Document:

Exhibit 10.2

Exhibit 10.2

August 12, 2010

Mr. Martin L. Orlowsky

714 Green Valley Road

Greensboro, NC 27408

Dear Martin:

We understand that your retirement from Lorillard, Inc. (the “Company”) will be
effective December 31, 2010 upon the expiration of the Amended and Restated Employment Agreement,
by and between you and the Company and dated as of December 19, 2008 (the “Employment
Agreement”). This letter sets forth the terms and conditions under which you will cease
serving as the Company’s President and Chief Executive Officer and will provide consulting services
to the board of directors of the Company (the “Board”), in order that the Company may
continue to benefit from your knowledge and extensive experience in the tobacco industry and in the
management and leadership of the Company and its businesses, products and customers. For the
avoidance of doubt, except for the change in your title described herein, your Employment
Agreement, including the compensation and benefits thereunder, will continue in full force and
effect through December 31, 2010.

1. Succession; Effect on Other Positions. Except as may otherwise be requested by the
Board, at the close of business on the date immediately preceding the date of the commencement of a
new President and Chief Executive Officer of the Company (expected to be on or about September 13,
2010,) you will no longer hold the title of President and Chief Executive Officer of the Company
and will serve the Company, in an executive capacity, as Chairman of the Board through December 31,
2010. At the close of business on December 31, 2010, you will cease serving as Chairman of the
Board and as an employee of the Company in all positions (“Retirement”). If, as of your
Retirement, you are a member of the Board or the board of directors of any of the Company’s
subsidiaries, or hold any other position with the Company or its subsidiaries, you will be deemed
to have resigned from all such positions as of the date of your Retirement. You agree to execute
such documents and take such other actions as the Company may request to reflect such resignations.

2. Consulting Period. Your service as a consultant to the Board pursuant to this
letter will commence on January 1, 2011 (the “Effective Date”) and will terminate on the
second anniversary of the Effective Date, subject to your continued compliance with this letter,
including the Restrictive Covenants (as defined in Section 6 below) (the “Consulting
Period”).

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 2

3. Services; Time Commitment.

(a) Services. During the Consulting Period, you will serve as a consultant and
advisor to the Company and the Board and will provide services as may be reasonably requested by
the Board or the Chief Executive Officer from time to time (the “Services”).

(b) Time Commitment. During the Consulting Period, you will (i) dedicate the amount
of your business time and attention which you deem reasonably necessary to perform the Services,
(ii) perform the Services at such locations as you reasonably deem appropriate, (iii) use your
reasonable best efforts to promote the best interests of the Company, and (iv) perform the Services
diligently and consistently with the requirements set forth in this letter. Notwithstanding the
foregoing, it is the intent of the Board and you, and the Board and you agree to use reasonable
efforts to ensure, that the amount of your Services will not exceed twenty percent of the average
level of services that you performed (whether as an employee or an independent contractor of the
Company) over the thirty-six-month period immediately preceding the Effective Date, consistent with
the intent that your Retirement with the Company (and its subsidiaries) constitute a “separation
from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).

4. Fees for Services and Related Matters.

(a) Fees for Services. During the Consulting Period, the Company will pay you an
annual consulting fee of $500,000 (the “Consulting Fee”), payable in arrears, in equal
monthly installments on the first day of each calendar month (or the following business day).

(b) Continued Vesting of Outstanding Equity Awards. Except as provided below,
effective as of your Retirement, you will be treated as a terminated employee and having incurred a
“separation from service,” as defined under Section 409A of the Code, for purposes of all of the
employee benefit plans of the Company and its subsidiaries. However, solely with respect to your
unvested stock appreciation rights, stock options and restricted stock awards (both time based and
performance based) that were granted under the Company’s equity plans and are outstanding as of
your Retirement, (i) each such stock appreciation right and stock option will continue to vest in
accordance with its applicable vesting schedule as if you were an employee during the Consulting
Period and thereafter through the applicable vesting date, and (ii) each such restricted stock
award will continue to vest in accordance with its applicable vesting schedule as if you were an
employee during the Consulting Period and any unvested restricted stock awards as of December 31,
2012 will vest immediately on such date. In the case of each of clauses (i) and (ii) above, the
vesting is subject to your continued compliance with this letter during the Consulting Period,
including the Restrictive Covenants, and, in the case
of stock options and stock appreciation rights that vest after the end of the Consulting
Period, continued compliance with the Restrictive Covenants through the applicable vesting date.
Stock options and stock appreciation rights, whether vested as of the date of your Retirement or
due to the continued vesting provisions of this Section 4(b), will continue to be exercisable by
you until the expiration of the original full term.

