Exhibit 10.1

REYNOLDS AMERICAN INC.

LONG-TERM INCENTIVE PROGRAM

 

 

PERFORMANCE SHARE AGREEMENT

 

 

DATE OF GRANT: May 1, 2014

1. Grant. Pursuant to the provisions of the Reynolds American Inc. 2009 Omnibus
Incentive Compensation Plan (the “Plan”), Reynolds American Inc. (the “Company”)
on the date set forth above, has granted to

SUSAN M. CAMERON (the “Grantee”),

subject to the terms and conditions which follow and the terms and conditions of
the Plan, an initial grant (the “Target Number”) of

149,192 Performance Shares.

A copy of the Plan has been provided to the Grantee and is made part of this
Performance Share Agreement (this “Agreement”) with the same force and effect as
if set forth in this Agreement itself. All capitalized terms used in this
Agreement shall have the meaning set forth in the Plan, unless otherwise defined
in this Agreement.

2. Value. Each Performance Share shall be equal in value to one share of common
stock, par value $0.0001 per share, of the Company or any security or other
consideration into which such share may be changed by reason of any transaction
or event of the type referred to in Section 11 of the Plan (each, a “Share”).

3. Scoring. (a) Subject to the terms and conditions of this Agreement, the
Performance Shares shall have a one-year performance period, consisting of the
twelve-month period beginning May 1, 2014 and ending April 30, 2015 (the
“Performance Period”), after which the number of Performance Shares earned (the
“Earned Number”) will be determined as provided below, and when vested, will be
paid in Shares.

(b) If the Company fails to pay to its shareholders cumulative dividends of at
least $2.68 per Share (the “Dividend Threshold”) for the Performance Period
(which shall include the dividend paid on each of July 1, 2014, October 1,
2014, January 2, 2015 and April 1, 2015), then the Target Number shall be
reduced by an amount equal to three times the percentage of the dividend
underpayment for the Performance Period, up to a maximum Target Number reduction
of 50% (the “Revised Target Number”).

(c) At the end of the Performance Period, after determining if the Dividend
Threshold has been met, the Earned Number shall be determined by multiplying the
Target Number, or Revised Target Number if the Dividend Threshold has not been
met, by the achievement score for the Performance Period (the “LTI Achievement
Score”) determined by the Committee guided by its consideration of the overall
performance of RAI and its operating

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companies during the Performance Period against the 2014 annual incentive award
program metrics, the Grantee’s progress on her succession planning goals, and
such other performance factors as the Committee chooses to consider; provided,
however, that such percentage shall in no event be greater than 150%; and
provided, further, that the value of the Earned Number of Performance Shares
that vest as provided in Section 4 of this Agreement, and are paid as provided
in Section 5 of this Agreement, shall not exceed any maximum limits set by the
Board of Directors pursuant to its resolutions adopted on April 16, 2014, or
otherwise contained in the Plan.

(d) Notwithstanding anything in Section 3 of this Agreement to the contrary, in
the event of a Change of Control prior to the end of the Performance Period, the
Earned Number shall be equal to the product of (i) the Target Number and
(ii) the LTI Achievement Score determined by the Committee for the portion of
the Performance Period prior to the Change of Control (the “Change of Control
Earned Number”).

4. Vesting. (a) Subject to the terms and conditions of this Agreement, the
Earned Number of Performance Shares shall vest on May 1, 2015 (the “Normal
Vesting Date”) if the Grantee remains employed by the Company or a subsidiary of
the Company on such date.

(b) Notwithstanding anything in Section 4(a) of this Agreement to the contrary,
in the event of the Grantee’s involuntary Termination of Employment where the
Grantee is eligible for and accepts severance benefits under a Company-sponsored
severance plan or agreement with the Company (with eligibility for severance
benefits to be determined in the sole discretion of the Company), prior to the
end of the Performance Period, the number of Performance Shares that will vest
on the Normal Vesting Date shall be equal to the product of (x) the Earned
Number and (y) a fraction, the numerator of which shall be the number of days
between the Date of Grant and the date of the Grantee’s involuntary Termination
of Employment, and the denominator of which shall be the number of days between
the Date of Grant and the Normal Vesting Date, and the remaining Performance
Shares will be forfeited and cancelled on the Normal Vesting Date.

