British American Tobacco p l c : Updated - Rules of the British American Tobacco Performance Share Plan

BRITISH AMERICAN TOBACCO P.L.C.

RULES

of the

BRITISH AMERICAN TOBACCO

PERFORMANCE SHARE PLAN

Adopted pursuant to shareholders' approval obtained on [

]

Herbert Smith Freehills LLP

HSF Ref: 30889176

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	CONTENTS
Clause	Heading	Page
1.	INTERPRETATION AND CONSTRUCTION	2
2.	PLAN LIMITS	4
3.	AWARDS	4
4.	AWARDS ARE NON-TRANSFERABLE	6
5.	PERFORMANCE CONDITION	6
6.	VESTING	7
7.	CESSATION OF OFFICE OR EMPLOYMENT	8
8.	CORPORATE ACTIONS	10
9.	OPTIONS	12
10.	DIVIDEND EQUIVALENT	12
11.	CASH ALTERNATIVE - OPTIONS AND CONDITIONAL AWARDS	13
12.	TAX LIABILITY	14
13.	SHARE PLAN ACCOUNTS	15
14.	CLAW-BACK	15
15.	VARIATION OF CAPITAL	16
16.	ADMINISTRATION	16
17.	AMENDMENTS	17
18.	DATA PROTECTION	17
19.	GENERAL	18
APPENDIX 1 : OPERATION OF CLAW-BACK	20
APPENDIX 2 : AWARDS GRANTED TO U.S. TAXPAYERS	22
1.	INTERPRETATION	22
2.	APPLICATION	22
3.	EXERCISE OF BOARD DISCRETION UNDER THE RULES	22
4.	TREATMENT OF AWARDS TO U.S. TAXPAYERS	22
5.	DIVIDEND EQUIVALENTS	23
6.	CASH ALTERNATIVE	23
7.	CODE § 409A EXEMPTION AND COMPLIANCE	23
8.	409A PENALTIES	24
9.	SETTLEMENT	24
ADDENDUM I: AWARDS GRANTED TO RAI PARTICIPANTS	25
1.	APPLICATION	25
2.	MODIFICATION	25
3.	TERMS	25
4.	SETTLEMENT	25
SCHEDULE 1 : PERFORMANCE CONDITIONS	26

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RULES OF THE BRITISH AMERICAN TOBACCO P.L.C.

PERFORMANCE SHARE PLAN

1. INTERPRETATION AND CONSTRUCTION

1.1 For the purposes of the Plan, the following terms shall have the meaning indicated below unless the context clearly indicates otherwise:

"Award" means one of a Conditional Award or an Option;

"Board" means the board of directors of the Company or a committee duly authorised by the board of directors (which, in respect of Awards granted to the executive directors and senior management of the Company, shall be the Remuneration Committee) or, following any Corporate Action, the Board or duly authorised committee as constituted immediately prior to the Corporate Act

"Claw-back" means a recovery of value by the Company from a Participant in accordance with the provisions of Rule 14 (Claw-back) and Appendix 1 (Operation of Claw-back);

"Company" means British American Tobacco p.l.c. (registered in England and Wales under No. 3407696);

"Conditional Award" means a right to receive a transfer of Shares following vesting of the Award;

"Control" has the meaning given by Section 995 of the Income Tax Act 2007; "Corporate Action" means any of the events referred to in:

1. Rules 8.1 to 8.4 (but excluding a Reorganisation as defined in Rule 8.7); or
2. if the Board determines that Awards will vest pursuant to such Rule, Rule 8.5;

"Dealing Day" means any day on which the London Stock Exchange is open for trading;

"Dealing Restriction" means any restriction on the dealing in shares, whether direct or indirect, pursuant to any law, regulation, code or enactment in England and Wales and/or the jurisdiction in which the Participant is resident, or any share dealing code of the Company;

"Eligible Employee" means an employee (including an executive director) of any Group Company;

"Employees' Share Scheme" has the meaning given by Section 1166 of the Companies Act 2006;

"Financial Year" means the financial year of the Company within the meaning of Section 390 of the Companies Act 2006;

"Grant Date" means the date on which a Conditional Award or Option is granted;

"Group" means the Company and any company which from time to time is a subsidiary of the Company, within the meaning of section 1159 of the Companies Act 2006 (each a "Group Company");

"Holding Period" means the two year period prior to the Normal Vesting Date of an Award which the Board determines shall be subject to a Holding Period;

