Reynolds American Inc. Executive Severance Plan

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(a)

“ Accounting Firm ” means a nationally recognized accounting firm, or actuarial, benefits or compensation consulting firm (with experience in performing the calculations regarding the applicability of Section 280G of the Code and of the tax imposed by Section 4999 of the Code) selected by the Company.

(b)

“ B&W ” means Brown & Williamson Tobacco Corporation.

(c)

“ Base Salary ” means, at any time, the then regular annual rate of pay which the Executive is receiving as annual salary, excluding amounts: (i) received under short-term or long-term incentive or other bonus plans, regardless of whether the amounts are deferred, or (ii) designated by the Participating Company as payment toward reimbursement of expenses.

(d)

“ BAT ” means, collectively, British American Tobacco p.l.c., a public limited company incorporated under the laws of England and Wales, and its affiliates, other than the Participating Companies.

(e)

“ BCA ” has the meaning set forth in Section 2(i).

(f)

“ Beneficial Owner ” or “ Beneficial Ownership ” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

(g)

“ Board ” means the Board of Directors of the Company.

(h)

“Cause” means the occurrence of any one or more of the following:

Notwithstanding the foregoing, a Tier I or Tier II Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Tier I or Tier II Executive a copy of a resolution duly adopted by the affirmative vote of not less than two thirds of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Tier I or Tier II Executive and an opportunity for the Tier I or Tier II Executive, together with the Tier I or Tier II Executive’s counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Tier I or Tier II Executive had committed an act constituting “Cause” as herein defined and specifying the particulars thereof in detail. Nothing herein will limit the right of the Tier I or Tier II Executive or his beneficiaries to contest the validity or propriety of any such determination.

(i)

An individual, corporation, partnership, group, associate or other entity or Person, other than any employee benefit plans sponsored by the Company, is or becomes the Beneficial Owner, directly or indirectly, of thirty percent (30%) or more of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors; provided , however , that the acquisition of Company securities by BAT pursuant to the Business Combination Agreement, dated as of October 27, 2003, between RJR and B&W, as thereafter amended (the “BCA”), or as expressly permitted by the Governance Agreement, dated as of July 30, 2004, among British American Tobacco p.l.c., B&W and the Company, as thereafter amended (the “Governance Agreement”), shall not be considered a Change in Control for purposes of this
subsection (i);

(ii)

Individuals who constitute the Board (or who have been designated as directors in accordance with Section 1.09 of the BCA) on July 30, 2004 (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was (A) approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee of the Company for director) or (B) made in accordance with Section 2.01 of the Governance Agreement, but excluding for this purpose any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of a director or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or Person other than the Board, shall be, for purposes of this paragraph (ii), considered as though such person were a member of the Incumbent Board; or

(j)

“ Change in Control Good Reason ” means the occurrence after a Change in Control of any one (1) or more of the following:

Control), except for across-the-board reductions generally applicable to all Tier I or Tier II Executives;

(iv)

A reduction by a Participating Company in aggregate employee benefits provided to a Tier I or Tier II Executive as compared to the value of aggregate employee benefits provided as of the date of the Change in Control, except for across-the-board reductions generally applicable to all Tier I or Tier II Executives;

(v)

The failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Plan, as contemplated in Article 8 herein; and

(vi)

A material breach of this Plan by a Participating Company which is not remedied by the Participating Company within ten (10) business days of receipt of written notice of such breach delivered by a Tier I or Tier II Executive to the Participating Company.

(n)

“ Committee ” means the Compensation and Leadership Development Committee of the Board, or another committee of the Board appointed by the Board to administer this Plan.

(o)

“ Company ” means Reynolds American Inc., a North Carolina corporation, and any successor thereto as provided in Article 8.

(p)

“ Disability ” or “ Disabled ” shall have the meaning ascribed to such term in the Company’s governing long-term disability plan, or if no such plan exists, at the discretion of the Board.

(q)

“ Effective Date ” means February 1, 2009.

(r)

“ Effective Date of Termination ” means the date on which a Qualifying Termination occurs, as provided in Section 3.1, which triggers the payment of Severance Benefits, or such other date upon which the Executive’s employment with a Participating Company terminates for reasons other than a Qualifying Termination.

(s)

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.

(t)

“ Excise Tax ” means, collectively, (i) the tax imposed by Section 4999 of the Code by reason of being “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code, or (ii) any similar tax imposed by state or local law, or (iii) any interest or penalties with respect to any excise tax described in clause (i) or (ii).

(u)

“ Executive ” means a Tier I, Tier II or Tier III Executive who is initially hired or rehired by a Participating Company on or after January 1, 2007, or who was hired before that date and is not a party to an effective agreement with a Participating Company providing for severance benefits.

(v)

“ General Release ” has the meaning set forth in Section 3.4.

(w)

“ General Severance Benefits ” mean the severance benefits as provided in Section 4.2(b) or 5.2(b), as applicable.

