Document:

Exhibit 10.60

 

Exhibit 10.60

December 19, 2007

Jeffrey A. Eckmann

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 March 31, 2005, 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.

          In addition, (i) Section 3 of this agreement describes additional benefits that are payable to
you, including those payable 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. (the “Trust”) and
the Offer of Employment Letter between you and the Company, dated July 29, 2004, as amended on
February 2, 2005 (the “2004 Offer Letter”), (ii) Section 4 of this agreement amends the Letter
Agreement between you and Susan M. Ivey, dated December 2, 2003 (the “2003 Letter Agreement”) and
(iii) Section 5 of this agreement further amends the 2004 Offer Letter.

1. Special Severance Benefits.

	 	(a)	 	If, during the course of your employment with the Company or any of its
affiliates, you incur a Separation from Service other than by the Company or any of its
affiliates for Cause, 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, including the
Reynolds American Retirement Plan, Reynolds American Supplemental Benefits
Plan, Reynolds American Additional Benefits Plan, Retirement Plan for Salaried
Employees of Brown & Williamson Tobacco Corporation, and Supplemental Pension
Plan for Executive of Brown & Williamson Tobacco Corporation to the extent
permitted thereunder or under a nonqualified plan established and maintained by
the Company or an affiliated company.

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	 	(iv)	 	Continuation of the coverage of you (and where applicable, your
eligible dependents) under the Company’s medical, life, dental and vision
insurance benefit plans until the end of the month in which your Severance
Period ends, at the same cost structure as active employees; provided, however,
that following your Termination Date you will be covered by the fully insured
medical, dental and vision plans maintained by the Company. Your required
payments, if any, towards the cost for such continuation coverage shall be made
on an after-tax basis.
	 
	 	(v)	 	If you are eligible for retiree health and life insurance
coverage on your Termination Date, additional age and service credit towards
eligibility for retiree health and life insurance coverage determined as if
your employment with the Company or an affiliated company had continued
throughout the Severance Period.
	 
	 	(vi)	 	If you participate in an executive supplemental payment plan on
your Termination Date, you will continue to receive the annual executive
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 6(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 6(a),

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	 	 	 	you will not be entitled to any benefits under this agreement and will be
entitled only to those benefits provided under the SBC.

	 	(x)	 	If you should die during your Severance Period, any cash
amounts under this Section 1(a) that remain unpaid as of the date of your death
shall be paid in cash to your estate in a single lump sum within ninety (90)
days following the date of your death, provided that your estate shall not have
the right to designate the payment date.

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

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	 	 	 	Annual Incentive Award Plan (the “AIAP”), or successor plans, is at any time
reduced by more than twenty percent (20%) without your consent;
provided, however, that nothing herein will be construed to
guarantee your target award if performance is below target;

	 	(ii)	 	your responsibilities are substantially reduced in importance
without your consent; or
	 
	 	(iii)	 	you are at any time required as a condition of continued
employment to become based at any office or location more than the minimum
number of miles required by the Internal Revenue Service for you to claim a
moving expense deduction, from your then current place of employment without
your consent, except for travel reasonably required in the performance of your
responsibilities.
	 
	 	 	 	Unless you provide written notification of your non-consent to any of the
events described in (i), (ii) or (iii) above within ninety (90) days after
the 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,

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	 	 	 	you retain an amount of the Excise Tax Adjustment Payment equal to the Excise
Tax imposed upon the Payments. You agree to cooperate fully with the Company and
its affiliates in any protester appeal by the Company or any of its affiliates in
the event of the imposition of any golden parachute tax. Such Excise Tax Adjustment
Payment shall be made no later than December 31 of the year following the year in
which you incur the Excise Tax. Any expenses, including interest and penalties
assessed on the Excise Tax described in this Section 2(a), incurred by you shall be
reimbursed promptly after you submit evidence of the incurrence of such expenses,
which reimbursement in no event will be later than December 31 of the year following
the year in which you incur the expense, provided that in no event will the amount
of expenses eligible for reimbursement in one year affect the amount of expenses to
be reimbursed, or in-kind benefits to be provided, in any other taxable year. Each
provision of reimbursements pursuant to this Section 2(a) shall be considered a
separate payment and not one of a series of payments for purposes of Section 409A.