(c) Notwithstanding anything in Section 4(a) of this Agreement to the contrary,
in the event of (i) the Grantee’s death while an active employee of the Company
or a subsidiary of the Company or (ii) the Grantee’s Permanent Disability (as
such term is defined in the Company’s Long-Term Disability Plan), in either
case, prior to the end of the Performance Period, the number of Performance
Shares that will vest on the date of the Grantee’s death or Permanent
Disability, as applicable, shall be equal to the product of (x) the Target
Number and (y) a fraction, the numerator of which shall be the number of days
between the Date of Grant and the date of the Grantee’s death or Permanent
Disability, as applicable, and the denominator of which shall be the number of
days between the Date of Grant and the Normal Vesting Date, and the remaining
Performance Shares will be forfeited and cancelled on the date of the Grantee’s
death or Permanent Disability, as applicable.

(d) Notwithstanding anything in Section 4(a) of this Agreement to the contrary,
in the event of a Change of Control prior to the end of the Performance Period,
the number of Performance Shares that will vest on the date of such Change of
Control shall be equal to the product of (i) the higher of (x) the Target Number
and (y) the Change of Control Earned Number, and (ii) a fraction, the numerator
of which shall be the number of days between the Date of Grant and the date of
the Change of Control, and the denominator of which shall be the number of days
between the Date of Grant and the Normal Vesting Date, and the remaining
Performance Shares will be forfeited and cancelled on the date of such Change of
Control.

 

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(e) Notwithstanding anything in Section 4 of this Agreement to the contrary, in
the event of the Grantee’s (i) voluntary Termination of Employment,
(ii) involuntary Termination of Employment where the Grantee is not eligible for
severance benefits under a Company-sponsored severance plan or agreement with
the Company (including, without limitation, a Termination of Employment for
Cause, as such term is defined in the relevant severance plan or agreement) or
(iii) involuntary Termination of Employment where the Grantee is eligible for
but does not accept the severance benefits under the relevant Company-sponsored
severance plan or agreement with the Company, in each case, prior to the end of
the Performance Period, the Performance Shares shall be immediately forfeited
and cancelled.

5. Payment. (a) Payment of vested Performance Shares shall be made only in
Shares. At the Company’s sole discretion, such Shares may be issued in
certificated or book-entry form.

(b) Except as set forth in Section 5(c) of this Agreement, no payment of vested
Performance Shares shall be made to the Grantee prior to the end of the
Performance Period. Except as otherwise provided by this Agreement, payment of
vested Performance Shares shall be made as soon as practicable following the
Normal Vesting Date, and in any event no later than March 15, 2016.

(c) In the event of a Change of Control, the Grantee’s death while an active
employee of the Company or a subsidiary of the Company or the Grantee’s
Permanent Disability, in each case prior to the end of the Performance Period,
the payment of vested Performance Shares shall be paid as soon as practicable
after such event occurs, and in any case no later than March 15 after the end of
the year in which such event occurs.

(d) In the event of the death of the Grantee while the Grantee is an active
employee of the Company or a subsidiary of the Company, any payment to which the
Grantee is entitled under this Agreement shall be made to the beneficiary
designated by the Grantee to receive the proceeds of any noncontributory group
life insurance coverage provided for the Grantee by the Company or a subsidiary
of the Company (such life insurance coverage, “Group Life Insurance Coverage,”
and such beneficiary, a “Designated Beneficiary”). If no designation of
beneficiary has been made by the Grantee under the Group Life Insurance
Coverage, distribution upon the Grantee’s death shall be made in accordance with
the provisions of the Group Life Insurance Coverage.