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 3

(c) Reimbursement of Expenses. The Company will, upon submission of appropriate
documentation and subject to the requirements of Section 7 hereof, reimburse you for your
reasonable business expenses, including, without limitation, airfares, and telecommunication
expenses, incurred by you during the Consulting Period in connection with the performance of your
duties hereunder in accordance with the Company’s policies and procedures in effect from time to
time with respect to its vendors. You will bear all of your other expenses.

(d) Sole Consideration. Except as specifically provided herein, you will be entitled
to no compensation or benefits from the Company with respect to the Services, will not be eligible
to participate in any employee benefit plans of the Company and its subsidiaries and will not be
credited with service for purposes of eligibility, vesting or benefit accrual under any employee
benefit plan of the Company or its subsidiaries.

(e) Clawback. You acknowledge and agree that all incentive compensation earned or
paid to you, including, without limitation, all equity awards earned and/or granted to you prior to
the date of your Retirement, are and will continue to be subject to the terms and conditions of the
Company’s clawback policy adopted by the Board, as amended from time to time.

5. Independent Contractor Relationship.

(a) Status as an Independent Contractor. In providing your Services, you are acting
solely as an independent contractor, not as an employee, agent or joint venturer of the Company,
and, except with respect to your equity awards, you will not be entitled to any benefits provided
to employees of the Company or any of its subsidiaries. The Company will not exercise general
supervision or control over the time, place or manner in which you provide the Services. You
acknowledge and agree that you are solely responsible for the payment of all Federal, state, local
and foreign taxes that are required by applicable laws or regulations to be paid with respect to
the Consulting Fee or other remuneration payable hereunder other than the equity awards which will
be subject to any reporting and withholding as required by applicable law, and under no
circumstances whatsoever, including without limitation, for the purposes of the Federal Insurance
Contributions Act, the Social Security Act, the Federal Unemployment Tax Act and Federal and state
income tax withholding, will you be deemed an employee of the
Company. You will have no authority to sign any document or extend any credit on behalf of
the Company or to bind the Company in any way.

(b) No Restrictions. You represent and warrant that you are able to enter into this
letter and that your ability to enter into this letter and to fully perform the Services
contemplated hereunder is not limited to or restricted by any agreements or understandings between
you and any other person or restricted or prohibited by applicable law.

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 4

(c) Non-Exclusive Services. The Company acknowledges that you are not prohibited by
this letter from obtaining employment with or otherwise providing services to another entity during
the Consulting Period, provided that, (i) such other employment or services do not interfere with
your ability to perform the Services under this letter and (ii) such other employment or services
are not prohibited by the Restrictive Covenants.

6. Restrictive Covenants.

(a) You agree that you are subject to the restrictive covenants as provided under Sections 10
through 12 of your Employment Agreement (“Restrictive Covenants”) which survive your
Retirement and the expiration of your Employment Agreement; provided, however, that you agree that
the Restrictive Covenants under Sections 11 and 12 of your Employment Agreement will apply for the
duration of the Consulting Period and for the three year period following the end of the Consulting
Period.

(b) In addition to the Restrictive Covenants, you acknowledge and agree that, during the
Consulting Period and at any time thereafter, you will hold in confidence all confidential and/or
proprietary information, knowledge, know-how, trade secrets, and similar matters and property of
the Company, and will not directly or indirectly disclose or make use of any such confidential
information. In addition, you agree that upon your cessation of the Consulting Period for any
reason, you will provide to the Company all documents, papers, files or other material in your
possession and under your control that are connected with or derived from your services to the
Company under your Employment Agreement or this letter.