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

	 	(i)	 	a material reduction in your duties, a material diminution in
your position or a material adverse change in your reporting relationship from
those in effect immediately prior to the Change of Control;
	 
	 	(ii)	 	a reduction in your pay grade or bonus opportunity as in effect
immediately prior to the Change of Control or as the same may thereafter be
increased from time to time during the term of this agreement;

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	 	(iii)	 	the failure to continue in effect any compensation plan in
which you participate at the time of the Change of Control, including but not
limited to the LTIP and AIAP, or any substitute plans adopted prior to the
Change of Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan providing you with substantially similar
benefits) has been made with respect to such plan in connection with the Change
of Control, or the failure to continue your participation therein on
substantially the same basis, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, as existed
at the time of the Change of Control;
	 
	 	(iv)	 	the taking of any action which would directly or indirectly
materially reduce any of the benefits to be provided to you under the
retirement or savings plans of the Company or any of its affiliates (unless
such reduction is required by law) or deprive you of any material fringe
benefit enjoyed by you at the time of the Change of Control, or the failure to
provide you with the number of paid vacation days to which you are 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.	 	Additional Benefits. In addition to the special severance benefits and certain
change of control protections described in Sections 1 and 2 of this agreement, you will be
eligible for the following additional benefits:

	 	(a)	 	Retention Bonus. If you remain actively employed by the Company or any
of its affiliates until April 30, 2008, you shall receive a lump sum amount equal to
$1,000,000 (the “Retention Bonus”), in accordance with the terms of the Trust. Subject
to the terms of the Trust, including, but not limited to Appendix A thereto, the
Retention Bonus shall be paid in cash to you as soon as practicable following April 30,
2008, but in no event later than March 15, 2009. By your signature below, you
acknowledge and agree that the payment of your Retention Bonus is subject to the terms
of the Trust.
	 
	 	(b)	 	Vesting of LTIP Awards. If, during the course of your employment with
the Company or any of its affiliates, you incur a Separation from Service other than by
the Company or any of its affiliates for Cause, any LTIP award that you received with a
performance period greater than one (1) year shall become

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	 	 	 	immediately and fully vested on your Termination Date, if not cancelled during the
relevant performance period due to the Company’s failure to satisfy any threshold
performance requirement, as provided in your 2004 Offer Letter.

	 	(c)	 	Retiree Health Coverage. Upon your termination of employment with the
Company and all of its affiliates, you shall be entitled to vested retiree health
coverage under the Brown & Williamson Tobacco Corporation Health Care Plan for Salaried
Employees (the “B&W Plan”) in lieu of the retiree health benefits generally provided by
the Company. By your signature below, you acknowledge and agree that your retiree
health coverage is subject to the terms of the B&W Plan.

	4.	 	Amendment to 2003 Letter Agreement.

	 	(a)	 	Section 3 of your 2003 Letter Agreement is hereby amended in its entirety to
read as follows:

	 	“3. 	 	 The Company will pay you an enhanced pension benefit equal to
the difference between (i) the present value of the pension benefits you would
have received under the B&W defined benefit pension plan and the B&W
supplemental pension plan based on your total pensionable service at B&W and
the Company and the terms of these plans in effect as of the closing, and (ii)
the sum of (A) the present value of your pension benefits, determined as of the
Termination Date, under the qualified and excess plans of B&W and the Company
and (B) the B&W supplemental pension plan liability retained by B&W. Subject
to Section 8 below, this enhanced pension benefit will be paid to you on your
Payment Date in a lump sum payment.”
	 