(e) In the event of the death of the Grantee while the Grantee is no longer an
active employee of the Company or a subsidiary of the Company, but at a time
while the Grantee continues to have Group Life Insurance Coverage, any payment
to which the Grantee is entitled under this Agreement shall be made to the
Designated Beneficiary. If no designation of beneficiary has been made by the
Grantee under the Group Life Insurance Coverage, distribution shall be made in
accordance with the provisions of the Group Life Insurance Coverage. In the
event of the death of the Grantee while the Grantee is no longer an active
employee of the Company or a subsidiary of the Company, and at a time while the
Grantee no longer has Group Life Insurance Coverage, distribution shall be made
to the Grantee’s estate.

 

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(f) For purposes of Sections 5(d) and 5(e), (i) if the Designated Beneficiary
predeceases the Grantee, distribution shall be made in accordance with the
provisions of the Group Life Insurance Coverage, and (ii) if the Designated
Beneficiary survives the Grantee but dies before payment is made, distribution
shall be made to the Designated Beneficiary’s estate.

6. Termination of Employment. 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).

7. Dividend Equivalent Payment. At the time of the payment of the vested
Performance Shares, the Grantee shall receive a cash dividend equivalent payment
in an amount equal to the product of (a) the Earned Number and (b) the aggregate
amount of dividends per share declared and paid to the Company’s shareholders on
Shares during the period from the Date of Grant through the date of the payment
of the Performance Shares, without interest (the “Actual Dividends Paid”);
provided, however, that in the event of the Grantee’s death while an active
employee of the Company or a subsidiary of the Company or Permanent Disability
or in the event of a Change of Control, the amount of the dividend equivalent
payment to the Grantee shall be equal to the product of (i) the Target Number
(in the case of death or Permanent Disability) or the Change of Control Earned
Number (in the case of a Change of Control), and (ii) the Actual Dividends Paid.
Notwithstanding anything in Section 7 of this Agreement to the contrary, to the
extent the payment of the vested Performance Shares occurs after both the date a
dividend has been declared by the Company and the record date for such dividend,
but prior to the dividend payment date related thereto, the amount of the Actual
Dividend Paid also shall include such dividend. In the case of a dividend
payment to be paid in property, the dividend payment shall be deemed to be the
fair market value of the property at the time of distribution of the dividend
payment to the Grantee, as determined by the Committee.

8. Rights as a Shareholder. The Grantee shall not be, nor have any of the rights
or privileges of, a shareholder of the Company with respect to the Performance
Shares unless and until, and to the extent, the Performance Shares vest and
Shares have been paid to the Grantee in accordance with Section 5 of this
Agreement.

9. Transferability. Other than as specifically provided in this Agreement with
regard to the death of the Grantee, this Agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Grantee, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Grantee.

10. No Right to Employment. Neither the execution and delivery of this Agreement
nor the granting of the Performance Shares evidenced by this Agreement shall
constitute any agreement or understanding, express or implied, on the part of
the Company or its subsidiaries to employ the Grantee for any specific period or
in any specific capacity or shall prevent the Company or its subsidiaries from
terminating the Grantee’s employment at any time with or without cause.

 

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11. Application of Laws. The granting of Performance Shares under this Agreement
shall be subject to all applicable laws, rules and regulations and to such
approvals of any governmental agencies as may be required.

12. Notices. Any notices required to be given hereunder to the Company shall be
addressed to the Corporate Secretary, Reynolds American Inc., Post Office Box
2990, Winston-Salem, NC 27102-2990, and any notice required to be given
hereunder to the Grantee shall be sent to the Grantee’s address as shown on the
records of the Company.

13. Taxes. Any taxes required by federal, state or local laws to be withheld by
the Company in respect of the grant of Performance Shares or payment of vested
Performance Shares hereunder shall be paid to the Company by the Grantee by the
time such taxes are required to be paid or deposited by the Company. The Grantee
hereby authorizes the necessary withholding of Performance Shares by the Company
to satisfy the minimum statutory tax withholding amount prior to delivery of the
vested Performance Shares.

