Exhibit 10.1

SUBSCRIPTION AND SUPPORT AGREEMENT dated as of July 15, 2014 (this “Agreement”),
by and among BRITISH AMERICAN TOBACCO P.L.C, a public limited company
incorporated under the laws of England and Wales (“BAT”), REYNOLDS AMERICAN
INC., a North Carolina corporation (“Parent”) and, for purposes of
Section 5.08(a) only, BROWN & WILLIAMSON Holdings Inc., a Delaware corporation
and wholly owned Subsidiary of BAT (“Holdings”).

WHEREAS Parent, Lantern Acquisition Co., a Delaware corporation and wholly owned
Subsidiary of Parent (“Merger Sub”), and Lorillard, Inc., a Delaware corporation
(the “Company”), intend to effect a merger of Merger Sub with and into the
Company pursuant to the agreement and plan of merger dated as of the date hereof
(the “Merger Agreement”);

WHEREAS, Holdings owns, as of the date hereof, the number of shares of Parent’s
common stock, par value $0.0001 per share (the “Parent Common Stock”) set forth
on Schedule B hereto (the “Owned Shares”); and

WHEREAS, on the terms and subject to the conditions set forth herein, BAT
desires to (directly or indirectly through one or more of its wholly owned
Subsidiaries designated by BAT (the “Designated Subsidiaries”)) subscribe for
and purchase from Parent, and Parent desires to issue and sell to BAT (or the
Designated Subsidiaries), a number of additional shares of Parent Common Stock
that will be equal to the number of shares (rounded up to the next whole share)
of Parent Common Stock that, when added to the number of shares of Parent Common
Stock beneficially owned by BAT immediately prior to the Share Issuance will
result in BAT owning 42.17832% of the shares of Parent Common Stock outstanding
immediately after the Merger (after giving effect to the Share Issuance), as set
forth in more detail on Schedule A attached hereto, as such amount may be
adjusted pursuant to Section 2.03, the proceeds of which will be used by Parent
to fund a portion of the Cash Consideration for the Merger and to pay
transaction costs and other expenses ancillary to the Merger.

NOW, THEREFORE, in order to implement the foregoing and in consideration of the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:

ARTICLE I

Certain Definitions

As used in this Agreement, the following terms shall have the meaning ascribed
to them below:

The term “Asset Purchase Agreement” shall mean the Asset Purchase Agreement
dated as of the date hereof among Parent, Lignum-2, L.L.C., a Texas limited
liability company (the “Acquiror”) and for purposes of certain provisions and as
guarantor of the obligations of the Acquiror, Imperial Tobacco Group PLC
(“Imperial”).

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The term “BAT” shall have the meaning set forth in the heading of this
Agreement.

The term “Closing” shall have the meaning set forth in Section 2.02 hereof.

The term “Closing Date” shall have the meaning set forth in Section 2.02 hereof.

The term “Company” shall have the meaning set forth in the recitals to this
Agreement.

The term “Designated Subsidiaries” shall have the meaning set forth in the
recitals to this Agreement.

The term “Holdings” shall have the meaning set forth in the heading of this
Agreement.

The term “Merger Agreement” shall have the meaning set forth in the recitals to
this Agreement.

The term “Merger Closing” shall mean the closing of the Merger as contemplated
by the Merger Agreement.

The term “Merger Sub” shall have the meaning set forth in the recitals to this
Agreement.

The term “New Shares” shall have the meaning set forth in Section 2.01 hereof.

The term “Owned Shares” shall have the meaning set forth in the recitals to this
Agreement.

The term “Parent” shall have the meaning set forth in the heading of this
Agreement.

The term “Parent Common Stock” shall have the meaning set forth in the recitals
to this Agreement.

The term “Per Share Purchase Price” shall have the meaning set forth in
Section 2.01 hereof.

The term “Purchase Price” shall have the meaning set forth in Section 2.01
hereof.

 

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The term “Share Purchase” shall have the meaning set forth in Section 2.01
hereof.

The term “Transfer” shall have the meaning set forth in Section 5.09 hereof.

The term “Voting Shares” shall have the meaning set forth in Section 5.08(a)
hereof.

Capitalized terms used herein (including the recitals hereto) but not defined
herein shall have the meanings set forth in the Merger Agreement.

ARTICLE II

Purchase of Parent Common Stock

SECTION 2.01. Purchase and Sale. (a) On the terms and subject to the conditions
set forth in this Agreement, BAT hereby agrees to subscribe for and purchase (or
BAT shall cause the Designated Subsidiaries to agree to subscribe for and
purchase) at the Closing, and Parent hereby agrees to issue, sell and deliver to
BAT (or the Designated Subsidiaries) at the Closing, a number of shares of
Parent Common Stock (the “New Shares”) at a price per share (the “Per Share
Purchase Price”, as such amount may be adjusted pursuant to Section 2.03), as
set forth on Schedule A hereto (the “Share Purchase”), the aggregate amount of
which shall be referred to herein as the “Purchase Price.”