	 	 	 	For clarification and restatement, the terms of your 2003 Letter Agreement
and other exhibits attached to this agreement are incorporated as the terms
and agreements between you and the company. Specifically, your salary at
the time you retire from the company will be used in determining your final
pension payment and your pension will be based on Brown & Williamson’s
average performance rating percentage for 2001, 2002, and 2003 as stated in
paragraph 3 of your December 2, 2003 Letter Agreement as attached as Exhibit
C.

	 	(b)	 	Your 2003 Letter Agreement is hereby amended by adding a new Section 8 to the
end thereof, to read as follows:

	 	“8. 	 	 Notwithstanding any provision to the contrary contained herein,
in the event that you are deemed to be a “specified employee” on your
Termination Date, determined pursuant to procedures adopted by the Company in
compliance with Section 409A, and if any portion of the payments or benefits to
be received by you upon separation from service would constitute a “deferral of
compensation” subject to Section 409A,

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	 	 	 	then to the extent necessary to comply with Section 409A, amounts that would
otherwise be payable pursuant to this offer letter during the six-month
period immediately following your Termination Date and benefits that would
otherwise be provided pursuant to this offer letter during the six-month
period immediately following your Termination Date will instead be paid or
made available on the earlier of (i) within ten (10) days following the
first business day of the seventh month after your Termination Date,
provided that you shall not have the right to designate the payment date; or
(ii) your death.

	 	 	 	To the extent applicable, it is intended that this letter agreement comply
with the provisions of Section 409A. This letter 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.”

	 	(c)	 	Except as amended in Sections 4(a) and 4(b) above, your 2003 Letter Agreement
shall remain unchanged and in full force and effect.

	5.	 	Amendment to 2004 Offer Letter.

	 	(a)	 	The third paragraph of the Section of your 2004 Offer Letter entitled
“Additional individualized benefits” is replaced by the following paragraphs:
	 
	 	 	 	“Beginning with the calendar year immediately following the end of your Severance
Period, you will be eligible for reimbursement of tax preparation/financial planning
costs, up to a maximum of $6,000 a year, until your death. Income will be imputed
on this amount, but the company will gross-up the taxes. Subject to the following
paragraph, any such expenses and tax gross-up payments incurred by you shall be
reimbursed promptly after you submit evidence of the incurrence of such expenses,
which reimbursement in no event will be later than December 31 of the year following
the year in which you incur the expense or pay the tax, as the case may be, provided
that in no event will the amount of expenses eligible for reimbursement in one year
affect the amount of expenses to be reimbursed, or in-kind benefits to be provided,
in any other taxable year. Each provision of reimbursements hereunder shall be
considered a separate payment and not one of a series of payments for purposes of
Section 409A.
	 
	 	 	 	Notwithstanding any provision to the contrary contained herein, in the event that
you are deemed to be a “specified employee” on your Termination Date, determined
pursuant to procedures adopted by the Company in compliance with Section 409A, and
if any portion of the payments or benefits to be received by you upon separation
from service would constitute a “deferral of compensation” subject to Section 409A,
then to the extent necessary to comply with Section 409A, amounts that would
otherwise be payable pursuant to this offer letter during the six-month period
immediately following your Termination Date and

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	 	 	 	benefits that would otherwise be provided pursuant to this offer letter during the
six-month period immediately following your Termination Date will instead be paid or
made available on the earlier of (i) within ten (10) days following the first
business day of the seventh month after your Termination Date, provided that you
shall not have the right to designate the payment date; or (ii) your death.

	 	 	 	To the extent applicable, it is intended that this offer letter comply with the
provisions of Section 409A. This offer letter shall be administered in a manner
consistent with this intent. References to Section 409A shall include any proposed,
temporary or final regulation, or any other guidance, promulgated with respect to
such section by the U.S. Department of Treasury or the Internal Revenue Service.”
	 