(x)

“ General Good Reason ” means a reduction by a Participating Company in excess of twenty percent (20%) of the aggregate value of (i) the Executive’s Base Salary and target annual bonus amount (as in effect on the date of such reduction) and (ii) the long-term incentive opportunities provided to the Executive (as in effect on the date of such reduction), except for across-the-board reductions generally applicable to all Executives. Notwithstanding the foregoing, (A) General Good Reason shall cease to exist for an event on the ninetieth (90 ^th ) day following the later of its occurrence or the Executive’s knowledge thereof, unless the Executive has given a Participating Company written notice thereof prior to

such date, (B) a Participating Company shall have thirty (30) days from receipt of such written notice to remedy the facts and circumstances claimed to provide the basis for the Executive’s General Good Reason and (C) the Executive shall be deemed to have terminated employment for General Good Reason on the thirtieth (30 ^th ) day following the Participating Company’s receipt of the written notice described in clause (A) if the Participating Company fails to remedy such circumstances by such thirtieth (30 ^th ) day. Unless the Executive becomes Disabled, the Executive’s right to terminate employment for a General Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting a General Good Reason herein.

(y)

“ Governance Agreement ” has the meaning set forth in Section 2(i).

(z)

“ Gross-Up Payment ” has the meaning set forth in Section 6.1.

(aa)

“ Incumbent Board ” has the meaning set forth in Section 2(i).

(bb)

“ Insurance Adjustment Payment ” has the meaning set forth in Section 4.1(b)(vi).

(cc)

“ Non-Competition Agreement ” has the meaning set forth in Section 3.4.

(dd)

“ Notice of Termination ” means a written notice provided by a Participating Company or the Executive indicating that the Executive’s employment is being terminated. In the event the Executive provides such notice, the Notice of Termination shall indicate the specific termination provision in this Plan relied upon and, if the Executive’s employment is being terminated by the Executive pursuant to Section 3.1(a) or 3.1(c), the Notice of Termination shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for the Executive’s termination of the Executive’s employment under the provision so indicated.

(ee)

“ Other Severance Arrangement ” has the meaning set forth in Section 9.2.

(ff)

“ Participating Company ” or “ Participating Companies ” means the Company and/or any other entity that adopts this Plan in accordance with the provisions of Section 9.3. “Participating Company” includes any successor(s) to a Participating Company, whether by merger, consolidation or otherwise. All Participating Companies are listed on Appendix A .

(gg)

“ Payment ” has the meaning set forth in Section 6.1.

(hh)

“ Payment Date ” means the last day of the month after the sixtieth (60 ^th ) calendar day following the date of the Executive’s Qualifying Termination.

(ii)

“ Person ” shall have the meaning ascribed to such term in Section 14(d) of the Exchange Act.

(jj)

“ Plan ” means this Reynolds American Inc. Executive Severance Plan.

(kk)

“ Qualifying Termination ” means any of the events described in Section 3.1, the occurrence of which triggers the payment of Severance Benefits.

(ll)

“ RJR ” means R.J. Reynolds Tobacco Holdings, Inc.

(mm)

“ Separation from Service ” has the meaning set forth in Section 3.1.

(nn)

“ Severance Benefits ” means the payout of Change in Control Severance Benefits or General Severance Benefits as provided in Article 4 or Article 5, as applicable.

(oo)

“ Subsidiary ” means any corporation or other entity in which the Company has a significant equity or other interest as determined by the Committee.

(pp)

“ Subsidized COBRA Period ” has the meaning set forth in Section 5.1(b)(vi).

(qq)

“ Tier I Executive ” means the Chief Executive Officer of the Company.

(rr)

“ Tier II Executive ” means an individual employed by a Participating Company at job level eleven (11) through fourteen (14), inclusive (within the meaning of the Company’s payroll structure).

(ss)

“ Tier III Executive ” means an individual employed by a Participating Company at job level ten (10) (within the meaning of the Company’s payroll structure).

(a)

Within twenty-four (24) calendar months following a Change in Control, the Executive incurs a Separation from Service other than:

(b)

Within twelve (12) calendar months prior to a Change in Control, the Executive incurs a Separation from Service by a Participating Company without Cause if such Separation from Service occurs at the request of any party involved in the

(i)

By a Participating Company for Cause; or

(ii)

By reason of death or Disability; or

(iii)

By the Executive without General Good Reason.

(a)

If the Executive becomes entitled to Pre-2010 Change in Control Severance Benefits, the Severance Benefits provided for under Section 4.1 shall be in lieu of the benefits provided to the Executive under Section 4.2. Similarly, if the Executive becomes entitled to Pre-2010 General Severance Benefits, the Severance Benefits provided under Section 4.2 shall be in lieu of the benefits provided to the Executive under Section 4.1.

(b)

If the Executive becomes entitled to Post-2009 Change in Control Severance Benefits, the Severance Benefits provided for under Section 5.1 shall be in lieu of the benefits provided to the Executive under Section 5.2. Similarly, if the Executive becomes entitled to Post-2009 General Severance Benefits, the Severance Benefits provided under Section 5.2 shall be in lieu of the benefits provided to the Executive under Section 5.1.

(c)

Notwithstanding anything in this Section 3.5 to the contrary, if the Executive incurs a Qualifying Termination described in Section 3.1(b), the Executive will be entitled to the Change in Control Severance Benefits provided for under Section 4.1 or 5.1, as applicable, in lieu of the General Severance Benefits provided under Section 4.2 or 5.2, as applicable.

(a)

Subject to Section 3.4, the Participating Company shall pay the Executive Change in Control Severance Benefits, as described in Section 4.1(b), if, prior to January 1, 2010, the Executive receives or delivers a Notice of Termination of a Qualifying Termination of the Executive’s employment pursuant to Section 3.1(a) or 3.1(b).

(b)

The Change in Control Severance Benefits to be provided to the Executive pursuant to Section 4.1(a) shall be the following: