REYNOLDS AMERICAN INC.
LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE
AGREEMENT
DATE OF GRANT: January 1,
2007
1.
Grant . Pursuant to the provisions of the Reynolds American
Inc. Long-Term Incentive Plan (the “Plan”), Reynolds
American Inc. (the “Company”) on the date set forth
above has granted to
Daniel M. Delen (the
“Grantee”),
subject to the
terms and conditions which follow and the terms and conditions of
the Plan, a grant of
34,825 Performance
Shares.
A copy of the
Plan has been provided to the grantee and made a part of this
Agreement with the same effect as if set forth in the Agreement
itself. All capitalized terms used below shall have the meaning set
forth in the Plan, unless otherwise defined in this
Agreement.
2.
Valuation of Performance Shares . Each Performance Share
shall be equal in value to one share of Common Stock.
3.
Vesting. (a) The Performance Shares shall vest on the
following dates in accordance with the following vesting
schedule:
(i) 34% on
December 31, 2007; and
(ii) 66% on
December 31, 2008.
For the
Performance Shares to vest on each such vesting date, the Company
must have paid to its shareholders a dividend of at least $.75 per
share in each fiscal quarter during the period commencing on the
Date of Grant and ending on such vesting date (the “Threshold
Requirement”), unless the Company’s Board of Directors
specifically approves the noncancellation of the Performance Shares
upon the declaration of a quarterly dividend of less than $.75 per
share. In the event the Company fails to pay its shareholders a
dividend of at least $.75 per share in any fiscal quarter during
the period from the Date of Grant and ending on December 31,
2008, and the Company’s Board of Directors does not approve
the noncancellation of the Performance Shares, the Performance
Shares that have not yet vested shall be cancelled.
1
(b) Notwithstanding
anything in Section 3(a) of this Agreement to the contrary, in the
event of (i) the Grantee’s death, (ii) the
Grantee’s Permanent Disability (as such term is defined in
the Company’s Long-Term Disability Plan), or (iii) a
Change of Control, 100% of the Performance Shares not previously
vested or cancelled due to the Company’s failure to meet the
Threshold Requirement, shall vest.
(c) Notwithstanding
anything in Section 3(a) of this Agreement to the contrary, in the
event of (i) the Grantee’s involuntary Termination of
Employment without Cause (as such terms are defined in
Section 4 of this Agreement), or (ii) the Grantee’s
Retirement (as such term is defined below), the number of
Performance Shares that will vest, if not previously cancelled due
to the Company’s failure to meet the Threshold Requirement,
shall be equal to (x) the product of (A) the original
number of Performance Shares granted to the Grantee under this
Agreement and (B) a fraction, the numerator of which shall be
the number of whole or partial months between January 1, 2007
and the date of the Grantee’s Termination of Employment, and
the denominator of which shall be 24, minus (y) the
number of Performance Shares previously vested. For purposes of
this Agreement, the term “Retirement” shall mean an
employee’s voluntary Termination of Employment on or after
his or her 65 th birthday, or on or after his or her 55
th birthday with 10 or more years of service with
the Company or a subsidiary of the Company.
(d) Notwithstanding
anything in Section 3(a) of this Agreement to the contrary, in the
event of the Grantee’s voluntary Termination of Employment
(other than at Retirement) or Termination of Employment for Cause
(as such terms are defined in Section 4 of this Agreement),
the Performance Shares that have not yet vested shall be
cancelled.
4.
Termination of Employment. (a) For purposes of this
Agreement, the term “Termination of Employment” shall
mean termination from active employment with the Company or a
subsidiary of the Company; it does not mean the termination of pay
and benefits at the end of a period of salary continuation (or
other form of severance pay or pay in lieu of salary).
(b) For
purposes of this Agreement, if the Grantee has an employment or
severance agreement, employment shall be deemed to have been
terminated for “Cause” only as such term is defined in
the employment or severance agreement. For purposes of this
Agreement, if the Grantee does not have an employment or severance
agreement that defines the term “Cause,” the
Grantee’s employment shall be deemed to have been terminated
for “Cause” if the Termination of Employment results
from the Grantee’s: (i) criminal conduct;
(ii) deliberate and continual refusal to perform employment
duties on substantially a full time basis; (iii) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of an authorized officer or employee more senior than
the Grantee; or (iv) deliberate misconduct which could be
materially damaging to the Company or any of its business
operations without a reasonable good faith belief by the Grantee
that such conduct was in the best interests of the Company. A
Termination of Employment shall not be deemed for Cause hereunder
unless the senior human resources executive of the Company shall
confirm that any such Termination of Employment is for Cause. Any
voluntary Termination of Employment by the Grantee in anticipation
of an involuntary Termination of Employment for Cause shall be
deemed to be a Termination of Employment for Cause.
2
5.
Dividends. As of the date any dividend is paid to
shareholders of Common Stock, the Grantee shall be paid an amount
equal to the product of (a) the number of Performance Shares
held by the Grantee that have not yet vested or been cancelled
pursuant to Section 3 of this Agreement, and (b) the
dividend per share of Common Stock paid to shareholders
of
|