14. Administration and Interpretation. In consideration of the grant of
Performance Shares hereunder, the Grantee specifically agrees that the Committee
shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan and
Agreement as are consistent therewith and to interpret or revoke any such rules.
All actions taken and all interpretations and determinations made by the
Committee shall be final, conclusive, and binding upon the Grantee, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or this Agreement. The Committee may delegate its
interpretive authority as permitted by the provisions of the Plan.

15. Compliance with Section 409A of the Code. This Agreement is intended to
comply with Section 409A of the Internal Revenue Code of 1986, as amended, and
shall be construed and interpreted in accordance with such intent.

16. Amendment. This Agreement is subject to the Plan, a copy of which has been
provided to the Grantee. The Board of Directors and the Committee, as
applicable, may amend the Plan, and the Committee may amend this Agreement, at
any time in any way, except that, other than as otherwise provided by the Plan,
any amendment of the Plan or this Agreement that would impair the Grantee’s
rights under this Agreement may not be made without the Grantee’s written
consent.

17. Litigation Assistance and Non-Disclosure of Confidential Information. (a) In
addition to any other obligations of the Grantee under law or any other
agreement with any Related Company, in consideration of the grant of Performance
Shares hereunder, the Grantee specifically agrees that the Grantee:

(i) if requested by the Company, will personally provide reasonable assistance
and cooperation to the Related Companies in activities related to the
prosecution or defense of any pending or future lawsuits or claims involving any
Related Company;

(ii) will promptly notify the Company’s General Counsel, in writing, upon
receipt of any requests from anyone other than an employee or agent of one of
the Related

 

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Companies for information regarding any Related Company which could reasonably
be construed as being proprietary, non-public or confidential, or if the Grantee
becomes aware of any potential claim or proposed litigation against any Related
Company;

(iii) will refrain from providing any information related to any claim or
potential litigation against any Related Company to any person who is not a
representative of the Company without the Company’s prior written permission,
unless required to provide information pursuant to legal process; and

(iv) will not engage in any activity detrimental to the interests of any Related
Company, including an act of dishonesty, moral turpitude or other misconduct
that has or could have a detrimental impact on the business or reputation of any
Related Company.

(b) In further consideration of the grant of Performance Shares hereunder, the
Grantee specifically agrees that, if required by law to provide sworn testimony
regarding any matter related to any Related Company: the Grantee will consult
with and have Company designated legal counsel present for such testimony (with
the Company being responsible for the costs of such designated counsel); the
Grantee will cooperate with the Company’s attorneys to assist their efforts,
especially on matters the Grantee has been privy to, holding all privileged
attorney-client matters in strictest confidence; and if the Grantee desires
legal counsel to represent and protect her interests (in addition to the
Company’s designated legal counsel provided under this Section 17(b)), the
Company will reimburse the Grantee for any reasonable legal expenses (including,
but not limited to, the reasonable costs of the Grantee’s counsel) and other
reasonable and necessary out-of-pocket expenses the Grantee may incur in
relation to such testimony.

(c) The Grantee acknowledges that, given the position(s) that the Grantee has
had with one or more of the Related Companies, the Grantee has had access to and
has acquired Confidential Information, and will continue to have access to and
acquire Confidential Information. The Grantee further acknowledges that the
Related Companies have a legitimate and significant business interest in
preventing the unauthorized disclosure of the Confidential Information.
Accordingly, the Grantee shall not, without the prior written consent of the
Company (which consent may be granted only by the Company’s General Counsel),
use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity, for any reason or purpose whatsoever,
any Confidential Information, except when required to do so by a court of
competent jurisdiction or any Governmental Authority, in any case, with
jurisdiction to order the Grantee to divulge, disclose or make accessible such
information. If the Grantee becomes compelled to disclose any Confidential
Information in the circumstances described in the preceding sentence, the
Grantee shall: promptly provide the Company’s General Counsel with written
notice thereof, so as to permit the Company to seek a protective order or other
appropriate remedy, and the Grantee shall cooperate with the Company in the
Company’s efforts in connection therewith; and disclose only that portion of the
Confidential Information that the Grantee is advised by her counsel (which
counsel will be reasonably acceptable to the Company and the reasonable costs
and expenses of which will be borne by the Company) the Grantee is legally
required to disclose and shall use reasonable efforts to have such disclosed
Confidential Information accorded confidential treatment.

