EX-10.7






Exhibit 10.7




FORM OF LORILLARD, INC.

AWARD CERTIFICATE

STOCK APPRECIATION RIGHT




          THIS CERTIFICATE, dated as of the                     day of                                         , evidences the grant of
the Award set forth below by Lorillard, Inc., a Delaware corporation (the “Company”) to
                                         (the “Participant”).




     1. Grant of Award.



          Subject to the provisions of this Certificate and the Lorillard, Inc. 2008 Incentive
Compensation Plan, as adopted, effective as of May 5, 2008 (the “Plan”), the Company hereby grants
to the Participant as of                                         (the “Grant Date”)                     Stock Appreciation Rights having
an Exercise Price of $                     per Stock Appreciation Right (such grant being herein called the
“Award”). Each Stock Appreciation Right represents the right to receive an amount, payable in
shares of Stock as provided in Paragraph 3 below, equal in value to the excess, if any, on the date
of exercise of the Fair Market Value of a share of Stock over the Exercise Price of the Stock
Appreciation Right. The Stock Appreciation Rights granted hereby are Free-Standing Stock
Appreciation Rights and are not granted in conjunction with an Option. Unless earlier terminated
pursuant to the terms of this Certificate, the Award shall expire on                                         . Capitalized
terms not defined herein shall have the meanings set forth in the Plan.




     2. Exercisability of the Award.



          The Award shall become vested and exercisable with respect to one-quarter (1/4) of the Stock
Appreciation Rights granted hereby on                                         and as to an additional one-quarter (1/4) of
such shares on each of the next three anniversaries of that date, subject to the prior termination
of the Award.




     3. Method of Exercise of the Award.


(a) An Award may be exercised at any time after the Grant Date with respect to those Stock
Appreciation Rights vested and before the expiration of the Award Term. To exercise an Award, the
Participant shall give written notice to the Company stating the number of shares with respect to
which the Award is being exercised.



(b) Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive
an amount equal to the product of (i) the excess of the Fair Market Value of one (1) share of Stock
on the date of exercise over the Exercise Price of the applicable Stock Appreciation Right,
multiplied by (ii) the number of shares of Stock in respect of which the Stock Appreciation Right
has been exercised. Except as otherwise determined by the Committee on not less than thirty (30)
days’ prior written notice to the Participant, the payment shall be made in




 









 







shares of Stock based upon the Fair Market Value on the date of exercise. Fractional shares shall
be settled by payment in cash based upon the Fair Market Value on such date.




     4. Award Term.



         Except as otherwise determined by the Committee after the date of this Certificate, the Award
Term shall end on the earliest of (1) the date on which the Award has been exercised in full, (2)
the date on which the Participant experiences a Termination for Cause or a voluntary Termination,
(3) the one-year anniversary of the date on which the Participant experiences a Termination due to
death or Disability, (4) the three-year anniversary of the date on which the Participant
experiences a Termination due to the Participant’s Retirement, and (5) the 90th day after the
Participant experiences a Termination for any other reason; provided, that in no event may
the Award Term extend beyond                                         . Upon the occurrence of a Termination of Participant
for any reason, the Award Term shall thereupon end with respect to any portion of the Award that is
unvested as of the date of such Termination and such unvested portion shall be forfeited
immediately.




     5. Nontransferability of the Award.



         The Award is not transferable except (i) as designated by the Participant by will or by the
laws of descent and distribution or (ii) as otherwise expressly permitted by the Committee
including, if so permitted, pursuant to a transfer to such Participant’s immediate family, whether
directly or indirectly or by means of a trust or partnership or otherwise. If any rights
exercisable by the Participant or benefits deliverable to the Participant under this Certificate
have not been exercised or delivered, at the time of the Participant’s death, such rights shall be
exercisable by the Designated Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of this Certificate and the Plan.




     6. Effect of Change in Control.



          In the event of a Change of Control (as defined in the Plan), the Award if not previously
exercisable and vested shall become fully exercisable and vested.




     7. Taxes and Withholdings.



          No later than the date of exercise of the Award granted hereunder, the Participant shall pay
to the Company or make arrangements satisfactory to the Committee regarding payment of any federal,
state or local taxes of any kind required by law to be withheld upon the exercise of such Award and
the Company shall, to the extent permitted or required by law, have the right to deduct from any
payment of any kind otherwise due to the Participant, federal, state and local taxes of any kind
required by law to be withheld upon the exercise of the Award granted hereunder, as provided in
Section 6.8 of the Plan. In this regard the Participant may elect to pay any tax withholding upon
the exercise of an Award by irrevocably authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Award and remit to the Company a
sufficient portion of the sale proceeds to pay such tax withholding.




 









 








     8. Notices.



         All notices and other communications under this Certificate shall be in writing and shall be
given by hand delivery to the other party or by confirmed fax or overnight courier, or by postage
paid first class mail, addressed as follows:




          If to the Participant:




	 	 	 	 	 
	 

	 	  

	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 





          If to the Company:



Lorillard, Inc.

714 Green Valley Road

Greensboro, NC 27408

Attention: Corporate Secretary

Facsimile: (336) 335-7707



or to such other address or facsimile number as any party shall have furnished to the other in
writing in accordance with this Paragraph 8. Notice and communications shall be effective when
actually received by the addressee.




     9. Effect of Certificate.



         Except as otherwise provided hereunder, this Certificate shall be binding upon and shall inure
to the benefit of any successor or successors of the Company, and to any transferee or successor of
the Participant pursuant to Paragraph 5.




     10. Conflicts and Interpretation.



          The Award is subject to the provisions of the Plan, which are hereby incorporated by
reference. In the event of any conflict between this Certificate and the Plan, the Plan shall
control. In the event of any ambiguity in this Certificate, any term which is not defined in this
Certificate, or any matters as to which this Certificate is silent, the Plan shall govern
including, without limitation, the provisions thereof pursuant to which the Committee has the
power, among others, to (i) interpret the Plan, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan and (iii) make all other determinations deemed necessary or
advisable for the administration of the Plan.




     11. Headings.



          The headings of paragraphs herein are included solely for convenience of reference and shall
not affect the meaning or interpretation of any of the provisions of this Certificate.




 









 








     12. Amendment.



          This Certificate may not be modified, amended or waived except by an instrument in writing
signed by the Company. The waiver by either party of compliance with any provision of this
Certificate shall not operate or be construed as a waiver of any other provision of this
Certificate, or of any subsequent breach by such party of a provision of this Certificate.




          IN WITNESS WHEREOF, as of the date first above written, the Company has caused this
Certificate to be executed on its behalf by a duly authorized officer.




	 	 	 	 	 
	 	LORILLARD, INC.

 	 
	 	By: