Document:

Exhibit 10.43

 

Exhibit
10.43

DEFERRED COMPENSATION PLAN FOR

DIRECTORS OF

REYNOLDS AMERICAN INC.

(Amended and Restated Effective November 30, 2007)

ARTICLE I

     1.1 NAME AND PURPOSE. The name of this plan is the “Deferred Compensation Plan for Directors
of Reynolds American Inc.” (the “Plan”). The Plan is an amendment, restatement and continuation of
the Deferred Compensation Plan for Directors of R.J. Reynolds Tobacco Holdings, Inc. The purpose
of this Plan is to provide non-employee Directors of the Company with increased flexibility in
timing the receipt of board service fees and to assist the Company in attracting and retaining
qualified individuals to serve as Directors.

     1.2 DEFINITIONS. Whenever used in the Plan, the following terms shall have the meaning set
forth below:

	 	(a)	 	“Closing Price” means the final closing price of a share of the Company’s
Common Stock (as reported on the New York Stock Exchange consolidated tape).
	 
	 	(b)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(c)	 	“Common Stock” means the Common Stock, par value $0.0001 per share, of the
Company.
	 
	 	(d)	 	“Company” means Reynolds American Inc., a North Carolina corporation.
	 
	 	(e)	 	“Compensation” means all cash remuneration paid to a Director for service as a
Director other than reimbursement for expenses and shall include, but not be limited
to, Board of Directors retainer fees, Board of Directors committee chairmanship and/or
committee attendance fees, and any fees for attendance at Board of Directors meetings.
	 
	 	(f)	 	“Director” means any individual serving on the Board of Directors of the
Company who is not an employee of the Company or any of its subsidiaries.
	 
	 	(g)	 	“Participant” means a Director who has filed an election to participate under
Section 3.1 with regard to any Plan Year.
	 
	 	(h)	 	“Plan Administrator” means the Corporate Governance, Nominating and Leadership
Development Committee of the Board of Directors of the Company.

 

 

	 	(i)	 	“Plan Year” means the calendar year except the first Plan Year is the period
July 30, 2004 through December 31, 2004.

ARTICLE II

     2.1 PARTICIPATION IN THE PLAN. Any individual who is a Director as defined in Section 1.2(f)
may participate in the Plan.

ARTICLE III

     3.1 ELECTION TO PARTICIPATE. Each Director may elect annually to have payment of all or any
increment of twenty-five percent (25%) of his or her Compensation for that Plan Year deferred. An
election to defer may provide that the Compensation deferred will be paid on (or commencing on)
January 2 of a specified year in the future or on (or commencing on) January 2 following the end of
the Plan Year during which the Participant ceased to be a Director.

     No election to defer under this Plan may be made after December 31 of the year preceding the
Plan Year during which Compensation would otherwise be paid or, if later, within thirty (30) days
after the date a Director becomes a Director. An election to defer any Compensation shall be in
writing and shall be delivered to the Plan Administrator. Except for the Plan Year during which a
Director becomes a Director, and then only with respect to Compensation earned after an election in
such Plan Year, an election to defer shall be effective only for the Plan Year immediately
following the date on which it was filed. In the absence of a written election to defer filed by a
Director with the Plan Administrator, any Compensation will be paid directly to the Director.

     For all Compensation deferred under this Plan after December 31, 2004, the election to defer
shall specify whether payment shall be made in a lump sum or in any number of annual installments
not exceeding ten (10).

     3.2 MODE OF DEFERRAL. Payment of a Participant’s Compensation may be deferred in twenty-five
percent (25%) increments by means of a cash credit, a stock credit or a combination of the two as
the Participant shall elect in writing at the same time as the election provided for in Section
3.1. If a Participant fails to make an election as to mode of deferral, he or she shall be deemed
to have elected deferral by means of a cash credit. Cash credits and stock credits shall be
recorded in accounts established in Participants’ names on the books of the Company.

	 	(a)	 	CASH CREDITS. If the deferral is wholly or partly by means of a cash credit,
the Participant’s cash credit account shall be credited, as of the last day of the
calendar quarter, with the dollar amount of Compensation deferred during the quarter.
As of the last day of each calendar quarter, the Participant’s cash credit account
shall also be credited with interest equivalent in an amount determined by applying to
the balance in the account as of the first day of the quarter (less any distributions
during the quarter) an interest rate for such quarter which, when annualized, shall be
the prime rate of JPMorgan Chase & Co. as of the first

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	 	 	 	business day of the quarter. Interest shall be calculated on the actual number of
days in the quarter based upon a 360-day year.
	 
	 	(b)	 	STOCK CREDITS. If the deferral is wholly or partly by means of a stock credit,
the Participant’s stock credit account shall be credited, as of the last day of the
calendar quarter, with a Common Stock equivalent equal to the number of shares of
Common Stock (including fractions of a share) that could have been purchased at the
average of the Closing Price on each business day during the last month of the calendar
quarter with the amount of the Compensation deferred during the quarter. As of the
date any dividend is paid to shareholders of Common Stock, the Participant’s stock
credit account shall 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 stock credit account is
equivalent on the record date for such dividend. In 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 Plan Administrator.
	 
	 	(c)	 	A Participant may elect in writing that all or any designated portion of his
stock credit account or his cash credit account be changed to, and such Participant
shall instead be credited with, the other type of account as of the first day of the
month following the month in which the election is received by the Plan Administrator.
For this purpose, the value of a participant’s stock credit account will be determined
using the average of the Closing Price on each business day during the month preceding
the effective date of the election. Notwithstanding the foregoing, any election to
transfer between accounts may be made no more frequently than once in any six (6) month
period and no such election may be made unless the transfer would be an exempt
transaction for purposes of Section 16(b) of the Securities Exchange Act of 1934.

     3.3 DISTRIBUTION OF CREDITS.

	 	(a)	 	For all Compensation deferred under this Plan prior to December 31, 2004, the
distribution of a Participant’s stock credit account or cash credit account will be
made as follows:

(i) Elections made pursuant to Section 3.1 shall be irrevocable by the Director.

(ii) Unless as otherwise elected in Section 3.3(a)(iii), payment of a Participant’s
deferred stock units shall be made in one (1) lump sum as soon as practicable in the
year in which the Participant had elected to receive payment.

(iii) At the election of the Participant made in writing and delivered to the Plan
Administrator at any time on or before December 1 of the year prior to the year in
which the Participant had elected to receive payment, distribution of all of his or

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her account shall be made in any number of annual installments not exceeding ten
(10). Any such election, unless made irrevocable by its terms, may be changed by
written notice to the Plan Administrator at any time prior to December 1 of the Plan
Year prior to the year in which the Participant had elected to receive payment.

	 	(b)	 	For all Compensation deferred under this Plan after December 31, 2004, the
distribution of a Participant’s stock credit account or cash credit account will be
made as follows:

(i) According to the election made by each Participant pursuant to Section 3.1,
payment of a Participant’s stock credit account or cash credit account will be made
either in a lump sum or in any number of annual installments not exceeding ten (10),
both on (or commencing on) January 2 of the year or years specified or on (or
commencing on) January 2 following the termination of his or her service as a
Director. Notwithstanding the foregoing provisions of this Section 3.3(b)(i), in
the event that a Participant is a “specified employee,” determined pursuant to
procedures adopted by the Company in compliance with Section 409A of the Code, at
the time of his or her termination of service, as provided in Section 3.3(b)(iii),
the payments to be paid following the termination of service as a Director shall be
paid no earlier than the first day of the seventh month following the date such
termination of service as a Director occurs (or if earlier, on the date of death).

(ii) Elections made pursuant to Sections 3.1 and 3.3(b)(i) are not irrevocable;
provided, however, any subsequent election that changes the timing or form of a
Participant’s previous distribution election shall comply with Section 409A of the
Code, including requirements that such election (A) may not be effective until
twelve (12) months after the date the election is made, (B) any subsequent elections
relating to payments scheduled for a particular date or dates must be made at least
twelve (12) months prior to the date of the first scheduled payment, and (C) all
subsequent elections for distributions, other than those triggered by disability,
death or an unforeseeable emergency, must delay distribution by at least five (5)
years from the original distribution date.