18. Noncompetition and Other Prohibited Activities. (a) In addition to any other
obligations of the Grantee under law or any other agreement with the Company or
any of its subsidiaries, in consideration of the grant of Performance Shares
hereunder, the Grantee, during

 

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the continuation of her employment by any Related Company and during the
one-year period commencing upon her Termination of Employment for any reason
(or, if the Grantee is receiving benefits under a severance plan or agreement,
the period of time set forth in the non-competition agreement entered into by
the Grantee in connection with the receipt of such severance benefits), will
not, directly or indirectly:

(i) be employed, or retained as an independent contractor, or otherwise provide
advisory or consulting services (in each case, whether compensated or not
compensated), in a sales-related capacity, marketing role, strategic planning
role, financial role, or in a product research and development role for any
Competitive Business;

(ii) be employed by, or retained as an independent contractor by, or otherwise
provide advisory or consulting services to (in each case, whether compensated or
not compensated), any Competitive Business in any sort of position or capacity
involving the performance of services that are the same as, or substantially
similar to, the services the Grantee performed while an employee of any Related
Company (collectively, “Competitive Services”);

(iii) serve (whether compensated or not compensated) as an officer or director
of any Competitive Business;

(iv) organize, own (other than owning up to 3% of the outstanding stock of a
publicly traded company) or operate any Competitive Business;

(v) (w) be employed, or retained as an independent contractor (in each case,
whether compensated or not compensated) by, (x) provide advisory or consulting
services (in each case, whether compensated or not compensated) to, (y) organize
or operate or (z) serve as a director of (whether compensated or
not-compensated) any Anti-Tobacco Organization;

(vi) (x) be employed, or retained as an independent contractor (in each case,
whether compensated or not compensated) by, (y) provide advisory or consulting
services (in each case, whether compensated or not compensated) to or (z) serve
as a director or official of (in each case, whether compensated or
non-compensated) any Regulator; or

(vii) solicit, offer employment to, or hire any employee, independent contractor
or any other individual providing services to any Related Company (other than
secretarial and clerical personnel), who was employed by, or provided services
to, any Related Company, at the time of the Grantee’s Termination of Employment,
or who was employed by, or provided services to, any Related Company during the
90-day period preceding such date, to become employed by or otherwise provide
services to, any person, firm, entity or corporation, or approach any such
person for any of the foregoing reasons.

As used in this Agreement, the term “including,” or variations thereof, shall
not be a term of limitation, but rather shall be deemed to be followed by the
words “without limitation.”

(b) For purposes of Section 17 and Section 18 of this Agreement, the terms set
forth below have the following definitions:

(i) “Anti-Tobacco Organization” means any firm, organization, entity, group, or
sole proprietorship, the activities or purposes of which include opposing,
advocating or lobbying against, or seeking the imposition of restrictions or
prohibitions with respect to, any of the Related Companies’ Businesses or the
use or consumption of any of the Products.

 

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(ii) “Competitive Business” means any corporation, limited liability company,
partnership, person, firm, organization, entity, enterprise, business or
activity that is engaged in any of the Related Companies’ Businesses in the
Territory or seeking to engage in any of the Related Companies’ Businesses in
the Territory.

