taken into account for the
purposes of this Rule 4.

 

5.                                       EXERCISE PRICE

 

5.1                                 Subject
to Rule 6 below the Exercise Price shall be such amount as the Board shall
determine being an amount not less than the greater of:-

 

(a)                                  subject
to Rule 5.2, 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 of an Option to subscribe for Shares, the nominal value of a Share.

 

5.2                                 For
the purposes of an Option granted at any other 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 agreed by HMRC in advance for the purposes of the Plan to be the
market value of a Share in accordance with Part VIII of the Taxation of
Chargeable Gains Act 1992.

 

6.                                       ADJUSTMENT OF OPTIONS

 

6.1                                 In
the event of 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, then the
number and the nominal value 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:-

 

(a)                                  any
such adjustment shall not take effect without the prior approval of HMRC;

 

(b)                                 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
fair and reasonable in their opinion;

 

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

 

(i)                                    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

 

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

 

6

 

7.                                       EXERCISE OF OPTIONS

 

7.1                                 An
Option shall be exercisable during the period mentioned in Rule 7.3 below in
respect of all or some of the Shares over which it was granted by the
Participant completing a written notice in the prescribed form on the reverse
of the certificate issued to the Participant under Rule 3.5 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.

 

7.2                                 It
is a condition of the exercise of an Option under the Plan that payment for the
Shares shall be made only with monies not exceeding the amount of the Repayment
to the Participant under the Savings Contract 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 Contract is less than the amount
required to pay for alt the Shares in respect of which it is purportedly
exercised, the Option shall be treated as exercised only in respect of such
number of Shares as may be acquired by the amount of the Repayment and shall
lapse as to the excess.

 

7.3                                 Save
as otherwise provided, an Option may not be exercised until the Bonus Date.
Subject only to the provisions of Rule 7.8 below, no Option may be exercised
later than six months after the Bonus Date.

 

7.4                                 Notwithstanding
any other provision hereof no Option may be exercised at any time when the
person seeking to exercise it is excluded from participation in this Plan by
virtue of either of paragraphs 10 and 11 of Schedule 3.

 

7.5                                 An
Option shall cease to be exercisable upon the Participant ceasing to hold
Scheme-Related Employment 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 within the meaning of the Employment Rights Act 1996
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 Participating Company;
or

 

(c)                                  his
leaving service at any time other than at a time specified in Rule 7.5(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 Bonus
Date shall not have occurred.

 

7.6                                 For
the purposes of Rule 7.5, if, at the Bonus Date, a Participant holds an office
or employment in a company which Is not a Participating Company but which is:-

 

(a)                                  an
Associated Company of the Company, or

 

(b)                                 a
company of which the Company has Control,

 

the Participant may exercise his Option within six months of that Bonus
Date.

 

7

 

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

 

(a)                                  a
Participant shall not be regarded as ceasing 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 the Company, any Associated Company and any company
Controlled by the Company.

 

7.8                                 In
the event of the death of a Participant prior to the Bonus 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
Bonus Date has not occurred and in the event of the death of a Participant
within six months commencing on the Bonus Date his personal representatives may
exercise the Option at any time within twelve months commencing on the Bonus
Date PROVIDED THAT such personal representatives shall not be entitled to
exercise the Option if at the date of the Participant’s death the Participant
was precluded from exercising the Option by reason of either of paragraphs 10
and 11 of Schedule 3. ;

 

7.9                                 A
Participant who reaches the Specified Age prior to the Bonus 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.

 

7.10                           If
an Option becomes exercisable under any provision of the Plan before the Bonus
Date shall be exercisable only over the number of Shares the aggregate Exercise
Price of which equals (as nearly as may be) but does not exceed the Repayment
made under the Savings Contract entered into on the grant of that Option but
excluding any contributions made directly by the Participant except to the
extent that such are:

 

(a)                                  made
pursuant to any special arrangements relating to absence from employment; or

 

(b)                                 made
at the same rate of contribution and at the same intervals as those
contributions previously deducted from his salary pursuant to the provisions of
Rule 3.3(b)(ii) between the date of the Participant ceasing to be employed by
the Group and the date on which the Option is exercised;

 

and the Option shall cease to be exercisable over any Shares in excess
of that number in respect of which it was granted. For the avoidance of doubt,
any Repayment under the Savings Contract shall exclude the Repayment of any
contributions made in advance under the Savings Contract the due date for
payment of which falls or would have fallen more than one month after the date
on which Repayment is made.