(iii) For purposes of this Section 3.3(b), termination of service as a Director shall be the
later of (A) the end of the Director’s service as a member of the Board of Directors of the Company
and (B) the Director’s separation from service with the Company within the meaning of Section 409A
of the Code.

	 	(c)	 	Distribution of a Participant’s cash credit and stock credit accounts shall be
made in cash. For this purpose, the value of a Participant’s stock credit account
shall be determined by multiplying the number of shares of Common Stock attributable to
the payment by the average of the Closing Price on each business day in the month of
December immediately prior to the Plan Year in which the payment is to be paid.

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     3.4 ADJUSTMENT. If the number of outstanding shares of Common Stock is increased or decreased
as a result of any stock dividend, subdivision or reclassification of shares, the number of shares
of Common Stock to which each Participant’s stock credit account is equivalent shall be increased
or decreased in proportion to the increase or decrease in the number of outstanding shares of
Common Stock and the Closing Price on which payments hereunder is based will be proportionately
decreased or increased. In the event the Company shall at any time be 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, there shall be credited to each Participant’s stock credit
account, in place of the shares then credited thereto, 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
shall receive any consideration other than common shares of the resulting or surviving corporation,
the Plan Administrator, in its sole discretion, shall determine the appropriate change in
Participants’ accounts.

     3.5 INSTALLMENT AMOUNT. In the event a Participant has elected to receive distribution of his
or her accounts in more than one installment, the amount of each installment shall be determined
either (a) by multiplying the current balance (denominated in cash units for the portion elected to
be deferred as cash credits and denominated in stock units for the portion elected to be deferred
in stock credits) in the accounts as determined under Section 3.2, by a fraction, the numerator of
which is one, and the denominator of which is the number of installments yet to be paid or (b) by
any other method acceptable to the Plan Administrator.

     3.6 DISTRIBUTION UPON DEATH. In the event of the death of a Participant, whether before or
after ceasing to serve as a Director, any cash credit account and stock credit account to which he
or she was entitled, shall be converted to cash and distributed in one (1) lump-sum to such person
or persons or the survivors thereof, including corporations, unincorporated associations or trusts,
as the Participant may have designated. All such designations shall be made in writing signed by
the Participant and delivered to the Plan Administrator. A Participant may from time to time
revoke or change any such designation by written notice to the Plan Administrator. If there is no
unrevoked designation on file with the Plan Administrator at the time of the Participant’s death,
or if the person or persons designated therein shall have all predeceased the Participant or
otherwise ceased to exist, such distributions shall be made in accordance with the Participant’s
will or in the absence of a will, to the administrator of the Participant’s estate. Any
distribution under this Section 3.6 shall be made as soon as practicable following the end of the
fiscal quarter in which the Plan Administrator is notified of the Participant’s death. In this
case, a Participant’s stock credit account shall be converted to cash by multiplying the number of
whole and fractional shares of Common Stock to which the Participant’s stock credit account is
equivalent by the average of the Closing Price of Common Stock on each business day during the last
month of the calendar quarter prior to the date of death.

     3.7 WITHHOLDING TAXES. The Company shall deduct from all distributions under the Plan any
taxes required to be withheld by federal, state, or local governments.

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ARTICLE IV

     4.1 PLAN ADMINISTRATOR. The Plan Administrator shall have full power and authority to
administer the Plan including the power to promulgate forms to be used with regard to the Plan, the
power to promulgate rules of Plan administration, the power to settle any disputes as to rights or
benefits arising from the Plan, and the power to make such decisions or take such action as the
Plan Administrator, in its sole discretion, deems necessary or advisable to aid in the proper
maintenance of the Plan.

ARTICLE V

     5.1 FUNDING. No promise hereunder shall be secured by any specific assets of the Company, nor
shall any assets of the Company be designated as attributable or allocated to the satisfaction of
such promises. Cash credit and stock credit accounts are not funded and are paid from the general
assets of the Company from which the Participant terminated service as a Director. Nothing herein
shall be construed to require the Company 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 the Company.

ARTICLE VI

     6.1 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall 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
Participant, be in any manner liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the Participant.