(iii) “Confidential Information” means all data, materials and information
(whether in the form of samples or in written, graphic, electronic or other
form, and whether marked or identified as confidential or proprietary)
concerning the business, operations or affairs of any Related Company including,
without limitation, information concerning any of the Related Companies’
policies, plans, strategies, trade secrets, know-how, processes, systems,
business methods, business or marketing plans, research and development
initiatives, products, customers, suppliers and personnel, except that
Confidential Information shall not include information that (A) is or becomes
generally known to the public other than by reason of the Grantee’s breach of
either the provisions of this Agreement or any other duty or obligation (whether
arising by contract, statute or otherwise) the Grantee owes to any Related
Company, (B) was known by the Grantee at the time of the disclosure to the
Grantee by any Related Company, as evidenced by the Grantee’s written records in
existence prior to such disclosure, or (C) is disclosed to the Grantee after the
Date of Grant by a third party who has a legal right to make such disclosure,
and who is subject to no confidentiality obligation to any Related Company.

(iv) “Governmental Authority” means the government of the United States of
America, any other nation or political subdivision thereof, whether state or
local, and any agency, authority, administration, instrumentality, regulatory
body, court or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.

(v) “Regulator” means: (x) the U.S. Food and Drug Administration (the “FDA”),
the Center for Tobacco Products established within the FDA (the “CTP”), the
Tobacco Products Scientific Advisory Committee established within the CTP, or
any other office, division, branch, committee, department or other body
(collectively, an “Organizational Body”) established by the FDA or by an
Organizational Body; or (y) any other Governmental Authority having the
authority to regulate, or make recommendations regarding any proposed
regulations affecting, any part of any of the Related Companies’ Businesses.

(vi) “Related Companies’ Businesses” means the businesses of manufacturing,
distributing, advertising, promoting, marketing or selling any of the following
products (collectively, “Products”): (w) any cigarette, cigar, little cigar,
“roll-your-own” tobacco, smokeless or smoke-free tobacco product (including
moist snuff, dry snuff, snus, loose leaf, plug and twist tobacco and any other
smokeless or smoke-free tobacco, including dissolvable products, that may be
invented through the date of Grantee’s Termination of Employment); (x) any
nicotine replacement therapy products, including nicotine gum, mouth spray and
pouches, and any products otherwise marketed or intended to be used as part of a
smoking cessation program; (y) any product commonly referred to as an
“e-cigarette”; and (z) any other product, including any tobacco or cigarette
substitute, that any Related Company invents, develops and/or markets through
the date of the Grantee’s Termination of Employment.

 

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(vii) “Related Company” means any one of the following, individually, and the
term “Related Companies” means all of the following, collectively: the Company,
R. J. Reynolds Tobacco Company, R.J. Reynolds Vapor Company, RAI International,
Inc., American Snuff Company, LLC, RAI Services Company, Santa Fe Natural
Tobacco Company, Inc., Niconovum, USA, Inc., Kentucky BioProcessing, Inc., SFR
Tobacco International GmbH, and their respective subsidiaries, parents,
affiliates (including partnerships and joint ventures in which any Related
Company is a partner or joint venturer), successors and assigns.

(viii) “Territory” means (v) the United States of America, its territories,
commonwealths and possessions (including duty-free stores or outlets located
anywhere in an of the foregoing places); (w) U.S. military installations located
anywhere in the world; (x) Western Europe; (y) Japan; and (z) any other location
in which any Related Company conducts any of the Related Companies’ Businesses
through the date of the Grantee’s Termination of Employment.

(c) The Grantee understands and agrees that:

(i) the purpose of this Section 18 is solely to protect the Related Companies’
legitimate business interests, including, but not limited to, the Related
Companies’ Confidential Information, customer relationships and goodwill, all of
which contribute to the Related Companies’ competitive advantage in operating
the Related Companies’ Businesses in the Territory;

(ii) the Related Companies manufacture, distribute, advertise, promote, market
and sell Products in the Territory, and the restrictive covenants contained in
this Agreement are necessary to protect the Related Companies’ legitimate
business assets and interests, and they are reasonable in time, territory, and
scope, and in all other respects;

(iii) the restrictive covenants contained in this Agreement constitute a
material inducement to RAI entering this Agreement, without which the Company
would not have entered into this Agreement; and

(iv) the covenants set forth in this Section 18 are essential elements of this
Agreement and shall be construed as agreements independent of any other
provision in this Agreement, and the existence of any claim or cause of action
of the Grantee against the Company or any other Related Company, whether
predicated on this Agreement or otherwise, shall not excuse the Grantee’s
breach, or constitute a defense to the enforcement by the Related Companies, of
these restricted covenants. The Company and the Grantee have had the opportunity
to independently consult with their respective counsel for advice in all
respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the businesses conducted by the Related
Companies.