 

7.11                          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

 

8.                                       LAPSE OF OPTIONS

 

8.1                                 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
(with the exception of paragraph 7.9 thereof) above and Rule 9 below, whichever
shall first occur; or

 

(b)                                 if
the Participant omits seven or more times to make a monthly payment due under
his Savings Contract or gives notice under the Savings Contract requiring
Repayment before the Bonus 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 Rule 7.5, Rule 7.6, Rule 7.8 or Rule 7.9 above or in
the circumstances of Rule 9 below.

 

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
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;

 

then any Subsisting Option may subject to Rule 9.3 below 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                                 Subject
to Rule 9.2A and Rule 9.3 below, if under Section 425 of the Companies Act 1985
the Court sanctions a compromise or arrangement proposed for the purposes of or
in connection with a scheme for the reconstruction of the Company or its amalgamation
with any other company or companies, any Subsisting Option may be exercised
within six months of the Court sanctioning the compromise or arrangement.

 

9.2A                       If a company (the “Successor
Company”) has obtained Control of the Company, and the shareholders of the
Successor Company immediately after it has obtained Control are substantially
the same as the shareholders of the Company immediately before that event, and
the Successor Company consents to the exchange of Options under this Rule,
Options will not be exercisable but will be exchanged, during the Appropriate
Period as defined in paragraph 38(3) of Schedule 3, pursuant to Rule 9.4 save
that references to the Acquiring Company in that Rule shall be deemed to be
references to the Successor Company.

 

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 subject
to Rule 9.3 be exercised at any time when that person remains so bound or
entitled.

 

9

 

9.4                                 If
as a result of the events specified in Rule 9.1, Rule 9.2 or Rule 9.2A above a
company has obtained Control of the Company, or if a company has become bound
or entitled as mentioned in Rule 0 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) 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

 

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 this Rule 9, Rules 6, 7.1
and 7.2, 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 (other than Rule 9.3 above) 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 9.3 above.

 

10

 

10.                                 ALLOTMENT AND LISTING

 

10.1                           Subject
to receipt of the appropriate remittance:-

 

(a)                                  Shares
to be issued pursuant to the exercise of an Option will be allotted not later
than 30 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; and

 

(b)                                 in
the case of Shares to be transferred pursuant to the exercise of an Option, the
Grantor shall transfer or procure that the Shares shall be transferred within
30 days after exercise of the Option, save that such Shares 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
considers 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 damage; and

 

(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 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
any doubt) is governed entirely by the Rules.

 

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

 

11

 

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 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 decisions 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 and maintain favourable tax, exchange control
or regulatory treatment for Participants in the Plan or for any member of the
Group;

 

(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;

 

(c)                                  in
relation only to Options to purchase Shares, without the prior consent of the
Trustee; or

 

(d)                                 to
a key feature (as that term is defined in paragraph 42(2B) of Schedule 3 to the
Act) of the Plan shall have effect at any time at which the Plan is and is
intended to remain HMRC approved without the prior approval of HMRC and HMRC shall
be, informed as soon as practicable of any unapproved amendment as a result of
which the Plan stands to lose approval;

 

unless, in any such case, the alteration is necessary to comply with
any legislation for the time being in force or with any conditions requisite to
approval of HMRC for the Plan AND provided that, at any

 

12

 

time at which the Plan is and is intended to remain so approved by HMRC,
no amendment shall take effect unless and until such amendment shall have been
approved by HMRC.

 

12.3                          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.

 

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).

 

12.4                          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.

 

12.5                          The
Company shall maintain all necessary books of account and records relating to
the Plan.

 

12.6                          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.

 

12.7                          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.

 

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

 

12.9                          The
Company shall keep available sufficient Issued and/or unissued Shares in the
capital of the Company to satisfy the exercise in full of all Options for the
time being remaining capable of being exercised.

 

12.10                    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.

 

12.11                    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. Any
notice to be given by the Trustee to any Participant or Eligible Employee shall
be sufficiently given if sent to his home address or place of work as last
reported in writing to the Trustee by the Company.