(c) You agree that the restrictions provided in this Section 6, including the Restrictive
Covenants (as modified by Section 6(a) hereof), are reasonable in their time, territory and scope,
and acknowledge that the Company would be irreparably injured by a violation of the terms of any
such covenants. You agree that the remedies at law for any breach of this letter by you would be
inadequate and that in the event of any such breach the Company will be entitled to seek a
preliminary injunction, temporary restraining order, or other equivalent relief, restraining you
from any actual or threatened breach of this letter in any court which may have competent
jurisdiction over the matter in dispute.

7. Section 409A. This letter is intended to comply with the provisions of Section
409A of the Code and the Treasury regulations relating thereto or an exception to Section 409A of
the Code. For purposes of compliance with Section 409A of the Code, each payment of compensation
under this letter will be treated as a separate payment of compensation, and in no event may you,
directly or indirectly, designate the calendar year of any payment under this letter. All
reimbursements provided under this letter will be provided in accordance with the requirements of
Section 409A of the Code, including, that (a) the amount of expenses eligible for reimbursement
during one calendar year will not affect the amount of expenses eligible for reimbursement in any
other calendar year; (b) the reimbursement of an eligible expense will be made no later than the
last day of the calendar year following the calendar year in which the expense is incurred; and (c)
the right to any reimbursement will not be subject to liquidation or exchange for another benefit.

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 5

8. Miscellaneous.

(a) Amendment. This letter may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and legal representatives.

(b) Successor. This letter is personal to you and without the prior written consent
of the Company will not be assignable by you. This letter and any rights and benefits hereunder
will inure to the benefit of and be enforceable by your legal representatives, heirs or legatees.
This letter and any rights and benefits hereunder will inure to the benefit of and be binding upon
the Company and its successors and assigns. As used in this letter, “Company” will mean the
Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this letter by operation of law, or otherwise.

(c) Headings. The headings in this letter are for convenience of reference only and
do not affect the interpretation of this letter.

(d) Notices. Any notice required or permitted to be given under this letter will be
deemed properly given in writing and if mailed by registered or certified, postage prepaid with
return receipt requested, to the business address of the Company, to the attention of the Senior
Vice President, Legal and External Affairs, General Counsel and Secretary, and to your residence
address, or to such other address as a party is directed pursuant to written notice from the other
party.

(e) Severability. The invalidity or unenforceability of any provision of this letter
will not affect the validity or enforceability of any other provision of this letter, and
this letter will be construed as if such invalid or unenforceable provision were omitted (but
only to the extent that such provision cannot be appropriately reformed or modified).

(f) Waiver of Breach. No waiver by any party hereto of a breach of any provision of
this letter by any other party, or of compliance with any condition or provision of this letter to
be performed by such other party, will operate or be construed as a waiver of any subsequent breach
by such other party of any similar or dissimilar provisions and conditions at the same or any prior
or subsequent time. The failure of any party hereto to take any action by reason of such breach
will not deprive such party of the right to take action at any time while such breach continues.

(g) Entire Agreement. Except as provided herein, from and after the Effective Date,
this letter will supersede any other agreement or understanding between the parties with respect to
the subject hereof, including but not limited to your Employment Agreement. For the avoidance of
doubt, this letter does not supersede or otherwise affect Sections 10 through 15 of the Employment
Agreement, which survive your Retirement and will remain in effect in accordance with the terms of
the Employment Agreement, as amended by this letter, or the rights with respect to the supplemental
retirement benefits set forth in Section 5(b) of the Employment Agreement, which will be paid in
accordance with the terms of the Employment Agreement.

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 6

(h) Governing Law. This letter will be governed by, and construed under and in
accordance with, the internal laws of the State of North Carolina, without reference to rules
relating to conflicts of laws.

(i) Counterparts. This letter may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

Mr. Martin L. Orlowsky

August 12, 2010

Page 7

If this letter correctly sets forth our agreement, please return a signed copy of this letter
to the Company.

	 	 	 	 	 
	 	Sincerely,

LORILLARD, INC.

 	 
	 	By:  	/s/ Ronald S. Milstein
 	 
	 	 	Ronald S. Milstein 	 
	 	 	Senior Vice President, Legal and

External Affairs, General Counsel

and Secretary 	 
	 

	 	 	 	 	 
	Accepted and agreed to this 12th day

of August, 2010.