"Market Value" means, in relation to a Share on any day, the mid-closing price of a Share on such day (as derived from the Daily Official List of the London Stock Exchange);

"Normal Vesting Date" means:

1. subject to (B) and (C):
2. 1. where the Board determines that an Award shall be subject to a Holding Period, the fifth anniversary of the Grant Date, or otherwise,
   2. the third anniversary of the Grant Date or any later date determined by the Board; or

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1. in respect of an Award granted in connection with the recruitment or promotion of an Eligible Employee, any other date (which may be prior to the third anniversary of the Grant Date) as determined by the Board prior to the Grant Date; or
2. where the Board determines that the grant is being made in exceptional circumstances to an Eligible Employee that is not an executive director of the Company, such other date (which may be prior to the third anniversary of the Grant Date) as may be determined by the Board prior to the Grant Date;

"Option" means a right to acquire Shares, which may be exercised by the Participant following the vesting of the Award during any period permitted for exercise;

"Option Price" shall be nil, or such other amount as the Board may determine (provided that the Board may reduce or waive such amount at any time);

"Participant" means an Eligible Employee who has received an Award to the extent it has not been released and has not lapsed (or, following his death, his Personal Representatives);

"Performance Condition" means the performance condition to which an Award is subject, which may consist of one or more performance elements, being as set out in a Schedule to the Plan (as substituted or amended by the Board from time to time);

"Performance Period" means the period of three Financial Years beginning with the Financial Year in which the Grant Date falls, or such other period as is determined by the Board prior to the Grant Date in accordance with Rule 5;

"Personal Representatives" means, following his death, the Participant's personal representatives, or a person fulfilling a similar function in any jurisdiction;

"Plan" means this British American Tobacco Performance Share Plan, as amended from time to time;

"Quarter Day" means 31 March, 30 June, 30 September or 31 December; "Rule" means a rule of this Plan;

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

"Treasury Shares" means Shares to which Sections 724 to 732 of the Companies Act 2006 apply;

"Trust" means any employee benefit trust from time to time established by the Company; "U.S. Taxpayer" has the meaning given in Rule 3.11 (U.S. Taxpayers); and

"vesting" means:

1. Shares subject to a Conditional Award becoming due to be transferred to the Participant; or
2. an Option becoming exercisable,

(and "vest" shall be construed accordingly).

1.2 In this Plan unless the context requires otherwise:

1. the headings are inserted for convenience only and do not affect the interpretation of any Rule;
2. a reference to a statute or statutory provision includes a reference:
3. 1. to that statute or statutory provision as from time to time consolidated, modified, re-enacted or replaced by any statute or statutory provision;
   2. to any repealed statute or statutory provision which it re-enacts (with or without modification); and
   3. to any subordinate legislation made under it;
4. words in the singular include the plural, and vice versa;
5. a reference to one gender shall be treated as a reference to any other gender;

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1. a reference to a person shall include a reference to a body corporate; and
2. a reference to writing or written form shall include any legible format capable of being reproduced on paper, irrespective of the medium used.

1.3 In this Plan:

1. a reference to the "transfer of Shares" (or similar) shall include both the issue and allotment of Shares and the transfer of Treasury Shares; and
2. a provision obliging, or permitting, any company to do any thing shall be read as obliging, or permitting, such company to do that thing, or procure that thing to be done; and
3. the use of the word "including" shall mean including without limitation and without prejudice to the generality of the foregoing.

2. PLAN LIMITS

1. Pursuant to the Plan and subject to Rule 2.2, the Board may not grant a Conditional Award or Option if the number of Shares subject to such proposed Award (the "Relevant Shares") would cause the limit in Rule 2.2 to be breached.
2. Rule 2.1 shall not apply in respect of a Conditional Award or Option granted on terms that it shall not be capable of being satisfied by the issue of Shares.
   10 per cent limit: Employees' Share Scheme
3. The number of Relevant Shares, when added to the aggregate of:
4. 1. the number of Shares subject to outstanding options or awards granted within the previous 10 years under the Plan or any other Employees' Share Scheme adopted by the Company which may be satisfied by the issue of Shares; and
   2. the number of Shares actually issued within the previous 10 years under the Plan, under any other Employees' Share Scheme or to a Trust (but excluding any of those Shares: that were used to satisfy an option or award granted more than 10 years previously, and without double counting any Shares which the Board has determined are to be used to satisfy options or awards counted under Rule 2.3.1 above),

may not exceed such number as represents 10 per cent of the Company's issued share capital immediately prior to such proposed grant or issue.