(d) The Grantee agrees that any breach of the covenants contained in Section 18
of this Agreement would irreparably injure the Related Companies and that their
remedies at law would be inadequate. Accordingly, in the event of any breach or
threatened breach of Section 18 of this Agreement, the Related Companies, in
addition to any other rights and remedies available at law or in equity, shall
be entitled to an injunction (and/or other equitable relief), restraining such
breach or threatened breach, and be entitled to the reimbursement of court
costs, attorneys’ fees

 

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and other costs and expenses incurred in connection with enforcing this
Agreement. The existence of any claim or cause of action on the part of the
Grantee against any Related Company shall not constitute a defense to the
enforcement of these provisions. This Agreement shall be enforceable by any
Related Company, either alone or together with any other Related Company or
Related Companies. The rights and remedies hereunder provided to the Related
Companies shall be cumulative and shall be in addition to any other rights or
remedies available at law, in equity or under this Agreement.

(e) If any of the provisions of Section 18 of this Agreement are determined by a
court of law to be excessively broad, whether as to geographical area, time,
scope or otherwise, such provision shall be reduced to whatever extent is
reasonable and shall be enforced as so modified. Any provisions of Section 18 of
this Agreement not so modified shall remain in full force and effect.

19. Recoupment Provisions. (a) Subject to the clawback provisions of the
Sarbanes-Oxley Act of 2002, the Committee may, in its sole discretion, direct
that the Company recoup, and upon demand by the Company the Grantee agrees to
return to the Company, all or a portion of any Shares paid to the Grantee
hereunder computed using financial information or performance metrics later
found to be materially inaccurate. The number of Shares to be recovered shall be
equal to the excess of the number of Shares paid out over the number of Shares
that would have been paid out had such financial information or performance
metric been fairly stated at the time the payout was made.

(b) The Committee may direct recoupment of Shares pursuant to Section 19(a) of
this Agreement whether or not it directs recoupment of related annual incentive
award payouts. The Committee also may amend a yearly LTI Achievement Score for
purposes of recoupment of Shares under this Agreement without directing
recoupment of related annual incentive award payouts.

(c) If the Company reasonably determines that the Grantee has materially
violated any of the Grantee’s obligations under Section 17 or 18 of this
Agreement, then effective the date on which such violation began, (i) any
Performance Shares that have not yet vested and been paid to the Grantee under
this Agreement shall be forfeited and cancelled, and (ii) the Company may, in
its sole discretion, recoup any and all of the Shares previously paid to the
Grantee under this Agreement.

(d) If, after a demand for recoupment of Shares under Section 19 of this
Agreement, the Grantee fails to return such Shares to the Company, the Grantee
acknowledges that the Company (or the Company through the actions of any of its
subsidiaries employing the Grantee, if applicable) has the right to effect the
recovery of the then current value of such Shares and the amount of its court
costs, attorneys’ fees and other costs and expenses incurred in connection with
enforcing this Agreement by (i) deducting (subject to applicable law and the
terms and conditions of the Plan) from any amounts the Company (and if
applicable, any subsidiary of the Company employing the Grantee) owes to the
Grantee (including, but not limited to, wages or other compensation),
(ii) withholding payment of future increases in compensation (including the
payment of any discretionary bonus amount) or grants of compensatory awards that
otherwise would have been made in accordance with the Company’s or any of its
subsidiaries’ otherwise applicable compensation practices, or (iii) any
combination of the foregoing. The right of recoupment set forth in the preceding
sentence shall not be the exclusive remedy of the Company, and the Company may
exercise each and every other remedy available to it under applicable law.