	 	(b)	 	Except as amended in Section 5(a) above, your 2004 Offer Letter shall remain
unchanged and in full force and effect.

	6.	 	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.
	 
	 	(g)	 	This agreement (including the Non-Competition, Non-Disclosure of Confidential
Information and Commitment to Provide Assistance Agreement attached hereto as
Exhibit A), the 2004 Offer Letter attached hereto as Exhibit B and the
2003 Letter Agreement attached hereto as Exhibit C embody the complete
agreement and understanding between you and the Company with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written or
oral (including, without limitation, the Prior Agreement), which may have related to
the subject matter hereof in any way.

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

	 	 	 	 	 
	 	REYNOLDS AMERICAN INC.

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

	 	 	 	 	 
	Accepted and agreed to as of this 28th day

of December          , 2007

 	 	 
	/s/ Jeffrey A. Eckmann
 	 	 
	Jeffrey A. Eckmann 	 	 
	 	 	 

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Exhibit A

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

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Exhibit B

[See
Exhibits 10.58 and 10.59 to Form 10-K]

 

 

Exhibit C

December 2, 2003

Dear Jeff:

This is to confirm the terms and conditions of you joining the new company following the closing of
the transaction with RJR.

	 	1.	 	Effective at the closing, you would become Executive Vice President Strategy,
Planning & Integration for the new company. Your salary will have to be approved by
the Compensation Committee of the new company. It will be comparable to other members
of the senior team but in no event will the recommendation be less than $450,000.
	 
	 	2.	 	You agree to be employed in this position for the later of two years after the
closing or August 31, 2006, at which time you will retire and receive two years pay as
severance, along with the target annual bonus for two years.
	 
	 	3.	 	Your pension will be based on your total pensionable service at B&W and the new
company. Your salary at the time you retire from the new company will be used in
determining your final pension payout. Your qualified plan and excess plan pension
payout will be no less than the pension you would have received under B&W’s plan for
the entire length of your service with B&W and RJR. The bonus portion of your pension
will be paid in accordance with B&W’s Supplemental Pension Plan. Specifically, your
pension will be based on B&W’s average performance rating percentage for 2001, 2002 and
2003.
	 
	 	4.	 	Any share plans you receive at the new company will vest at your retirement
date.
	 
	 	5.	 	During this two-year period, you will participate in all benefit and perquisite
programs of the new company on a basis comparable to other members of the senior
management team.
	 
	 	6.	 	Upon retirement, you will participate in the benefit and perquisite programs
currently available to you as a Senior Vice President of B&W.

 

 

	 	7.	 	In connection with moving to Winston-Salem, you can elect to either relocate
under B&W’s relocation policy or be provided with a company-paid apartment during this
two-year period.

If, for any reason, any provision of this agreement is not fulfilled by the new company, B&W agrees
to make up the difference between what is covered by the new company and what is provided for in
this agreement.

	 	 	 
	/s/ Jeff Eckmann

	 	/s/ Susan M. Ivey
	 

	 	 
	Jeff Eckmann

	 	Susan Ivey

President & Chief Executive Officer

Brown & Williamson Tobacco Corp.

3

 

Note to File

Re: Jeff Eckmann

B&W Pension Benefits

Jeff was employed by Ivey’s (a related BATUS retail company) from November 1, 1988 the June 4,
1990.

It has been agreed and communicated to Jeff that he will receive notional pension service credits
in the B&W non-qualified pension program for the time he was employed by Ivey’s. The actuarial
value of any Ivey’s qualified or non-qualified pension benefits he has received or will receive
will be deducted from his B&W pension benefits.