ARTICLE VII

     7.1 DELEGATION OF ADMINISTRATIVE DUTIES. Administrative duties imposed by this Plan may be
delegated by the Plan Administrator or the individual charged with such duties.

     7.2 GOVERNING LAW. All questions arising in respect of the Plan, including those pertaining
to its validity, interpretation and administration, shall be governed, controlled and determined in
accordance with the applicable provisions of federal law and, to the extent not preempted by
federal law, the laws of the State of North Carolina.

     7.3 AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Plan Administrator at any time
may terminate and in any respect, amend or modify the Plan.

     7.4 COMPLIANCE WITH SECTION 409A OF THE CODE. The Plan is intended to comply with Section
409A of the Code and shall be construed and interpreted in accordance with such intent. Each
payment pursuant to this Plan shall be considered a separate payment and not one of a series of
payments for purposes of Section 409A of the Code.

6Exhibit 10.57

 

Exhibit 10.57

December 19, 2007

Susan M. Ivey

	 	 	 	Re: Special Severance Benefits and Change of Control Protections

     As consideration for your entering into the Non-Competition, Non-Disclosure of Confidential
Information and Commitment to Provide Assistance Agreement, attached hereto as Exhibit A and made a
part of this document, you will be eligible for special severance and certain change of control
protections from Reynolds American Inc. (the “Company”), the terms and conditions of which are set
forth below. This agreement will amend and supersede the prior letter agreement regarding Special
Severance Benefits and Change of Control Protections, dated October 7, 2004, between you and the
Company (the “Prior Agreement”) and any other severance agreements entered into prior to the date
hereof. In addition, Section 3 of this agreement amends the Offer of Employment Letter between you
and the Company, dated July 29, 2004 (the “Offer Letter”) and Section 4 of this agreement describes
the retiree health coverage that is available to you under the terms of the Offer Letter.

	1.	 	Special Severance Benefits.

	 	(a)	 	If, during the course of your employment with the Company or any of its
affiliates, you incur a Separation from Service other than (1) by reason of disability
or death, (2) by the Company or any of its affiliates for Cause or (3) by you without
General Good Reason, you will receive:

	 	(i)	 	An amount equal to three (3) years’ pay (defined as base pay
and target bonus at the time of your Termination Date (as defined below)),
payable as follows:

	 	(A)	 	If your Termination Date occurs prior to
January 1, 2010, such amount shall be paid in cash to you in equal
monthly installments (or more frequent installments as determined by
the Company) over the Severance Period (as defined below) commencing on
the last day of the month after the sixtieth (60th) calendar day
following the Termination Date (the “Payment Date”); or
	 
	 	(B)	 	If your Termination Date occurs on or after
January 1, 2010, such amount shall be paid in cash to you in a single
lump sum on your Payment Date.

	 	 	 	For purposes of this agreement, (x) “Termination Date” means the date on
which you incur a Separation from Service in accordance with this Section
1(a)(i) and (y) “Severance Period” means the three (3) year period following
your Termination Date. A “Separation from Service” shall be deemed to have
occurred on the date on which the level of bona fide

 

 

	 	 	 	services reasonably anticipated to be performed by you is forty-five percent
(45%) or less of the average level of bona fide services performed by you
during the immediately preceding thirty-six (36) month period (or your full
period of service if you have been providing services for less than
thirty-six (36) months).

	 	(ii)	 	An amount equal to the matching contributions and/or retirement
enhancement contributions, if any, that would be contributed by the Company on
your behalf under the Company’s qualified defined contribution plan (the “CIP”)
and nonqualified defined contribution benefit plans assuming that (A) you had
continued to be employed as an active participant in the CIP throughout the
Severance Period, (B) your pay was equal to the amount determined in Section
1(a)(i) above and (C) you contributed in an amount that would have provided for
the maximum matching contributions during the Severance Period (without regard
to any amendment to the CIP made subsequent to your Termination Date which
reduces the matching contributions and/or retirement enhancement contributions
thereunder). The benefit described in this Section 1(a)(ii) shall be paid in
cash to you in a single lump sum on your Payment Date.
	 