 

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 any
way to the extent necessary to render the Plan capable of approval by HMRC or
any other governmental or other regulatory body pursuant to any present or future
United Kingdom legislation.

 

12.13                    The
Plan shall be subject to, governed by and construed in accordance with English
law.

 

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

 

SPECIMEN

 

THE IMPERIAL TOBACCO GROUP

 

UK SHARESAVE PLAN

 

OPTION CERTIFICATE

 

	
  Name of Option Holder

  	
   

  
	
   

  	
   

  
	
  Address of Option Holder

  	
   

  
	
   

  
	
   

  	
  Postcode

  	
   

  
	
   

  	
   

  
	
  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
adopted by a resolution of Imperial Tobacco Group PLC in general meeting on [•].

 

Signed on behalf of

 

	
   

  	
  Director

  	
   

  	
  Secretary

  

 

	
  NOTES:

  	
  (1)

  	
  The option cannot be assigned or
  transferred.

  
	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
  In order to exercise your option please
  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 Sharesave 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.

 

15

 

SPECIMEN

 

[Reverse of Certificate]

 

THE IMPERIAL TOBACCO GROUP

 

UK 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

  	
   

  
	
   

  	
   

  
	
   

  	
  POSTCODE

  	
   

  
	
   

  	
   

  
	
  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

 

16

 

IMPERIAL TOBACCO GROUP PLC

 

 

THE IMPERIAL TOBACCO GROUP IRISH SHARESAVE
PLAN

(approved under Schedule 12A Taxes Consolidation Act, 1997)

 

adopted by the Board of Imperial Tobacco
Group Plc on 1st February 2005

pursuant to a shareholders resolution passed on 1st February
2005

and approved by the Revenue Commissioners on 11th March 2005

Amended by the Remuneration Committee on 27 April 2007 such amendments

approved by the Revenue Commissioners on 18 May 2007

 

A & L Goodbody

International Financial Services Center,

North Wall Quay,

Dublin 1

 

Tel: 01-649-2000

Fax: 01-649-2649

 

 

THE IMPERIAL TOBACCO GROUP IRISH SHARESAVE PLAN

 

	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  2.

  	
  COMMENCEMENT AND TITLE

  	
   

  	
  3

  
	
  3.

  	
  GRANT OF OPTIONS

  	
   

  	
  3

  
	
  4.

  	
  LIMITATIONS ON THE ISSUE OF
  SHARES

  	
   

  	
  5

  
	
  5.

  	
  EXERCISE PRICE

  	
   

  	
  6

  
	
  6.

  	
  ADJUSTMENT OF OPTIONS

  	
   

  	
  6

  
	
  7.

  	
  EXERCISE OF OPTIONS

  	
   

  	
  6

  
	
  8.

  	
  LAPSE OF OPTIONS

  	
   

  	
  9

  
	
  9.

  	
  TAKE-OVER AND LIQUIDATION

  	
   

  	
  9

  
	
  10.

  	
  ALLOTMENT AND LISTING

  	
   

  	
  10

  
	
  11.

  	
  EMPLOYMENT RIGHTS

  	
   

  	
  11

  
	
  12.

  	
  ADMINISTRATION OF THE PLAN

  	
   

  	
  12

  
	
  13.

  	
  TERMINATION OF THE PLAN

  	
   

  	
  13

  
	
  OPTION CERTIFICATE 1

  	
   

  	
  14

  

 

 

RULES OF THE IMPERIAL TOBACCO GROUP IRISH SHARESAVE PLAN

 

1.             Definitions

 

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

 

“Act” means the Taxes Consolidation Act,
1997;

 

“Adoption Date” means the date on which
the Imperial Tobacco Group International Sharesave Plan is adopted by the
Company in general meeting;

 

“Application Period” means such period
as the Board may determine but being a period not less than 14 days and not
more than 21 days from an Invitation Date;

 

“Associated Company” has the same
meaning as in Section 432 of the Act;

 

“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;

 

“Bonus Date” means the earliest date on
which the maximum bonus is payable and in any other case the earliest date on
which a bonus is payable under the Savings Contract;

 

“Commencement Date” means the date on
which the Plan is approved by the Revenue Commissioners;