(b) At the Closing, (i) Parent shall issue to BAT (or the Designated
Subsidiaries) the number of New Shares set forth on Schedule A hereto, free and
clear of any Liens, against delivery by Parent to BAT (or the Designated
Subsidiaries) by electronic book-entry at The Depository Trust Company,
registered in the name of BAT (or the Designated Subsidiaries), and released by
Computershare Trust Company, N.A., Parent’s transfer agent, of such New Shares
and (ii) BAT shall cause to be delivered to Parent the Purchase Price by wire
transfer in immediately available funds to an account or accounts designated by
Parent at least two Business Days before the Closing Date.

SECTION 2.02. The Closing. Subject to the provisions of Article VI, the closing
(the “Closing”) of the Share Purchase will take place at the offices of Jones
Day in New York, New York as soon as practicable after all of the conditions set
forth in Article VI (other than conditions which by their terms are required to
be satisfied or (to the extent permitted by Law) waived at the Closing, but
subject to the satisfaction or waiver of such conditions) have been satisfied or
waived by the party entitled to the benefit of the same, and which date shall be
the same as the date of the Merger Closing (the “Closing Date”).

SECTION 2.03. Provisions to Prevent Dilution. In the event that, on or after the
date hereof and prior to the Closing, Parent changes the number of shares of
Parent Common Stock issued and outstanding prior to the Closing as a result of a

 

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reclassification, stock split (including a reverse stock split), stock dividend
or distribution, recapitalization, subdivision, or other similar transaction,
the Per Share Purchase Price (as defined in Schedule A hereto) will be equitably
adjusted to eliminate the effects of such event. On or after the date hereof and
prior to the Closing, Parent will not take any of the actions specified in
Section 5.01(a)(i) of the Merger Agreement (other than actions in respect of
which an equitable adjustment to the Per Share Purchase Price is required by the
preceding sentence) without BAT’s prior written consent.

ARTICLE III

Representations and Warranties of Parent

Parent represents and warrants to BAT as follows:

SECTION 3.01. Organization; Standing. Parent is a corporation duly incorporated
and validly existing under the laws of the State of North Carolina.

SECTION 3.02. Authority; Execution and Delivery; Enforceability. Parent has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to issue and sell the New Shares and
consummate the other transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and, assuming the due authorization,
execution and delivery by BAT, this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms except
as enforcement may be limited by bankruptcy, insolvency, reorganization or
similar Laws affecting creditors’ rights generally and by general principles of
equity.

SECTION 3.03. Capitalization. (a) The authorized capital stock of Parent
consists of 1,600,000,000 shares of Parent Common Stock and 100,000,000 shares
of Parent Preferred Stock. At the close of business on July 7, 2014,
(i) 531,283,513 shares of Parent Common Stock were issued and outstanding,
(ii) 1,000,000 shares of Series B Parent Preferred Stock were issued and
outstanding, (iii) 4,703,316 shares of Parent Common Stock were reserved and
available for issuance pursuant to the Parent Stock Plans in respect of
outstanding awards and (iv) 34,116,111 shares of Parent Common Stock were
reserved and available for issuance pursuant to the awards not yet granted under
Parent Stock Plans. Except as set forth in this Section 3.03(a) (and other than
(i) shares of Parent Common Stock to be issued pursuant to this Agreement and
the Merger Agreement and (ii) shares of Parent Capital Stock that may be issued
pursuant to the Rights Agreement), at the close of business on July 7, 2014, no
shares of capital stock or voting securities of, or other equity interests in,
Parent were issued, reserved for issuance or outstanding. From the close of
business on July 7, 2014 to the date of this Agreement, there have been no
issuances by Parent of shares of capital stock or voting securities of, or other
equity interests in, Parent other than the issuance of Parent Common Stock
(i) in settlement of Parent Performance Shares or Parent DSUs or (ii) in lieu of
Parent DSUs at the election of directors of Parent.

 

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(b) All outstanding shares of Parent Capital Stock are, and, at the time of
issuance, all shares of Parent Common Stock constituting the New Shares will be,
duly authorized, validly issued, fully paid and nonassessable, free and clear of
any Liens and not subject to, or issued in violation of, any purchase option,
call option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the NCBCA, the Parent Articles, the Parent
Bylaws or any Contract to which Parent is a party or otherwise bound (other than
rights granted pursuant to the Rights Agreement).

(c) Except as set forth in this Agreement, pursuant to the terms of the Merger
Agreement, pursuant to obligations under the Rights Agreement and the rights
issued in accordance with the Rights Agreement and pursuant to the Parent Stock
Plans, there are no issued, reserved for issuance or outstanding, and there are
no outstanding obligations of Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, (i) any capital stock of Parent or any securities of
Parent convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of, or other equity interests in, Parent, (ii) any
warrants, calls, options or other rights to acquire from Parent, or any other
obligation of Parent to issue, deliver or sell, or cause to be issued, delivered
or sold, any capital stock or voting securities of, or other equity interests
in, Parent, or (iii) any rights issued by or other obligations of Parent that
are linked in any way to the price of any class of Parent Capital Stock, the
value of Parent or any part of Parent or any dividends or other distributions
declared or paid on any shares of capital stock of Parent. Other than (A) the
withholding of shares of Parent Common Stock to satisfy tax obligations with
respect to awards granted pursuant to the Parent Stock Plans, (B) the
acquisition by Parent of awards granted pursuant to the Parent Stock Plans in
connection with the forfeiture of such awards and (C) obligations under the
Rights Agreement and the Governance Agreement, there are not any outstanding
obligations of Parent to repurchase, redeem or otherwise acquire any shares of
capital stock or voting securities or other equity interests of Parent or any
securities, interests, warrants, calls, options or other rights referred to in
clause (i), (ii) or (iii) of the immediately preceding sentence. There are no
bonds, debentures, notes or other Indebtedness of Parent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which shareholders of Parent may vote.

