Exhibit 10.1

REYNOLDS AMERICAN INC.
LONG-TERM INCENTIVE PLAN

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PERFORMANCE SHARE AGREEMENT

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DATE OF GRANT: AUGUST 31, 2004

W I T N E S S E T H:

     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

“FirstName” “LastName” (the “Grantee”),

subject to the terms and conditions which follow and the terms and conditions of
the Plan, a grant of

“Number” Performance Shares.

A copy of the Plan is attached 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 August 31, 2005;
(ii)
  33% on August 31, 2006; and
(iii)
  33% on August 31, 2007.

For the Performance Shares to vest on each such vesting date, the Company must
have paid to its shareholders a dividend of at least $.95 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 $.95 per share. In the
event the Company fails to pay its shareholders a dividend of at least $.95 per
share in any fiscal quarter during the period from the Date of Grant and ending
on August 31, 2007, 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.

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     (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 August 31, 2004 and the date of
the Grantee’s Termination of Employment, and the denominator of which shall be
36, 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 65th birthday, or on or after
his or her 55th 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.

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     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 Common Stock on such date. In the
case of dividends paid in property, the dividend shall be deemed to be the fair
market value of the property at the time of distribution of the dividend, as
determined by the Committee.

     6. Payment. (a) Payment of Performance Shares shall be made only in cash as
soon as practicable following the date of vesting. The amount of payment shall
be determined by multiplying (i) the number of vesting Performance Shares by
(ii) the Fair Market Value at which the Common Stock is traded at the close of
business on the vesting date.

     (b) In the event of the death of a Grantee, any payment to which such
Grantee is entitled under the Plan 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 (“Group Life Insurance Coverage”). If the Grantee has not designated
such beneficiary, or desires to designate a different beneficiary, the Grantee
may file with the Company a written designation of a beneficiary under the Plan,
which designation may be changed or revoked only by the Grantee, in writing. If
no designation of beneficiary has been made by a Grantee under the Group Life
Insurance Coverage or filed with the Company under the Plan, distribution upon
such Grantee’s death shall be made in accordance with the provisions of the
Group Life Insurance Coverage. If a Grantee is no longer an employee of the
Company at the time of death, no longer has any Group Life Insurance Coverage
and has not filed a designation of beneficiary with the Company under the Plan,
distribution upon such Grantee’s death shall be made to the Grantee’s estate.

     7. 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 change; 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.

     8. 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.

     9. Adjustments in Performance Shares. In the event that the outstanding
shares of the Common Stock subject to the Grant are, from time to time, changed
into or exchanged for a different number or kind of shares of the Company or
other securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock

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dividend, spinoff combination of shares or otherwise, the Committee shall make
an appropriate and equitable adjustment in the number and kind of shares or
other consideration as to which the Grant shall be equivalent. Any adjustment
made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.

     10. Application of Laws. The Grant and the obligations of the Company
hereunder shall be subject to all applicable laws, rules and regulations and to
such approvals of any governmental agencies as may be required.

     11. Taxes. Any taxes required by federal, state or local laws to be
withheld by the Company on the grant or payment of Performance Shares 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 by the Company to satisfy such tax withholding obligations prior to
delivery of the payment of the Performance Shares.

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

     14. Amendment. The Board of Directors may amend the Plan and the
Compensation Committee may amend this Agreement at any time and in any way,
except that 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.

     15. Obligations of Grantee. (a) In consideration of the grant of
Performance Shares hereunder, the Grantee, both while actively employed and in
the event of Grantee’s Termination of Employment for any reason, specifically
agrees that within the term of this Grant or within one year following the
payment of any amounts pursuant to the Grant, if later: (i) the Grantee will
personally provide reasonable assistance and cooperation to the Company in
activities related to the prosecution or defense of any pending or future
lawsuits or claims involving the Company; (ii) the Grantee will promptly notify
the Company upon receipt of any requests from anyone other than an employee or
agent of the Company for information regarding the Company, or if the Grantee
becomes aware of any potential claim or proposed litigation against the

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Company; (iii) the Grantee will refrain from providing any information related
to any claim or potential litigation against the Company to any non-Company
representatives without either the Company’s written permission or being
required to provide information pursuant to legal process; (iv) the Grantee will
not disclose or misuse any confidential information or material concerning the
Company; and (v) the Grantee will not engage in any activity contrary or harmful
to the interests of the Company. 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 Company-related matter: the
Grantee will consult with and have Company designated legal counsel present for
such testimony (the Company will be responsible for the costs of such designated
counsel); the Grantee will confine his or her testimony to items about which the
Grantee has knowledge rather than speculation, unless otherwise directed by
legal process; and 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.

     (b) If the Company reasonably determines that the Grantee has materially
violated any of the Grantee’s obligations under this Agreement, then this Grant
shall terminate, effective the date on which such violation began (unless
otherwise terminated sooner), and the Company may demand the return of any
amount paid to the Grantee hereunder, and the Grantee hereby agrees to return
such amounts upon such demand. If after such demand the Grantee fails to return
such amounts, the Grantee acknowledges that the Company has the right to deduct
from any amounts the Company owes to the Grantee (including, but not limited to,
wages or other compensation), or to commence judicial proceedings against the
Grantee, to recover such amounts and any and all of its attorney’s fees and
costs.

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     16. GOVERNING LAW. 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.

     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:    

     

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      Authorized Signatory
 
       

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        Grantee        
 
       
Grantee’s Taxpayer Identification Number:
       
 
       

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Grantee’s Home Address:
       
 
       

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