 	 	 
	/s/ Martin L. Orlowsky
 	 	 
	Martin L. OrlowskyExhibit 10.3

Exhibit 10.3

August 12, 2010

Mr. Murray S. Kessler

Dear Murray:

I am pleased to confirm the terms of your employment with Lorillard, Inc. (the “Company”).

	 	1.	 	“Effective Date”. September 13, 2010.
	 
	 	2.	 	Positions. On the Effective Date, you will begin to serve as Chief Executive
Officer and President of the Company. In that capacity, you will report directly to
the Board of Directors of the Company (the “Board”) and have all of the customary
authorities, duties and responsibilities that accompany these positions, including
engaging in appropriate philanthropic and civic activities in the Greensboro, North
Carolina area as a representative of the Company . You will be initially appointed to
the Board as of the Effective Date and will thereafter be nominated for election to the
Board. You will be appointed Chairman of the Board on January 1, 2011.
	 
	 	3.	 	Location. You will be required to perform your duties at the Company’s
headquarters in Greensboro, North Carolina (and such travel to other locations as
business requires) and will maintain a residence in Greensboro, North Carolina during
the term of your employment.
	 
	 	4.	 	Annual Base Salary. Your annual base salary will be $1,200,000 per year,
payable at the times consistent with the Company’s general policies regarding
compensation of executives.
	 
	 	5.	 	Signing Bonus. You will be entitled to a $1 million cash signing bonus payable
within 30 days of the Effective Date, subject to repayment (i.e., “clawback”) on a
pro-rata basis in the event that your employment ceases (other than (i) a severance
qualifying termination under the Senior Executive Severance Pay Plan, as in effect from
time to time (the “Severance Plan”) or (ii) if your employment ceases due to your death
or Disability (as defined in the Severance Plan)) prior to the second anniversary of
the Effective Date based on the portion of the two-year period elapsed from the
Effective Date through the date of the termination of your employment.

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 2

	 	6.	 	Annual Target Bonus Opportunity.

	 	•	 	2010 and 2011 Fiscal Years. With respect to the Company’s 2010 and 2011
fiscal years, you will be eligible to be awarded an annual bonus based on a
target bonus opportunity of $1.8 million, with the actual bonus (if any) to be
determined by the Compensation Committee of the Board (the “Committee”) based
on the achievement of pre-established performance goals and the terms of the
Company’s annual incentive plan as in effect from time to time; provided that
the actual bonus for the 2010 fiscal year will be pro-rated for the portion of
the fiscal year beginning on the Effective Date and ending December 31, 2010.
	 
	 	•	 	Post-2011 Fiscal Years. With respect to the Company’s 2012 fiscal year and
each fiscal year thereafter during which you remain employed by the Company,
you will be eligible to be awarded an annual bonus based on a annual target
bonus opportunity and with such other terms and conditions, including, without
limitation, the achievement of performance goals, as are established by the
Committee consistent with its then applicable policies.

	 	7.	 	Long-Term Incentive Award.

	 	•	 	2010 Fiscal Year. With respect to the Company’s 2010 fiscal year, your
target annual long-term incentive opportunity will be $5 million (based on the
grant date expected value of such awards as reasonably estimated by the
Committee, consistent with the methodology applicable to Peer Executives)
pro-rated for the portion of the 2010 fiscal year beginning on the Effective
Date and ending December 31, 2010 (the “2010 LTI Award”).

	 	•	 	One-third (based on value) of the 2010 LTI Award will be in the form of
stock options to acquire shares of Company common stock to be granted in
four equal installments on each of the following dates: on or about the
Effective Date, December 31, 2010, March 31, 2011 and June 30, 2011, at an
exercise price equal to the closing price of a share of Company common
stock on the date of grant (the “2010 LTI Options”). Each tranche of the
2010 LTI Options will (i) vest in four equal annual installments on each of
the first, second, third and fourth anniversaries of the Effective Date,
subject to your continued employment on such dates, (ii) expire no later
than ten years from the Effective Date, (iii) be subject to the terms of
the Company’s applicable equity incentive plan, and (iv) otherwise have the
same terms and conditions as those applicable to the 2010 fiscal year stock
options awarded to other senior executives of the Company (“Peer
Executives”) in February 2010.
	 
