EX-10.1








Exhibit 10.1




REYNOLDS AMERICAN INC.




ANNUAL INCENTIVE AWARD PLAN




Effective July 30, 2004,




As Amended November 30, 2004








1






REYNOLDS AMERICAN INC.




ANNUAL INCENTIVE AWARD PLAN




Effective July 30, 2004,




As Amended November 30, 2004




INDEX














	 	 	 	 	 
	Section Page

1.Purpose 
	 	 	2	 
	2.Definitions 
	 	 	2	 
	3.Eligibility 
	 	 	2	 
	4.Performance Objectives 
	 	 	2	 
	5.Determination of Target Awards 
	 	 	3	 
	6.Determination of Cash Awards 
	 	 	3	 
	7.Determination of Cash Awards for SBC Program Participants 
	 	 	4	 
	8.Deferral 
	 	 	6	 
	9.Tax Withholding 
	 	 	8	 
	10.Adjustments, Amendment or Termination 
	 	 	8	 
	11.Adoption/Withdrawal by Operating Companies 
	 	 	9	 
	12.Miscellaneous 
	 	 	10	 
	13.Effective Date 
	 	 	11	 
	Exhibit A: Definitions 
	 	 	A-1	 







2




REYNOLDS AMERICAN INC.




ANNUAL INCENTIVE AWARD PLAN




Effective July 30, 2004




As Amended November 30, 2004




1. Purpose




The Reynolds American Inc. Annual Incentive Award Plan is established to link corporate and
business priorities with individual and group performance objectives for the management
employees of RAI and its affiliated companies. The Plan is an amendment, restatement and
continuation of the R.J. Reynolds Tobacco Holdings, Inc. Annual Incentive Award Plan.



2. Definitions




Capitalized terms have the meanings set forth in Exhibit A.



3. Eligibility




To be eligible to participate in the Plan and receive an award, an employee must:




	 	(a)	 	except as otherwise provided in Section 6, be employed by a Company or one of
its subsidiaries for at least three months during the year at a salary grade approved
for participation in the Plan by the Chief Executive Officer;






	 	(b)	 	not be a participant in a sales incentive plan or any other bonus plan
designated by the Committee; and






	 	(c)	 	except as otherwise provided herein, be actively employed by a Company or one
of its subsidiaries on the last day of the year.





4. Performance Objectives




	 	(a)	 	Subject to the approval of the Committee, the Chief Executive Officer of each
Company will establish specific objectives (the “Performance Objectives”) for each
Company for each year. Subject to the approval of the Chief Executive Officer of RAI,
the Chief Executive Officers of the Operating Companies also may establish Performance
Objectives for some or all of their respective subsidiaries. Performance Objectives
may be based on any financial, operational or other criteria, such as market share.






	 	(b)	 	Each participant and the manager to whom the Participant reports (the
“Reviewing Manager”) may have specific individual performance objectives (the “Personal
Program Objectives”) for each year in which Personal Program Objectives determine, in
whole or in part, the Participant’s Cash Award. The next higher level of management
will review the Personal Program Objectives to ensure that they contribute to the
Performance Objectives established by the Chief Executive Officer. In addition,
subject to the approval of the Chief Executive Officer of RAI, the Chief Executive
Officers of the Operating Companies may establish specific Company focus areas (the
“Company Focus Areas”) for some or all of their respective subsidiaries in place of
Personal Program Objectives for each year in which Company Focus Areas determine, in
whole or in part, the Participant’s Cash Award.






	 	(c)	 	Each of the Performance Objectives and Personal Program Objectives/Company
Focus Areas will be weighted for the purpose of determining awards under the Plan.
Different weights may be assigned to the objectives for different Participants and
Companies. However, the aggregate weights for the Performance Objectives and Personal
Program Objectives/Company Focus Areas will each range from 1-100% and together total
100%.






	 	(d)	 	Performance Objectives and Personal Program Objectives/Company Focus Areas may
be reviewed and revised during the year pursuant to the procedures used for their
adoption. The Chief Human Resources Officer may change the weighting of any objective
for any Participant.