SECTION 3.04. No Conflicts; No Violations. The execution and delivery by Parent
of this Agreement does not, and the performance of its obligations hereunder,
and the issuance and sale of the New Shares and the consummation of the other
transactions contemplated hereby will not, (i) conflict with, or result in any
violation of any provision of, the Parent Articles or the Parent Bylaws or
(ii) conflict with, or result in any violation of any provision of, subject to
compliance with and filing under the HSR Act and the Exchange Act, any Judgment
or Law, in each case, applicable to Parent or its properties or assets (assuming
that the Parent Shareholder Approval is obtained), other than, in the case of
clause (ii), any matters that, individually or in the aggregate, would not
prevent or materially impede, interfere with, hinder or delay the consummation
of the Share Purchase.

 

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ARTICLE IV

Representations and Warranties of BAT

BAT represents and warrants to Parent as follows:

SECTION 4.01. Organization; Standing. BAT is a public limited company duly
organized, validly existing and in good standing under the laws of England and
Wales.

SECTION 4.02. Authority; Execution and Delivery; Enforceability. Each of BAT and
the Designated Subsidiaries, as applicable, has all requisite corporate power
and authority to execute and deliver this Agreement (to the extent a party
hereto), to perform its obligations hereunder, to purchase the New Shares and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by BAT and, assuming the due authorization, execution and
delivery by Parent, this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except, in each
case, as enforcement may be limited by bankruptcy, insolvency, reorganization or
similar Laws affecting creditors’ rights generally and by general principles of
equity.

SECTION 4.03. No Conflicts; No Violations. The execution and delivery by BAT of
this Agreement does not, and the performance of its obligations hereunder, the
purchase of the New Shares by BAT or a Designated Subsidiary and the
consummation of the transactions contemplated hereby, will not, (i) conflict
with, or result in any violation of any provision of, the organizational
documents of BAT or any such Designated Subsidiary or (ii) conflict with, or
result in any violation of any provision of, subject to compliance with and
filing under the HSR Act and the Exchange Act, any Judgment or Law, in each
case, applicable to BAT, any such Designated Subsidiary or their respective
properties or assets other than, in the case of clause (ii), any matters that,
individually or in the aggregate, would not prevent or materially impede,
interfere with, hinder or delay the consummation of the Share Purchase.

SECTION 4.04. Unregistered Shares. Subject to Section 8.01, BAT has been advised
by Parent that (a) the offer and sale of the New Shares have not been registered
under the Securities Act or any other applicable state, foreign or federal
securities Laws; and (b) it may not sell or dispose of any such Parent Common
Stock except pursuant to a registered offering in compliance with, or in a
transaction exempt from, the registration requirements of the Securities Act and
any other applicable state, foreign or federal securities Laws. BAT (or, if
applicable, the Designated Subsidiaries) is acquiring the New Shares for its own
account, for investment only, and not with a view to any resale or public
distribution thereof.

SECTION 4.05. The Owned Shares.

(a) BAT (or one or more of its wholly owned Subsidiaries) is the record and
beneficial owner of the Owned Shares, free and clear of any Lien and any other
limitations or restrictions, and has full voting power and full power to issue
instructions

 

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with respect to the matters set forth in Section 5.08(a) hereof, in each case
with respect to all of the Owned Shares, subject to the requirements of
applicable Laws, the terms of this Agreement and the provisions of the
Governance Agreement. In connection with its acquisition of the New Shares, the
only information furnished by Parent which has been relied on by BAT is that
which is set forth or included in (i) the reports and other documents which have
been filed with the SEC, (ii) the Transaction Agreements or (iii) the materials
that have been distributed to the members of the board of directors of Parent.

(b) As of the date of this Agreement, the Owned Shares represent all of the
shares of Parent Common Stock beneficially owned by BAT.

ARTICLE V

Covenants

SECTION 5.01. Use of Proceeds. Parent hereby agrees that the proceeds from the
issuance and sale of the New Shares pursuant to this Agreement shall be used
only to fund a portion of the Cash Consideration for the Merger and, in Parent’s
sole discretion, transaction expenses and other costs ancillary to the Merger.

SECTION 5.02. Amendments to Merger Agreement. Parent hereby agrees that prior to
the termination of this Agreement, Parent shall not (a) amend, modify or waive,
grant any consent or extension in respect of, any material term or condition of
the Merger Agreement without BAT’s prior written consent (which BAT shall
provide, withhold or condition in its sole discretion) or (b) amend, modify or
waive, grant any consent or extension in respect of, any term of the Merger
Agreement that is not material without BAT’s prior written consent (which
consent shall not be unreasonably withheld, delayed or conditioned). For the
avoidance of doubt, and without establishing a standard for materiality or an
exclusive or exhaustive list, each of the conditions set forth in Article VII of
the Merger Agreement and the provisions related to the amount of the Merger
Consideration and the treatment of the Company equity-based awards in the Merger
shall be deemed material for purposes of this Section 5.02.

