Document:

exv10w1

Exhibit 10.1

EXECUTIVE BONUSES 2010

The 2010 corporate objectives that could trigger bonus payments under the 2010 Bonus Plan are:

1. Transition toward profitability in commercial operations

2. Accumulate a portfolio of strategic assets

3. Increase stockholder value

The bonus payable is equal to the weighting percentage (0-150%) multiplied by the ‘target bonus’
amount as defined below. Note that whether or not these objectives are met and the relative
weighting of the objectives is left to the discretion of the Compensation Committee. However, to
be eligible for consideration the events must occur on or before December 31, 2010. The bonus is
payable upon the Compensation Committee’s determination that the objectives for the bonus have been
met, in part or in full, at the Committee’s discretion. The weighting (0-150%) is determined at the
discretion of the Compensation Committee. This weighting determines the bonus to be paid to the
Chief Executive Officer, and when multiplied against the target bonus amounts for the other named
executive officers creates the pool of funds to be distributed amongst those other named executive
officers, at the Committee’s discretion. For executives other than the Chief Executive Officer,
the Compensation Committee will solicit and consider evaluations and recommendations submitted to
the Compensation Committee by the Chief Executive Officer regarding individual performance when
determining the bonus payment. Once a pool has been created by achievement, in whole or in part, of
the 2010 corporate objectives and determination of the Compensation Committee of the weighting
percentage, the Committee can determine a bonus payment for each of the other named executive
officers that ranges from zero to any maximum amount such that the total paid to the other named
executive officers in aggregate does not exceed the value of the pool.

Payments under the 2010 Bonus Plan, if any, are contingent upon the Company’s achievement of
certain corporate objectives described above, and the relevant officers’ continued employment with
the Company on the date of payment.

The ‘Target Bonus’ amounts are defined as:

For Srinivas Rao, Mike Gendreau:

25% x annual base salary

For Sabrina Johnson

35% x annual base salary

For Jay Kranzler:

 

 

66 2/3% x annual base salary

	 	 	The bonus amounts are calculated based on annual base salaries as of the earlier of the
achievement of the objective or December 31, 2010.
	 
	 	 	Examples to illustrate bonus calculation formula:

	 	1)	 	Assuming the objective is met with 50% weighting, the bonus to Jay Kranzler
would be 50% x 66 2/3% x annual base salary.
	 
	 	 	 	The pool would be calculated as:
	 
	 	 	 	50% x ((25% x Rao annual base salary)+(25% x Gendreau annual base salary)+(35% x
Johnson annual base salary))
	 
	 	2)	 	Assuming the objective is met with 150% weighting, the bonus to Jay Kranzler
would be 150% x 66 2/3% x annual base salary.
	 
	 	 	 	The pool would be calculated as:
	 
	 	 	 	150% x ((25% x Rao annual base salary)+(25% x Gendreau annual base salary)+(35% x
Johnson annual base salary))exv4w2

Exhibit 4.2

LORILLARD TOBACCO COMPANY,

as Issuer

LORILLARD, INC.,

as Guarantor

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

Trustee

SECOND SUPPLEMENTAL INDENTURE

Dated April 12, 2010

 

6.875% Senior Notes due 2020

8.125% Senior Notes due 2040

 

Supplemental to Indenture dated June 23, 2009

 

 

     THIS SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”) is
made the 12th day of April, 2010, among LORILLARD TOBACCO COMPANY, a corporation duly incorporated
and existing under the laws of Delaware and having its principal executive office at 714 Green
Valley Road, Greensboro, North Carolina 27408 (the “Company”), LORILLARD, INC., a
corporation duly incorporated and existing under the laws of Delaware and having its principal
executive office at 714 Green Valley Road, Greensboro, North Carolina 27408 (the
“Guarantor”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking
association, as Trustee (the “Trustee”).

RECITALS OF THE COMPANY

     WHEREAS, the Company entered into an Indenture, dated June 23, 2009 with the Trustee (the
“Original Indenture,” and together with this Second Supplemental Indenture, referred to
herein as the “Indenture”) (all capitalized terms used in this Second Supplemental
Indenture and not otherwise defined herein have the meanings assigned to such terms in the Original
Indenture), for the purposes of issuing its Securities, evidencing its senior unsecured
indebtedness, unlimited as to principal amount, to bear such rates of interest, to mature at such
time or times, to be issued in one or more series and to have such other provisions as authorized
by or pursuant to the authority granted in one or more resolutions of the Board of Directors of the
Company; and

     WHEREAS, Section 901 of the Original Indenture provides that without the consent of the
Holders of the Securities of any series issued under the Original Indenture, the Company, when
authorized by a Board Resolution, and the Trustee may, in certain circumstances, enter into one or
more indentures supplemental to the Original Indenture; and

     WHEREAS, the Company proposes to issue (i) a series of Securities designated as its 6.875%
Senior Notes due 2020 (the “2020 Senior Notes”), the terms of which shall be set forth in and in
the form of Exhibit A-1 and (ii) a series of Securities designated as its 8.125% Senior
Notes due 2040 (the “2040 Senior Notes”) the terms of which shall be set forth in and in
the form of Exhibit A-2 hereto, or determined in the manner provided in an Officers’
Certificate of the Company as provided in Section 301 of the Original Indenture (such 2020 Senior
Notes and 2040 Senior Notes, collectively being referred to herein as the “Notes” and all
references to Securities in the Original Indenture shall be deemed to refer also to the Notes
unless the context otherwise provides) which such 2020 Senior Notes shall be guaranteed by the
Guarantor (the “2020 Senior Notes Guarantee”) in the form of Exhibit B-1 hereto and
which such 2040 Senior Notes shall be guaranteed by the Guarantor (the “2040 Senior Notes
Guarantee” and together with the 2020 Senior Notes Guarantee, the “Guarantees”) in the
form of Exhibit B-2 hereto; and

     WHEREAS, the entry into this Second Supplemental Indenture by the parties hereto is in all
respects authorized by the provisions of the Original Indenture; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Second
Supplemental Indenture and to make it a valid and binding obligation of the Company have been done
or performed; and

     NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Notes by the Holders thereof,
it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the
Notes, as follows:

     Section 1. The Original Indenture is hereby amended solely with respect to the Notes
as follows:

 

 

     (A) Definitions. By amending Section 101 to insert the following definitions in their
entirety in the appropriate alphabetical order as follows:

     “Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or more series of related
transactions, of all or substantially all of the Company’s assets and the assets of
its Subsidiaries, taken as a whole, to any “person,” other than to Lorillard, Inc.
or one of its Subsidiaries;

(2) the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any person becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the Company’s outstanding Voting Stock or other
Voting Stock into which the Company’s Voting Stock is reclassified, consolidated,
exchanged or changed, measured by voting power rather than the number of shares;

(3) the Company consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, the Company, in any such event pursuant
to a transaction in which any of the Company’s outstanding Voting Stock is converted
into or exchanged for cash, securities or other property, other than any such
transaction where the shares of the Company’s Voting Stock outstanding immediately
prior to such transaction constitute, or are converted into or exchanged for, a
majority of the Voting Stock of the surviving person or any direct or indirect
parent company of the surviving person immediately after giving effect to such
transaction;

(4) the first day on which a majority of the members of the Company’s Board of
Directors are not Continuing Directors; or

(5) the adoption of a plan relating to the Company’s liquidation or dissolution
(other than the Company’s liquidation into a newly formed holding company).