	 	 	 	 	 
	 	 
	/s/ Henry C. Frick 	 	Date:  March 19, 2004 
	Henry C. Frick 	 	 
	V.P. Human ResourcesExhibit 10.64

 

Exhibit 10.64

June 16, 2000

Mr. Thomas R. Adams

Dear Tom:

Your eligibility for a special retirement benefit was described on pages 2 and 3 of your employment
offer letter dated May 24, 1999. That description did not include any reference to a surviving
spouse benefit. The following is intended to officially amend and expand the description in the
May 24, 1999 letter to include eligibility for a surviving spouse benefit as follows:

	 	•	 	In the event of your death prior to your termination of employment, your surviving
spouse will be entitled to payment of a 50% survivor annuity under the special retirement
benefit. Such benefit will be calculated as if you had been involuntarily terminated for a
reason other than cause on the day before your death, with a standard 50% joint and
survivor annuity (as described in the Company’s qualified retirement plan) in effect.
Alternatively, your surviving spouse may elect another payment form or timing of payment
that is actuarially equivalent to the 50% joint and survivor annuity.
	 
	 	 	 	If your death is prior to termination of your employment but after you reach age 50, your
surviving spouse and other eligible dependents will be eligible to participate in the
Company’s retiree health programs as they exist as of the date of your death, providing such
eligible dependents are covered under the corresponding active employee health programs at
the time of your death.
	 
	 	•	 	In the event of your death after you have commenced receiving the special retirement
benefit, any survivor benefit will be in accordance with your election among all of the
forms of payment provided in the Company’s qualified plan.

Sincerely,

/s/ Robert R. Gordon, Jr.

Robert R. Gordon, Jr.

RRGjr/ev

	 	 	 
	Cc:

	 	Ms. K.A. Cissna

Ms. D.S. Harris

 

 

July 21, 1999

Mr. Thomas R. Adams

Dear Tom:

The purpose of this letter is to clarify and document the Company’s intent regarding your
eligibility for retiree welfare benefits (medical, dental, life insurance) in conjunction with your
special retirement benefit, as it was set out in your employment offer letter dated May 24, 1999.

The Company’s intent is as follows: If your active employment ceases after age 50 and at
that time you qualify for the special retirement benefit provided in the May 24, 1999 letter, you
will be eligible to participate in the Company’s retiree welfare programs as they exist at the time
of your actual retirement.

The premiums you will pay for your retiree medical and dental coverages will be based on the number
of years of service, including all additional years of service credit, used to calculate your
special retirement benefit.

Sincerely,

/s/ Robert R. Gordon, Jr.

Robert R. Gordon, Jr.

RRGjr/ev

	 	 	 
	Cc:

	 	Ms. K.A. Cissna

Ms. D.S. Harris

 

 

May 24, 1999

Mr. Thomas R. Adams

Dear Tom:

It is my pleasure to confirm our offer to you to join R. J. Reynolds Tobacco Company as Senior Vice
President and Controller. Ken Lapiejko will establish with you a specific starting date.

As Senior Vice President and Controller, your new base salary will be $250,000 per year (or
$20,833.33 per month). Your Annual Incentive Award Plan (AIAP) target bonus percent will be 50%.
Attached is a description of the 1999 AIAP plan. For 1999, your actual award will be the full year
1999 calculated award, prorated for the period of active service from your start date through
December 31, 1999. Your new job level will be executive job level D.

Immediately after your starting date, you will be paid a “signing-on” bonus in the gross amount of
$100,000. Required tax deductions will be withheld from this payment.

Under the Company’s Long Term Incentive Plan (LTIP), you will receive a 1999 grant of 50,000 RJRT
Performance Appreciation Rights (PARs). For purposes of vesting, you will be deemed to have been
granted the PARs on January 1, 1999. Attached is the 1999 LTIP communication that has been sent to
other participants in the plan explaining the valuation process for the 1999 grants. In the
future, you will be eligible to be considered for LTIP grants under the same circumstances and LTIP
provisions as other senior executives of the Company.