SECTION 5.03. Amendments to Asset Purchase Agreement and Other Divestiture
Agreements. Parent hereby agrees that prior to the termination of this
Agreement, Parent shall not (a) (i) amend, modify or waive, grant any consent or
extension in connection with, any material term or condition of the Asset
Purchase Agreement or any Other Divestiture Agreement without BAT’s prior
written consent (which BAT shall provide, withhold or condition in its sole
discretion) or (ii) amend, modify or waive, grant any consent or extension in
connection with, any term of the Asset Purchase Agreement or any Other
Divestiture Agreement that is not material without BAT’s prior written consent
(which consent shall not be unreasonably withheld, delayed or conditioned) or
(b) agree, or permit its Subsidiaries to agree, to any terms or conditions of
any Antitrust Divestiture/Restriction or any other action contemplated by
clauses (i) through (iii) of Section 6.03(d) of the Merger Agreement that,
individually or

 

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in the aggregate, would or would reasonably be expected to result in a
Substantial Detriment without BAT’s prior written consent (which BAT shall
provide, withhold or condition in its sole discretion). For the avoidance of
doubt, and without establishing a standard for materiality or an exclusive or
exhaustive list, the provisions in the Asset Purchase Agreement or Other
Divestiture Agreements, as applicable, related to conditions to closing,
consideration received by Parent and indemnification shall be deemed material
for purposes of this Section 5.03.

SECTION 5.04. Required Actions. Each of BAT and Parent hereby agrees from and
after the date hereof and until the earlier of the Closing Date and the
termination of this Agreement to and to cause their respective subsidiaries to:

(a) use its reasonable best efforts to furnish to the other all reasonable
assistance, cooperation and information required for a filing under the HSR Act
relating to the transactions contemplated by this Agreement;

(b) give the other reasonable prior notice (and copies) of any registration,
declaration, submission, notice or filing relating to any filings required under
the HSR Act relating to the Transactions and, to the extent reasonably
practicable, of any communication with any Government Entity regarding the
Transactions, and permit the other to review, discuss in advance, and consider
in good faith the views of, and, to the extent practicable and legally
permissible, secure the participation of, the other in connection with any such
registration, declaration, submission, notice, filing and communication;

(c) unless prohibited by applicable Law or by the applicable Government Entity,
(A) to the extent reasonably practicable, give the other reasonable prior notice
of its intent to participate in or attend any meeting, proceeding or engage in
any conversation with respect to any Governmental Entity in respect of the
Transactions, (B) to the extent reasonably practicable, give the other
reasonable prior notice of any such meeting, proceeding or conversation and
allow the other the opportunity to participate in any such meeting, proceeding
or conversation, (C) in the event that the other is prohibited by applicable Law
or by the applicable Government Entity from participating in such conversation,
consult with, and keep the other reasonably apprised with respect thereto and
(D) furnish the other with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and its Affiliates and its respective Representatives on the one hand, and any
Governmental Entity or members of any Governmental Entity’s staff, on the other
hand, with respect to the Transactions, and in Parent’s case, furnish BAT with
copies of all correspondence, filings and communications it receives from the
Company or the Company’s Affiliates or their respective Representatives pursuant
to Section 6.03(g)(vi) of the Merger Agreement, in each case, to the extent
practicable and legally permissible and subject to redaction of competitively
sensitive information, valuation material or information subject to attorney
client privilege, as applicable; and

(d) furnish the other with copies of (including drafts as they become
available), and give the other the opportunity to review and comment upon, any
report or

 

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other form to be filed with the SEC or the UK Listing Authority with respect to
the Transactions as well as any comments from or correspondence with the SEC or
the UK Listing Authority relating thereto.

SECTION 5.05. Transaction Litigation. Subject to applicable Law, Parent shall
keep BAT reasonably apprised of any action taken in the defense or settlement of
any litigation against the Company or its directors or officers by a holder of
securities of the Company relating to the Transactions to the extent Parent is
aware of any such action.

SECTION 5.06. Takeover Statutes. BAT and the board of directors of BAT, and
Parent and the board of directors of Parent, hereby agree to use their
respective reasonable best efforts to (i) take all action reasonably appropriate
to ensure that no state takeover statute or regulation is or becomes applicable
to the issuance of the New Shares or the other transactions contemplated by this
Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the issuance of the New Shares pursuant to this
Agreement or the other transactions contemplated by this Agreement, take all
action reasonably appropriate to ensure that such issuance of the New Shares
pursuant to this Agreement and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement.

SECTION 5.07. Public Announcements. (a) Parent and BAT hereby agree to use their
respective reasonable best efforts to develop a joint communications plan and to
consult with each other before issuing, and give each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the Transactions (including any press release or public statement
Parent receives from the Company pursuant to Section 6.08 of the Merger
Agreement), and not to issue any such press release or make any such public
statement prior to such consultation, except as such party may reasonably
conclude may be required by applicable Law, court process or by obligations
pursuant to any rule of or listing agreement with any national securities
exchange (including the UK Listing Authority) or national securities quotation
system (in such event, with prompt notice to the other party).