	 	(iii)	 	If you are eligible to participate in the Company’s defined
benefit pension plan as of your Termination Date, an additional pension benefit
determined as if your employment with the Company or an affiliated company had
continued throughout the Severance Period, and calculated as if your base pay
and target bonus for such additional period remained at the level in effect on
your Termination Date, which benefit shall be provided under and paid pursuant
to the terms of the Company’s qualified retirement plans to the extent
permitted thereunder or under a nonqualified plan established and maintained by
the Company or an affiliated company.
	 
	 	(iv)	 	Continuation of the coverage of you (and where applicable, your
eligible dependents) under the Company’s medical, life, dental and vision
insurance benefit plans until the end of the month in which your Severance
Period ends, at the same cost structure as active employees; provided, however,
that following your Termination Date you will be covered by the fully insured
medical, dental and vision plans maintained by the Company. Your required
payments, if any, towards the cost for such continuation coverage shall be made
on an after-tax basis.
	 
	 	(v)	 	If you are eligible for retiree health and life insurance
coverage on your Termination Date, additional age and service credit towards
eligibility for retiree health and life insurance coverage determined as if
your employment with the Company or an affiliated company had continued
throughout the Severance Period.
	 
	 	(vi)	 	If you participate in an executive supplemental payment plan on
your Termination Date, you will continue to receive the annual executive

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	 	 	 	supplemental payment that you were entitled to receive on your Termination
Date until the end of your Severance Period. Such annual payment shall be
made (A) in January of each year of the Severance Period if your Termination
Date occurs prior to January 1, 2010, or (B) in a single lump sum on your
Payment Date if your Termination Date occurs on or after January 1, 2010.
	 
	 	(vii)	 	If you are eligible to participate in the Company’s MedSave
Plan as of your Termination Date, an amount equal to the contributions that
would have been credited as Company contributions to your notional account
under the MedSave Plan assuming that (A) you had continued to be employed as an
active participant in the MedSave Plan throughout the Severance Period and (B)
the Company had credited your notional account thereunder with the maximum
amount of matching contributions each year during the Severance Period, shall
be paid in cash to you in a single lump sum on your Payment Date.
	 
	 	(viii)	 	If you actively participate in any of the Company’s voluntary, employee
pay-all plans or programs on your Termination Date, you may continue to
participate in such plan or program, pursuant to the terms and conditions set
forth therein, until the end of your Severance Period.
	 
	 	(ix)	 	These special severance benefits replace any compensation or
benefits under the Reynolds American Salary and Benefits Continuation Program
(“SBC”). It is intended that you will not receive any less pay or benefits
than provided under the SBC; provided, however, that any payment or benefit
provided under this Section 1(a) is conditioned upon your execution of the
release described in Section 5(a) and the expiration of any applicable
revocation period occurring on or before your Payment Date. In the event that
you do not execute the release described in Section 5(a), you will not be
entitled to any benefits under this agreement and will be entitled only to
those benefits provided under the SBC.
	 
	 	(x)	 	If you should die during your Severance Period, any cash
amounts under this Section 1(a) that remain unpaid as of the date of your death
shall be paid in cash to your estate in a single lump sum within ninety (90)
days following the date of your death, provided that your estate shall not have
the right to designate the payment date.

	 	(b)	 	For purposes of this agreement, “Cause” means the occurrence of any one or more
of the following : (i) your criminal conduct; (ii) your deliberate and continual
refusal to perform employment duties on substantially a full time basis; (iii) your
deliberate and continual refusal to act in accordance with any specific lawful
instructions of an authorized officer or employee more senior than you or a majority of
the Board of Directors of the Company; or (iv) your deliberate misconduct which could
be materially damaging to the Company or any of its business operations without a
reasonable good faith belief by you that such

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	 	 	 	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 (or the Chief Executive Officer of the Company, in the case of the
termination of employment of 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 you in anticipation of an involuntary termination of
employment for Cause shall be deemed to be a termination of employment for Cause.