5. Determination of Target Awards




Each Participant’s target award for each year equals the product of (a) the Participant’s
highest annual rate of base salary in effect for three months or more during the year,
multiplied by (b) the Participant’s highest target award level for which he was eligible for
three months or more during the year. Each Participant’s target award level is expressed as
a percentage of base pay and falls within a range of target award levels set for the
Participant’s salary grade. The Committee will periodically review and may modify the range
of target award levels for each salary grade. Subject to the approval of the Chief Human
Resources Officer, Reviewing Managers will periodically review and may modify specific
target award levels for individual Participants.



6. Determination of Cash Awards




	 	(a)	 	Promptly after the end of each year, the Chief Executive Officer of RAI will
review the performance of each Company with the Committee. Subject to the approval of
the Committee, the Chief Executive Officers of the Operating Companies may give a
rating to each Performance Objective for the year (a “Performance Rating”) ranging from
1-150% for each Performance Objective.






	 	(b)	 	The Reviewing Manager will review the performance of each Participant promptly
after the end of each year in which Personal Program Objectives determine, in whole or
in part, the Participant’s Cash Award. The Reviewing Manager will give the Participant
a rating (a “Personal Program Rating”) for each of his or her Personal Program
Objectives for the year, which may range from 1-150%. The Chief Executive Officers of
the Operating Companies will review the Company performance for specific Company Focus
Areas promptly after the end of each year in which Company Focus Areas determine, in
whole or in part, each Participant’s Cash Award. Subject to the approval of the
Committee, the Chief Executive Officers of the Operating Companies may give a rating to
each Company Focus Area (a “Company Focus Area Rating”) ranging from 1-150%.






	 	(c)	 	The amount of each Cash Award is determined by multiplying the Participant’s
Performance Ratings and Personal Program Ratings/Company Focus Area Ratings by the
respective weights assigned to the corresponding Performance Objectives and Personal
Program Objectives/Company Focus Areas pursuant to Section 4(c). The sum of the
resulting percentages is then multiplied by the target award for the Participant
established pursuant to Section 5. If a Participant is transferred during the year to
a position with different Performance Objectives, the Performance Ratings applicable to
the Participant will be determined by applying the applicable Performance Ratings on a
pro-rata basis, based on the months of employment during the year in each position.






	 	(d)	 	When a Participant becomes eligible to participate in the Plan after the start
of the year, the Participant’s Cash Award will be prorated for the number of months of
eligibility during the year. In the event a Participant is on a leave of absence
during the year, the Participant’s Cash Award may be prorated, based on the number of
full or partial months of active employment at the discretion of the Chief Human
Resources Officer.






	 	(e)	 	If a Participant’s employment is interrupted by the Participant’s death,
Disability or Retirement at any time during the year, the Participant will receive a
Cash Award equal to his or her target award, prorated for the number of full or partial
months of employment during the year, as soon as practicable after such death,
Disability or Retirement. The prorating will give the Participant a full month’s
credit for any partial month of work or short-term disability.






	 	(f)	 	If a Participant loses eligibility under the Plan as the result of a transfer
to a position within the Companies not eligible for participation in the Plan, the
Participant will receive a Cash Award equal to his or her actual award determined in
accordance with Section 6(c), prorated for the number of full and partial months as an
eligible employee under the Plan. If the Participant’s employment has been for a
period of less than three months, the Participant’s Cash Award shall be determined
under this Plan at the base salary in effect on the date before the Participant loses
eligibility under the Plan.






	 	(g)	 	After obtaining approval from the Committee and satisfying its requirements,
the Companies will pay the Cash Award as soon as practicable after the end of the year
(or at such other time as determined by the Committee), except as provided in the event
of death, Disability or Retirement pursuant to Section 6(e).