 

“Company” means Imperial Tobacco Group
PLC;

 

“Companies Act 1985” means the Companies
Act 1985 of the United Kingdom;

 

“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 under Irish
law, 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;

 

“Control” has the same meaning as in
Section 432 of the Act;

 

1

 

“Date of Grant” means the date on which
the Board (or the Trustee) passes a resolution to grant an Option under Rule 3.4
below;

 

“€” means Euro;

 

“Eligible Employee” means
any employee (including a full-time 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 three years as the Board shall on or before the Invitation Date
determine;

 

(b)           is
chargeable to tax in respect of his office or employment under Schedule E of
the Act; and

 

(c)           is
not ineligible to participate in the Plan by virtue of any of the provisions of
the Act including in particular paragraph 8 of Schedule 12A

 

provided that:

 

(i)            the
Board may treat any employee or director of a member of the Group who meets
requirement (c) above as an Eligible Employee; and

 

(ii)           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;

 

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

 

“Euro Equivalent” means
in relation to an amount denominated in GB pounds Sterling its equivalent in
Euros at such exchange rate as the Board shall in its discretion designate on
or before the Invitation Date;

 

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

 

“Group” means
the Company and its Subsidiaries from time to time together with any such
company as the Board and the Revenue Commissioners shall have agreed may
participate;

 

“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 of the Group;

 

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

 

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

 

“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 a member of the Plan
for the time being;

 

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

 

2

 

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

 

“Savings Contract” means
a  certified contractual savings scheme
within the meaning of Section 519C(4) of the Act with a qualifying savings
institution as defined in Section 519C(1) of the Act;

 

“Schedule 12A” means
Schedule 12A to the Act;

 

“Share” means a fully paid ordinary
share in the capital of the Company which satisfies paragraphs 11 to 15 of
Schedule 12A;

 

“Specified Age” means
the age of 60 years;

 

“Subsidiary” means
a subsidiary of the Company as defined in Section 155 the Companies Act 1963
over which the Company has Control;

 

“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 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 Irish Sharesave Plan.

 

3.             Grant
of Options

 

3.1           On
or prior to an Invitation Date the Board (or the Trustee) may decide in its
absolute discretion:

 

(a)           whether
to invite applications for the grant of Options. Such invitations shall be
issued in such form as the Board shall prescribe from time to time including by
way of electronic communication; and

 

(b)           whether
to invite applications for three year Options or five year Options.

 

3.2           Where
applications are invited, such invitations shall be sent to all Eligible
Employees and shall state:

 

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

 

(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 less than 14 nor more than 21 days after the Invitation
Date except in exceptional circumstances as determined by the Board; and

 

3

 

(c)           whether
application may be made for three year Options or five year Options;

 

PROVIDED THAT any accidental failure or omission to deliver an
invitation to an Eligible Employee shall not invalidate the grant of an Option
to any other Eligible Employee.

 

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
Contract under which the applicant agrees to make such specified contributions
being:

 

(i)            not
less than €12 per month (or such other amount as may be specified under the
Department of Finance Specifications for the purposes of paragraph 25(2)(a) of
Schedule 12A); nor

 

(ii)           when
aggregated with contributions made under any other savings contract linked to a
savings related share option scheme approved under Schedule 12A, more than the
lower of €320 (or such other maximum amount as may for the time being be
permitted by the Department of Finance Specifications for the purposes of
paragraph 25(2)(a) of Schedule 12A) and the Euro Equivalent of 250 GB pounds
Sterling per month;

 

as shall secure on the Bonus Date, as nearly as may be, Repayments of
an amount equal to that for which Shares may be acquired under his Option if
exercised in full; and

 

(b)           shall
empower the Board (or the Trustee) 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 Bonus 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; and

 

(ii)           to
deduct from the Participant’s pay such contribution 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 and pay the same on behalf of the Participant in discharge of the
Participant’s obligations under the Savings Contract; and

 

(iii)          to
state whether any bonus payable under the Savings Contract shall be included in
the amount of the Repayment which may be used to exercise the Option.

 

(c)           must
state whether the application is for a three year Option or a five year Option.