Notwithstanding the foregoing, a transaction will not be deemed to involve a Change
of Control if (i) the Company becomes a direct or indirect wholly-owned subsidiary
of a holding company and (ii) (A) the direct or indirect holders of the Voting Stock
of such holding company immediately following that transaction are substantially the
same as the holders of the Company’s Voting Stock immediately prior to that
transaction or (B) immediately following that transaction no person (other than a
holding company) is the beneficial owner, directly or indirectly, of more than 50%
of the Voting Stock of such holding company.

“Change of Control Triggering Event” means the occurrence of both (1) a Change of
Control and (2) a Ratings Event.

“Continuing Directors” means, as of any date of determination, any member of the
Company’s Board of Directors who (1) was a member of such Board of Directors on the
Issue Date of the Notes or (2) was nominated for election, elected or appointed to
such Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board of Directors at the time of such nomination, election
or appointment (either by a specific vote or by approval of the Company’s proxy
statement in which such

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member was named a nominee for election as a director,
without objection to such nomination).

“Investment Grade” means a rating equal to or higher than Baa3 (or the equivalent)
by Moody’s; a rating equal to or higher than BBB- (or the equivalent) by S&P; and
the equivalent investment grade credit rating from any Substitute Rating Agency or
Rating Agencies selected by the Company.

“Issue Date” means April 12, 2010.

“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s
Corporation, and its successors.

“person” has the meaning given thereto in Section 13(d)(3) of the Exchange Act.

“Rating Agencies” means (1) each of Moody’s and S&P; and (2) if Moody’s or S&P
ceases to rate the Notes or fails to make a rating of the Notes publicly available
for reasons outside of the Company’s control, a Substitute Rating Agency.

“Ratings Event” means the Notes cease to be rated Investment Grade by each of the
Rating Agencies on any day within the 60-day period (which 60-day period will be
extended so long as the rating of the Notes is under publicly announced
consideration for a possible downgrade by any of the Rating Agencies) after the
earlier of (1) the occurrence of a Change of Control and (2) public notice of the
occurrence of a Change of Control or the Company’s intention to effect a Change of
Control.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

“Substitute Rating Agency” means a “nationally recognized statistical rating
organization” registered under Section 15E of the Exchange Act for the classes of
credit ratings described in clauses (i) through (v) of Section 3(a)(62)(B) of the
Exchange Act selected by us (as certified by our Chief Executive Officer, Chief
Financial Officer or Treasurer) as a replacement agency for Moody’s or S&P, or both
of them, as the case may be.

“Voting Stock” means, with respect to any specified “person” (as that term is used
in Section 13(d)(3) of the Exchange Act) as of any date, the capital stock of such
person that is at the time entitled to vote generally in the election of the board
of directors of such person.

     (B) Events of Default. By replacing Sections 501 and 502 of the Original Indenture as
follows:

SECTION 501 Events of Default.

     “Event of Default” wherever used herein with respect to the Notes means any one
of the following events and such other events as may be established with respect to
the Notes as contemplated by Section 301 (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by operation
of law pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

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     (1) default in the payment of any installment of interest on the Notes
when it becomes due and payable, and continuance of such default for a
period of 30 days; or

     (2) default in the payment of principal of, or premium, if any, on the
Notes at Maturity; or

     (3) default in the performance of, or breach of, any covenant or
warranty of the Company in respect of the Notes contained in the Indenture,
in this Second Supplemental Indenture or in the Notes (other than a covenant
or warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with) and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee for the Notes or to the
Company and such Trustee by the Holders of at least 25% in principal amount
of the Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or

     (4) the Company shall commence any case or proceeding seeking to have
an order for relief entered on its behalf as debtor or to adjudicate it as
bankrupt or insolvent or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment of its debts or any
other relief under any bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or other similar
act or law of any jurisdiction, domestic or foreign, now or hereafter
existing; or the Company shall apply for a receiver, custodian or trustee
(other than any trustee appointed as a mortgagee or secured party in
connection with the issuance of indebtedness for borrowed money of the
Company) of it or for all or a substantial part of its property; or the
Company shall make a general assignment for the benefit of creditors; or the
Company shall take any corporate action in furtherance of any of the
foregoing; or

     (5) an involuntary case or other proceeding shall be commenced against
the Company with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect seeking the appointment of a
trustee, receiver, liquidator, custodian or similar official of it or any
substantial part of its property; and such case or other proceeding
(A) results in the entry of an order for relief or a similar order against
it or (B) shall continue unstayed and in effect for a period of 60
consecutive days; or

     (6) the Guarantor shall commence any case or proceeding seeking to have
an order for relief entered on its behalf as debtor or to adjudicate it as
bankrupt or insolvent or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment of its debts or any
other relief under any bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or other similar
act or law of any jurisdiction, domestic or foreign, now or hereafter
existing; or the Guarantor shall apply for a receiver, custodian or trustee
(other than any trustee appointed as a mortgagee or secured party in
connection with the issuance of indebtedness for borrowed money of the
Guarantor) of it or for all or a substantial part of its

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property; or the
Guarantor shall make a general assignment for the benefit of creditors; or
the Guarantor shall take any corporate action in furtherance of any of the
foregoing; or

     (7) an involuntary case or other proceeding shall be commenced against
the Guarantor with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect seeking the
appointment of a trustee, receiver, liquidator, custodian or similar
official of it or any substantial part of its property; and such case or
other proceeding (a) results in the entry of an order for relief or a
similar order against it or (b) shall continue unstayed and in effect for a
period of 60 consecutive days; or

     (8) the guarantee of the Notes by the Guarantor is determined to be
unenforceable or invalid or shall for any reason cease to be in full force
and effect except as permitted by the Indenture and the Guarantees, or the
Guarantor repudiates its obligations under such guarantee.

SECTION 502 Acceleration of Maturity; Rescission and Annulment.