7. Determination of Cash Awards for SBC Program Participants




	 	(a)	 	If a Participant’s employment terminates pursuant to the SBC Program at any
time during the year, the Participant will receive a Cash Award for the year of
termination of active employment equal to his or her actual award determined in
accordance with Section 6(c), prorated for the number of full or partial months as an
active employee. In addition, the SBC Program may provide the Participant with credit
for some or all of the period of salary continuation and, if so, will establish
criteria to determine the Performance Ratings for the Participant during this period.
Payment of the resulting Cash Awards, if any, will be governed by the terms of the SBC
Program.






	 	(b)	 	If an employee returns from the SBC Program to active employment for the
Companies, where such employee received credit under the Plan in accordance with
Section 7(a) for some or all of the period of salary continuation pursuant to the SBC
Program, but the employee’s active employment for the Companies does not satisfy the
eligibility requirements of Section 3, the employee will receive a Cash Award equal to
his or her target award, prorated for the period he or she received salary continuation
pursuant to the SBC Program and was eligible for credit under the Plan. A Cash Award
to be made pursuant to this Section 7(b) will be paid to the employee as soon as
practicable following his or her return to active service.






	 	(c)	 	If an employee returns from the SBC Program to active employment for the
Companies, where such employee received credit under the Plan in accordance with
Section 7(a) for some or all of the period of salary continuation pursuant to the SBC
Program and he or she continues to satisfy the eligibility requirements of Section 3,
the Participant will receive (i) a Cash Award equal to his or her target award,
prorated for the period he or she received salary continuation pursuant to the SBC
Program and was eligible for credit under the Plan, and (ii) a Cash Award equal to his
or her actual award determined in accordance with Section 6(c), prorated for the number
of full or partial months as an active employee. Payment of the Participant’s Cash
Award pursuant to Section 7(c)(i) will be paid as soon as practicable following his or
her return to active service. Payment of the Participant’s Cash Award pursuant to
Section 7(c)(ii) will be paid as provided in Section 6(g).






	 	(d)	 	If an employee has his or her SBC interrupted (short-term) and he or she
received credit under the Plan in accordance with Section 7(a) for some or all of the
period of salary continuation pursuant to the SBC Program, but the employee’s active
employment for the Companies does not satisfy the eligibility requirements of Section
3, he or she will receive a Cash Award equal to his or her target award, prorated for
the period he or she received salary continuation pursuant to the SBC Program and was
eligible for credit under the Plan, to be paid at the end of the employee’s SBC period.






	 	(e)	 	If an employee has his or her SBC interrupted (short-term) and he or she
returns to active employment for the Companies, where such employee received credit
under the Plan in accordance with Section 7(a) for some or all of the period of salary
continuation pursuant to the SBC Program and he or she continues to satisfy the
eligibility requirements of Section 3, the Participant will receive (i) a Cash Award
equal to his or her target award, prorated for the period he or she received salary
continuation pursuant to the SBC Program and was eligible for credit under the Plan,
and (ii) a Cash Award equal to his or her actual award determined in accordance with
Section 6(c), prorated for the number of full or partial months as an active employee.
Payment of the Participant’s Cash Award pursuant to Section 7(e)(i) will be paid at the
end of the employee’s SBC period. Payment of the Participant’s Cash Award pursuant to
Section 7(e)(ii) will be paid as provided in Section 6(g).





8. Deferral




	 	(a)	 	As of the last day of each year prior to 2004, each Participant who is on a
United States payroll may elect to defer payment of the Cash Award for that year. An
election to defer will be pursuant to procedures established by the Committee and will
be in writing, signed by the Participant and delivered to the Company by December 15 of
the year preceding payment. The election will be irrevocable and will specify the
percentage of the Cash Awards (from 5% to 100%) which will be paid (i) as soon as
practicable after the year in which the Participant’s Retirement, Disability or other
termination of employment occurs or, if earlier, (ii) in January of any designated
future year. If the Participant’s employment with the Companies and their subsidiaries
terminates before the designated year, the award will be paid in January of the year
following termination. If a Participant is eligible for CIP and elects to defer the
proceeds of Cash Awards, the Company will contribute an additional 3% to the amount
deferred on account of the 3% Company match that the Participant would have received
under CIP if the Participant had not deferred the Cash Award.






	 	(b)	 	Each Participant will specify, on the notice electing deferred payment pursuant
to Section 8(a), whether the Cash Award will be deferred by cash credit, Common Stock
credit, or a combination of the two. If a Participant elects to defer payment pursuant
to Section 8(a) and fails to choose a mode of deferral, the Participant’s deferral will
be by means of a cash credit. Cash credits and stock credits will be recorded in
accounts established in each Participant’s name on the books of the Participant’s
Company. At the direction of RAI, any Participant’s accounts may be consolidated on
the books of RAI or any of its subsidiaries.






	 	(i)	 	If the deferral is wholly or partly a cash credit, the
Participant’s cash credit account will be credited, as of the date(s) that
payment of the Cash Awards would otherwise have been made, with the dollar
amount of the portion of the Cash Awards deferred by means of a cash credit.
In addition, the Participant’s cash credit account will be credited as of the
last day of each calendar quarter with an interest equivalent in an amount
determined by applying to the current balance in the account an interest rate
equal to the average prime rate of JPMorgan Chase & Co. or its successor during
the preceding quarter. Interest will be credited for the actual number of days
in the quarter using a 365-day year.






	 	(ii)	 	If the deferral is wholly or partly a Common Stock credit, the
Participant’s Common Stock credit account will be credited, as of the date(s)
that payment of the Cash Awards would otherwise have been made, with the Common
Stock equivalent of the number of shares of Common Stock (including fractions
of a share) that could have been purchased with the portion of the Cash Awards
deferred by means of a Common Stock credit at the Closing Price on the date
that payment of the Cash Awards would otherwise have been made. As of the date
any dividend is paid to shareholders of Common Stock, the Participant’s Common
Stock credit account will also be credited with an additional Common Stock
equivalent equal to the number of shares of Common Stock (including fractions
of a share) that could have been purchased at the Closing Price on such date
with the dividend paid on the number of shares of Common Stock to which the
Participant’s Common Stock credit account is then equivalent. If dividends are
paid in property, the dividend will be deemed to be the fair market value of
the property at the time of distribution of the dividend, as determined by the
Committee.






	 	(c)	 	Payment of deferred Cash Awards will be made in a single cash payment as soon
as practicable in January of the appropriate year. If and to the extent that the
deferral is by means of the Common Stock credit account the value of the payment will
be based on the Closing Price of Common Stock on the last trading day of the year prior
to payment. Notwithstanding the foregoing, if a Participant elects in writing before
December 15 of the year his employment terminates due to Retirement or Disability,
payment will be made in substantially equal annual installments (not to exceed ten)
commencing in January following the Retirement or Disability. Notwithstanding any
election under Section 8(a) to defer Cash Awards by means of a Common Stock credit, the
Common Stock credit account of a Participant who elects to receive installment payments
will be converted into a cash credit account as of January 1 of the year in which such
installment payments commence. Any election by a Participant under this Section 8(c)
will be irrevocable after December 15 of the year prior to commencement of payment.






	 	(d)	 	At the one-time election of a Participant made in writing to the Committee, all
or any designated portion of the Common Stock credit account may be converted to, and
such Participant will be credited with, a cash credit account as of the first business
day of the calendar quarter following the quarter in which the election is made. The
amount credited to the cash credit account will be determined by multiplying the number
of shares of Common Stock to which the Participant’s Common Stock credit account is
then equivalent and as to which such election has been made by the Closing Price on the
last business day of the calendar quarter in which the election is made. Any Common
Stock credits attributable to dividends paid on Common Stock during the calendar
quarter in which the election is made will be credited before making the conversion.
Such election may be made by a Participant at any time prior to the end of the calendar
year in which termination of employment occurs. An election by a Participant under
this Section 8(d) will be irrevocable.






