Document:

Exhibit 10.65

 

Exhibit
10.65

LISA
J. CALDWELL

Senior Vice President

Human Resources

 

Winston-Salem, NC 27102

Voice:   336-741-7041

Fax:      336-741-0607

Internet: lisa.caldwell@rjrt.com

March 22, 2007

Mr. Thomas
R. Adams

Dear Tom:

     This letter will confirm our understanding on the following matters.

     It
is important that you return to the role of Senior Vice President and
Chief Accounting Officer of Reynolds American, Inc. (the
“Company”) to ensure organizational stability.

     Accordingly,
if you remain actively employed by the Company until April 30, 2008, you will
be eligible to receive a lump sum “Retention Bonus” payment
of $100,000 under the terms of the Retention Trust Agreement dated
May 13, 1998, as amended, between R.J. Reynolds Tobacco
Holdings, Inc. and Wachovia Bank, N.A. Federal, state and other
withholdings or deductions will apply to any retention bonus payment. The Retention Bonus will not
be included in any benefit or retirement plan calculations. Payment will be made as soon as
practical following April 30, 2008. Payment of a Retention Bonus
will not affect your eligibility for Special Severance Benefits and
Change of Control Protections under your Executive Severance
Agreement.

     In
the event of your Permanent Disability (as defined by the
Company’s Long Term Disability Plan) prior to your payment
date, you will be eligible to receive your Retention Bonus
immediately following your date of Permanent Disability. In the event
of your death prior to your payment date, your Retention Bonus shall
be paid to your estate.

 

Mr.
Thomas R. Adams

Page 2

     If
you voluntarily quit or are terminated for Cause as defined in the
retention trust, prior to your payment date, you
will not be eligible to receive the Retention Bonus described above.
If you are involuntarily terminated without Cause prior to the
payment date, you will receive a pro rata payout under the terms of
the trust.

     By
your signature below, you acknowledge and agree that the payment of
your Retention Bonus is subject to the terms of the above-referenced
retention trust, that this letter is not an employment
contract and that nothing obligates the Company to employ you for any specific term.

Sincerely,

/s/ Lisa J. Caldwell

Lisa J.
Caldwell

Senior Vice President

Human Resources

Acknowledged
and accepted this
23rd
day of March, 2007.

Employee
Signature: /s/ Thomas R. AdamsExhibit 10.67

 

Exhibit 10.67

REYNOLDS AMERICAN INC.

[____________ __, 200_]

[Name]

[Street]

[City, State, Zip]

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                        ,
_______, between you and the Company, or an affiliate of the Company (the “Prior Agreement”) and
any other severance agreements entered into prior to the date hereof.

	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 two (2) 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.

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	 	(vi)	 	If you participate in an executive supplemental payment plan on
your Termination Date, you will continue to receive the annual executive
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 3(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 3(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

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	 	 	 	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 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.

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	 	 	 	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 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 the 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 the 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.

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	 	(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 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 the 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

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	 	 	 	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
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.

	3.	 	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.

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	 	(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.

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     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:  	 	 
	 	 	Its:  Senior Vice President Human Resources 	 
	 	 	 	 
	 

	 	 	 	 	 
	Accepted and agreed to as of this ___day

of                                         , 2007

 	 	 
	
 	 	 
	[Employee] 	 	 
	 	 	 

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Exhibit A

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

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