If an Event of Default with respect to any particular series of Securities occurs
and is continuing (other than an Event of Default described in Section 501(4) or
501(5)), then and in every such case either the Trustee for the Securities of such
series or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the entire principal amount (or, in the case
of (i) OID Securities, such lesser amount as may be provided for in the terms of
that series or (ii) Indexed Securities, the amount determined in accordance with the
specified terms of those Securities) of all the Securities of that series to be due
and payable immediately, by a notice in writing to the Company (and to such Trustee
if given by Holders), and upon any such declaration of acceleration such principal
or such lesser amount, as the case may be, together with accrued interest and all
other amounts owing hereunder, shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived.

If any Event of Default specified in Section 501(4), 501(5), 501(7) or 501(8) occurs
with respect to the Company, all of the unpaid principal amount (or, if the
Securities of any series then outstanding are (i) OID Securities, such lesser amount
as may be provided for in the terms of that series or (ii) Indexed Securities, the
amount determined in accordance with the specified terms of those Securities) and
accrued interest on all Securities of each series then Outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act by
the Trustee or any Holder.

Notwithstanding anything herein to the contrary, to the extent elected by the
Company, the sole remedy for an Event of Default relating to the failure by the
Company to comply with the obligation set forth in Section 704 will, for the first
120 days after the occurrence of such an Event of Default, consist exclusively of
the right for Holders of each series of Securities to receive additional interest on
the Securities of that particular series equal to 0.25% per annum of the principal
amount of the Securities of such series. If the Company so elects, such additional
interest will be payable in the same manner and on the same dates as the stated
Interest Payment Dates on the Securities of that particular series. The additional
interest will accrue on all outstanding Securities from and including the date on
which such Event of Default first occurs to, but not including, the 120th day

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thereafter (or such earlier date on which such Event of Default shall have been
cured or waived by Holders as provided in Section 513). On such 120th day after
such Event of Default (if the Event of Default relating to such obligation is not
cured or waived by Holders as provided in Section 513 prior to such 120th day), such
additional interest will cease to accrue and the Securities will be subject to
acceleration as provided above. The provisions of this paragraph will not affect
the rights of Holders in the event of the occurrence of any other Event of Default.
In the event the Company does not elect to pay the additional interest upon such
Event of Default in accordance with this paragraph, the Securities will be subject
to acceleration as provided above.

In order to elect to pay the additional interest as the sole remedy during the first
120 days after the occurrence of an Event of Default relating to the failure by the
Company to comply with the obligation set forth in Section 704 in accordance with
the immediately preceding paragraph, the Company must notify all Holders of each
series of Securities, the Trustee for the Securities of such series and the Paying
Agent for the Securities of such series of such election by delivering to the
Trustee an Officers’ Certificate as provided below on or before the close of
business on the date on which such Event of Default first occurs. Upon the
Company’s failure to deliver such Officers’ Certificate or pay the additional
interest specified in the immediately preceding paragraph, the Securities will be
subject to acceleration as provided above.

If the Company elects to pay additional interest, the Company shall deliver to the
Trustee an Officers’ Certificate to that effect stating that (i) the amount of such
additional interest that is payable and (ii) the date on which such additional
interest is payable. Unless and until a Responsible Officer of the Trustee receives
such certificate, the Trustee may assume without inquiry that no additional interest
is payable. If the Company has paid additional interest directly to the Persons
entitled to it, the Company shall deliver to the Trustee an Officers’ Certificate
setting forth the particulars of such payment.

At any time after such a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee for
the Securities of any series as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Securities of that series, by
written notice to the Company and such Trustee, may rescind and annul such
declaration and its consequences if:

     (1) the Company has paid or deposited with such Trustee a sum
sufficient to pay in the currency or currency unit in which the Securities
of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except as provided in
Section 311(c)):

     (A) all overdue interest, if any, on all Securities of that
series;

     (B) the principal of, and premium, if any, on any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon from the date such principal
became due at a rate per annum equal to the rate borne by the
Securities of such series (or, in the case of (i) OID Securities,
the Securities’ Yield to Maturity or (ii) Indexed Securities, the
rate determined in accordance with the specified terms of those
Securities), to the extent that the payment of such interest shall
be legally enforceable;

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     (C) to the extent that payment of such interest is lawful,
interest upon overdue interest at a rate per annum equal to the rate
borne by the Securities of such series (or, in the case of (i) OID
Securities, the Securities’ Yield to Maturity or (ii) Indexed
Securities, the rate determined in accordance with the specified
terms of those Securities); and

     (D) all sums paid or advanced by such Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
such Trustee, its agents and counsel and all other amounts due to
such Trustee under Section 607;

     and

     (2) all Events of Default with respect to the Securities of such
series, other than the nonpayment of the principal of Securities of that
series which has become due solely by such acceleration, have been cured or
waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

     (C) Limitation on Liens. By replacing Section 1007(b) of the Original Indenture in
its entirety as follows:

(b) The Company and/or any Subsidiary may create, assume or incur, or suffer to be
created, assumed or incurred, liens which would otherwise be prohibited by
Subsection (a) of this Section 1007, provided that the indebtedness secured thereby,
plus the aggregate value of the Sale and Leaseback Transactions permitted by the
provisions of Subsection (b) of Section 1008, does not at the time exceed 15% of
Consolidated Net Tangible Assets.

     (D) Sale and Leaseback Transactions. By replacing Section 1008(b) of the Original
Indenture in its entirety as follows:

(b) The Company or a Subsidiary may enter into a Sale and Leaseback Transaction
which would otherwise be prohibited by Subsection (a) of this Section 1008, provided
that the value thereof plus the aggregate indebtedness permitted to be secured under
the provisions of paragraph (b) of Section 1007 does not at the time exceed 15% of
Consolidated Net Tangible Assets.

     (E) Repurchase Upon Change of Control Triggering Event. By adding Section 1011 to the
Original Indenture in its entirety as follows:

Section 1011. Repurchase Upon Change of Control Triggering Event

(a) If a Change of Control Triggering Event occurs, each Holder of Notes may require
the Company to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess of $2,000) of that Holder’s Notes pursuant to an offer (the
“Change of Control Offer”) of payment in cash equal to 101% of the aggregate
principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on
the Notes repurchased to, but not including, the date of repurchase (a “Change of
Control Payment”).

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(b) Within 30 days following any Change of Control Triggering Event or, at the
Company’s option, prior to any Change of Control, but after public announcement of
the transaction that constitutes or may constitute the Change of Control, the
Company shall mail a notice to Holders describing the transaction that constitutes
or may constitute the Change of Control Triggering Event and offering to repurchase
the Notes on the date specified in the notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (a “Change of
Control Payment Date”). The notice, if mailed prior to the date of consummation of
the Change of Control, shall state that the Change of Control Offer is conditioned
on the Change of Control Triggering Event occurring on or prior to the Change of
Control Payment Date.