(b) BAT and Parent agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement or the other
Transactions will be in the form heretofore agreed to by the parties.
Notwithstanding the foregoing provisions of this Section 5.07, BAT and Parent
may make any oral or written public announcements, releases or statements
without complying with the foregoing requirements if the substance of such
announcements, releases or statements, was publicly disclosed and previously
subject to the foregoing requirements.

SECTION 5.08. Voting Agreements of BAT. From and after the date hereof and until
the earlier of the Closing Date and the termination of this Agreement:

(a) at any meeting of the stockholders of Parent or in any other circumstance
upon which a vote with respect to the Share Issuance is sought, or at any

 

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adjournment or postponement thereof, or in connection with any written consent
of the stockholders of Parent or in any other circumstances in which the
stockholders of Parent are entitled to vote, consent or give any other approval
with respect to the Share Issuance, each of BAT and Holdings shall (or shall
cause its wholly owned Subsidiaries that are the holders of record of the shares
of Parent Common Stock on any applicable record date to) (i) appear at each such
meeting in person or by proxy or otherwise cause all the shares of Parent Common
Stock beneficially owned by it as of such record date (the “Voting Shares”) to
be counted as present for purposes of calculating a quorum at such meeting and
respond to each request by Parent for written consent, if any and (ii) vote or
cause to be voted (including by written consent, if applicable) the Voting
Shares, to the extent the Voting Shares may vote on the matter in question,
(x) in favor of (A) granting the Parent Shareholder Approval and (B) subject to
clause (ii)(y) of this Section 5.08(a), any proposal to adjourn or postpone the
Parent Shareholders Meeting and (y) against any action or agreement that would
reasonably be expected to, in any material respect, impede, interfere with or
prevent the Share Issuance and the other Transactions as contemplated by the
Transaction Agreements; and

(b) in the event that BAT becomes the beneficial owner of any other securities
entitling the holder thereof to vote or give consent with respect to the matters
set forth in Section 5.08(a), then the terms of Section 5.08(a) shall apply to
such other securities as though they were Voting Shares hereunder.

SECTION 5.09. Transfer. Prior to the earlier of the Closing Date and the
termination of this Agreement and subject to applicable Laws and the provisions
of the Governance Agreement, BAT agrees not to, and to cause its wholly owned
Subsidiaries not to, directly or indirectly (A) sell, transfer, tender or
otherwise dispose of (collectively, “Transfer”) or enter into any contract,
option or other arrangement or understanding with respect to the Transfer of,
any or all of the Owned Shares to any Person other than to a Subsidiary of BAT
or (B) grant any proxy, enter into any voting arrangement, whether by proxy,
voting agreement or otherwise, with respect to any Owned Shares that conflicts
or is inconsistent with this Agreement. Any action taken or attempted to be
taken in violation of the preceding sentence will be null and void. BAT
acknowledges and agrees that this Section 5.09 constitutes adequate and
sufficient notice of the restriction on the Transfer of the Owned Shares as
contemplated by Section 55-6-26 of the NCBCA and further agrees to provide such
notice to each of its Subsidiaries who is the owner of record of Owned Shares.

SECTION 5.10. Capacity. Parent hereby acknowledges that BAT is making the
agreements pursuant to Section 5.08 and Section 5.09 only in its capacity as a
beneficial owner of Parent Common Stock and nothing herein shall limit or affect
any actions taken by any individual in such individual’s capacity as a director
of Parent, nor shall any action taken in any such individual’s capacity as a
director be deemed a breach of this Agreement.

SECTION 5.11. Enforcement of Obligations under Merger Agreement, Asset Purchase
Agreement and Other Divestiture Agreements. Parent hereby agrees that prior to
the termination of this Agreement, Parent will use its reasonable best efforts
to

 

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enforce (a) the Company’s obligations under the Merger Agreement, (b) Imperial’s
and the Acquiror’s obligations under the Asset Purchase Agreement and (c) its
counterparty’s obligations under any Other Divestiture Agreement.

ARTICLE VI

Conditions to Closing

SECTION 6.01. Conditions to Each Party’s Obligation to Effect the Share
Purchase. The respective obligation of each party to effect the Share Purchase
is subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:

(a) Satisfaction of Merger Conditions. All of the conditions set forth in
Article VII of the Merger Agreement (other than conditions which by their terms
are required to be satisfied or (to the extent permitted by Law) waived at the
Merger Closing, but subject to the satisfaction or waiver of such conditions)
shall have been satisfied or waived by the party entitled to the benefit of the
same.

(b) Consummation of the Transactions Contemplated by the Merger Agreement. The
Closing contemplated by the Merger Agreement (other than the Share Purchase
contemplated by this Agreement) shall have been (or will substantially
simultaneously with the transactions contemplated by this Agreement be)
consummated.

(c) Regulatory Approvals. Any waiting period applicable to the Share Purchase
under the HSR Act shall have been terminated or shall have expired.

SECTION 6.02. Condition to BAT’s Obligation to Effect the Share Purchase. The
obligation of BAT to consummate the Share Purchase is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Representations and Warranties. The representations and warranties of Parent
contained in Section 3.01, Section 3.02 and Section 3.03 shall be true and
correct in all respects at and as of the date of this Agreement and at and as of
the Closing Date as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such earlier date),
and the other representations and warranties of Parent contained in this
Agreement that are qualified by “materiality” shall be true and correct in all
respects as so qualified at and as of the date of this Agreement and at and as
of the Closing Date as if made at and as of such time and that are not qualified
by “materiality” shall be true and correct in all material respects at and as of
the date of this Agreement and at and as of the Closing Date as if made at and
as of such time. BAT shall have received a certificate signed on behalf of
Parent by an executive officer of Parent to such effect.

