Ex-10.53



 






Exhibit 10.53




Performance Unit

One-Year Vest




REYNOLDS AMERICAN INC.

LONG-TERM INCENTIVE PLAN







PERFORMANCE UNIT AGREEMENT







DATE OF GRANT: February 2, 2005




W I T N E S S E T H:




     1. Grant. Pursuant to the provisions of the Long-Term Incentive Plan
(collectively, the “Plan”), Reynolds American, Inc. (the “Company”) on the above date has granted
to



<<First
Name>> <<Last Name>> (the “Grantee”),




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



<<Number>>
(Performance Units.



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 in this Agreement shall have the meaning
set forth in the Plan, unless otherwise indicated.




     2. Valuation of Performance Units. Each Performance Unit shall have an
initial
value of $1,000 (the “Initial Grant Value”). The Compensation Committee of the Company’s Board of
Directors (the “Compensation Committee”) shall value each Performance Unit at the end of 2005 using
the performance measures set forth in the grid attached as Exhibit A, but the Compensation
Committee shall have the discretion to reduce the resulting valuation (the “Payment Value”). The
Grantee agrees that the Performance Units granted hereunder are in lieu of an award under the
Company’s Annual Incentive Award Plan for 2005.



     3. Vesting. (a) The Performance Units shall vest on December 31, 2005, or
if
earlier, upon the Grantee’s death, Permanent Disability (as defined in the Company’s Long Term
Disability Plan), or retirement. For purposes of this Agreement, the term “retirement” shall mean
the Grantee’s voluntary Termination of Employment (as such term is defined in Section 5 of this
Agreement) 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.



     (b) Notwithstanding anything in Section 3(a) to the contrary, in the event of the
Grantee’s involuntary Termination of Employment without Cause (as such terms are defined in Section
5 of this Agreement), the number of Performance Units which shall vest shall be



 









 




equal to the product of (i) the original number of Performance Units granted to the Grantee under
this Agreement and (ii) a fraction, the numerator of which shall be the number of whole or partial
months between January 1, 2005 and the date of the Grantee’s Termination of Employment, and the
denominator of which shall be 12.




     (c) Upon the Grantee’s voluntary Termination of Employment or Termination of Employment for
Cause (as such terms are defined in Section 5 of this Agreement) prior to the end of a Performance
Period, all of the Grantee’s Performance Units shall be cancelled, except to the extent that at the
time of Termination of Employment, the Grantee has an employment or termination agreement with the
Company or one of its subsidiaries which includes non-cancellation of some or all of the
Performance Units.



     4. Payment. (a) Payment of Performance Units shall be made only in Cash.
Except under such other circumstances as the Compensation Committee deems appropriate, no payment
shall be made to the Grantee prior to the end of 2005. Payment of vested Performance Units shall
be made in the amount of the Payment Value as soon as practicable following the close of the
Company books at the end of 2005, and in any event no later than March 15, 2006.



     (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.




     
5.  
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 a majority of the Board of Directors of the Company; or (iv) deliberate
misconduct which could be materially damaging to the Company or any of its business operations
without a reasonable



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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 chief human resources
officer of the Company shall confirm that any such Termination of Employment is for Cause;
provided, however, that the chief executive officer of the Company shall be
required to confirm that a Termination of Employment of the chief human resources officer of the
Company 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.



     6.  
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.


     7. No Right to Employment. Neither the execution and delivery of this
Agreement nor the granting of the Performance Units 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.



     8. Application of Laws. The granting of Performance Units 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.



     9. 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.



     10. Taxes. Any taxes required by federal, state or local laws to be
withheld by
the Company in respect of the grant of Performance Units or payment of the Payment Value 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 by the Company
to satisfy such tax withholding obligations prior to delivery of the Payment Value.



     11. Administration and Interpretation. (a) In consideration of the grant
of



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Performance Units 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 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 the Agreement. The Compensation Committee may delegate its interpretive
authority to an officer or officers of the Company.




     (b) This Agreement is intended to comply with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and shall be construed and interpreted in accordance with such
intent. The Performance Units shall be subject to Section 409A of the Code and shall be paid in a
manner that will comply with Section 409A of the Code, including proposed, temporary or final
regulations or any other guidance issued by the Secretary of Treasury and the Internal Revenue
Service with respect thereto (the “Guidance”). Any provision of this Agreement that would cause
the Performance Units to fail to satisfy Section 409A of the Code shall have no force and effect
until amended to comply with Code Section 409A (which amendment may be retroactive to the extent
permitted by the Guidance).



     12. Amendment. This Agreement is subject to the Plan, a copy of which is
attached. 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, other than for adjustments under Section 11(b)
hereof and 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.



     13. Obligations of Grantee. (a) In consideration of the grant of
Performance
Units hereunder, the Grantee, while both 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 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 Units 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



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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.



     14. 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:  	
 	 
	 	 	                          Authorized Signatory 	 
	 	 	 	 
	 




	 
	


	                       Grantee

	 

	Grantee’s Taxpayer Identification Number:

	 

	


	 

	Grantee’s Home Address:

	 

	


	 

	


	 

	









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