(c) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Notes or portions of Notes properly tendered
pursuant to the Change of Control Offer;

(ii) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions of Notes properly tendered; and

(iii) deliver or cause to be delivered to the Trustee the Notes properly
accepted together with an Officers’ Certificate stating the aggregate
principal amount of Notes or portions of Notes being purchased.

(d) The Paying Agent shall promptly remit to each Holder of properly tendered Notes
the Change of Control Payment for the Notes, and the Trustee shall promptly
authenticate and deliver (or cause to be transferred by book-entry) to each Holder a
new Note equal in principal amount to any unpurchased portion of any Notes
surrendered; provided that each new Note shall be in a principal amount of $2,000 or
an integral multiple of $1,000 in excess of $2,000.

(e) The Company shall not be required to make a Change of Control Offer upon the
occurrence of a Change of Control Triggering Event if a third party makes such an
offer in the manner, at the times and otherwise in compliance with the requirements
set for an offer made by the Company, and the third party repurchases all Notes
properly tendered and not withdrawn under its offer. In addition, the Company shall
not repurchase any Notes if there has occurred and is continuing on the Change of
Control Payment Date an Event of Default under the Indenture, other than a default
in the payment of the Change of Control Payment upon a Change of Control Triggering
Event.

(f) The Company shall comply with the requirements of Section 14(e) of the
Securities Exchange Act of 1934, as amended, Rule 14e-1 thereunder and any other
securities laws and regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the Notes as a result of a
Change of Control Triggering Event. To the extent that the provisions of any such
securities laws or regulations conflict with the provisions of this Section 1011,
the Company shall comply with those securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 1011 by virtue of any
such conflict.

     (F) Redemption of Securities. Sections 1101 – 1107 shall not apply to the Notes. The
Notes shall not be redeemable prior to maturity.

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     (G) Sinking Funds. Sections 1201 – 1203 shall not apply to the Notes. The Notes
shall not be entitled to any sinking fund.

     Section 2. The recitals and statements in this Second Supplemental Indenture are made
by the Company only and not by the Trustee, and the Trustee makes no representation as to the
validity or sufficiency of this Second Supplemental Indenture (other than with respect to the due
authorization, execution and delivery of this Second Supplemental Indenture by the Trustee). All
of the provisions contained in the Original Indenture in respect of the rights, privileges,
immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and of
this Second Supplemental Indenture as fully and with like effect as if set forth herein in full.

     Section 3. As supplemented hereby, the Original Indenture is in all respects ratified
and confirmed, and the Original Indenture and this Second Supplemental Indenture shall be read,
taken and construed as one and the same instrument and all references to Securities in the Original
Indenture shall be deemed to refer also to the Notes unless the context otherwise provides.

     Section 4. This Second Supplemental Indenture shall be governed by, and construed in
accordance with, the laws of the State of New York.

     Section 5. In the event of a conflict between the terms and conditions of the Original
Indenture and the terms and conditions of this Second Supplemental Indenture, then the terms and
conditions of this Second Supplemental Indenture shall prevail; provided that if and to the extent
that any provision of this Second Supplemental Indenture limits, qualifies or conflicts with
another provision which is required to be included herein or in the Original Indenture by the Trust
Indenture Act of 1939, as amended, such required provision shall control.

     Section 6. All covenants and agreements in this Second Supplemental Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.

     Section 7. In case any provision in this Second Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired hereby.

     Section 8. Nothing in this Second Supplemental Indenture, expressed or implied, shall
give to any Person, other than the parties hereto and any Paying Agent, any Security Registrar and
any Authenticating Agent for the Notes and their successors under the Indenture, and the Holders of
the Notes any benefit or any legal or equitable right, remedy or claim under this Second
Supplemental Indenture.

     Section 9. This Second Supplemental Indenture may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.

(signature page follows)

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     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture
dated April 12, 2010 to be duly executed.

	 	 	 	 	 
	 	LORILLARD TOBACCO COMPANY,

Issuer

 	 
	 	By:  	      /s/ David H. Taylor
 	 
	 	 	Name:  	David H. Taylor 	 
	 	 	Title:  	Executive Vice President, Finance and
Planning and Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LORILLARD, INC.,

Guarantor

 	 
	 	By:  	      /s/ David H. Taylor
 	 
	 	 	Name:  	David H. Taylor 	 
	 	 	Title:  	Executive Vice President, Finance and
Planning and Chief Financial Officer 	 
	 

Signature Page to Second Supplemental Indenture

 

 

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON TRUST 

COMPANY, N.A.,

Trustee

 	 
	 	By:  	/s/ Geraldine Creswell
 	 
	 	 	Name:  	Geraldine Creswell 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to Second Supplemental Indenture

 

 

EXHIBIT A-1

FORM OF NOTE DUE 2020

REGISTERED

No.

LORILLARD TOBACCO COMPANY

6.875% Senior Notes due 2020

	 	 	 

	 

	 	 PRINCIPAL AMOUNT
	 

	 	 $
	 

	 	 CUSIP NO. 544152 AB7
	 

	 	 ISIN NO. US544152AB75

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”) TO A NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

     LORILLARD TOBACCO COMPANY, a Delaware corporation (hereinafter called the “Company,”
which term includes any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
DOLLARS on May 1, 2020, and to pay interest thereon from April 12, 2010 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually in
arrears on May 1 and November 1 in each year, commencing November 1, 2010 at the rate of 6.875% per
annum until the principal hereof is paid or made available for payment.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest, which shall be April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and
may be paid to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a

 

 

Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee for the Notes, notice whereof shall be given to Holders of
Notes not less than 10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.

     Payment of the principal of (and premium, if any) and interest on this Note will be made at
the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America or in such Foreign
Currency as applicable, as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall appear on the
Securities Register or by wire transfer at such place and to such account at a banking institution
in the United States as may be designated in writing to the Trustee at least 15 days prior to the
date for payment by the person entitled thereto. All payments of principal, premium, if any, and
interest in respect of this Note will be made by the Company in immediately available funds.

     Additional provisions of this Note are contained on the reverse hereof, and such provisions
shall have the same effect as though fully set forth in this place.

     Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee for the Notes by manual signature, this Note shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.

 

 

     IN WITNESS WHEREOF, LORILLARD TOBACCO COMPANY has caused this instrument to be duly executed.

	 	 	 	 	 
	Dated:  April 12, 2010 	LORILLARD TOBACCO COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Notes of the series designated therein described in the within-mentioned
Indenture.