	 	(c)	 	Notwithstanding any provision to the contrary contained herein, in the event
that you are deemed to be a “specified employee” on your Termination Date, determined
pursuant to procedures adopted by the Company in compliance with Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder
((“Section 409A”) and (the “Code”), respectively), and if any portion of the payments
or benefits to be received by you upon separation from service would constitute a
“deferral of compensation” subject to Section 409A, then to the extent necessary to
comply with Section 409A, amounts that would otherwise be payable pursuant to this
agreement during the six-month period immediately following your Termination Date and
benefits that would otherwise be provided pursuant to this agreement during the
six-month period immediately following your Termination Date will instead be paid or
made available on the earlier of (i) within ten (10) days following the first business
day of the seventh month after your Termination Date, provided that you shall not have
the right to designate the payment date; or (ii) your death.
	 
	 	(d)	 	For purposes of this agreement, “General Good Reason” means the occurrence of
one (1) or more of the following events:

	 	(i)	 	the total amount of your base salary and targeted awards under
the Company’s Long-Term Incentive Plan (the “LTIP”) and the Company’s Annual
Incentive Award Plan (the “AIAP”), or successor plans, is at any time reduced
by more than twenty percent (20%) without your consent; provided,
however, that nothing herein will be construed to guarantee your target
award if performance is below target;
	 
	 	(ii)	 	your responsibilities are substantially reduced in importance
without your consent; or
	 
	 	(iii)	 	you are at any time required as a condition of continued
employment to become based at any office or location more than the minimum
number of miles required by the Internal Revenue Service for you to claim a
moving expense deduction, from your then current place of employment without
your consent, except for travel reasonably required in the performance of your
responsibilities.
	 
	 	 	 	Unless you provide written notification of your non-consent to any of the
events described in (i), (ii) or (iii) above within ninety (90) days after
the

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	 	 	 	occurrence of any such event, you will be deemed to have consented to the
occurrence of such event or events and no General Good Reason will exist.
If you provide written notice of your non-consent to any of the events
described in (i), (ii) or (iii) above within ninety (90) days after the
occurrence of any such events, your employment by the Company or any of its
affiliates will be deemed to have been terminated for General Good Reason
ninety (90) days after receipt of such written notice by the Company or any
of its affiliates.

	 	(e)	 	Each payment and each provision of benefits pursuant to this Section 1 shall be
considered a separate payment and not one of a series of payments for purposes of
Section 409A.

	2.	 	Change of Control. In the event of a Change of Control of the Company (as such
Change of Control is defined in the LTIP), or any successor plan, the following will occur:

	 	(a)	 	The Company will hold you harmless from any golden parachute tax imposed by any
federal, state or local taxing authority as a result of any payments made by the
Company or any of its affiliates. In the event that it is determined that any payment
or distribution by the Company or any of its affiliates to or for you (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”),
then you will be entitled to receive from the Company or any of its affiliates an
additional payment (an “Excise Tax Adjustment Payment”) in an amount such that after
payment by you of all applicable federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties imposed with respect to
such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment,
you retain an amount of the Excise Tax Adjustment Payment equal to the Excise Tax
imposed upon the Payments. You agree to cooperate fully with the Company and its
affiliates in any protester appeal by the Company or any of its affiliates in the event
of the imposition of any golden parachute tax. Such Excise Tax Adjustment Payment
shall be made no later than December 31 of the year following the year in which you
incur the Excise Tax. Any expenses, including interest and penalties assessed on the
Excise Tax described in this Section 2(a), incurred by you shall be reimbursed promptly
after you submit evidence of the incurrence of such expenses, which reimbursement in no
event will be later than December 31 of the year following the year in which you incur
the expense, provided that in no event will the amount of expenses eligible for
reimbursement in one year affect the amount of expenses to be reimbursed, or in-kind
benefits to be provided, in any other taxable year. Each provision of reimbursements
pursuant to this Section 2(a) shall be considered a separate payment and not one of a
series of payments for purposes of Section 409A.
	 