 

3.4           Within
30 days or, in exceptional circumstances, such longer period as may have been
previously agreed in writing with the Revenue Commissioners, of the date
pursuant to Rule 5.1(a) by reference to which the Exercise Price was determined
or in a case where the number of shares over which Options are to be granted is
determined by Rule 3.4(b) below, within 42 days of such date and subject to the
limitations and conditions contained in the Plan, Options shall by resolution
of the Board (or the Trustee) be granted to the Eligible Employees who have
applied for them in accordance with the following provisions:

 

(a)           Options
shall be granted to the Eligible Employees in respect of all the Shares applied
for by them, save that

 

4

 

(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
and applications are received which would, if met in full, exceed that limit,
then the following steps shall be carried out successively to the extent
necessary to eliminate the excess over the limitation imposed:

 

(i)            the
excess over the minimum monthly savings contribution permitted under Rule 3.3(a)
chosen by each applicant shall be reduced pro rata to the extent necessary; and

 

(ii)           applications
will be selected by lot, each based on a monthly savings contribution of the
minimum amount permitted under Rule 3.3(a) and the inclusion of no bonus in the
Repayment under the Savings Contract.

 

3.5           No
payment will be required from a Participant on the grant of an Option. Each
Participant will be issued with a certificate.

 

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
number of Shares over which an Option is granted to any Eligible Employee must
be so limited that the aggregate of the Exercise Price for those Shares does
not exceed the Repayment under the Savings Contract entered into on the grant
of such Option.

 

3.9           In
determining the number of Shares over which an Option will be granted the
Repayment will be converted to GB pounds Sterling at the exchange rate
prevailing as at the date on which the Exercise Price is fixed in accordance
with Rule 5.1(a) or, where appropriate, for the purposes of Rule 5.2, as at
such date as is agreed in writing with the Revenue Commissioners.

 

3.10         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 signed original 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

 

4.1           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
total number of Shares acquired or which may be acquired during the ten years
preceding such Date of Grant under this Plan and under 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
total number of Shares acquired or which may be acquired during the preceding
five years under the Plan and under all other Employees’ Share Schemes
established by the

 

5

 

Company 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 which shall have been
the subject of Options which have lapsed shall not be taken into account for
the purposes of this Rule 4.

 

5.             Exercise
Price

 

5.1           Subject
to Rule 6 below the Exercise Price shall be such amount as the Board shall
determine being an amount not less than the greater of:

 

(a)           subject
to Rule 5.2, 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 of an Option to subscribe for Shares, the nominal value of a Share.

 

5.2           For
the purposes of an Option granted at any other 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 agreed in writing by the Revenue Commissioners in advance
for the purposes of the Plan to be the market value of a Share in accordance
with Section 548 of the Act.

 

6.             Adjustment
of Options

 

6.1           In
the event of 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, 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 determine to be appropriate provided always that:

 

(a)           any
such adjustment shall not take effect without the prior approval in writing of
the Revenue Commissioners;

 

(b)           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 fair
and reasonable in their opinion;

 

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

 

(i)            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

 

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

 

7.             Exercise
of Options

 

7.1           An
Option shall be exercisable during the period mentioned in Rule 7.3 below in
respect of all or some of the Shares over which it was granted by the
Participant forwarding written details specifying the number of Shares in
respect of which the Option is exercised, a remittance in Euros for that number
of Shares calculated by reference to the Exercise Price and evidence of the
amount of the Repayment under the Savings Contract. The date of exercise of the
Option shall be the date of

 

6

 

receipt by the Company or the Trustee (acting as agent of the Company)
of such notice and payment.

 

7.2           It
is a condition of the exercise of an Option under the Plan that payment for the
Shares shall be made only with monies not exceeding the sterling equivalent of
the amount of the Repayment to the Participant under the Savings Contract to
which he has contributed in relation to the Option. If upon the exercise of an
Option the sterling equivalent amount of the Repayment then due to a
Participant under his Savings Contract is less than the amount required to pay
for all the Shares in respect of which it is purportedly exercised, the Option
shall be treated as exercised only in respect of such number of Shares as may
be acquired by the sterling equivalent of the amount of the Repayment and shall
lapse as to the excess.

 

For the purposes of this Rule 7.2, references to the sterling
equivalent of any amount of the Repayment means the sterling equivalent
determined by the Board by reference to such published rate of exchange between
GB pounds Sterling and Euros as may be made available to the Board on or about
the date of exercise of the Option and which the Board determines in its
discretion to be appropriate.

 

7.3           Save
as otherwise provided, an Option may not be exercised until the Bonus Date. Subject
only to the provisions of Rule 7.8 below, no Option may be exercised later than
six months after the Bonus Date.

 

7.4           Notwithstanding
any other provision hereof no Option may be exercised at any time when the
person seeking to exercise it is excluded from participation in this Plan by
virtue of either of paragraphs 8 and 9 of Schedule 12A.

 

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

 

(b)           injury,
disability or redundancy within the meaning of the Redundancy Payments Acts
1967 - 1991 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
Participating Company; or

 

(c)           his
leaving service at any time other than at a time specified in Rule 7.5(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 Bonus
Date shall not have occurred.

 

7.6           For
the purposes of Rule 7.5, if, at the Bonus Date, a Participant holds an office
or employment in a company which is not a Participating Company but which is:

 

(a)           an
Associated Company of the Company, or

 

(b)           a
company of which the Company has Control,

 

the Participant may exercise his Option within six months of that Bonus
Date.

 

7

 

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

 

(a)           a
Participant shall not be regarded as ceasing 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 the
Company, any Associated Company and any company Controlled by the Company.

 

7.8           In
the event of the death of a Participant prior to the Bonus 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
Bonus Date has not occurred and in the event of the death of a Participant
within six months commencing on the Bonus Date his personal representatives may
exercise the Option at any time within twelve months commencing on the Bonus
Date PROVIDED THAT such personal representatives shall not be entitled to
exercise the Option if at the date of the Participant’s death the Participant
was precluded from exercising the Option by reason of either of paragraphs 8
and 9 of Schedule 12A.

 

7.9           A
Participant who reaches the Specified Age prior to the Bonus 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.

 

7.10         If
an Option becomes exercisable under any provision of the Plan before the Bonus
Date it shall be exercisable only over the number of Shares the aggregate
Exercise Price of which equals (as nearly as may be) but does not exceed the
Repayment made under the Savings Contract entered into on the grant of that
Option but excluding any contributions made directly by the Participant except
to the extent that such are:

 

(a)           made
pursuant to any special arrangements relating to absence from employment; or

 

(b)           made
at the same rate of contribution and at the same intervals as those
contributions previously deducted from his salary pursuant to the provisions of
Rule 3.3(b)(ii) between the date of the Participant ceasing to be employed by
the Group and the date on which the Option is exercised;

 

and the Option shall cease to be exercisable over any Shares in excess
of that number in respect of which it was granted. For the avoidance of doubt,
any Repayment under the Savings Contract shall exclude the Repayment of any
contributions made in advance under the Savings Contract the due date for
payment of which falls or would have fallen more than one month after the date
on which Repayment is made.

 

7.11         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

 

8.             Lapse
of Options

 

8.1           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
(with the exception of paragraph 7.9 thereof) above and Rule 9 below, whichever
shall first occur; or

 

(b)           if
the Participant omits seven or more times to make a monthly payment due under
his Savings Contract or gives notice under the Savings Contract requiring
Repayment before the Bonus 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 Rule 7.5, Rule 7.6, Rule 7.8 or Rule 7.9 above or in
the circumstances of Rule 9 below.

 

9.             Take-over
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
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;

 

then any Subsisting Option may subject to Rule 9.4 below 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           Subject
to Rule 9.2A and Rule 9.4 below, if under Section 425 of the Companies Act 1985
the Court sanctions a compromise or arrangement proposed for the purposes of or
in connection with a scheme for the reconstruction of the Company or its
amalgamation with any other company or companies, any Subsisting Option may be
exercised within six months of the Court sanctioning the compromise or
arrangement.

 

9.2A        If
a company (the “Successor Company”) has obtained
Control of the Company, and the shareholders of the Successor Company
immediately after it has obtained Control are substantially the same as the
shareholders of the Company immediately before that event, and the Successor
Company consents to the exchange of Options under this Rule, Options will not
be exercisable but will be exchanged, during the Appropriate Period as defined
in paragraph 16(2) of Schedule 12A, pursuant to Rule 9.4 save that references
to the Acquiring Company in that Rule shall be deemed to be references to the
Successor Company.