	 	 	 	 	 
	Dated:  April 12, 2010 	THE BANK OF NEW YORK MELLON TRUST 

COMPANY, N.A.,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

 

 

	 	 	 	 	 

(Reverse of Note)

LORILLARD TOBACCO COMPANY

     This Note is one of a series of the Senior Notes designated therein as 6.875% Notes due May 1,
2020 (the “2020 Senior Notes”).This 2020 Senior Note is one of a duly authorized issue of
debentures, notes or other evidences of indebtedness of the Company of the series hereinafter
specified, which series is limited in aggregate principal amount to $750,000,000 (except as
provided in the Indenture hereinafter mentioned), all such 2020 Senior Notes issued and to be
issued under the Indenture, dated June 23, 2009, as supplemented by the Second Supplemental
Indenture, dated April 12, 2010, by and among the Company, Lorillard, Inc., as Guarantor, and The
Bank of New York Mellon Trust Company, N.A., as Trustee (herein called the “Indenture”), to
which Indenture and all other indentures supplemental thereto reference is hereby made for a
statement of the rights and limitations of rights thereunder of the Holders of the 2020 Senior
Notes and of the rights, obligations, duties and immunities of the Trustee for each series of 2020
Senior Notes and of the Company, and the terms upon which the 2020 Senior Notes are and are to be
authenticated and delivered. Each holder of a 2020 Senior Note, by acceptance thereof, agrees to
be bound by the terms of this 2020 Senior Note and the within referenced Indenture.

Guarantee

     The 2020 Senior Notes have the benefit of the unconditional guarantee by the Guarantor to pay
the principal of, and premium, if any, and interest, if any, on the 2020 Senior Notes, according to
the terms of and as more fully described in the Indenture and the related Guarantee Agreement
executed by the Guarantor on the date hereof.

Defeasance

     The Indenture contains provisions for defeasance at any time of the entire principal of all
the 2020 Senior Notes of any series upon compliance by the Company with certain conditions set
forth therein.

Events of Default

     If an Event of Default (other than an Event of Default described in Section 501(4) or 501(5)
of the Indenture as amended by the Second Supplemental Indenture) with respect to the 2020 Senior
Notes shall occur and be continuing, then either the Trustee or the Holders of not less than 25% in
principal amount of the 2020 Senior Notes then Outstanding may declare the entire principal amount
of the 2020 Senior Notes due and payable in the manner and with effect provided in the Indenture.
If an Event of Default specified in Section 501(4) or 501(5) of the Indenture as amended by the
Second Supplemental Indenture occurs with respect to the Company, all of the unpaid principal
amount and accrued interest then Outstanding shall ipso facto become and be immediately due and
payable in the manner with the effect provided in the Indenture without any declaration or other
act by the Trustee or any Holder.

     Notwithstanding anything in the immediately preceding paragraph to the contrary, to the extent
elected by the Company, the sole remedy for an Event of Default relating to the failure by the
Company to comply with the obligation to provide certain reports and information as set forth in
Section 704 of the Indenture will, for the first 120 days after the occurrence of such an Event of
Default, consist exclusively of the right for Holders to receive additional interest on the 2020
Senior Notes equal to 0.25% per annum of the principal amount of the 2020 Senior Notes. If the
Company so elects, such additional interest will be payable in the same manner and on the same
dates as the stated Interest Payment Dates on the 2020 Senior Notes. The additional interest will
accrue on all outstanding 2020 Senior Notes from and

 

 

including the date on which such Event of
Default first occurs to, but not including, the 120th day thereafter (or such earlier date on which
such Event of Default shall have been cured or waived by Holders as provided in Section 513 of the
Indenture). On such 120th day after such Event of Default (if the Event of Default relating to
such obligation is not cured or waived by Holders as provided in Section 513 of the Indenture prior
to such 120th day), such additional interest will cease to accrue and the 2020 Senior Notes will be
subject to acceleration as provided in the paragraph above. In the event the Company does not
elect to pay the additional interest upon such Event of Default in accordance with this paragraph,
the 2020 Senior Notes will be subject to acceleration as provided in paragraph above.

Amendments

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
2020 Senior Notes under the Indenture at any time by the Company and the Guarantor with the consent
of the Holders of more than 50% in aggregate principal amount of the Outstanding 2020 Senior Notes
of each series of 2020 Senior Notes then Outstanding affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate principal amount of the
2020 Senior Notes of any series at the time Outstanding, on behalf of the Holders of all the 2020
Senior Notes of such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences with respect to such
series. Any such consent or waiver by the Holder of this 2020 Senior Note shall be conclusive and
binding upon such Holder and upon all future Holders of this 2020 Senior Note and of any 2020
Senior Note issued upon the transfer hereof or in exchange or in lieu hereof whether or not
notation of such consent or waiver is made upon this 2020 Senior Note.

Payment

     No reference herein to the Indenture and no provision of this 2020 Senior Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on this 2020 Senior Note at the times,
place and rate, and in the coin or currency, herein and in the Indenture prescribed.

Transfer, Registration and Exchange

     As provided in the Indenture and subject to certain limitations therein set forth, this 2020
Senior Note is transferable on the Security Register of the Company, upon surrender of this 2020
Senior Note for registration of transfer at the office or agency of the Company to be maintained
for that purpose in the Borough of Manhattan, The City of New York, or at any other office or
agency of the Company maintained for that purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed
by the Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more
new 2020 Senior Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The 2020 Senior Notes are issuable only in registered form only in denominations of $2,000 and
integral multiples of $1,000 in excess of $2,000 or the equivalent amount thereof in the case of
2020 Senior Notes denominated in a Foreign Currency or currency unit. As provided in the Indenture
and subject to certain limitations therein set forth, 2020 Senior Notes are exchangeable for a like
aggregate principal amount of 2020 Senior Notes of a like tenor and of a different authorized
denomination, as requested by the Holder surrendering the same.

 

 

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     The Company, the Trustee for the 2020 Senior Notes and any agent of the Company or such
Trustee may treat the Person in whose name this 2020 Senior Note is registered as the owner hereof
for the purpose of receiving payment as herein provided and for all other purposes, whether or not
this 2020 Senior Note be overdue, and neither the Company, such Trustee nor any such agent shall be
affected by notice to the contrary.

     Certain of the Company’s obligations under the Indenture with respect to 2020 Senior Notes may
be terminated if the Company irrevocably deposits with the Trustee money or Government Obligations
sufficient to pay and discharge the entire indebtedness on all 2020 Senior Notes, as provided in
the Indenture.

     This 2020 Senior Note shall for all purposes be governed by, and construed in accordance with,
the laws of the State of New York.

     Certain terms used in this 2020 Senior Note which are defined in the Indenture have the
meanings set forth therein. In the event of any conflict or inconsistency between any of the terms
of this 2020 Senior Note and any of the terms of the within referenced Indenture, the terms of the
Indenture shall control.