	 	(e)	 	If the number of outstanding shares of Common Stock is increased as the result
of any stock dividend, subdivision or reclassification of shares, the number of shares
of Common Stock to which each Participant’s Common Stock credit account is equivalent
will be increased in proportion to the increase in the number of outstanding shares of
Common Stock. If the number of outstanding shares of Common Stock is decreased as the
result of any combination or reclassification of shares, the number of shares of Common
Stock to which each Participant’s Common Stock credit account is equivalent will be
decreased in proportion to the decrease in the number of outstanding shares of Common
Stock. In the event the Company is consolidated with or merged into any other
corporation and holders of the Company’s Common Stock receive common shares of the
resulting or surviving corporation, each Participant’s Common Stock credit account, in
place of the shares then credited thereto, will be credited with a stock equivalent
determined by multiplying the number of common shares of stock given in exchange for a
share of Common Stock upon such consolidation or merger, by the number of shares of
Common Stock to which the Participant’s account is then equivalent. If in such a
consolidation or merger, holders of the Company’s Common Stock receive any
consideration other than common shares of the resulting or surviving corporation, the
Committee will determine the appropriate change in Participants’ accounts. In the
event of an extraordinary dividend, including any spin-off, the Committee will make
appropriate adjustments to each Participant’s Common Stock credit account.






	 	(f)	 	If a Participant dies, whether before or after termination of employment, any
cash credit account and Common Stock credit account to which he or she is entitled,
including any award approved after the Participant’s death as to which an election to
defer was made and any remaining installment payments, will be distributed in cash, as
soon as practicable (unless the Committee otherwise provides) to the Participant’s
beneficiaries pursuant to Section 12(i).





9. Tax Withholding




Each Participant’s employer will deduct any taxes required to be withheld by federal, state,
local or foreign governments from payments and distributions under the Plan.



10. Adjustments, Amendments or Termination




	 	(a)	 	The Committee may make appropriate and equitable adjustments in the Performance
Ratings, Personal Program Ratings/Company Focus Areas Ratings and the number, terms and
conditions of any Cash Awards if it determines that conditions warrant such adjustment.
Such conditions may include, without limitation, changes in the economy, laws,
regulations and generally accepted accounting principles, as well as corporate events
such as a merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, spin-off, change of control or other event. Any adjustment made by the
Committee shall be final and binding upon the Companies and the Participants.






	 	(b)	 	The Committee may amend, suspend or terminate the Plan at will and at any time,
but it will not take any action that would materially adversely affect the rights of
Participants with respect to deferral accounts.





11. Adoption/Withdrawal by Operating Companies




	 	(a)	 	Adoption of Plan. Any entity may, with the consent of the Committee, adopt the
Plan and thereby become an Operating Company hereunder by executing an instrument
evidencing such adoption and filing a copy thereof with the Committee. By this
adoption of the Plan, Operating Companies (other than RAI) shall be deemed to consent
to actions taken by RAI in entering into any arrangements for the purpose of providing
benefits under the Plan, and to authorize RAI and/or the Committee on behalf of RAI to
take any actions within the authority of RAI under the terms of the Plan.






	 	(b)	 	Withdrawal/Effect of Termination. Notwithstanding the foregoing, in the case
of any Operating Company that adopts the Plan and thereafter (i) ceases to exist or
(ii) withdraws or is eliminated from the Plan, it shall not thereafter be considered an
Operating Company thereunder and the employees of such Operating Company shall no
longer be eligible to participate in the Plan. Any Operating Company (other than RAI)
which adopts the Plan may elect separately to withdraw from the Plan and such
withdrawal shall constitute a termination of the Plan as to it; provided, however, that
such terminating Operating Company shall continue to be an Operating Company for the
purposes hereof as to Participants to whom it owes obligations hereunder, unless RAI or
the Committee directs otherwise.






	 	(c)	 	Expenses. The expenses of administering the Plan will be paid by RAI, unless
RAI, in its sole and absolute discretion, directs the Operating Companies to pay some
or all of the expenses.






(d) Liability for Payment/Transfers of Employment.