	 	•	 	Two-thirds (based on value) of the 2010 LTI Award will be in the form of
restricted Company common stock to be granted on or about the Effective
Date (the “2010 LTI Restricted Stock”). The 2010 LTI Restricted Stock will
(i) vest in full in a single installment on the third anniversary of the
Effective Date, subject to your continued employment through such date,
(ii) be subject to the terms of the Company’s applicable equity incentive
plan, and (iii) otherwise have the same terms and conditions as those
applicable to the 2010 fiscal year restricted stock awards granted to Peer
Executives in February 2010.

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 3

	 	•	 	2011 Fiscal Year. With respect to the Company’s 2011 fiscal year, you will
be eligible to be awarded a long-term incentive award based on a target annual
long-term incentive opportunity of $5 million (based on the grant date expected
value of such awards as reasonably estimated by the Committee, consistent with
the methodology applicable to Peer Executives), with the actual award (if any)
to be determined by the Committee. Any such awards granted to you will have
terms and conditions as determined by the Committee, subject to the terms of
the Company’s applicable equity incentive plan and generally consistent with
those applicable to Peer Executives, including, without limitation, the
achievement of performance goals.
	 
	 	•	 	Post-2011 Fiscal Years. Beginning with the 2012 fiscal year of the Company
and each fiscal year thereafter during which you remain employed by the Company
and the Company maintains a long-term incentive plan, you will be eligible to
be awarded a long-term incentive award in amounts (if any) and with terms and
conditions determined by the Committee, subject to the terms of the Company’s
equity incentive plans (or other long-term incentive program) as in effect from
time to time and with terms and conditions generally consistent with those
applicable to Peer Executives, including, without limitation, the achievement
of performance goals.

	 	8.	 	Severance Protection Prior to a Change in Control. You will be eligible to
participate in the Severance Plan with respect to any qualifying termination under the
Severance Plan prior to a “Change in Control” (as defined in the Form of Severance
Agreement currently in place for Peer Executives (the “Executive Severance
Agreement”)).
	 
	 	9.	 	Change in Control Severance Protection. Promptly following the Effective Date,
you and the Company will enter into an Executive Severance Agreement that provides you
with change in control severance protection with a three times severance multiple,
which agreement will be substantially in the form attached hereto as Exhibit A,
other than with respect to the excise tax gross-up protection relating to Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), provided in Section 6.2
of the Executive Severance Agreement (the “280G Gross-Up”). The 280G Gross-Up
provision set forth in Section 6.2 of the Executive Severance Agreement will be
replaced with a 

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 4

	 	 	 	“better of net-after-tax or cutback” provision, which generally will provide (in a manner consistent with the
application of Section 280G of the Code) that “parachute payments” will be reduced
to less than three times your “base amount” (such terms having the meanings under
Sections 280G(b)(2) and (3) of the Code) if such a reduction would place you in a
better after-tax financial position than your financial position if you received all
such payments and paid all applicable taxes, including any excise tax under Section
4999 of the Code. Such other modifications to the Executive Severance Agreement
will be made as are necessary to effectuate the elimination of the 280G Gross-Up and
the implementation of the better of net-after-tax or cutback provision. The
treatment of outstanding equity awards upon a change in control of the Company will
be consistent with the terms applicable to other Peer Executives.
	 
	 	10.	 	Benefits; Reimbursements. You will be entitled to employee and fringe benefits
on the same basis as those provided from time to time to Peer Executives. In
connection with your joining the Company, the Company will promptly pay the reasonable
and documented legal fees, not to exceed $50,000, incurred in connection with the
negotiation and documentation of the employment arrangements with the Company. The
Company will also reimburse you for reasonable and documented moving expenses from your
current residence to Greensboro, North Carolina, consistent with the terms of the
Company’s relocation practices, including a temporary housing allowance for up to four
months following the Effective Date.
	 
	 	11.	 	Company Policies. You will be subject to all policies of the Company,
including, without limitation, the stock ownership guidelines and the incentive
compensation clawback policy applicable to executives of the Company, as each policy is
amended from time to time.
	 