 

 

FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

(Name and address of Assignee, including zip code, must be printed or typewritten)

 

 

the within 2020 Senior Note, and all rights thereunder, hereby irrevocably, constituting and
appointing

 

 

Attorney to transfer the said 2020 Senior Note on the books of Lorillard Tobacco Company with full
power of substitution in the premises.

	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 

	 	 	 	 	 	NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within 2020
Senior Note in every particular, without alteration or
enlargement or any change whatever.

 

 

EXHIBIT A-2

FORM OF NOTE DUE 2040

REGISTERED

No.

LORILLARD TOBACCO COMPANY

8.125% Senior Notes due 2040

	 	 	 

	 
	 	PRINCIPAL AMOUNT
	 
	 	$
	 
	 	CUSIP NO. 544152 AC5
	 
	 	ISIN NO.  GTD SR NT

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”) TO A NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

     LORILLARD TOBACCO COMPANY, a Delaware corporation (hereinafter called the “Company,”
which term includes any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
$250,000,000 on May 1, 2040 and to pay interest thereon from April 12, 2010 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually in
arrears on May 1 and November 1 in each year, commencing November 1, 2010 at the rate of 8.125% per
annum until the principal hereof is paid or made available for payment.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest, which shall be April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and
may be paid to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a

 

 

Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee for
the Notes, notice whereof shall be given to Holders of Notes not less than 10 days prior to such
Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said Indenture.

     Payment of the principal of (and premium, if any) and interest on this Note will be made at
the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America or in such Foreign
Currency as applicable, as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall appear on the
Securities Register or by wire transfer at such place and to such account at a banking institution
in the United States as may be designated in writing to the Trustee at least 15 days prior to the
date for payment by the person entitled thereto. All payments of principal, premium, if any, and
interest in respect of this Note will be made by the Company in immediately available funds.

     Additional provisions of this Note are contained on the reverse hereof, and such provisions
shall have the same effect as though fully set forth in this place.

     Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee for the Notes by manual signature, this Note shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.

 

 

     IN WITNESS WHEREOF, LORILLARD TOBACCO COMPANY has caused this instrument to be duly executed.

	 	 	 	 	 	 	 

	Dated: April 12, 2010	 	LORILLARD TOBACCO COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Notes of the series designated therein described in the within-mentioned
Indenture.

	 	 	 	 	 
	Dated:  April 12, 2010 	THE BANK OF NEW YORK MELLON TRUST 

COMPANY,N.A.,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

 

 

	 	 	 	 	 

(Reverse of Note)

LORILLARD TOBACCO COMPANY

     This Note is one of a series of the Senior Notes designated therein as 8.125% Notes due May 1,
2040 (the “2040 Senior Notes”).This 2040 Senior Note is one of a duly authorized issue of
debentures, notes or other evidences of indebtedness of the Company of the series hereinafter
specified, which series is limited in aggregate principal amount to $250,000,000 (except as
provided in the Indenture hereinafter mentioned), all such 2040 Senior Notes issued and to be
issued under the Indenture, dated June 23, 2009, as supplemented by the Second Supplemental
Indenture, dated April 12, 2010, by and among the Company, Lorillard, Inc., as Guarantor, and The
Bank of New York Mellon Trust Company, N.A., as Trustee (herein called the “Indenture”), to
which Indenture and all other indentures supplemental thereto reference is hereby made for a
statement of the rights and limitations of rights thereunder of the Holders of the 2040 Senior
Notes and of the rights, obligations, duties and immunities of the Trustee for each series of 2040
Senior Notes and of the Company, and the terms upon which the 2040 Senior Notes are and are to be
authenticated and delivered. Each holder of a 2040 Senior Note, by acceptance thereof, agrees to
be bound by the terms of this 2040 Senior Note and the within referenced Indenture.

Guarantee

     The 2040 Senior Notes have the benefit of the unconditional guarantee by the Guarantor to pay
the principal of, and premium, if any, and interest, if any, on the 2040 Senior Notes, according to
the terms of and as more fully described in the Indenture and the related Guarantee Agreement
executed by the Guarantor on the date hereof.

Defeasance

     The Indenture contains provisions for defeasance at any time of the entire principal of all
the 2040 Senior Notes of any series upon compliance by the Company with certain conditions set
forth therein.

Events of Default

     If an Event of Default (other than an Event of Default described in Section 501(4) or 501(5)
of the Indenture as amended by the Second Supplemental Indenture) with respect to the 2040 Senior
Notes shall occur and be continuing, then either the Trustee or the Holders of not less than 25% in
principal amount of the 2040 Senior Notes then Outstanding may declare the entire principal amount
of the 2040 Senior Notes due and payable in the manner and with effect provided in the Indenture.
If an Event of Default specified in Section 501(4) or 501(5) of the Indenture as amended by the
Second Supplemental Indenture occurs with respect to the Company, all of the unpaid principal
amount and accrued interest then Outstanding shall ipso facto become and be immediately due and
payable in the manner with the effect provided in the Indenture without any declaration or other
act by the Trustee or any Holder.

     Notwithstanding anything in the immediately preceding paragraph to the contrary, to the extent
elected by the Company, the sole remedy for an Event of Default relating to the failure by the
Company to comply with the obligation to provide certain reports and information as set forth in
Section 704 of the Indenture will, for the first 120 days after the occurrence of such an Event of
Default, consist exclusively of the right for Holders to receive additional interest on the 2040
Senior Notes equal to 0.25% per annum of the principal amount of the 2040 Senior Notes. If the
Company so elects, such additional interest will be payable in the same manner and on the same
dates as the stated Interest Payment Dates on the 2040 Senior Notes. The additional interest will
accrue on all outstanding 2040 Senior Notes from and including

 

 

 the date on which such Event of Default first occurs to, but not including, the 120th day
thereafter (or such earlier date on which such Event of Default shall have been cured or waived by
Holders as provided in Section 513 of the Indenture). On such 120th day after such Event of
Default (if the Event of Default relating to such obligation is not cured or waived by Holders as
provided in Section 513 of the Indenture prior to such 120th day), such additional interest will
cease to accrue and the 2040 Senior Notes will be subject to acceleration as provided in the
paragraph above. In the event the Company does not elect to pay the additional interest upon such
Event of Default in accordance with this paragraph, the 2040 Senior Notes will be subject to
acceleration as provided in paragraph above.

Amendments

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
2040 Senior Notes under the Indenture at any time by the Company and the Guarantor with the consent
of the Holders of more than 50% in aggregate principal amount of the Outstanding 2040 Senior Notes
of each series of 2040 Senior Notes then Outstanding affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate principal amount of the
2040 Senior Notes of any series at the time Outstanding, on behalf of the Holders of all the 2040
Senior Notes of such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences with respect to such
series. Any such consent or waiver by the Holder of this 2040 Senior Note shall be conclusive and
binding upon such Holder and upon all future Holders of this 2040 Senior Note and of any 2040
Senior Note issued upon the transfer hereof or in exchange or in lieu hereof whether or not
notation of such consent or waiver is made upon this 2040 Senior Note.