	 	(i)	 	Subject to the provisions of subsections (ii) and (iii) hereof,
each Operating Company shall be solely liable for and shall reimburse RAI for
the Operating Company’s appropriate share of any funding necessary to provide
benefits to its employees who are Participants under this Plan;






	 	(ii)	 	Notwithstanding the foregoing, upon a transfer of employment
among Operating Companies, any liability for the payment of a Cash Award to or
on behalf of a Participant shall be transferred from the prior Operating
Company to the new Operating Company. The last Operating Company of the
Participant shall be responsible for the payment of any Cash Award payable
hereunder after the Participant’s termination of employment, whether liability
for such payment accrued before or after the Participant’s transfer of
employment to such Operating Company; and






	 	(iii)	 	Notwithstanding the foregoing, in the event that RAI is unable
or refuses to satisfy its obligation hereunder with respect to the payment of
any Cash Award to or on behalf of its Participants, each of the Operating
Companies (unless it is insolvent), other than RAI, shall guarantee and be
jointly and severally liable for a portion of such Cash Award under the Plan,
allocated based on a fraction, the numerator of which is equal to the number of
Participants in the Plan who are current or former employees of the Operating
Company and the denominator of which is the total number of Participants in the
Plan, excluding current or former RAI employees (as in effect on the date of
the determination).





12. Miscellaneous




	 	(a)	 	Except as determined by the Committee, no person will have any right to receive
an award.






	 	(b)	 	The Committee has the power to interpret the Plan and, together with the
officers of the Companies, has complete discretion in making determinations and taking
action pursuant to the Plan. All interpretations, determinations and actions by the
Committee will be final, conclusive and binding on all parties. Subject to the
preceding sentence, the Chief Executive Officer of RAI will administer the Plan and
will resolve all administrative questions and interpretations. The Committee and the
Chief Executive Officer of RAI may delegate their authority to anyone. In such event,
references in the Plan to the Committee or to the Chief Executive Officer of RAI will
refer to their delegates when appropriate.






	 	(c)	 	The Companies, their Boards of Directors, the Committee, the officers and the
other employees of RAI and its subsidiaries will not be liable for any action taken in
good faith in interpreting and administering the Plan.






	 	(d)	 	For purposes of the Plan, a Participant on leave of absence approved by a
Company or a subsidiary of a Company will be considered an employee. Except as
otherwise provided herein, a Participant on salary continuation under an SBC Program or
agreement of severance will not be considered an employee but will be deemed to be
terminated on his or her last day of active employment. A Participant absent due to
short-term disability on the last day of a year is deemed to be actively employed if
such Participant was actively employed at any time during the year.






	 	(e)	 	Nothing herein creates a vested right. The Cash Awards and the interest,
dividends and other expenses on Cash Awards deferred under Section 8 are not funded
and, except to the extent provided in Section 11(d)(iii), are paid from the general
assets of the Company from which the Participant terminated employment. Nothing herein
shall be construed to require the Companies to maintain any fund or segregate any
amount for the benefit of any Participant and no Participant or other person shall have
any claim against, right to, or security or other interest in, any fund, account or
asset of any Company from which he or she terminated employment. Other benefits
referred to herein may be funded or unfunded as provided for in the individual plans.






	 	(f)	 	The Plan does not create or confer on any Participant any right to employment,
and the employment of any Participant may be terminated by the Participant or the
Participant’s employer without regard to the effect that termination might have on the
Participant with respect to the Plan.






	 	(g)	 	Participants may not transfer, pledge or encumber any benefit under the Plan
prior to its receipt in cash. Except as required by law, creditors may not attach or
seize any such benefit.






	 	(h)	 	The Plan will be governed by and subject to the laws of the State of North
Carolina.