 

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 subject
to Rule 9.4 below be exercised at any time when that person remains so bound or
entitled.

 

9.4           If
as a result of the events specified in Rule 9.1, Rule 9.2 or Rule 9.2A 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 16(2) of Schedule 12A release
any Subsisting Option of his in consideration of the grant of a new Option (the
“New Option”) which satisfies the
following conditions:

 

9

 

(a)                                  the
New Option shall be over shares in the Acquiring Company or another company
which satisfies paragraph (b) or (c) of Paragraph 11 of Schedule 12A in
relation to the Acquiring Company and shall satisfy the conditions specified in
paragraphs 11 to 15 inclusive of Schedule 12A;

 

(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 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

 

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 this Rule 9, Rules 6, 7.1 and 7.2, 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 other than paragraph 9.4 above 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:

 

(a)           Shares
to be issued pursuant to the exercise of an Option will be allotted as soon as
practicable 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

 

10

 

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; and

 

(b)           in
the case of Shares to be transferred pursuant to the exercise of an Option, the
Board or Trustee, as appropriate, shall transfer or procure that the Shares
shall be transferred as soon as practicable after exercise of the Option, save
that such Shares 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
considers 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 damage; and

 

(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 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
any doubt) is governed entirely by the Rules.

 

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, exchange, transfer
(including to countries outside the European Economic Area which may not have
the same level of data protection laws as in Ireland) and retention of his
personal data in connection with the operation and implementation of the Plan
by

 

11

 

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 of the Company) 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 decisions shall be final and binding.

 

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;

 

(b)           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 and maintain favourable tax, exchange control or
regulatory treatment for Participants in the Plan or for any member of the
Group;

 

(c)           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; or

 

(d)           in
relation only to Options to purchase Shares, without the prior consent of the
Trustee;

 

unless, in any such case, the alteration is necessary to comply with
any legislation for the time being in force or with any conditions requisite to
obtain or to maintain approval of the Revenue Commissioners for the Plan AND
provided that, at any time at which the Plan is and is intended to remain so
approved by the Revenue Commissioners, no amendment shall take effect unless
and until such amendment shall have been approved in writing by the Revenue
Commissioners.

 

12.3         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

 

12

 

(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 entirely be 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).

 

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

 

12.5         The
Company shall keep available sufficient issued and/or unissued Shares in the
capital of the Company to satisfy the exercise in full of all Options for the
time being remaining capable of being exercised.

 

12.6         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.

 

12.7         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. Any
notice to be given by the Trustee to any Participant or Eligible Employee shall
be sufficiently given if sent to his home address or place of work as last
reported in writing to the Trustee by the Company.

 

12.8         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 any
way to the extent necessary to render the Plan capable of approval by the
Revenue Commissioners or any other governmental or other regulatory body
pursuant to any present or future Irish legislation.

 

12.9         The
cost of the preparation of this Plan shall be borne by the Irish Participating
Companies in such proportions as are agreed with the Company.

 

12.10       The costs of operation and
administration of this Plan shall be borne by the Irish Participating Companies
in such proportions as are agreed from time to time with the Company on such
basis as determined by the Company.

 

12.11       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.

 

12.12       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.

 

12.13       The Plan shall be subject to,
governed by and construed in accordance with Irish law.

 

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 of the Plan and on such termination
no further Options shall be granted, but the subsisting rights of Participants
shall not be affected by such termination.

 

13

 

Imperial Tobacco Group plc

 

IRISH 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 at an
exercise price of [   ]p per share upon and subject to the terms
of the Imperial Tobacco Group PLC Irish Sharesave Plan adopted pursuant to a
resolution of Imperial Tobacco Group PLC in general meeting on [l].

 

Signed on behalf of

 

Director                                     Secretary

 

NOTES: (1)                                   The
option cannot be assigned or transferred.

 

[(2)          In
order to exercise your option please send this Option Certificate together with
a request for a cheque for the relevant exercise price of the shares and
evidence of the amount repaid under your Sharesave contract to the [insert name
of savings carrier] (or such other person as shall have been notified to you)].
* To be agreed with savings carrier.

 

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.

 

14

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