Payment

     No reference herein to the Indenture and no provision of this 2040 Senior Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on this 2040 Senior Note at the times,
place and rate, and in the coin or currency, herein and in the Indenture prescribed.

Transfer, Registration and Exchange

     As provided in the Indenture and subject to certain limitations therein set forth, this 2040
Senior Note is transferable on the Security Register of the Company, upon surrender of this 2040
Senior Note for registration of transfer at the office or agency of the Company to be maintained
for that purpose in the Borough of Manhattan, The City of New York, or at any other office or
agency of the Company maintained for that purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed
by the Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more
new 2040 Senior Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The 2040 Senior Notes are issuable only in registered form only in denominations of $2,000 and
integral multiples of $1,000 in excess of $2,000 or the equivalent amount thereof in the case of
2040 Senior Notes denominated in a Foreign Currency or currency unit. As provided in the Indenture
and subject to certain limitations therein set forth, 2040 Senior Notes are exchangeable for a like
aggregate principal amount of 2040 Senior Notes of a like tenor and of a different authorized
denomination, as requested by the Holder surrendering the same.

 

 

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     The Company, the Trustee for the 2040 Senior Notes and any agent of the Company or such
Trustee may treat the Person in whose name this 2040 Senior Note is registered as the owner hereof
for the purpose of receiving payment as herein provided and for all other purposes, whether or not
this 2040 Senior Note be overdue, and neither the Company, such Trustee nor any such agent shall be
affected by notice to the contrary.

     Certain of the Company’s obligations under the Indenture with respect to 2040 Senior Notes may
be terminated if the Company irrevocably deposits with the Trustee money or Government Obligations
sufficient to pay and discharge the entire indebtedness on all 2040 Senior Notes, as provided in
the Indenture.

     This 2040 Senior Note shall for all purposes be governed by, and construed in accordance with,
the laws of the State of New York.

     Certain terms used in this 2040 Senior Note which are defined in the Indenture have the
meanings set forth therein. In the event of any conflict or inconsistency between any of the terms
of this 2040 Senior Note and any of the terms of the within referenced Indenture, the terms of the
Indenture shall control.

 

 

FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

(Name and address of Assignee, including zip code, must be printed or typewritten)

 

 

the within 2040 Senior Note, and all rights thereunder, hereby irrevocably, constituting and
appointing

 

 

Attorney to transfer the said 2040 Senior Note on the books of Lorillard Tobacco Company with full
power of substitution in the premises.

	 	 	 

	Dated:                                         
	 	 
	 

	 	 
	 

	 	NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within 2040
Senior Note in every particular, without alteration or
enlargement or any change whatever.

 

 

EXHIBIT B-1

FORM OF GUARANTEE OF 2020 SENIOR NOTES

     GUARANTEE, dated April 12, 2010 (as amended from time to time, this “Guarantee”), made
by Lorillard, Inc., a Delaware corporation (the “Guarantor”), in favor of The Bank of New
York Mellon Trust Company, N.A., as trustee (“Trustee”) for the registered holders (the
“Holders”) of the 6.875% Senior Notes due May 1, 2020 (the “2020 Senior Notes”) of
Lorillard Tobacco Company, a Delaware corporation (the “Issuer”).

WITNESSETH:

     SECTION 1. Guarantee. (a) The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the
principal of, premium, if any, and interest on the 2020 Senior Notes (the “Obligations”),
according to the terms of the 2020 Senior Notes and as more fully described in the Indenture dated
June 23, 2009 (as amended by the Second Supplemental Indenture, dated April 12, 2010) by and among
the Issuer, the Guarantor and the Trustee, and any other amounts payable by the Guarantor under the
Indenture.

     (b) It is the intention of the Guarantor that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to
this Guarantee. To effectuate the foregoing intention, the amount guaranteed by the Guarantor
under this Guarantee shall be limited to the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of the Guarantor that are relevant
under such laws, result in the Obligations of the Guarantor under this Guarantee not constituting a
fraudulent transfer or conveyance. For purposes hereof, “Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors.

     SECTION 2. Guarantee Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Indenture, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of
Holders of the 2020 Senior Notes with respect thereto. The liability of the Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:

     (i) any lack of validity, enforceability or genuineness of any provision of the
Indenture, the 2020 Senior Notes or any other agreement or instrument relating thereto;

     (ii) any change in the time, manner or place of payment of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or any consent to
departure from the Indenture;

     (iii) any exchange, release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any other guarantee, for all or any of
the Obligations; or

     (iv) any other circumstance that might otherwise constitute a defense available to, or
a discharge of, the Issuer or a guarantor.

 

 

     SECTION 3. Ranking. The Guarantor covenants and agrees that its obligation to make
payments of the Obligations hereunder constitutes an unsecured obligation of the Guarantor ranking
pari passu with all existing and future senior unsecured indebtedness of the Guarantor.

     SECTION 4. Waiver; Subrogation. (a) The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to this Guarantee and any
requirement that the Trustee, or the Holders of any 2020 Senior Notes protect, secure, perfect or
insure any security interest or lien or any property subject thereto or exhaust any right or take
any action against the Issuer or any other Person or any collateral.

     (b) The Guarantor hereby irrevocably waives any claims or other rights that it may now or
hereafter acquire against the Issuer that arise from the existence, payment, performance or
enforcement of the Guarantor’s obligations under this Guarantee or the Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Trustee, or the Holders
of any 2020 Senior Notes against the Issuer or any collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including, without limitation, the
right to take or receive from the Issuer, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim, remedy or right. If
any amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior
to the cash payment in full of the Obligations and all other amounts payable under this Guarantee,
such amount shall be held in trust for the benefit of the Trustee and the Holders of any 2020
Senior Notes and shall forthwith be paid to the Trustee, to be credited and applied to the
Obligations and all other amounts payable under this Guarantee, whether matured or unmatured, in
accordance with the terms of the Indenture and this Guarantee, or be held as collateral for any
Obligations or other amounts payable under this Guarantee thereafter arising. The Guarantor
acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated by the Indenture and this Guarantee and that the waiver set forth in this Section 4 is
knowingly made in contemplation of such benefits.

     SECTION 5. No Waiver; Remedies. No failure on the part of the Trustee or any Holder
of the 2020 Senior Notes to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.