	 	12.	 	Restrictive Covenants.

	 	•	 	Confidentiality. You agree not to disclose, either while employed by the
Company or at any time thereafter, to any person not employed by the Company,
any confidential information of the Company obtained by you while in the employ
of the Company, including, without limitation, information relating to any of
the Company’s or its subsidiaries’, and affiliates’ (within the meaning of Rule
501 of the Securities Act of 1933) (the “Affiliated Entities”), inventions,
processes, formulae, plans, devices, compilations of information, methods of
distribution, customers, client relationships, marketing strategies or trade
secrets; provided, however, that this provision will not preclude you from the
use or disclosure of information generally known or available in the
marketplace through no fault of you or from disclosure required by law or court
order or to enforce your rights in any litigation, mediation or arbitration
involving this letter or any other agreement between you or among you and the
Company or its Affiliated Entities, or to perform your duties to the Company.
Your obligations hereunder will be in
addition to, and not in limitation of, any obligations or duties imposed upon
you by law.

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 5

	 	•	 	Non-Competition Covenant. You agree that while employed by the Company and
at all times during the three-year period following your termination of
employment for any reason (the “Restricted Period”) you will not, directly or
indirectly, (i) be employed by, engaged as a consultant, director or advisor
for or provide any services or assistance in any capacity to any company or
other entity, firm or organization that researches, develops, manufactures,
provides, sells or markets products or services that compete or will compete
with the products and/or services manufactured, marketed, sold or being
researched or developed by the Company or its Affiliated Entities as of the
date of your termination (a “Competitor”) or (ii) organize, establish or
operate as a Competitor.
	 
	 	•	 	Non-Solicitation of Customers. You acknowledge and agree that during the
Restricted Period you will not, directly or indirectly, solicit, induce or
persuade or attempt to solicit, induce or persuade any customer, client,
supplier, licensee or other business relation (in each case, whether former,
current or prospective) of the Company or any of its Affiliated Entities to
cease doing business with the Company or such Affiliated Entity, or in any way
interfere with the relationship between any such customer, client, investor,
supplier, licensee or business relation, on the one hand, and the Company or
any Affiliated Entity, on the other hand.
	 
	 	•	 	Non-Solicitation/No Hire of Employees. You acknowledge and agree that,
without the Company’s written consent, during the Restricted Period you will
not, directly or indirectly, solicit, induce or persuade or attempt to solicit,
induce or persuade any individual who is, on the date of your termination (or
was, during the six-month period prior to the date of your termination),
employed by or providing services to the Company or the Affiliated Entities to
terminate or refrain from renewing or extending such employment or services, or
to become employed by or become a consultant to any other individual, entity,
firm or organization other than the Company or the Affiliated Entities. In
addition, during the Restricted Period, you will not, without the Company’s
written consent, directly or with knowledge indirectly, hire any person who is
or who was, within the six-month period preceding such activity, an employee of
the Company or its Affiliated Entities; provided, however, that you will be
deemed to have knowledge with respect to the hiring of any such individual at
the level of vice president or above.
	 
	 	•	 	Enforcement; Remedies. You understand that the provisions of this paragraph
12 may limit your ability to earn a livelihood in a business similar to the
business of the Company, but you nevertheless agree that such provisions do not
impose a greater restraint than is necessary to protect the goodwill or other
business interests of the Company, are reasonable limitations as to scope and
duration and are not unduly burdensome to you. You further agree that the
Company would be irreparably harmed by any actual or threatened breach of the
covenants in this paragraph 12 and that, in addition to any other
remedies at law including money damages, the Company will be 

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 6

entitled
to seek a preliminary
injunction, temporary restraining order, or other equivalent relief, restraining
you from any actual or threatened breach of this letter in any court which may
have competent jurisdiction over the matter in dispute. With respect to any
provision of this paragraph 12 finally determined by a court of competent
jurisdiction to be unenforceable, you hereby agree that a court shall have
jurisdiction to reform such provisions, including the duration or scope of such
provisions, as the case may be, so that they are enforceable to the maximum
extent permitted by law. If any of the covenants of this paragraph 12 are
determined to be wholly or partially unenforceable in any jurisdiction, such
determination will not be a bar to or in any way diminish the rights of the
Company to enforce any such covenant in any other jurisdiction.