Treasury Shares

2.4 References in this Rule 2 to the issue of Shares shall include the transfer of Treasury Shares, but only until such time as the guidelines issued by institutional investor bodies cease to provide that they should be so included.

3. AWARDS Eligibility

1. Awards may be granted to Eligible Employees selected by the Board.
   Timing of grants
2. An Award may only be granted:
3. 1. during the period of 42 days commencing on the date on which the Plan is approved shareholders of the Company in general meeting;
   2. during the period of 42 days commencing on the Dealing Day immediately following the day on which the Company announces its results for the preceding financial year, half-year or other period;

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1. in respect of an Award to be granted in respect of the recruitment or promotion of an Eligible Employee, as soon as reasonably practicable after the Eligible Employee commences holding office or employment with any Group Company or the promotion takes effect; and/or
2. at such time at which the Board determines that exceptional circumstances exist which justify the grant of the Award,

or, in any such case, if the grant of Awards during such period or at such time would be contrary to any Dealing Restriction, as soon as reasonably practicable after such restriction ceases to apply.

Individual limit

3.3 An Award may not be granted to an Eligible Employee where it would cause the aggregate Relevant Value of the Shares subject to such Award and any Award(s) granted to the Eligible Employee in the same Financial Year to exceed an amount equal to 600% of:

1. the gross annual basic salary of that Eligible Employee as at the first day of such Financial Year or, if later, the first day of the Eligible Employee's employment with the Group during such Financial year; or
2. the gross revised salary of that Eligible Employee if that Eligible Employee is promoted during such Financial Year.

An Award granted in breach of this limit shall immediately lapse in respect of the number of Shares which cause this limit to be breached. Awards which have been released or have lapsed, or which are granted in connection with the recruitment or promotion of an Eligible Employee in lieu of incentive awards granted by the individual's former employer which are forfeited, and any right to receive Shares as a dividend equivalent, shall be ignored for this purpose.

In this Rule 3.3, the "Relevant Value" of a Share subject to an Award means (as determined by the Board): (i) the Market Value of a Share on the Dealing Day immediately preceding the Grant Date; or (ii) the average of the Market Values of a Share over the three Dealing Days preceding the Grant Date; or (iii) in respect of an Award granted under Rule 3.2.1, the Market Value of a Share determined for the purposes of grants to Eligible Employees in March 2025 under the Company's 2016 Long Term Incentive Plan.

1. Where an Eligible Employee's gross annual basic salary is denominated in a currency other than pounds sterling, for the purposes of Rule 3.3 above such gross annual basic salary shall be converted into pounds sterling on such basis as the Board may reasonably determine.
   Method of grant
2. An Award shall be granted by the Board.
3. A Conditional Award or an Option shall be granted by deed.
4. No payment for the grant of an Award shall be made by the Participant.
5. A Participant may within 30 days of the Grant Date release an Award (in full but not in part) by written notice to the Company. Where a Participant does not release an Award within such period, the Participant shall be deemed to have accepted the Award on the terms set out in the Rules. Alternatively, it may be a term of the grant of an Award that the Participant shall be required to accept the terms of the Award within such period following grant as may be determined by the Board and, where the Board specifies such period, the Award shall lapse at the end of such period (or at the end of any extension to such period as may be agreed by the Board) if the terms of the Award have not been accepted by the Participant.
   Award notification
6. As soon as practicable following the Grant Date the Company shall notify a Participant of the grant of an Award. Such notification shall specify:

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1. whether the Award takes the form of a Conditional Award or an Option;
2. the Grant Date;
3. the Normal Vesting Date;
4. the number of Shares in respect of which the Award is granted;
5. in relation to an Option, the Option Price (if any);
6. the full terms of the Performance Condition and the Performance Period;
7. if applicable, that the Award is subject to a Holding Period;
8. if applicable, that the dividend equivalent provisions of Rule 10 (Dividend equivalent) shall apply; and
9. that the Award is subject to the claw-back provisions of Rule 14 (Claw-back) and Appendix 1 (Operation of Claw-back).

Holding Period

3.10 An Award shall be subject to a Holding Period:

1. where the Award is granted to an Eligible Employee who, on the Grant Date, is an executive director of the Company (save where the Board determines otherwise in relation to an Award granted in connection with the recruitment of that Eligible Employee); or
2. otherwise, if the Board so determines prior to the Grant Date.

U.S. Taxpayers

3.11 The provisions of Appendix 2 (Awards Granted to U.S. Taxpayers) shall apply to a Conditional Award or an Option that is held by any Participant while the Participant is subject to taxation under the U.S. Internal Revenue Code of 1986, as amended (a "U.S. Taxpayer"). References to Code §409A are to §409A of the U.S. Internal Revenue Code of 1986, as amended, and shall include references to the regulations, notices and other guidance issued thereunder.

4. AWARDS ARE NON-TRANSFERABLE

1. A Participant may not transfer, assign, pledge, charge or otherwise dispose of, or grant any form of security or other interest over, any part of his interest in an Award. An Award shall (unless the Board determines otherwise) lapse on the Participant doing so (whether voluntarily or involuntarily), being deprived of the beneficial ownership of an Award by operation of law, or becoming bankrupt.
2. Rule 4.1 does not restrict the transmission of an Award to the Participant's Personal Representatives following his death.

5. PERFORMANCE CONDITION

1. An Award shall be granted subject to the Performance Condition.
2. Subject to Rule 5.3, each element of the Performance Condition shall be assessed over a period of not less than three years, ending no later than the Normal Vesting Date.
3. An Award may be granted on terms that the Performance Condition shall be assessed over such shorter period as the Board may determine prior to the grant of the Award where the Award:
4. 1. is granted in respect of the recruitment or promotion of an Eligible Employee; or
   2. where the Board determines that the grant is being made in exceptional circumstances to an Eligible Employee that is not an executive director of the Company.

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1. If events happen following the Grant Date which cause the Board to determine that any element of the Performance Condition is no longer a fair measure of the Company's performance, the Board may alter the terms of such element as it determines to be appropriate but not so that the revised target is, in the opinion of the Board, materially less challenging than was intended in setting the original Performance Condition.
2. The Performance Condition may not be retested.

6. VESTING Normal vesting

1. An Award shall vest on the Normal Vesting Date.
   Vesting subject to Dealing Restrictions
2. A Conditional Award shall not vest unless, and vesting shall be delayed until, the Board is satisfied that at that time:
3. 1. such vesting;
   2. the transfer of Shares to the Participant and the sale of Shares pursuant to Rule 12 (Tax Liability); and
   3. any action needed to be taken by the Company to give effect to such vesting

is not contrary to any Dealing Restriction.

Extent of vesting determined by the Performance Condition

1. The extent to which an Award shall be capable of vesting (if at all) shall be determined by reference to the Performance Condition. At the end of the period over which the Performance Condition is assessed, the Award shall lapse to the extent that the Performance Condition is not met.
2. Where an Award vests (pursuant to Rule 6.7 (International Transfers), Rule 7 (Cessation of office or employment) or 8 (Corporate Actions)) prior to the end of the period over which any element of the Performance Condition is assessed, such element shall be assessed based on performance to the last Quarter Day prior to the date on which the Award vests using such information (not limited to published accounts) as the Board shall determine.
   Effect of vesting
3. The effect of the vesting of an Award is that:
4. 1. the Shares in respect of which a Conditional Award vests shall be transferred to the Participant as soon as is reasonably practicable (which may include transferring the Shares on more than one consecutive Dealing Day on such basis as the Board may determine); and
   2. an Option shall, to the extent that it vests, become exercisable in accordance with Rule 9 (Options).

Disciplinary proceedings

6.6 Unless the Board determines otherwise, an Award shall not vest (and no dividend equivalent under the provisions of Rule 10 (Dividend equivalent) shall be paid, whether in cash or Shares) while a Participant is subject to an investigation process and/or formal disciplinary process (or similar), or where a Participant has been served with notice that such a process may be instigated without such notice having been rescinded, and vesting shall (subject to the Award lapsing to any extent prior to or as a result of the conclusion of such process pursuant to Rule 7 (Cessation of office or employment) or 14 (Claw-back)) be delayed until the conclusion of such process.

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International transfers

1. Where a Participant, whilst continuing to hold an office or employment with a Group Company, is to be transferred to work in another country, and as a result the Board considers that following such transfer either he or a Group Company is likely to suffer a tax disadvantage in respect of an Award or, due to securities or exchange control laws, the Participant is likely to be restricted in his ability to receive Shares pursuant to an Award, to exercise an Option and/or to hold or deal in Shares, the Board may decide that an Award shall vest on such date as it may determine, in which case:
2. 1. the proportion of the Award which may vest shall be limited (unless the Board determines otherwise) to a pro rata proportion on the basis of the number of months (rounded up to the nearest whole month) which have elapsed from the first day of the Performance Period to such vesting date, as compared to the number of whole months within the Performance Period. Any remainder of the Award shall lapse; and
   2. an Option may be exercised during such period as may be determined by the Board ending no later than the date on which the Participant's transfer takes effect.