	 	(i)	 	In the event of the death of a Participant, any distribution to which such
Participant is entitled under the Plan shall be made to the beneficiary designated by
the Participant to receive the proceeds of any noncontributory group life insurance
coverage provided for the Participant by the Participant’s Company (“Group Life
Insurance Coverage”). If the Participant has not designated such beneficiary, or
desires to designate a different beneficiary, the Participant may file with the Chief
Human Resources Officer a written designation of a beneficiary under the Plan, which
designation may be changed or revoked only by the Participant, in writing. If no
designation of beneficiary has been made by a Participant under the Group Life
Insurance Coverage or filed with the Chief Human Resources Officer under the Plan,
distribution upon such Participant’s death shall be made in accordance with the
provisions of the Group Life Insurance Coverage. If a Participant is no longer an
employee of a Company or one of its subsidiaries at the time of death, no longer has
any Group Life Insurance Coverage and has not filed a designation of beneficiary with
the Chief Human Resources Officer under the Plan, distribution upon such Participant’s
death shall be made to the Participant’s estate.






	 	(j)	 	A Company may supersede some or all of the terms of the Plan with respect to
individual Participants pursuant to an employment, termination or similar agreement.
In case of conflict, the agreement will control.





13. Effective Date




The Plan is effective as of July 30, 2004.



3




EXHIBIT A




Definitions





(a) “Board of Directors” The Board of Directors of RAI.




(b) “Cash Award” Annual cash payments made to Participants pursuant to the Plan.




	 	(c)	 	“Chief Executive Officer” For employees of RAI and the chief executive
officers of the Operating Companies, the chief executive officer of RAI. For the other
employees of each Operating Company and its subsidiaries, the chief executive officer
of the Operating Company primarily responsible for their performance.






	 	(d)	 	“Chief Human Resources Officer” For employees of RAI and the executive
officers of the Operating Companies, the chief human resources officer of RAI. For the
other employees of each Operating Company and its subsidiaries, the chief personnel
officer of the Operating Company primarily responsible for their performance.






	 	(e)	 	“CIP” The Reynolds American Capital Investment Plan, or comparable
Company-sponsored 401(k) plan in which employees participate, or any successor thereof.






	 	(f)	 	“Closing Price” The closing sale price of the Common Stock as shown on the New
York Stock Exchange consolidated tape and reported in the Wall Street Journal.






(g) “Committee” The Compensation Committee of the Board of Directors.




(h) “Common Stock” The Common Stock of RAI.




(i) “Companies” RAI and the Operating Companies.




(j) “Company Focus Areas” As defined in Section 4(b) of the Plan.




(k) “Company Focus Areas Rating” As defined in Section 6(b) of the Plan.




	 	(l)	 	“Disability” Being totally and permanently disabled as defined in the
Long-Term Disability Plan of the Operating Company employing the participant.






(m) “Group Life Insurance Coverage” As defined in Section 12(i) of the Plan.




	 	(n)	 	“Operating Companies” R. J. Reynolds Tobacco Company, Santa Fe Natural Tobacco
Company, Inc., R. J. Reynolds Global Products, Inc. (and related international
businesses), Lane Limited and any future operating companies acquired by Reynolds
American Inc. that become wholly-owned direct or indirect subsidiaries of Reynolds
American Inc.






	 	(o)	 	“Participant” For any year, an employee who is eligible for or who has
deferred receipt of an award under the Plan. An eligible employee is a Participant
only with respect to the Company for which he works most directly.






(p) “Performance Objectives” As defined in Section 4(a) of the Plan.




(q) “Performance Rating” As defined in Section 6(a) of the Plan.




(r) “Personal Program Objectives” As defined in Section 4(b) of the Plan.




(s) “Personal Program Rating” As defined in Section 6(b) of the Plan.




(t) “Plan” Reynolds American Inc. Annual Incentive Award Plan.




(u) “RAI” Reynolds American Inc.




(v) “Retirement” Retirement with eligibility for retiree medical benefits.




(w) “Reviewing Manager” As defined in Section 4(b) of the Plan.




	 	(x)	 	“SBC” or “SBC Program” A salary and benefits continuation or other program
maintained by a Company for the purpose of providing severance-type benefits to
employees whose employment is involuntarily terminated.






4