	 	13.	 	Representations. You acknowledge and warrant that you are currently free to
commence employment with the Company pursuant to the terms of this letter and, you are
not restricted in any way, including by way of restrictive covenants with prior
employers, from fulfilling all of the duties set forth in this letter.
	 
	 	14.	 	Miscellaneous.

	 	•	 	Entire Agreement; Amendment. This letter shall supersede any other
agreement or understanding, written or oral, with respect to the matters
covered herein. This letter may not be amended or modified otherwise than in
writing signed by the parties hereto.
	 
	 	•	 	Severability. The invalidity or unenforceability of any provision of this
letter will not affect the validity or enforceability of any other provision of
this letter, and this letter will be construed as if such invalid or
unenforceable provision were omitted (but only to the extent that such
provision cannot be appropriately reformed or modified).
	 
	 	•	 	Governing Law. This letter will be governed by, and construed under and in
accordance with, the internal laws of the State of North Carolina, without
reference to rules relating to conflicts of laws.
	 
	 	•	 	Tax Matters. The Company may withhold from any amounts payable to you such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation. To the extent any taxable
expense reimbursement or in-kind benefits under paragraph 10 of this letter are
subject to Section 409A of the Code, (i) the amount thereof eligible during one
calendar year will not affect the amount eligible in any other calendar year;
(ii) the reimbursement of an eligible expense will be made no later than the
last day of the calendar year following the calendar year in which the
expense is incurred; and (iii) the right to any reimbursement or receipt of
in-kind benefit will not be subject to liquidation or exchange for another
benefit. Each payment under 

 

 

 

Mr. Murray Kessler

August 12, 2010

Page 7

	 	 	 	this letter will be treated as a separate payment for purposes of Section 409A of the Code. To the extent not provided in an
applicable plan or other agreement in which you are a participant or a party, in
the event that you become entitled to a payment of deferred compensation as a
result of your separation from service in which you are a specified employee (as
provided under Section 409A of the Code), such payment will be postponed to the
extent necessary to satisfy Section 409A and any amounts so postponed will be
paid in a lump sum six months after such separation from service (or any earlier
date of your death).
	 
	 	•	 	Arbitration. Except with respect to any dispute under or alleged breach of
paragraph 12, any dispute or controversy arising under or in connection with
this letter will be settled exclusively by confidential arbitration in
Greensboro, North Carolina in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. The Company will pay the
costs of such arbitration, other than any petitioner’s fee owed by you and your
attorneys fees which will be borne by you.
	 
	 	•	 	Indemnification. On the Effective Date, you will enter into the Company’s
form of indemnification agreement applicable to its officers and members of the
Board.
	 
	 	•	 	Inconsistency. In the event of any inconsistency between the terms of this
letter that provide for substantive rights respecting compensation and the
terms of any plan or agreement of the Company in which you are a participant or
a party, this letter will control unless otherwise provided by specific
reference to this paragraph in such other plan or agreement.
	 
	 	•	 	Successors. This letter is personal to you and without the prior written
consent of the Company will not be assignable by you. This letter and any
rights and benefits hereunder will inure to the benefit of and be enforceable
by your legal representatives, heirs or legatees. This letter and any rights
and benefits hereunder will inure to the benefit of and be binding upon the
Company and its successors and assigns.
	 
	 	•	 	Headings. The headings in this letter are for convenience of reference only
and do not affect the interpretation of this letter.
	 
	 	•	 	Counterparts. This letter may be executed in separate counterparts, each of
which is deemed to be an original and all of which taken together constitute
one and the same.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

If this letter correctly sets forth our agreement, please return a signed copy of this letter
to the Company.

We look forward to your leadership.

	 	 	 	 	 
	 	Sincerely,

LORILLARD, INC.

 	 
	 	By:  	/s/ Ronald S. Milstein
 	 
	 	 	Ronald S. Milstein 	 
	 	 	Senior Vice President, Legal and External
Affairs, General Counsel and Secretary 	 
	 

	 	 	 	 	 
	Accepted and agreed to this

12th day of August 2010.

 	 	 
	/s/ Murray S. Kessler
 	 	 
	Murray S. Kessler

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