	 	(b)	 	If your employment is terminated without Cause following such Change of
Control, the Company or any of its affiliates will pay to you as incurred all legal

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	 	 	 	and accounting fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by any compensation-related plan, agreement or arrangement
of the Company or any of its affiliates), unless your claim is found by an arbitral
tribunal of competent jurisdiction to have been frivolous. Any such payments shall
be made no later than December 31 of the year following the year in which you incur
the expenses, provided that in no event will the amount of expenses eligible for
reimbursement in one year affect the amount of expenses to be reimbursed, or in-kind
benefits to be provided, in any other taxable year. Each provision of
reimbursements pursuant to this Section 2(b) shall be considered a separate payment
and not one of a series of payments for purposes of Section 409A.
	 
	 	(c)	 	During the 24-month period following a Change of Control, you will be entitled
to terminate your employment for Change of Control Good Reason and receive the
severance benefits set forth in Section 1 of this agreement as if you had incurred a
Separation from Service other than for Cause.
	 
	 	(d)	 	For purposes of this agreement, “Change of Control Good Reason” means, without
your express written consent, any of the following events occurring after a Change of
Control:

	 	(i)	 	a material reduction in your duties, a material diminution in
your position or a material adverse change in your reporting relationship from
those in effect immediately prior to the Change of Control;
	 
	 	(ii)	 	a reduction in your pay grade or bonus opportunity as in effect
immediately prior to the Change of Control or as the same may thereafter be
increased from time to time during the term of this agreement;
	 
	 	(iii)	 	the failure to continue in effect any compensation plan in
which you participate at the time of the Change of Control, including but not
limited to the LTIP and AIAP, or any substitute plans adopted prior to the
Change of Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan providing you with substantially similar
benefits) has been made with respect to such plan in connection with the Change
of Control, or the failure to continue your participation therein on
substantially the same basis, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, as existed
at the time of the Change of Control;
	 
	 	(iv)	 	the taking of any action which would directly or indirectly
materially reduce any of the benefits to be provided to you under the
retirement or savings plans of the Company or any of its affiliates (unless
such reduction is required by law) or deprive you of any material fringe
benefit enjoyed by you at the time of the Change of Control, or the failure to
provide you with the number of paid vacation days to which you are

6

 

	 	 	 	entitled on the basis of your employer’s practice with respect to you as in
effect at the time of the Change of Control;
	 
	 	(v)	 	any material breach by the Company or its affiliates of any
provision of this agreement or any other of your contractual arrangements with
the Company or its affiliates; or
	 
	 	(vi)	 	requiring you to be become based at any office or location more
than the minimum number of miles required by the Code for you to claim a moving
expense deduction, from the office or location at which you were based
immediately prior to such Change of Control, except for travel reasonably
required in the performance of your responsibilities.

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	3.	 	Amendment to 2004 Offer Letter.

	 	(a)	 	The third paragraph of the Section of your Offer Letter entitled “Additional
individualized benefits” is hereby replaced by the following paragraphs:
	 
	 	 	 	“Upon your Separation from Service, you will be eligible for reimbursement
of tax preparation/financial planning costs, up to a maximum of $12,000 a
year, until your death. Income will be imputed on this amount, but the
company will gross-up the taxes. Any such expenses and tax gross-up
payments incurred by you shall be reimbursed promptly after you submit
evidence of the incurrence of such expenses, which reimbursement in no event
will be later than December 31 of the year following the year in which you
incur the expense or pay the tax, as the case may be, provided that in no
event will the amount of expenses eligible for reimbursement in one year
affect the amount of expenses to be reimbursed, or in-kind benefits to be
provided, in any other taxable year. Each provision of reimbursements
hereunder shall be considered a separate payment and not one of a series of
payments for purposes of Section 409A.
	 
	 	 	 	Notwithstanding any provision to the contrary contained herein, in the event
that you are deemed to be a “specified employee” on your Termination Date,
determined pursuant to procedures adopted by the Company in compliance with
Section 409A, and if any portion of the payments or benefits to be received
by you upon separation from service would constitute a “deferral of
compensation” subject to Section 409A, then to the extent necessary to
comply with Section 409A, amounts that would otherwise be payable pursuant
to this offer letter during the six-month period immediately following your
Termination Date and benefits that would otherwise be provided pursuant to
this offer letter during the six-month period immediately following your
Termination Date will instead be paid or made available on the earlier of
(i) within ten (10) days following the first business day of the seventh
month after your Termination Date, provided that you shall not have the
right to designate the payment date; or (ii) your death.
	 