(b) Performance of Obligations of Parent. Parent shall have performed in all
respects all obligations required to be performed by it under Section 5.02 and
Section 5.03 and in all material respects all obligations (other than those
required under Section 5.02 and Section 5.03) required to be performed by it
under this Agreement, in each case at or prior to the Closing Date, and BAT
shall have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.

 

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SECTION 6.03. Condition to Parent’s Obligation to Effect the Share Purchase. The
obligation of Parent to consummate the Share Purchase is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Representations and Warranties. The representations and warranties of BAT
contained in Section 4.01 and Section 4.02 will be true and correct in all
respects at and as of the date of this Agreement and at and as of the Closing
Date as if made at and as of such time, and the other representations and
warranties of BAT contained in this Agreement that are qualified by
“materiality” shall be true and correct in all respects as so qualified at and
as of the date of this Agreement and at and as of the Closing Date as if made at
and as of such time and that are not qualified by “materiality” shall be true
and correct in all material respects at and as of the date of this Agreement and
at and as of the Closing Date as if made at and as of such time. Parent shall
have received a certificate signed on behalf of BAT by an executive officer of
BAT to such effect.

(b) Performance of Obligations of BAT. BAT shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Parent shall have received a certificate
signed on behalf of BAT by an executive officer of BAT to such effect.

ARTICLE VII

Termination

SECTION 7.01. Termination. This Agreement may be terminated at any time prior to
the Closing as follows:

(a) automatically upon the termination of the Merger Agreement in accordance
with its terms;

(b) by BAT, if:

(i) Parent breaches or fails to perform any of its covenants or agreements set
forth in Section 5.02 or Section 5.03 of this Agreement; or

(ii) Parent breaches or fails to perform any of its covenants or agreements
contained in this Agreement (other than those contained in Section 5.02 or
Section 5.03), or if any of the representations or warranties of Parent
contained herein fails to be true and correct, which breach or failure (A) would
give rise to the failure of a condition set forth Section 6.02(a) or
Section 6.02(b) and (B) is not capable of being cured; or

 

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(c) by Parent, if:

(i) BAT materially breaches or fails to perform any of its covenants or
agreements contained in this Agreement, which breach or failure is not capable
of being cured; or

(ii) any of the representations or warranties of BAT contained herein fails to
be true and correct, which failure (A) would give rise to the failure of a
condition set forth in Section 6.03(a) and (B) is not capable of being cured.

The party desiring to terminate this Agreement pursuant to clause (b) or (c) of
this Section 7.01 will give written notice of such termination to the other
party in accordance with Section 8.02, specifying the provision of this
Agreement pursuant to which such termination is effected. Parent and BAT shall
deliver any such notice, in addition to any other notice delivered under this
Agreement, to the Company pursuant to the procedures specified in Section 9.02
of the Merger Agreement.

SECTION 7.02. BAT Expenses. (a) In the event that the Merger Agreement or the
Asset Purchase Agreement has been terminated and Parent receives a Company
Termination Fee or Imperial Termination Fee (as defined in the Asset Purchase
Agreement), as applicable, Parent shall promptly, but in no event later than
three Business Days after receipt of such Company Termination Fee or Imperial
Termination Fee, as applicable, and written documentation, reasonably
satisfactory to Parent, of BAT’s reasonable out-of-pocket costs and expenses,
pay at the direction of BAT (i) in the case of the Company Termination Fee, the
lesser of (A) all of the reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by BAT in connection with the
Transactions and (B) $30,000,000, and (ii) in the case of the Imperial
Termination Fee, the lesser of (A) all of the reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees and expenses) incurred by BAT in
connection with the Transactions and (B) $8,500,000.

(b) Parent and BAT acknowledge and agree that the agreements contained in
Section 7.02(a) are an integral part of the transactions contemplated by this
Agreement, and accordingly, if Parent fails promptly (subject to BAT’s provision
of written documentation as provided in Section 7.02(a)) to pay the amounts due
pursuant to Section 7.02(a) and, in order to obtain such payment, BAT commences
an Action that results in a Judgment in its favor for such payment, then Parent
will pay to BAT such payment and BAT’s reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees and expenses) in connection with
such Action, together with interest on the amount of such payment from the date
such payment was required to be made hereunder until the date of payment at the
prime rate in effect on the date such payment was required to be made.

ARTICLE VIII

Miscellaneous

SECTION 8.01. Governance Agreement. Each party hereto acknowledges and agrees
that (a) neither the Governance Agreement nor any provision

 

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thereof is modified, amended or waived by anything contained in this Agreement
or any other Transaction Agreement or the consummation of any Transactions
contemplated hereby and thereby, and (b) the Share Purchase is not restricted by
Article IV of the Governance Agreement and the New Shares shall constitute
“Registrable Securities” (as defined in and) under the Governance Agreement and
BAT has the right to cause the registration of such New Shares subject to
conditions set forth in Article III of the Governance Agreement. Notwithstanding
clause (a) above, BAT, on behalf of itself and any of its Subsidiaries which are
holders of Parent Common Stock, consents to the performance by Parent of its
obligations under the Merger Agreement and the Asset Purchase Agreement, to the
extent BAT’s consent is required therefor under the terms of the Governance
Agreement.