Upon employment, you will be eligible for immediate coverage under the Company’s employee benefits
plans. In addition, you will participate in the Company’s Flexible Perquisites Program as an
executive job level D participant. This program will provide you $25,000 per year in cash (paid
quarterly) and the use of a leased car with a purchase value of up to $24,000, although you can
personally supplement the lease payments to get a car with a purchase price of up to $40,000. This
program will also provide you with supplemental medical, dental, and business travel accident
insurance. Additionally, you will be able to purchase through the Company additional life
insurance for yourself and your wife as well as insurance on your personal automobiles and excess
liability insurance.

 

 

Mr. Thomas R. Adams

Page 2

May 24, 1999

Provided that you remain employed by the Company for three years from the date you start working,
at the end of the three years you will be paid a special retention incentive in the gross amount of
$500,000. To secure this obligation, the Company established an irrevocable trust and contributed
funds it believes are sufficient to satisfy all payment under the Special Incentive Program. Any
payments to you under this program will come from the trust, with no recourse to the Company or its
subsidiaries. If your employment terminates before your payment date, certain rules of the program
apply. They are described in an attachment to this letter.

In recognition of the fact that, by joining Reynolds Tobacco, you will be forfeiting certain
retirement benefits form your previous employer, you will be eligible for a special retirement
benefit as follows:

	 	•	 	Your gross retirement benefit will be calculated according to the following formula:

	 	—	 	Gross Annual Retirement Benefit = Final Average

Compensation X total years of credited service X 0.0175.

	 	•	 	For this purpose, Final Average Compensation will be defined as the highest consecutive
three years of pay (base salary plus actual bonus) out of the last five years. If your
employment ends before the completion of three years of service, and you are not eligible
for severance, Final Average Compensation will be your actual average annual pay for your
period of employment.
	 
	 	•	 	At age 55, you will be credited with additional service credit so that the total of your
actual and additional service credit will equal 20 years.
	 
	 	•	 	You will vest in this special retirement benefit at the earlier of your age 55 or the
effective date of your involuntary termination for any reason except cause; provided
however, that if you are involuntarily terminated for any reason except cause prior to age
55, service for calculation of this special retirement benefit will be 20 years less two
times the number of full and partial years between the end of any period of salary
continuation (see description of severance eligibility below) and age 55.
	 
	 	•	 	This special retirement benefit will be offset by any amounts paid from the Company’s
qualified retirement plan. All benefits earned under this special retirement benefit,
except those paid from the Company’s qualified retirement plan, will be unfunded and will
be a general obligation of the Company.

 

 

Mr. Thomas R. Adams

Page 3

May 24, 1999

If, during the course of your employment with the Company or one of its subsidiaries, you are
involuntarily terminated for any reason other than cause (as defined in the Long Term Incentive
Plan), you will receive two years’ pay (defined as base pay and target bonus at the time of
termination), payable over three years, and full employee benefits coverage for three years, and if
the Company’s Flexible Perquisite Program is still in effect, coverage under this program according
to its terms and conditions for three years. These special severance benefits replace any
compensation or benefits under the Company’s standard Salary and Benefit Continuation Program
(“SBC”). It is intended that you would not receive any less than the SBC obligation would provide,
and the rules that determine eligibility for payment under SBC apply for this program. Should an
involuntary separation ever occur, the Company will expect your cooperation in transitioning your
responsibilities, and will ask you, prior to the payment of any benefits, to sign a letter
containing a release of claims.

In consideration of this offer of employment, you will be expected to sign the Non-competition,
Non-Disclosure of Confidential Information, and Commitment to Provide Assistance Agreement
accompanying this letter.

The role you’ve been offered represents a unique opportunity for you to positively impact the
future of R. J. Reynolds Tobacco Company. We have great confidence that you are especially well
suited for the role and that you will make an outstanding contribution to our enterprise.

Sincerely,

/s/ Robert R. Gordon, Jr.

Robert R. Gordon, Jr.

RRGjr/ev

Attachments

Cc:     Mr. K.J. Lapiejko

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