 

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20. Qualified Performance-Based Awards. If the Grantee is a “Covered Employee”
within the meaning of Section 162(m) of the Internal Revenue Code, the grant of
Performance Shares evidenced by this Agreement shall be considered a Qualified
Performance-Based Award. In furtherance thereof, and notwithstanding anything in
this Agreement or the Plan to the contrary, the Earned Number of Performance
Shares that the Grantee may earn for the Performance Period pursuant to the
grant evidenced by this Agreement (the “Earned Shares”) shall be determined by
the Committee based on, and must have a value (the “Earned Shares Value”) that
in no event exceeds a value equal to, the percentage of the Company’s cumulative
Cash Net Income (as defined below) for the Performance Period previously
established by the Board of Directors of the Company in resolutions adopted on
April 16, 2014 to apply with respect to the Grantee for the Performance Period
(the “Award Pool Value”). Notwithstanding the prior sentence, the Committee
shall have the power and authority, in its sole and absolute exercise of
negative discretion, to reduce the Earned Shares such that the Earned Shares
Value will be less than the Award Pool Value, which reduction may be made by
taking into account the factors described above under Section 3 of this
Agreement or any other criteria the Committee deems appropriate. The reductions
in Earned Shares Value, if any, shall not result in any increases in the value
of performance shares earned by any other awardee. For purposes of this
Agreement, the term “Cash Net Income” shall mean the Company’s net income from
continuing operations in the consolidated statement of income adjusted for the
impact of non-cash items, such as depreciation, amortization, unrealized gains
and losses, intangible asset impairments and other non-cash gains/losses
included in net income (as reported in the Company’s quarterly and annual
reports for the period from April 1, 2014 through March 31, 2015).

21. Electronic Signature. This Agreement is delivered electronically. The
Grantee consents to using an electronic signature to sign this Agreement and be
legally bound to her acceptance or rejection of the grant. By electronically
signing the Agreement, the Grantee also consents to entering into this Agreement
in electronic form. The Grantee acknowledges that her electronic signature will
have the same legal force and effect as a handwritten signature. The Grantee’s
electronic signature, including date and time of signing will be stored
electronically with the Performance Share grant record.

22. GOVERNING LAWS. THE LAWS OF THE STATE OF NORTH CAROLINA SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT,
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 22, ANY CONTROVERSY OR
DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY
IN THE COURTS (FEDERAL AND STATE) SITUATED IN THE STATE OF NORTH CAROLINA,
FORSYTH COUNTY. THE GRANTEE CONSENTS TO PERSONAL JURISDICTION IN THE STATE OF
NORTH CAROLINA AND IN THE COURTS THEREOF FOR THE ENFORCEMENT OF THIS AGREEMENT,
AND WAIVES ANY RIGHTS THE GRANTEE OTHERWISE MAY HAVE UNDER THE LAWS OF ANY
JURISDICTION TO OBJECT ON ANY BASIS TO JURISDICTION OR VENUE WITHIN THE STATE OF
NORTH CAROLINA TO ENFORCE THIS AGREEMENT. IN ADDITION, AND NOTWITHSTANDING THE
FOREGOING, THE COMPANY MAY ELECT, IN ITS DISCRETION, TO SEEK A TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR

 

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PERMANENT INJUNCTIVE (OR SIMILAR) RELIEF TO ENFORCE ITS RIGHTS UNDER SECTIONS 17
AND 18 OF THIS AGREEMENT IN ANY JURISDICTION OR COURT ANYWHERE IN THE WORLD THAT
THE COMPANY DETERMINES TO BE APPROPRIATE, AND THE GRANTEE HEREBY CONSENTS TO
VENUE IN ANY SUCH JURISDICTION OR COURT IN SUCH EVENT.

IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Grantee
have executed this Agreement as of the Date of Grant first above written.

 

REYNOLDS AMERICAN INC.   By:  

/s/ Lisa J. Caldwell

    Authorized Signature

 

/s/ Susan M. Cameron

Grantee’s Signature Print Name:  

Susan M. Cameron

 

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