SECTION 8.02. Notices. All notices, requests, demands and other communications
under this Agreement will be in writing and will be given (and will be deemed to
have been duly given upon receipt) by delivery in person, by prepaid overnight
courier (providing proof of delivery) or by email to the respective parties at
the following addresses or email addresses (or at such other address for a party
as will be specified in a notice given in accordance with this Section 8.02):

(a) If to Parent, to it at the following address:

 

Reynolds American Inc.

401 North Main Street

Winston-Salem, North Carolina 27101

Attention: Martin L. Holton III

Email: holtonm@rjrt.com

 

with a copy to

 

Jones Day

222 East 41st Street

New York, New York 10017

Attention:   Jere R. Thomson   Randi C. Lesnick

Email:   jrthomson@jonesday.com   rclesnick@jonesday.com

(b) If to BAT, to it at the following address:

 

British American Tobacco p.l.c.

Globe House

4 Temple Place

London WC2R 2PG

Attention: Robert Casey

Email: Robert_Casey@bat.com

 

with a copy to

 

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attention:   Philip A. Gelston   Ting S. Chen

Email:   pgelston@cravath.com   tchen@cravath.com

 

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SECTION 8.03. Amendment. Subject to Section 8.11, this Agreement may be amended,
modified or waived only by a written instrument signed by Parent and BAT.

SECTION 8.04. Extension; Waiver. At any time prior to the Closing, either party
may (a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement, (c) waive compliance with any covenants
and agreements of the other party contained in this Agreement or (d) waive the
satisfaction of any of the conditions to the obligations of the other party
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver will be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.

SECTION 8.05. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned, in whole or in
part, by operation of Law or otherwise by any of the parties without the prior
written consent of the other parties; provided, that BAT may assign its rights
and obligations pursuant to this Agreement to any of its Subsidiaries so long as
BAT continues to remain primarily liable for all of such rights and obligations
as if no such assignment had occurred. Any purported assignment that does not
comport with the foregoing sentence will be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.

SECTION 8.06. Fees and Expenses. Subject to Section 7.02, each party shall bear
its own fees and expenses and the expenses of its counsel in connection with the
transactions contemplated by this Agreement.

SECTION 8.07. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement, and
will become effective when one or more counterparts have been signed by each
party and delivered to the other party.

SECTION 8.08. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any applicable rule or

 

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Law, or public policy, all other conditions and provisions of this Agreement
will nevertheless remain in full force and effect so long as either the economic
or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party or such party waives its rights under
this Section 8.08 with respect thereto. Upon such determination that any term or
other provision (or part thereof) is so invalid, illegal or incapable of being
enforced, the parties will negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

SECTION 8.09. Governing Law; Consent to Jurisdiction; Venue.

(a) This Agreement will be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to any choice or conflicts of
laws principles (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the Laws of any jurisdiction other than the
State of Delaware; provided, however, that the Share Issuance (to the extent
required by the Laws of the State of North Carolina to be governed thereby) and
matters relating to the conduct of directors of Parent, will be governed by, and
construed in accordance with, the Laws of the State of North Carolina, without
giving effect to any choice or conflicts of laws principles (whether of the
State of North Carolina or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of North
Carolina.

(b) Each party hereby (i) expressly and irrevocably submits to the exclusive
personal jurisdiction of the Court of Chancery of the State of Delaware (or, to
the extent such court declines to accept jurisdiction over a particular matter,
any federal court within the State of Delaware, or, if such federal court
declines to accept jurisdiction, any state court within the State of Delaware
that has jurisdiction) in the event any dispute arises out of this Agreement or
the transactions contemplated hereby, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from the court identified in the foregoing clause (i), (iii) agrees that it will
not bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than the court identified in the foregoing clause (i),
(iv) agrees that the other party will have the right to bring any Action for
enforcement of a judgment entered by the court identified in the foregoing
clause (i), and (v) expressly and irrevocably waives (and agrees not to plead or
claim) any objection to the laying of venue of any Action arising out of this
Agreement or the transactions contemplated hereby in the court identified in the
foregoing clause (i) or that any such Action brought in such court has been
brought in an inconvenient forum. Each party agrees that a final judgment in any
Action will be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by applicable Law. The parties
hereto hereby declare that it is their intention that this Agreement shall be
regarded as made under the laws of the State of Delaware and that the laws of
said State shall be applied in interpreting its provisions in all cases where
legal interpretation shall be required. Each of the parties hereto agrees that
this Agreement (A) involves at least $100,000.00, and (B) has been entered into
by the parties hereto in express reliance upon 6 Del.C. 2708. Each party agrees
(1) to the extent such party is not otherwise subject to

 

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service of process in the State of Delaware, to appoint and maintain an agent in
the State of Delaware as such party’s agent for acceptance of legal process in
connection with any legal proceeding brought under this Agreement, and (2) that,
to the fullest extent permitted by applicable Law, service of process in
connection with any such proceeding may also be made on such party by prepaid
certified mail to the address provided in Section 8.02 with a proof of mailing
receipt validated by the United States Postal Service constituting evidence of
valid service, and that service made pursuant to (1) or (2) above shall, to the
fullest extent permitted by applicable law, have the same legal force and effect
as if served upon such person personally within the State of Delaware. For
purposes of implementing the parties’ agreement to appoint and maintain an agent
for service of process in the State of Delaware, each party that has not as of
the date of this Agreement already duly appointed such an agent, does hereby
appoint Corporation Service Company as such agent.