7. CESSATION OF OFFICE OR EMPLOYMENT Cessation where Awards lapse

1. An Award shall lapse:
2. 1. on the Participant ceasing to hold office or employment with any Group Company; or
   2. if the Participant gives or receives notice of such cessation, on such earlier date as may be determined by the Board,

save in each case where Rule 7.2, 7.3, 7.6 or 7.7 applies.

Reasons for cessation where Awards remain capable of vesting

7.2 An Award shall not lapse pursuant to Rule 7.1 where the reason for the cessation or notice is:

1. disability, ill-health or injury (as evidenced to the satisfaction of the Board);
2. the transfer of the Participant's employment in connection with the disposal of a business or undertaking, or a part- business or part- undertaking;
3. the company with which the Participant holds office or employment ceasing to be a Group Company; or
4. any other reason, if the Board so determines,

provided that the Board shall not exercise its discretion under Rule 7.2.4 unless the Participant has entered into a settlement agreement (or equivalent document) acceptable to the Board in relation to the cessation of employment, which shall be entered into not later than the date on which the Participant ceases to hold office or employment with any Group Company (unless the Board determines, at its sole discretion, that the period for entering into such settlement agreement shall be extended).

Where the Board exercises its discretion under Rule 7.2.4 the Board may also impose additional conditions on the Award (including as to when the Award may vest).

This Rule 7.2 shall not apply to an Award which is subject to a Holding Period during such Holding Period and, instead, Rule 7.3 shall apply during the Holding Period.

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Cessation during a Holding Period

1. An Award shall not lapse pursuant to Rule 7.1 during a Holding Period for any reason other than the Participant's dismissal, or the Participant receiving notice of termination of office or employment, on the grounds of misconduct.
   Cessation prior to the Normal Vesting Date
2. Where prior to the Normal Vesting Date a Participant ceases to hold office or employment with any Group Company in circumstances where the Award does not lapse as provided for in Rule 7.2 or Rule 7.3:
3. 1. an Award shall not vest at the date of such cessation, but shall continue to be capable of vesting (in which case an Option may be exercised during the period of six months, or such other period as may be determined by the Board, from such date on which the Award may vest, and shall lapse at the expiry of such period); or
   2. the Board may determine that the Award (other than an Award subject to an Holding Period) shall instead vest on or at any time following the date of cessation (in which case an Option may be exercised during the period of six months, or such other period as may be determined by the Board, from such vesting date, and shall lapse at the expiry of such period).

For the avoidance of doubt, the Board may make the determination in Rule 7.4.2 on a standing basis (subject to revocation of such determination at any time) in respect of all Awards to be granted to a specified Eligible Employee or specified category of Eligible Employees.

7.5 Where prior to the Normal Vesting Date a Participant ceases to hold office or employment with any Group Company for any of the reasons specified in Rule 7.2, unless the Board determines otherwise:

1. if the date of such cessation falls within the first six months of the Performance Period, the Award shall lapse in full on the date of such cessation; or
2. where Rule 7.5.1 does not apply, the proportion of the Award which may vest (under any Rule) shall be limited to a pro rata proportion on the basis of the number of months (rounded up to the nearest whole month) which have elapsed from the first day of the Performance Period to the date of cessation, as compared to the number of whole months within the Performance Period. Any remainder of the Award shall lapse.

Exercise period in the event of cessation on or after the Normal Vesting Date

1. Where on or after the Normal Vesting Date a Participant ceases to hold office or employment with any Group Company for any reason other than the Participant's dismissal, or the Participant receiving notice of termination of office or employment, on the grounds of misconduct, an Option shall not lapse until the expiry of the period of six months, or such other period as may be determined by the Board, from the date of cessation.
   Death
2. An Award shall vest on the Participant's death. An Option may be exercised (by the Participant's Personal Representatives) during a period of one year from the date of the Participant's death and shall lapse at the expiry of such period. Where a Participant dies during an exercise period pursuant to either Rule 7.4 or 7.6 an Option shall not lapse as a result of such Rule until the expiry of the twelve month period in this Rule 7.7.
   Cessation following a Corporate Action
3. Where a Participant ceases to hold office or employment with any Group Company following a Corporate Action within the relevant exercise period referred to in Rule 8 (Corporate

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