     SECTION 6. Continuing Guarantee; Transfer of Interest. This Guarantee is a
continuing guarantee and shall (a) remain in full force and effect until the earliest to occur of
(i) the date, if any, on which the Guarantor shall consolidate with or merge into the Issuer or any
successor thereto, (ii) the date, if any, on which the Issuer or any successor thereto shall
consolidate with or merge into the Guarantor, (iii) payment in full of the Obligations, and (iv)
the rating of the Issuer’s long term senior unsecured debt by Standard & Poor’s of A or higher, (b)
be binding upon the Guarantor, its successors and assigns, and (c) inure to the benefit of and be
enforceable by any Holder of 2020 Senior Notes, the Trustee, and by their respective successors,
transferees, and assigns.

     SECTION 7. Reinstatement. This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by any Holder of the 2020 Senior Notes or the Trustee upon the
insolvency, bankruptcy or reorganization of the Issuer or otherwise, all as though such payment had
not been made.

     SECTION 8. Amendment. The Guarantor may amend this Guarantee at any time for any
purpose without the consent of the Trustee or any Holder of the 2020 Senior Notes; provided,
however, that if such amendment adversely affects (a) the rights of the Trustee or (b) any Holder
of the 2020 Senior

 

 

Notes, the prior written consent of the Trustee (in the case of (b), acting at the written
direction of the Holders of more than 50% in aggregate principal amount of 2020 Senior Notes) shall
be required.

     SECTION 9. Governing Law. This Guarantee shall be governed by, and construed in
accordance with the laws of the State of New York.

 

 

     IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and delivered
by its officer thereunto duly authorized as of the date first above written.

	 	 	 	 	 
	 	LORILLARD, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT B-2

FORM OF GUARANTEE OF 2040 SENIOR NOTES

     GUARANTEE, dated April 12, 2010 (as amended from time to time, this “Guarantee”), made
by Lorillard, Inc., a Delaware corporation (the “Guarantor”), in favor of The Bank of New
York Mellon Trust Company, N.A., as trustee (“Trustee”) for the registered holders (the
“Holders”) of the 8.125% Senior Notes due May 1, 2040 (the “2040 Senior Notes”) of
Lorillard Tobacco Company, a Delaware corporation (the “Issuer”).

WITNESSETH:

     SECTION 1. Guarantee. (a) The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the
principal of, premium, if any, and interest on the 2040 Senior Notes (the “Obligations”),
according to the terms of the 2040 Senior Notes and as more fully described in the Indenture dated
June 23, 2009 (as amended by the Second Supplemental Indenture, dated April 12, 2010) by and among
the Issuer, the Guarantor and the Trustee, and any other amounts payable by the Guarantor under the
Indenture.

     (b) It is the intention of the Guarantor that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to
this Guarantee. To effectuate the foregoing intention, the amount guaranteed by the Guarantor
under this Guarantee shall be limited to the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of the Guarantor that are relevant
under such laws, result in the Obligations of the Guarantor under this Guarantee not constituting a
fraudulent transfer or conveyance. For purposes hereof, “Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors.

     SECTION 2. Guarantee Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Indenture, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of
Holders of the 2040 Senior Notes with respect thereto. The liability of the Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:

     (i) any lack of validity, enforceability or genuineness of any provision of the
Indenture, the 2040 Senior Notes or any other agreement or instrument relating thereto;

     (ii) any change in the time, manner or place of payment of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or any consent to
departure from the Indenture;

     (iii) any exchange, release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any other guarantee, for all or any of
the Obligations; or

     (iv) any other circumstance that might otherwise constitute a defense available to, or
a discharge of, the Issuer or a guarantor.

 

 

     SECTION 3. Ranking. The Guarantor covenants and agrees that its obligation to make
payments of the Obligations hereunder constitutes an unsecured obligation of the Guarantor ranking
pari passu with all existing and future senior unsecured indebtedness of the Guarantor.

     SECTION 4. Waiver; Subrogation. (a) The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to this Guarantee and any
requirement that the Trustee, or the Holders of any 2040 Senior Notes protect, secure, perfect or
insure any security interest or lien or any property subject thereto or exhaust any right or take
any action against the Issuer or any other Person or any collateral.

     (b) The Guarantor hereby irrevocably waives any claims or other rights that it may now or
hereafter acquire against the Issuer that arise from the existence, payment, performance or
enforcement of the Guarantor’s obligations under this Guarantee or the Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Trustee, or the Holders
of any 2040 Senior Notes against the Issuer or any collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including, without limitation, the
right to take or receive from the Issuer, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim, remedy or right. If
any amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior
to the cash payment in full of the Obligations and all other amounts payable under this Guarantee,
such amount shall be held in trust for the benefit of the Trustee and the Holders of any 2040
Senior Notes and shall forthwith be paid to the Trustee, to be credited and applied to the
Obligations and all other amounts payable under this Guarantee, whether matured or unmatured, in
accordance with the terms of the Indenture and this Guarantee, or be held as collateral for any
Obligations or other amounts payable under this Guarantee thereafter arising. The Guarantor
acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated by the Indenture and this Guarantee and that the waiver set forth in this Section 4 is
knowingly made in contemplation of such benefits.

     SECTION 5. No Waiver; Remedies. No failure on the part of the Trustee or any Holder
of the 2040 Senior Notes to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.

     SECTION 6. Continuing Guarantee; Transfer of Interest. This Guarantee is a
continuing guarantee and shall (a) remain in full force and effect until the earliest to occur of
(i) the date, if any, on which the Guarantor shall consolidate with or merge into the Issuer or any
successor thereto, (ii) the date, if any, on which the Issuer or any successor thereto shall
consolidate with or merge into the Guarantor, (iii) payment in full of the Obligations, and (iv)
the rating of the Issuer’s long term senior unsecured debt by Standard & Poor’s of A or higher, (b)
be binding upon the Guarantor, its successors and assigns, and (c) inure to the benefit of and be
enforceable by any Holder of 2040 Senior Notes, the Trustee, and by their respective successors,
transferees, and assigns.

     SECTION 7. Reinstatement. This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by any Holder of the 2040 Senior Notes or the Trustee upon the
insolvency, bankruptcy or reorganization of the Issuer or otherwise, all as though such payment had
not been made.

     SECTION 8. Amendment. The Guarantor may amend this Guarantee at any time for any
purpose without the consent of the Trustee or any Holder of the 2040 Senior Notes; provided,
however, that if such amendment adversely affects (a) the rights of the Trustee or (b) any Holder
of the 2040 Senior

 

 

Notes, the prior written consent of the Trustee (in the case of (b), acting at the written
direction of the Holders of more than 50% in aggregate principal amount of 2040 Senior Notes) shall
be required.

     SECTION 9. Governing Law. This Guarantee shall be governed by, and construed in
accordance with the laws of the State of New York.

 

 

     IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and delivered
by its officer thereunto duly authorized as of the date first above written.

	 	 	 	 	 
	 	LORILLARD, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:

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