SECTION 8.10. Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY ACTION ARISING OUT OF THE TRANSACTION AGREEMENTS OR ANY OF THE
TRANSACTIONS. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER
AND CERTIFICATIONS IN THIS SECTION 8.10.

SECTION 8.11. Third Party Beneficiaries. Except as provided in this
Section 8.11, the provisions of this Agreement are solely for the benefit of the
parties hereto and are not intended to confer upon any Person except the parties
hereto any rights and remedies hereunder. The Company is an intended third party
beneficiary of, with enforceable rights and remedies under this Agreement
(including pursuant to Section 8.12) in respect of, BAT’s agreement (a) to
purchase the New Shares pursuant to, and in accordance with, Section 2.01,
(b) to take (or refrain from taking) such actions as set forth in Section 5.08,
including attending and voting, in person or by proxy, or otherwise causing to
be voted, the Voting Shares at any meeting of Parent stockholders (or other
circumstance at which a vote with respect to the Share Issuance is sought)
pursuant to, and in accordance with, Section 5.08, and (c) to take (or refrain
from taking) such actions set forth Section 5.09, including BAT’s agreement not
to Transfer Owned Shares or grant proxies or enter voting arrangements in
respect of Owned Shares, pursuant to, and in accordance with, Section 5.09, in
each case subject to the terms and conditions of this Agreement. Without the
prior written consent of the Company, (x) Sections 2.01, 5.08, 5.09 and this
Section 8.11 may not be amended, modified or waived, (y) this Agreement may not
be terminated by the mutual written consent of BAT and Parent and (z) no other
amendment, modification or waiver, or grant of consent or extension in
connection therewith, may be made to, or granted under, this Agreement that is
inconsistent with the foregoing clauses (x) and (y).

 

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SECTION 8.12. Specific Performance. The parties acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, and that monetary damages, even if available, would not be
an adequate remedy therefor. It is accordingly agreed that, prior to the
termination of this Agreement pursuant to Article VII, the parties (and, for the
avoidance of doubt, the Company in respect of those provisions of this Agreement
to which it is a third party beneficiary pursuant to Section 8.11) will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the performance of terms and provisions of this
Agreement, without proof of actual damages (and each party hereby waives any
requirement for the securing or posting of any bond in connection with such
remedy), this being in addition to any other remedy to which they are entitled
at law or in equity. The parties further agree not to assert that a remedy of
specific enforcement is unenforceable, invalid, contrary to Law or inequitable
for any reason, nor to assert that a remedy of monetary damages would provide an
adequate remedy for any such breach.

SECTION 8.13. Interpretation. When a reference is made in this Agreement to an
Article or a Section, such reference will be to an Article or a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they will be deemed to be followed by
the words “without limitation.” The words “hereof”, “hereto”, “hereby”, “herein”
and “hereunder” and words of similar import when used in this Agreement will
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The term “or” is not exclusive. The word “extent” in the phrase “to
the extent” will mean the degree to which a subject or other thing extends, and
such phrase will not mean simply “if”. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement, instrument or Law defined or referred to herein means such
agreement, instrument or Law as from time to time amended, modified or
supplemented, unless otherwise specifically indicated. References to a Person
are also to its permitted successors and assigns. Unless otherwise specifically
indicated, all references to “dollars” and “$” will be deemed references to the
lawful money of the United States of America. Each party has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement must be construed as if it is
drafted by both parties, and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of authorship of any of the
provisions of this Agreement.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

Reynolds American Inc.   By:  

/s/ Susan M. Cameron

    Name:   Susan M. Cameron     Title:   President and Chief Executive Officer
British American Tobacco p.l.c.   By:  

/s/ Robert Casey

    Name:   Robert Casey     Title:   Assistant General Counsel, Corporate
SOLELY FOR PURPOSES OF SECTION 5.08(a): Brown & Williamson Holdings, Inc.   By:
 

/s/ Timothy Hazlett

    Name:   Timothy Hazlett     Title:   President

 

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SCHEDULE A

The number of New Shares to be purchased by, and issued to, BAT pursuant to
Section 2.01 will be equal to the number of shares (rounded up to the next whole
share) of Parent Common Stock that, when added to the number of shares of Parent
Common Stock beneficially owned by BAT immediately prior to the Share Issuance,
will result in BAT owning 42.17832% of the shares of Parent Common Stock
outstanding immediately after the Merger (after giving effect to the Share
Issuance), including the number of shares of Parent Common Stock issuable to the
Company equity holders (including in respect of equity-based awards),
beneficially owned by BAT on the Closing Date (after giving effect to the Share
Issuance), and held by all other Persons.

 

Per Share Purchase Price:

   $ 60.16   

 

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SCHEDULE B

 

Stockholder

   Owned Shares

Brown & Williamson Holdings Inc.

   223,334,019

 

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