	 	 	 	To the extent applicable, it is intended that this offer letter
comply with the provisions of Section 409A. This offer letter shall
be administered in a manner consistent with this intent. References
to Section 409A shall include any proposed, temporary or final
regulation, or any other guidance, promulgated with respect to such
section by the U.S. Department of Treasury or the Internal Revenue
Service.”
	 
	 	(b)	 	Except as amended in Section 3(a) above, your Offer Letter shall remain
unchanged and in full force and effect.

8

 

	4.	 	Retiree Health Coverage. If you remain actively employed by the Company or any of
its affiliates until you reach age fifty (50), upon your termination of employment with the
Company and all of its affiliates, you shall be entitled to vested retiree health coverage
under the Brown & Williamson Tobacco Corporation Health Care Plan for Salaried Employees (the
“B&W Plan”) in lieu of the retiree health benefits generally provided by the Company. By your
signature below, you acknowledge and agree that your retiree health coverage is subject to the
terms of the B&W Plan.

	5.	 	Miscellaneous.

	 	(a)	 	In further consideration for these special severance and change of control
benefits, and should an involuntary termination of your employment ever occur, the
Company will expect your cooperation in transitioning your responsibilities, and, prior
to the 60th day following your Termination Date, you will execute a letter
containing a release of claims and a reaffirmation of your Non-Competition,
Non-Disclosure of Confidential Information and Commitment to Provide Assistance
Agreement each in a form reasonably satisfactory to the Company and any period for
revocation will have expired.
	 
	 	(b)	 	You acknowledge and agree that nothing contained in this agreement obligates
the Company or any one of its affiliates (i) to employ you for any specific term or
(ii) to grant you any short-term or long-term incentive awards under the plans and
programs of the Company or any of its affiliates.
	 
	 	(c)	 	To the extent applicable, it is intended that this agreement comply with the
provisions of Section 409A. This agreement shall be administered in a manner
consistent with this intent. References to Section 409A shall include any proposed,
temporary or final regulation, or any other guidance, promulgated with respect to such
section by the U.S. Department of Treasury or the Internal Revenue Service.
	 
	 	(d)	 	This agreement may not be modified, amended or waived in any manner other than
by an instrument in writing signed by you and the Company.
	 
	 	(e)	 	This agreement, including the Non-Competition, Non-Disclosure of Confidential
Information and Commitment to Provide Assistance Agreement attached hereto as
Exhibit A, shall be governed, controlled and determined in accordance with the
applicable provisions of federal law and, to the extent not preempted by federal law,
the laws of the State of North Carolina, without regard to the conflicts of law rules
of such state.
	 
	 	(f)	 	The Company may withhold from any amounts payable under this agreement all
federal, state, city or other taxes as the Company is required to withhold pursuant to
any applicable law, regulation or ruling.
	 
	 	(g)	 	This agreement (including the Non-Competition, Non-Disclosure of Confidential
Information and Commitment to Provide Assistance Agreement attached hereto as
Exhibit A) and the Offer Letter attached hereto as Exhibit B, embody
the

9

 

	 	 	 	complete agreement and understanding between you and the Company with respect to the
subject matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written or
oral (including, without limitation, the Prior Agreement), which may have related to
the subject matter hereof in any way.

10

 

     Please indicate your acceptance of the terms of this agreement by signing this agreement below
and returning it to the Company. A copy will be provided to you.

	 	 	 	 	 
	 	REYNOLDS AMERICAN INC.

 	 
	 	By:  	/s/ Lisa J. Caldwell
 	 
	 	Its:  	Senior Vice President Human Resources 	 
	 

	 	 	 	 	 
	 	Accepted and agreed to as of this 20th day

of December, 2007

 	 
	 	/s/ Susan M. Ivey
 	 
	 	Susan Ivey 	 
	 	 	 

11

 

	 	 	 	 	 

Exhibit A

[Form of Non-Disclosure/Non-Competition Agreement]

 

 

Exhibit B

[See
exhibit 10.56 to Form 10-K]

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